Money Question

[OmahaInvestor]

Right now I am in college and I have the luxury of getting most of my college paid for through scholorships but I still have the option of taking out student loans. Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? It'd be interest free until I graduate, plus its a very low interest rate after that? I've been successful this far and wouldn't take too much out that it'd kill me if I lost it. It is cheaper than trading on margin and being in college I don't have a whole lot of excess money to invest. What are your opinions on this idea?

[DSteckler]

<< Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? >>

Yes.

[Websman]

Use your money for school. You're young and have plenty of time. School is more important.

[thebign1]

<< Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? >>

Yes.

Yes, I agree with DSteckler. Don't mix oil with water. Invest that money in your education if you need it. That's something you can't lose.

Also, that would be the same as buying on margin. regards, Norm

[sisterwin2]

Not a good move. You have plenty of time to invest. Just my thinking but I dont think one should invest unless Your out of CC debt, have paid into your retirement fund, in fact the only debt you should have is your Home. All else should be paid.

Thats just how I do it. IF I loose then I lost my beer money only.

[sisterwin2]

Not a good move. You have plenty of time to invest. Just my thinking but I dont think one should invest unless Your out of CC debt, have paid into your retirement fund, in fact the only debt you should have is your Home. All else should be paid.

Thats just how I do it. IF I loose then I lost my beer money only.

[Runner]

Having seen the segment on TV regarding education it makes me wonder if it is worth it. IMHO I think education in our country is over rated. Yes if your working a job you need all those awesome degrees and loans to pay for. But here is the kicker open your own business and take charge on your own life. Not some stupid boss telling you what to do. Heck the problem in this country is most have been told what to do their whole life and so they cannot make their own decisions.
Give me a break $100 for that book? What a rip off those jokers are getting fat off the system. Listen I’m not against education if it helps you in opening your own business. Heck I barley made it through high school and by my typing and spelling skills {I’m sure you all have noticed} you must think wow he is a fool.

But this fool does not listen to da- man… YA see I learned that unless you take charge of yourself someone else would. Education does not mean you will succeed in life, many broke unhappy educated people out there. They throw all their education at people at the JOB, but inside they know something is missing. They get up drag their butts to work and do the same thing through out life for 30 years. Hear is the big kicker most will not have the same job for 30 years. Most will not have a nice nest egg, most will try to climb the latter and realize the ladder was leaning against the wrong wall.

My point find something you LOVE to DO and open your own business and fall on your face enough and you’ll get the best education in the world.

[IIC]

<< Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? >>

Yes.

I knew you'd say that...Hey, I thought you were on a Personal Business Trip Dave ;)

[IIC]

Right now I am in college and I have the luxury of getting most of my college paid for through scholorships but I still have the option of taking out student loans. Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? It'd be interest free until I graduate, plus its a very low interest rate after that? I've been successful this far and wouldn't take too much out that it'd kill me if I lost it. It is cheaper than trading on margin and being in college I don't have a whole lot of excess money to invest. What are your opinions on this idea?

Obviously your "scholorships" (sic) are not for English...I'd take the loan money and invest in a grammar tutor.

OK...I couldn't resist tryin' to be funny. http://bestsmileys.com/silly/21.gif

Now, I march to the beat of a different drummer here...I think you should take the money and invest it...If you can still say to yourself that if you lost it all it wouldn't kill you...then why not?

You say that you've been successful so far...So I assume that you already have an account. I'm also gonna assume that you are young with no dependents although I don't know that for a fact.

What you are contemplating is "leverage"...The use of credit or borrowed funds to improve one's speculative capacity and increase the rate of return from an investment, as in buying securities on margin. I think it will be a valuable lesson for later life whether you win or lose.

But on a final note...Don't blame me if you lose it all...get married...have 5 kids...and have to get a second job to pay off the loan.

