Let's talk about investing

[Helevitia]

I''m always talking about money with 2 of my buddies. We are forever trying to figure out a way to make money or betters ways to invest.

Out latest scheme is, we both applied for 2 credit cards that offer 5% cashback on gas, groceries, and pharmacy. It's capped at $300/year. The 2nd credit card has 0% balance transfers for 12months with no fees and I can write one check to myself. I plan on writing a check for the full amount of credit and to myself and depositing this money into a 3% savings account. So 10k at 3% for the year is $300. Plus, I will use the other card to get the $300 for the 5% cashback and I get a standard 1% cashback unlimited for all other purchases.

I plan on making $800-$1000 this year off of credit cards.

Anybody else got any scheme they want to share?

[Dr Mordrid]

Those are sucker bets. I'd rather invest in index funds, bonds etc. for the long term and only speculate on short term stuff rarely, and even then only with <10% of my total assets.

Dr. Mordrid

[Helevitia]

Those are sucker bets.

How so? You spend money everyday anywway, why not spend it on a CC where you earn cashback?

I'd rather invest in index funds, bonds etc. for the long term and only speculate on short term stuff rarely, and even then only with <10% of my total assets.

Dr. Mordrid

I'm already investing in 401k, stock market, and IRA accounts.

[KvHagedorn]

I found my "luck" in the stock market increased greatly when I lowered my expectations. Think about it.. if you make 10% per year, you are way ahead of the game. So gradually I gravitated toward swing trading. Pick a relatively stable company listed on a major exchange that has some volatility to it. When it dips enough below its long-term average (assuming you follow what the company is doing and do the standard due diligence) buy big time. When it goes up 10% sell. It might take a year, but it might take 3 days.. if the latter, then you can go hunting for another buying opportunity and so on.

I know it's gambling, but the odds are better than Vegas, and some guy probably won't come looking for me with a baseball bat if I cash in.

[UtwigMU]

The first thing I would do is ditch the credit card and use it only for online purchases and traveling and strategic purchases where carrying large amount of cas is dangerous. Use cash or debet card.

Credit card companies force retailers to pay provision, which is part of what you get paid back by company operating on thinner margins than other credit card companies. I don't know how it runs in the states, but here with cash you can usually get 3-5% discount.

Second thing is to disperse your investments in various things like real estate and state bonds (safest), life insurance, mutual funds (there are different kinds ranging from conservative to more risky and potentialy more profitable and stock market (quite risky, you need to know what you're doing here, only make a small part of your investment here).

By saving moderate amount for few decades with 5-10% you can be a millionare - do your math.

Third - in order to save you need to start borrowing less or if neccessary borrowing cheaper. Thus you no longer spend money on interest. Usually a loan from the bank is cheaper than credit card loan or going in red on personal account. Also some retailers might offer monthly installment payments list price and offer cash discount. Usually if you calculate interest you see it's better to borrow from bank under more favourable terms.

Fourth thing is to refinance loans, only get loan for house and start saving for larger purchases. Plan to help your kids sooner, plan to move in smaller house when older, plan to convert house to rent (monthly payment for life from financial institution).

[Dr Mordrid]

For online purchases I only use bank gift cards. They operate just like VISA/MC with a logo from one or the other, but only in the amount you purchase.

That way anyone trying to use the numbers after my purchase hit a brick wall and not my bank account (in the case of debit cards) or credit card.

Since I can buy them for face value and with no fee at my bank it's cheap insurance when making online purchases.

Dr. Mordrid

[schmosef]

Get this book: The Wealthy Barber.

My copy talked about Canadian Tax strategies, I'm not sure if there's an American edition with American Tax strategies. Other than that, it's a really fun read with some really sage advice for building personal wealth.

You'll thank me.

[Wombat]

For online purchases I only use bank gift cards. They operate just like VISA/MC with a logo from one or the other, but only in the amount you purchase.

Discover, and some other CCs, offer one-time card numbers. You tell them how much you want the "card" to have and they generate a card number just that purpose, on the fly.

[Brian Ellis]

I agree with UtwigMU. My biggest debt is a few hundred on the current credit card and this is paid automatically by the bank when it falls due, each month. I have no mortgage on my house, that I bought cash 7 years ago and has doubled in value since. Most of my assets are in 7 mutual funds of different types in three currencies. The only direct equity is in the shares of a Swiss bank, which I was fortunate enough to get at launch of the new issue, just one year ago, at 98% and is today priced at 104.7%. I hold long term government bonds of two countries; I think the first comes to maturity in 2012, but it pays 9% of par value (I paid 120% of par plus commission, from the maturation of an earlier issue).

