Son_of_Perdition
Senior Member
This is a redundant post that I deleted.
We had a long term savings plan for 4 years by the end of 2013. In 2009 we started saving $50 per month to start in our credit union account. Every year for the last 3 years we have deposited our federal and state refund (if there was one) into the long term also. At the end of 2013 we had just over $8,500 accumulated. At the beginning of 2014 I was figuring our taxes and our refunds totaled $2,200. We had finally reached the $300 a month deposit plateau so potentially we were going to have an additional $3,600 being deposited. First thing I did was raise my withholding on both my pension and Social Security. I figured it would add another $1,000 to our refund. The plan for 2014, I had checked our return on our money market account at the credit union, they were paying a paltry .23% on our savings. I knew we had to do better than that, so my plan was as follows, we started investing the first of Mar 2014:
Step 1 - Brought a $3,500 CD at the credit union paying .23%.
Step 2 - Used the CD as collateral on a personal loan for $3,500 payments are $300.03 per month at 5.25% (2% percent over prime).
Step 3 - Deposited the $3,500 loan proceeds in a discount brokerage account.
Step 4 - Chose a stock that had a dividend yield of 3.28%, purchased 100 shares. Total cost was $3487.
Benefits of above plan. The personal loan is in my wife's name and the credit union reports to the credit bureaus helping her FICO score. The money is readily available in the CD if an emergency comes up and she has to pay off the loan early. The interest charged on the loan is tax deductible since the money was borrowed to invest. If the stocks go up in value (hopefully so) then the added value will add to her net worth but will not be taxable until the shares are sold after one year making them a long term capitol gain that is taxed at a lower rate. If nothing happens or the value goes down, she will hang onto them still earning 3.25% each year (unless the dividend is reduced).
We had a long term savings plan for 4 years by the end of 2013. In 2009 we started saving $50 per month to start in our credit union account. Every year for the last 3 years we have deposited our federal and state refund (if there was one) into the long term also. At the end of 2013 we had just over $8,500 accumulated. At the beginning of 2014 I was figuring our taxes and our refunds totaled $2,200. We had finally reached the $300 a month deposit plateau so potentially we were going to have an additional $3,600 being deposited. First thing I did was raise my withholding on both my pension and Social Security. I figured it would add another $1,000 to our refund. The plan for 2014, I had checked our return on our money market account at the credit union, they were paying a paltry .23% on our savings. I knew we had to do better than that, so my plan was as follows, we started investing the first of Mar 2014:
Step 1 - Brought a $3,500 CD at the credit union paying .23%.
Step 2 - Used the CD as collateral on a personal loan for $3,500 payments are $300.03 per month at 5.25% (2% percent over prime).
Step 3 - Deposited the $3,500 loan proceeds in a discount brokerage account.
Step 4 - Chose a stock that had a dividend yield of 3.28%, purchased 100 shares. Total cost was $3487.
Benefits of above plan. The personal loan is in my wife's name and the credit union reports to the credit bureaus helping her FICO score. The money is readily available in the CD if an emergency comes up and she has to pay off the loan early. The interest charged on the loan is tax deductible since the money was borrowed to invest. If the stocks go up in value (hopefully so) then the added value will add to her net worth but will not be taxable until the shares are sold after one year making them a long term capitol gain that is taxed at a lower rate. If nothing happens or the value goes down, she will hang onto them still earning 3.25% each year (unless the dividend is reduced).