Now...as far as an education...I agree, a college education is not mandatory to being happy or successful...Although for some types of jobs it is mandatory... But there is more to college than just books. It is also a transitional period where you are still semi-sheltered from the dog-eat-dog world but you can learn some good social skills and become a more well-rounded person. For example, you are only required to take maybe 1/4 of your courses in your major...Why is that? Because you will take 3/4 electives which should give you a general type knowledge by exposing you to different areas.

My degree is in Criminal Justice...How does that help me in the Real Estate Business...or in my investing? The classes I took in my major probably do not directly help...But what about the Speech elective I took...or the four Psychology classes I took. Here's a little example of a valuable lesson I learned in college:

My first semester I took Psychology 1,2...It was 6 semester hours...met 3 times a week for like 2 hrs a class. It was one of those Freshman Herd classes where there are hundreds of people in the class. The class ran all day and you could go to any sessions you wanted to. Anyway, there was a multiple choice test you had to take every Thursday, Friday or Saturday...The test consisted of 30 questions out of a pool of 300 questions...You could take it up to 3 times(there would be different questions of the pool of 300 on each test) and your best score was your points for the week. They also posted sample tests in the hallway each week.

Anyway, the first week I went to class...read the assigned chapters and went to take the test...I scored the equivalent of a "D". So I think to myself..."This is BS". But I still had time. On Friday night I went to look at all the sample tests in the hallway...Looked up all the answers (Well, maybe not all) and took the test twice on Saturday and did well. So I come up with this idea..."Forget going to class"..."Forget reading the chapters"...I'm just going to go down there every Tuesday or Wednesday night and get all the sample questions.

So the end of the semester rolls around and I have the equivalent score of a B+...But there is a big notice posted in the Hallway that stated that you could take any of the previous tests a 4th time during the finals weeks...So, I'm about 5 or 6 points away from getting an "A" in the class...So I take every test that I didn't get 100 on a 4th time...I failed every single one of them...So I end up with a B+ in the class...Didn't learn very much about Psychology...Or did I????...I LEARNED how to work the system.

Another example...I took a History class where 50% of your grade was based on class participation. Well, I wasn't a shy guy...So what do I do?...Every time I think I know the answer...I raise my hand and start waving it around...Now you know how they ask a question and nobody raises their hand?...They call on somebody to answer...Who do they call on?...The people who never raise their hand...How many times do you think I got called on when nobody raised their hand?...Right...ZERO!!! I did the same thing when I used to work for some Big Corporations in Department meetings...works every time.

So what is your Major???

Good luck...Doug(IIC)

[billyjoe]

I also question the value of a college degree although I have a couple. Where you live or chose to live and who your parents were and what they did for a living has a greater impact on your future in my opinion. Most of my friends who received college degrees and stayed in our area were no more successful than those who went right from high school to a factory job. A great majority of my classmates who became doctors and lawyers were the sons/daughters of doctors and lawyers and in some cases the grandchildren of doctors/lawyers. They didn't appear to be more intelligent than the average student. Some seemed to be below average intelligence , but apparently didn't realize it. They were expected to become lawyers, that's what their family business was.
I can almost guarantee that the vast majority of them have little knowlege of the stock market except for stories about the great tip they or a relative profited from many years ago.

billyjoe

[spikefader]

With that scholarship luxury it sounds like you're able to have your cake and eat it too. i.e. get your education and afford to speculate at the same time. But only use that money to speculate if you can 'afford' it. If a financial setback hits do you have a family safety net or other options? Having considered all that, and deciding you will invest, I strongly urge you to first build a routine or system that is broad and robust across all market conditions. Have your plan completely tweaked to perfection. Invest in the time to do this! Papertrade your strategy for months, in all market conditions. Learn about risk/reward, sensible money management, equity curve growth, psychology in markets, the elements of fear and greed, and support and resistance. Don't put faith in 'indicators', don't be fooled about what they are and what they do, and how successfully they do it. Buy weakness and sell strength. Avoid being aggressive or impatient with your entries and exits. Don't procrastinate when immediate action is called for. Learn about hedging.

If you do trade now, find a practice that strictly limits the downside and allows winners to run. That may be diversification across multiple issues or stops on a few positions. I urge you to paper trade 'out of the money' put and call options to show you how you can limit your downside nicely, yet leveraging success when you're correct about direction. Buy current month/next month out of the money options on the picks that have high volatility and volume, and good open interest. Your downside is strictly limited to the value of the option and there is large upside potential.

But above all, give priority to your education no matter how much you hate it. Education gives you opportunity, choices, power that the 'uneducated' don't have. Surround yourself with people who are successful, both 'educated' and 'uneducated' people. Wisdom cannot come without experience. Wisdom in the markets will come with experience. Markets will always be there, so there is no rush! Don't commit money to the markets until you have invested a great deal of time into it first. This is serious business where serious mistakes can be made. Don't underestimate the psychological impact of failure in the market, and the decisions it can make you make for the future. Set yourself up for success, and not failure. Time is on your side. Use it.

And Godspeed dude! :D

[Runner]

WOW Doug, awesome insight. I did not like people telling what to do when I was a teenager. What did I do? I joined the United States Army. Talk about a rude awakening! LOL

In hindsight this was the smartest move I made. Leaned some valuable lessons serving in the military. I bet the professors could not have taught me some of the things learned in the Army. When I got out of the Army I was told by a VA. Rep at the unemployment office that with my skills and education I’d never be able to make a good living. He told me the only chance I had was in law enforcement. Then he said I could not even do that because I had zero college. I was smoking mad when I left this jerk. I worked in a battery plant sucking in lead dust all day dressed like a space man. The plant shut down and went to Mexico. This told me manufacturing sucked. I hated life but I started a landscaping business on sure determination. My partner and I went door to door knocking and talking to people about what we do. We started with just a small craftsmen mower. Many people slammed the door in our face. But wait there is the gold after the rainbow. We started to figure out what we were made of, as our families were getting hungry. We just plane out refused to quit and new we would make it.

Things are different now and we own over 100K in equipment and bring in over 300K in business. We have learned some lessons few might learn. The big lesson is to not listen to the naysayers. The losers in life will drag you down to their level in a heartbeat. Hey did Thomas Edison listen to the losers? 10,000 tries later he did it. How about good old Mr. Sanders with KFC. The college professor that told Fred Smith his business model sucked and would never work…Hello FEDX. I bet these men and I do mean MEN were glad they never listened to the losers in life.

I found something that I love and get paid for it. Little did I know all the time spent in the Infantry prepared me for a business that keeps me outdoors, Just simply awesome.

People do what you Love to do and find away to get paid for it and you’ll never go hungry!

[OmahaInvestor]

I probably should have given you a better idea about how much money I was thinking on using. I was going to try to stay below 10k, to match the money I have in outside funds. That way I wouldn't be financially destroyed if things went badly. I also have a great summer job (at a manufacturing plant) that allows me to make almost 1k a week. I'm telling you that just to give you some idea of my ability to pay things off. I currently have no dependents..although I have a girlfriend that makes me pay for everything when we go out. Which is shocking I know.
As far as college goes...the only reason I went for was to play sports. Since that allows me to get most of my college paid for, it worked out for the best. This is my last semester of college since I will be graduating with a Business Management degree. I plan on starting my own business in the future and currently have been writing up a business plan to get some investors. Although, my grammar apparently sucks I think college for the most part taught me a lot about how to work the system. Which is helpful because I was surprised at how many of my fellow students do not do that or have no idea how to. Most people don't analyze situations and find ways to manipulate them. Thanks for the advice so far, I really like hearing your success stories about how you failed at things and then worked through them to get better. Because, no doubt in my life I will fail, and some of the best learning comes from failure and hearing about other peoples past mistakes/successes. Maybe I will start a thread just to hear those sorts of things.

[Websman]

I'm actually a college dropout myself, and I will be the first to say that a college degree will not guarantee success, but it can't hurt either. I would always recommend putting college first.

I can't complain, though. I'm not filthy rich, but I do live a good quality of life and have an excellent retirement coming to me in another 12 years.