I have neither the expertise nor the inclination to play the stock market, so most of my mutual funds are automatically reinvested, as I don't need to see the interest. About half of them are geared for growth and half for security. None of them are geared to a single sector. They have actually held their own pretty well over the last 3-4 years. At the worst, I theoretically lost only 5% from the pre-recession peak (mostly in dollars because of the exchange rate) and today they are worth a lot more. Of course, they are a long term investment, in case of a rainy day.

[Umfriend]

So wait, how does that work. Your second card does not debit your bank account for 12 months. OK. But the debt on the 2nd credit card does not accrue interest becoming due after 12 mos either?

[Helevitia]

The first thing I would do is ditch the credit card and use it only for online purchases and traveling and strategic purchases where carrying large amount of cas is dangerous. Use cash or debet card.

I disagree. Since most of us use money daily, why not use a credit card where you get cashback and earn a little money? As long as you aren't in debt, there really isn't a negative side to this. By using my credit card for normal purchases and pyaing it off every week, I get free money. I don't understand why more people don't do this?

Credit card companies force retailers to pay provision, which is part of what you get paid back by company operating on thinner margins than other credit card companies. I don't know how it runs in the states, but here with cash you can usually get 3-5% discount.

It's the same here. They charge ~3% on average to retailers. And yes, at some locations, you can pay cash and drop the price by that same 3%. But let me ask you, can you save money by paying cash for groceries? Or gas? Or prescriptions? Nope, you can't. Since those are the three items that you earn 5% on then why not? I spend approx. $6000/year on those 3 items. I will make $300 just off of those 3 things. I get 1% on everything else. So i will probably make $400-$500 off of one card.

Second thing is to disperse your investments in various things like real estate and state bonds (safest), life insurance, mutual funds (there are different kinds ranging from conservative to more risky and potentialy more profitable and stock market (quite risky, you need to know what you're doing here, only make a small part of your investment here).

Agreed. And I already do all of this.

Third - in order to save you need to start borrowing less or if neccessary borrowing cheaper. Thus you no longer spend money on interest. Usually a loan from the bank is cheaper than credit card loan or going in red on personal account. Also some retailers might offer monthly installment payments list price and offer cash discount. Usually if you calculate interest you see it's better to borrow from bank under more favourable terms.

How about borrowing money for 0% for 12 months? Can you beat that? That is why I am going to do it and put the money in a 3% savings account or possibly into a CD wtih a higher interest rate. When the 12 months is up, I return the money. The only downside to this and it is a small one is you need to pay 1.5% of the money back every month. So you just use the money you borrowed to pay itself back or use a 2nd credit card with the same offer to pay it back.

[Helevitia]

Discover, and some other CCs, offer one-time card numbers. You tell them how much you want the "card" to have and they generate a card number just that purpose, on the fly.

I was going to mention this but you beat me to it

[Helevitia]

So wait, how does that work. Your second card does not debit your bank account for 12 months. OK. But the debt on the 2nd credit card does not accrue interest becoming due after 12 mos either?

No, the 1st card is used for daily purchases. I get 5% up to $300, which I will hit for sure.

The 2nd card I borrow the money by writing a check to myself. I deposit that money into a savings account at 3%. When the 12 months end, I return the money I borrowed and keep the interest ($300 in my case).

[xortam]

We use an REI CC (outdoor store) which rebates you 1% of all your charges outside their business and 10% rebate for store purchases. We also get a 20% reduction on one item when we receive our annual rebate. Most everything gets piled on the REI card.

[Helevitia]

We use an REI CC (outdoor store) which rebates you 1% of all your charges outside their business and 10% rebate for store purchases. We also get a 20% reduction on one item when we receive our annual rebate. Most everything gets piled on the REI card.

Which card is this if you don't mind me asking?

BTW, my buddy just showed me something crazy!

Walter Cavanagh of Santa Clara, California, USA, has 1,397 individual credit cards, which together are worth more than $1.65 million in credit. He keeps them in the world's longest wallet, which is 250 ft. in length and weighs 38 lbs. 8 oz.