Never investment on the market yet, my mortgage is @ 3%, should i put my extra income on TSLA or pay back the house ? help a noob :)
Paying down the house is always good. The stock could always take a dive, and you will have nothing to show for it.
Pay down your mortgage. If you have enough disposable income buy the S or X. TSLA stock price is a good bet for the long term but it is still a bet.
The money you put into stock especially individual stock should be mad money. The kind you would stuff down g-strings in Vegas. However you are already making a substantial investment in real estate so my advise would be to diversify. At least I am sure that's what my financial adviser would tell me.
3% fixed or variable?
You can always buy stock and then use a stop loss order to limit (or eliminate) your downside. You'll incur a few extra $$ in transaction costs, and if the stock starts to rise you'll need a new stop loss to lock in your gains (unless all you want to do is protect your investment).
Assuming you are getting tax relief on your mortgage payment, you are probably paying less than 2.5% in real terms. If you are either prepared to risk break even on the stock, or think you'll make more than 2.5% (plus any short or long term capital gains, depending on how long you hold the stock) then invest.
There is a saying that "never invest money that you cannot afford to lose" thus I'd advise on focusing on the mortgage.
Formal ROI theory says assign a probability of each level of rise or decline, multiply by the amounts available for each guess, and average the result. That is your expected return. If it's higher than 3% positive, invest. If not, don't. A refinement is to further pre-weight each option by a "significance" factor: How much you care if that result happens. That can be decisive. Most people fear loss more than they value gain.
Always pay down your debts first.
Answer: it's complicated. If you think your mortgage is at or below inflation, some say
it's worthwhile to leave debt there and invest elsewhere. Inflation will whittle away at your
debt while your investments grow. 3% is right around the historic inflation rate (depending
on if you believe the way the CPI is calculated, some think inflation is much higher). There
are many conservative investments that will a) hedge against inflation and b) have returns
ON AVERAGE greater than 3%.
It comes down to your risk tolerance as well.
Stop loss orders are no guarantee of protection from a significant loss. A stock can open on a gap down blowing through your stop like it wasn't there. I agree with the comments above that "you pay down your debts first" and never bet on an individual stock with money you wouldn't be ok leaving at the roulette table. TSLA is an extremely speculative issue akin to many dot com bubble stocks. I'm not saying TSLA is pets.com but it is very pricey, has no earnings only potential. Yes it could be the next Amazon or Google but how many of the other dot coms are still around? What I see here in these threads touting the stock is the common misconception of mistaking a company for it's stock. There are a lot of good companies with good products that have stocks that go nowhere. This isn't exactly a bet on 00 but it's a long way from betting on red or black.
@roccosima A good recent example of behavior (in my opinion) that separates the company
from the stock is AAPL.
Generally playing individual stocks (especially short term) is a high risk game. IMHO.
The money you save for your future goes on the house the money you set aside for gambling (investing) goes to TSLA. People get in trouble when they think they are the same funds. If you are asking do I stop saving to gamble, I think you know that answer.
Actually it's worse than that. The money you invest in TSLA does *not* go to Tesla, it goes
to whoever held the stock that you are trading with. Tesla has already gotten all the money
that they are going to get from their stock offering (modulo them making money on stock
that they hold and it goes up). So "investing" in TSLA only helps them insofar as it makes
the stock go up. If you really want to give them money, buy a car :)
Along the lines of helping Tesla: once you've bought the stock and have your car, throw a Tesla test drive party with all your friends, contact list, office staff, Facebook acquaintances, etc. You'll have fun throwing the party, your friends will think you're more cool, and you'll help the stock price and thus your investment by bumping sales.
Your next chance to buy stock from Tesla might be an offering to finance GenIII production.
The next chance to buy TSLA is now. You Must average in at this point. TSLA is going to be flat heading into 1Q results. Tesla is going to chew through their losses like a mega machine and their gross margin will creep towards the 15% mark, 20 by Q3 and ultimately 25 by Q4.. Revenue is going to be the largest in the companies history. The fundamentals that the street salivates on are starting to come into focus and this stock is ready for prime time.
Roa's Smuggler Rules that Han Solo swears by include the following guideline:
"Only gamble what you're willing to loose".
If you're looking to play in the stock market, only use money you can afford to loose.
unless you're talking about loose money?
Tell the editor for the book 'cause that's a direct quote :P
Well, the editor blew it; loose/goose; lose/use.
The correct saying is "never ignore a call for help, never take from those who were poorer than yourself, never play sabacc unless you're prepared to lose, always be prepared to make a quick getaway, and never pilot a ship under the influence", which Hans learned shortly after his leaving the academy. As for TSLA, caveat emptor!
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