[DSteckler]

<< I thought you were on a Personal Business Trip Dave >>

Check the time stamp; that was before I left this morning.

[IIC]

<< I thought you were on a Personal Business Trip Dave >>

Check the time stamp; that was before I left this morning.

Dave...I'm gonna tell you the same thing I tell my wife..."You want me to remember your schedule???...Email it to me"...Actually...I do tell her that all the time...But you don't have to if it's too much trouble Dave :)

[Adam]

They get up drag their butts to work and do the same thing through out life for 30 years. Hear is the big kicker most will not have the same job for 30 years. Most will not have a nice nest egg, most will try to climb the latter and realize the ladder was leaning against the wrong wall.

My point find something you LOVE to DO and open your own business and fall on your face enough and you’ll get the best education in the world.

I agree completely with this tought.
I am am not highly educated nor did I hold good grades in school.(note the many spelling mistakes in my post also) Yet, in my short 28 years I started two businesses one succesful for a short period the other a struggle. I learned more about life and making money, learned that there was something the public school dosen't teach. Proper money management. Hence, this question from an obviously educated person probly round 18. That was about the time I was making the wrong decisions with and extremely lucrative company. Only to loose it because of those decisions. The second was a struggle the entire way. A two year real life course on bad partners and stepping up to the plate with no choice tough decisions were needed to be made. With a much older partner who had no concept of simple accounting it was left to me to take over the company's finance and acting manager with my partner as my employee. Once shutting the doors after one successful year and the last year collecting no salary I returned to the the family buisiness to start over. From the lessons I learned I took to the company and from the first day saw how lacking my fathers company had been in the site management. Now five years later we've doubled the size of the company and some, mostly in my last two years as increased influence, my recommendation and contributions consistently increased sales, profits, and quality of service. Today as V.P. of a fair size environmental contracting corp. I'm planning to leave so I can persue my buisnesses I find enjoyable and also has began creating a profit. I'm lucky to have expericened this so early in my life and can only hope it makes up for no colledge education.

None of the knowledge that I used to apply in these situations as well as the successfull investments into projects a companies that I enjoy being a part of where learned in school. Sales and entrapanureship is not tought. In starting and running a buisiness you are always a sales representative to the company. Even more when it's your own cause it's 24/7. It should be and open mindedness encouraged, insted children are being schooled to be employees. Children who have separate trains of thought and ways of learning are being limited due to our standardization and lax stance on increasing the intensity of the eduction in the US public schools...

In response to the students question, IIC is right, same thing as trading on margin. One big difference though. In a margin account they hold assets to balance what you've barrowed. To get Margin Called realy sucks. I experienced this many times five years back. It's bad enough to loose the money, but if it was money lost and now gone but you still have to pay back ican be devistating. Try it out with a credit card. go gamble away a portion of money enough not that hurts to much but makes you feel it. As you pay it back think of if this happend 10 fold or more. Not fun. Unless you are one of the few that are truely successfull, trade with what you can afford to lose. Use that low intrest money for you education. A fully thoughtout and strong business Idea, Plan, use Dicipline to.

Money is not everything. It can make life easier if it is under control. Having alot of money does one no good if some can't achieve positive control. Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.

Succesfull wishes for all who aspire to achieve. Thank's to $$MM$$ and many others on this forum what I learn everday is invauble to futhering my understand of the market.

[IIC]

[QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.[QUOTE]

Tell that to Continental Airlines...I think BK has been in their Business Plan since 1983

[Websman]

[QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.[QUOTE]

Tell that to Continental Airlines...I think BK has been in their Business Plan since 1983

I did well with my POTW short on CAL this past week. I'm now thinking that this may be a good long term short. What do you think?

[IIC]

[QUOTE=IIC][QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.

I did well with my POTW short on CAL this past week. I'm now thinking that this may be a good long term short. What do you think?

