Menu

Taxable investing vs debt paydown

Home Personal Finance and Budgeting Taxable investing vs debt paydown

  • xraygoggles xraygoggles 
    Participant
    Status: Physician
    Posts: 93
    Joined: 10/26/2018

    I get what you are saying, but what I meant was, if I was a betting man, I would bet that it’s more likely that stocks will go down next year, in which case I could pay off the remaining debt during this time span.

    Then, I would use the excess monthly funds towards making up for the year lost investing, and, if we are not in an 11th year bull market, buy stocks cheaper than I would today. Even if there is a sustained bull run next year, I still paid off my debt during that time. I just didn’t make as much through investing, that’s all.

    In the end, we are only talking about a one year time frame. Not sure if that has any effect in the long run.

    “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

    #234392 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3088
    Joined: 09/18/2018

    LMAO,
    You can rationalize being a “betting man” on market timing for one year. No problem.

    How about 18 months? Or how about another perfectly wonderful goal? It’s not that hard to rationalize staying on plan or suspending it as needed.

    Conversely, if it’s not that big of a deal, why not follow your plan? Easy Peary!

    #234409 Reply
    Liked by CordMcNally
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6193
    Joined: 01/12/2016

    I get what you are saying, but what I meant was, if I was a betting man, I would bet that it’s more likely that stocks will go down next year, in which case I could pay off the remaining debt during this time span.

    Then, I would use the excess monthly funds towards making up for the year lost investing, and, if we are not in an 11th year bull market, buy stocks cheaper than I would today. Even if there is a sustained bull run next year, I still paid off my debt during that time. I just didn’t make as much through investing, that’s all.

    In the end, we are only talking about a one year time frame. Not sure if that has any effect in the long run.

    Click to expand…

    In a years time frame it doesnt matter and you’re technically doing a good thing, its not like we’re talking pulling money out, you’re just saying extra is going to debt as opposed to investing. Its totally fine.

    Long term, investing will be better, and its incredibly foolish to worry about one or two years of performance and essentially resulting when your time frame is decades right? I mean its silly, but it is incredibly hard not to do. I would work on matching your decision making process up with your time frames better.

    #234435 Reply
    Liked by xraygoggles
    Avatar docnews 
    Participant
    Status: Physician
    Posts: 410
    Joined: 01/09/2016

    @xraygoggles Any bonds that could be sold to rebalance when the stock market dips. Could substitute with CDs/saving account as well.

    #234453 Reply
    Liked by xraygoggles
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 937
    Joined: 02/06/2016

    I know it’s irrational thinking, but I just can’t get myself to invest in year 10 of the longest bull market in history, outside of the tax-advantaged accounts. What goes up must come down at some point, correct?

    Click to expand…

    Yes, market valuations are high.  A bear market is coming.  All of that is a fact, a known truth.  But….

    We don’t know when the bear is coming.  It could be tomorrow, it could be in 5 years.  So we will never know when to get out and when to get back in.  The ups and downs are a given, but the timing of the ups and downs are unknowable, even by the most highly educated experts.

    So, go ahead and do both, pay down debt and invest in taxable.  If you feel anxious, then tilt a bit more to your debt pay down as that is also a good financial move.  But I would not tilt all the way in that direction, again because with the market, you just never know.  Over the very long term, things tend to work out quite well.

     

    #234461 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1863
    Joined: 02/11/2019
    What goes up must come down at some point, correct

    Click to expand…

    I hope not!

    There will be many disappointed people if the market is not valued higher then today’s all time high in 30 years.

    “Never let your sense of morals prevent you from doing what is right.”

    #234539 Reply
    xraygoggles xraygoggles 
    Participant
    Status: Physician
    Posts: 93
    Joined: 10/26/2018

    Thanks for the input. I was holding off starting a taxable account due to fears of recession and focusing solely on debt.

    Just started a taxable account today with 100% SCHB. I will probably be glad I started one early on in my career, sounds like.

    “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

    #235050 Reply
    Liked by jz

Reply To: Taxable investing vs debt paydown

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear