Kubota still offering 0 percent financing

[5030]

Far as I'm concerned, owning real estate is a good and stable investment but keep in mind that most new home buyers are financing their purchase with ARM's which can be good but can also be real bad financially as interest rates climb (and they should). The prime really needs to be at the rate of inflation to stem additional inflation.

Just glad my real estate holdings are either almost paid off and are fixed rate mortgages Only have one property that isn't.

 

[rScotty]

Torvy has been implying for years now that he can easily go into equities and make a return that outperforms his debt obligations with financing. Where I take issue with that is it is not a guarantee. He says it like it is some guaranteed sure thing that will happen and you and I Scotty both know that is not fact. What he doesn't mention is the very real possibility that his equity holdings don't outperform his finance obligations and he is left holding the bag and then some.

Cahaba, I don't know that I agree with that at all. What you are proposing about making more on investing than is being spent seems to work just fine for every bank and financial organization in the country - as well as the entire insurance agency and every retirement fund in every company.

Not to speak of investing being a source of income for every single family trust that keeps its "trustfund babies" and "coupon clippers" not only afloat but luxuriously so. In fact, investing inherited wealth is so successful that a lot of people think it will be the ruin of our country and economy.

So I think that investing really can work as Torvy says. All those industries couldn't be wrong, could they?

As for it applying to Torvy, well....maybe. He works a job so maybe not. But teaching college finance could be his hobby. We do know that teaching college is a hobby for a number of successful people.

rScotty

 

[rScotty]

Not implying anything. Look at the data. 50 year average return is 10%. Inflation over the same period is 3%. This is despite recessions, wars,etc. It is also the market average. This literally means that you can buy a mutual fund that is indexed to the S&P and have a reasonable expectation that over time you will gain, on average, 7% over inflation. So, as long as your interest rate paid is less than 7%, you will gain more than you will pay. (The 125 year average is just under 10%)

The mistake most amateur investors make is that they look in the short term and freak out. You will have low stretches, but in an 84 month loan term, your odds of losing that bet are miniscule. If you have a halfway decent investment advisor, your returns over that time will be more like 15-30%. Is it possible to lose? Sure. It is more likely that any number of worse things will happen. If I take out a 0% (or even 2.99%) loan, I am absolutely certain I will beat that over the term of the loan. If I don't beat it, it would be due to something so cataclysmic that I wouldn't worry about paying it off. I'm talking significant societal breakdown and/or WWIII, or alien invasions, etc.

Yes, unfortunately what Torvy says is true. I say "unfortunately" because if none of those dreaded breakdowns happen and the aliens stay quietly on the sidelines, then just what he says will happen: investment will always grow in the long term.

So if we buy that argument about increasing gains in the long term - and I do - then you must also conclude that in a world with a limited supply of goods, then ultimately the portion of society that invests will end up owning everything.

What follows at that point is his "significant societal breakdown". And that's the problem in a nutshell. If there is a better way, nobody has found it yet.

rScotty

 

[rScotty]

Yep. Low interest rates are not “predatory” loans UNLESS they come with unrealistic terms, penalties, etc.
Otherwise, low interest rates, coupled with sensible payment terms & regulations benefit everyone rich or poor.

Yep. And by that same logic, loans with not interest at all would be the least predatory of all and have the most benefit to everyone.

Ultimately, some version of that no interest loan may be where we go. There are some experiments going on. But I feel if it happens it will be in a far distant future, and only if we can survive making the same old mistakes another dozen times.

rScotty

 

[Cahaba Valley Farm]

Cahaba, I don't know that I agree with that at all. What you are proposing about making more on investing than is being spent seems to work just fine for every bank and financial organization in the country - as well as the entire insurance agency and every retirement fund in every company.

Not to speak of investing being a source of income for every single family trust that keeps its "trustfund babies" and "coupon clippers" not only afloat but luxuriously so. In fact, investing inherited wealth is so successful that a lot of people think it will be the ruin of our country and economy.

So I think that investing really can work as Torvy says. All those industries couldn't be wrong, could they?

As for it applying to Torvy, well....maybe. He works a job so maybe not. But teaching college finance could be his hobby. We do know that teaching college is a hobby for a number of successful people.

rScotty

I wasn't talking about investing in general, I was specifically referencing equities. Equities rise and fall with the economy. Right now equity investors are not having a good time. The stock market I believe has come to the end of an era and the new era is going to an era of high interest rates, inflation and scarcity.

 

[arrow]

Yep. And by that same logic, loans with not interest at all would be the least predatory of all and have the most benefit to everyone.

.

rScotty

How?
I feel it's the most predatory because it is built on a false premise disguised as to what's good for the consumer.
The finance charge is already accounted for and it is a captive one at that. You have no say in what the interest rate charge is at "0%" nor are you allowed to know.
It has nothing to do with "oh but if you pay on time, you can invest that money and make more than what we are hiding in our finance charge that we are not telling you about lest you catch on that you're really paying a finance charge."
It is all about the vendor attempting to sell on the false premise of "the money you borrowed to buy our stuff will cost you nothing."
All the rest is embroidery our species uses to justify stupidity.