I have no idea...I hate airlines...although I did buy GOL last week and basically broke even on a trailing stop...IIC

[Adam]

[QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.[QUOTE]

Tell that to Continental Airlines...I think BK has been in their Business Plan since 1983

How many times should a company be allowed to be run into the ground. Can't help 9/11 but.

When I lost my first company I could have bankrupted and went home with out being hurt to much. Instead I took out loans to pay my debts and close my doors honorably. But I was at piece knowing I didn't screw anyone! I didn't leave my mistake for someone else to clean up.

[Adam]

[QUOTE=IIC][QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.

I did well with my POTW short on CAL this past week. I'm now thinking that this may be a good long term short. What do you think?

Webs, Speaking of profitting on the down side any view on Walmart. I'm holding walmart puts jan 07 at the money?

Any comments wecome.


"OK, I don't mind bankrupcies when my puts or shorts are properly positioned"

[IIC]

[QUOTE=IIC][QUOTE=Adam] Bankrupcy and bad buisness are bad for the economy and just plain bad for buisness.

How many times should a company be allowed to be run into the ground. Can't help 9/11 but.

When I lost my first company I could have bankrupted and went home with out being hurt to much. Instead I took out loans to pay my debts and close my doors honorably. But I was at piece knowing I didn't screw anyone! I didn't leave my mistake for someone else to clean up.

Continental went BK at least 2x before 911

[Websman]

[QUOTE=Adam][QUOTE=IIC]

Continental went BK at least 2x before 911

Remember Pan Am??? or TWA???

they both went away like a bad "wif".

[IIC]

[QUOTE=IIC][QUOTE=Adam]

Remember Pan Am??? or TWA???

they both went away like a bad "wif".

Of course...Pan Am went under...years later they came back briefly...but it wasn't the same company...just some jokers who bought the name....Remember Western Air...Eastern Air...PSA...In the early '70's PSA(Not the current one...the old Pacific SW) outfitted their Stews in pink hot pants...Whoa!!!
http://www.scripophily.net/psaairpacsou.html

[Adam]

Sounds to me it either it doen't pay to fly, or there's a bunch of clowns running the buisness.

Speakin of hot pants , flew hooter to Myrtle beech and they had some nice girls aboard. On the way home we got robbed, no hooters girls!!!!

[Websman]

Sounds to me it either it doen't pay to fly, or there's a bunch of clowns running the buisness.

I hope Northwest doesn't go out of business before March. I've already booked tickets to Paris. It would suck to loose the money I paid for them.

[Adam]

I hope Northwest doesn't go out of business before March. I've already booked tickets to Paris. It would suck to loose the money I paid for them.

I think 3 months is a good bet for now. You'll be ok, Just hope they ain't cuttin corners hiring cheap pilots! Have a safe flight....lol

[billyjoe]

There have been over 160 airline bankruptcies since 1979. They're listed on Google. Any airline naming itself PSA (prostate specific antigen) deserves to be penalized. The good news is you're more likely to go bankrupt than crash.

billyjoe

[Adam]

There have been over 160 airline bankruptcies since 1979. They're listed on Google. Any airline naming itself PSA (prostate specific antigen) deserves to be penalized. The good news is you're more likely to go bankrupt than crash.

billyjoe


.......LOL....

[IIC]

Sounds to me it either it doen't pay to fly, or there's a bunch of clowns running the buisness.

Speakin of hot pants , flew hooter to Myrtle beech and they had some nice girls aboard. On the way home we got robbed, no hooters girls!!!!

Speaking of Hooters...They will be opening a new Hooters Hotel and Casino in Vegas soon...I'm counting on Dave to get us all comped there...Maybe that's where we should hold the Mr. Market Convention???

http://www.hooterscasinohotel.com/

Geez...this thread sure changed directions fast...IIC

[OmahaInvestor]

I was in Vegas a few weeks ago. The Hooters casino I think opens up this month or at least this quarter. Around here though the Hooter girls usually aren't that good looking. In fact, we even had a pregnant one once.