 

[Cahaba Valley Farm]

How?
I feel it's the most predatory because it is built on a false premise disguised as to what's good for the consumer.
The finance charge is already accounted for and it is a captive one at that. You have no say in what the interest rate charge is at "0%" nor are you allowed to know.
It has nothing to do with "oh but if you pay on time, you can invest that money and make more than what we are hiding in our finance charge that we are not telling you about lest you catch on that you're really paying a finance charge."
It is all about the vendor attempting to sell on the false premise of "the money you borrowed to buy our stuff will cost you nothing."
All the rest is embroidery our species uses to justify stupidity.

I 100% percent agree with this ^^^

 

[arrow]

I didn't say investing in general, I was specifically referencing equities. Equities rise and fall with the economy. Right now equity investors are not having a good time. The stock market I believe has come to the end of an era and the new era is going to an era of high interest rates, inflation and scarcity.

This "investment" crap is nothing but a red herring.
It's the same as "if you practice catching this ball everyday, you will become a professional baseball player". Maybe, but what are the odds of this happening?
There is absolutely no guarantee one will make money no matter what statistics are utilized. Statistics are "generalizations" and have little to do with what happens to YOU.
It is superfluous to the conversation and just another side car to justify paying on time.
Proof? Let's say I spent the 3 grand on derivatives that I didn't pay up front because I'm BORROWING money. AT&T looked like a pretty safe bet. Then some wisbrain from corporate decided that they should buy Direct TV. So a stock you purchased for $29 now becomes $18 because Direct turns out to be a dog and now Ma Bell needs to unload it at a loss.
Let's do the reverse: With the money saved with paying on time, you buy Apple. Now with your 3 grand, you've made 50K. Wonderful.
The truth of the matter is, does the average person who swallows the 0% gag, really have the wherewithal to sit down and explore stock reports or is water seeking its own level here?

 

[Torvy]

I didn't say investing in general, I was specifically referencing equities. Equities rise and fall with the economy. Right now equity investors are not having a good time. The stock market I believe has come to the end of an era and the new era is going to an era of high interest rates, inflation and scarcity.

I'm not sure where you got the term equities. The term gets misused interchangeably with stocks. The simplified difference is that equities are not publicly traded ownership shares and stocks are publicly traded ownership shares. There are other subtle differences, but the biggest difference is that equities tend to better reflect the value of the business and is less affected by the whims of day traders and trendy investing.

I don't recommend any one type of investment. I use the S&P (Dow works, too) to illustrate that even an unsophisticated investor can consistently bring in returns, adjusted for inflation of about 7% (over time).

Here is an article that can help with understanding and has specific data. I cannot find a good chart of 5 year rolling averages, but I have seen them. Buy and hold, especially now with low prices. There have been very few 5 year segments that have lost money in the last 50 years...even the last 125.

Average Historical Stock Market Returns for S&P 500 (5-year up to 150-year averages) - Trade That Swing

These are the average yearly returns for the US stock market over the last 5, 10, 20, 30, 50, 100, and 150-years. Most data is based on the S&P 500.

tradethatswing.com

Even during the high interest and high inflation of the 70s. Scarcity (literally the main thing economists study), would tend to raise value. Diamonds are scarce, worth many $. Water is not scarce, pretty cheap. Remember, the broader market, not individual stocks.

This does not mean that the stock market is the only, or even the best investment. Your investment portfolio should be diverse and balanced against your age, health and risk tolerance. What it means is that investments can return comfortably beyond even the rising interest rates. There is a limit and there is risk. The risk, however, is much less than financial advisors or investment firms can say. Because, lawsuits. Losses are most often the result of fear. People see dips and rush to pull money out of the market, realizing those losses. Knowledgeable investors ride those dips out and buy more (if they have the resources).

 

[arrow]

Cahaba, I don't know that I agree with that at all. What you are proposing about making more on investing than is being spent seems to work just fine for every bank and financial organization in the country - as well as the entire insurance agency and every retirement fund in every company.

Not to speak of investing being a source of income for every single family trust that keeps its "trustfund babies" and "coupon clippers" not only afloat but luxuriously so. In fact, investing inherited wealth is so successful that a lot of people think it will be the ruin of our country and economy.

So I think that investing really can work as Torvy says. All those industries couldn't be wrong, could they?

As for it applying to Torvy, well....maybe. He works a job so maybe not. But teaching college finance could be his hobby. We do know that teaching college is a hobby for a number of successful people.

rScotty

Cahaba, I don't know that I agree with that at all. What you are proposing about making more on investing than is being spent seems to work just fine for every bank and financial organization in the country - as well as the entire insurance agency and every retirement fund in every company.

Not to speak of investing being a source of income for every single family trust that keeps its "trustfund babies" and "coupon clippers" not only afloat but luxuriously so. In fact, investing inherited wealth is so successful that a lot of people think it will be the ruin of our country and economy.

So I think that investing really can work as Torvy says. All those industries couldn't be wrong, could they?

As for it applying to Torvy, well....maybe. He works a job so maybe not. But teaching college finance could be his hobby. We do know that teaching college is a hobby for a number of successful people.

rScotty

What's not being said here Scotty is this institutional money is being moved around by "experts". Not your average Joe.
These people "live" finance. It is their thing. They know the ins and outs and heck, they may even have info that is considered "insider trading" for you and I.
Finance is most definitely a "who (and what) you know world."
That being said, even these folks have had their heads handed to them.