Back to the subject I've decided not to use the money for investing. I'll just work more hours at my job and save up it'd be much easier that way. Thanks for all the advice.

[Adam]

Speaking of Hooters...They will be opening a new Hooters Hotel and Casino in Vegas soon...I'm counting on Dave to get us all comped there...Maybe that's where we should hold the Mr. Market Convention???



http://www.hooterscasinohotel.com/

Geez...this thread sure changed directions fast...IIC

Girls, liquor,stocks and gambling? I'd never forgive myself if I missed it!!!
VEGAS $$MM$$ CONVENTION!!!!!


Everhing changes faster now in the information age....one minute money, the next minute panties.....or have they always been that close???


OmahaInvestor, Always study before you invest. Invest in a financial education. By that I mean Investing in all types of assets as well as you schooling. When you go to the bank for a loan noone asks to see your your grade transcipts or resume, they want to see your balance sheet. This is the report card for the affluent. How you manage this balance sheet is what makes you wealthy. I believe IIC said what he learned in colledge was to work the system and work the people. I only made it 1 1/2 (not very good)years in colledge before I had to make money to live. I've lost lots and learned lessons, every failure has more lessons than does a success. Financial education. Learn to read financial statements. You sound like your already on the right track with your decision. Don't forget about the infinite investment options. Real estate, if the market softens, it would be a good time for a young man to get into a house at a reasonable price by his colledge to live and rent out for a couple years and when you graduate you should be selling for a profit. See, many options study them, each has separate risks, some are more stable. You've already started in the right direction by joining the group here.

$$MM$$ is huge!!! and only the finest meats and cheeses are here!!!

[Websman]

I'm liking the $$$Mr Market$$$ in Vegas thing. I can get a good deal on some AirTran tickets out of Pensacola.

[mimo_100]

Right now I am in college and I have the luxury of getting most of my college paid for through scholorships but I still have the option of taking out student loans. Do you guys think it'd be stupid of me to use this money not for school but to take it out and use it to invest? It'd be interest free until I graduate, plus its a very low interest rate after that? I've been successful this far and wouldn't take too much out that it'd kill me if I lost it. It is cheaper than trading on margin and being in college I don't have a whole lot of excess money to invest. What are your opinions on this idea?


If the money is interest free, you could borrow $20,000, and make 3 or 4 thousand dollars by taking out a 3 yr cd compounded at 5%, then paying it back when you graduate. No risk. This assumes they would let you use the money whereever you wanted.

Tim

[IIC]

If the money is interest free, you could borrow $20,000, and make 3 or 4 thousand dollars by taking out a 3 yr cd compounded at 5%, then paying it back when you graduate. No risk. This assumes they would let you use the money whereever you wanted.

Tim

He'll have to pay taxes on that money though...IIC

[mimo_100]

He'll have to pay taxes on that money though...IIC

Good point.

I assumed that, as a student, his line 36 was pretty small.

I just ran a quick tax return on Joe Student who earns $8000

in wages, pays $800 in fed taxes, $200 in state taxes, FICA and Medicare,

earns $1000 in interest, $4850 in standard deductions, and $3100 in personal exemptions. His total taxable income was $0. He got an $800 tax refund.

I used TurboTax 2004 as I have not purchased 2005 yet.

Tim

[IIC]

Good point.

I assumed that, as a student, his line 36 was pretty small.

I just ran a quick tax return on Joe Student who earns $8000

in wages, pays $800 in fed taxes, $200 in state taxes, FICA and Medicare,

earns $1000 in interest, $4850 in standard deductions, and $3100 in personal exemptions. His total taxable income was $0. He got an $800 tax refund.

I used TurboTax 2004 as I have not purchased 2005 yet.

Tim

Can I send you my taxes too...you're fast???

[mimo_100]

Can I send you my taxes too...you're fast???

(Laughing).............

TurboTax is fast -- I just feed in the numbers. It's quite easy. Try it
if you haven't done your taxes yet -- cheap -- $40.00.

[IIC]

(Laughing).............

TurboTax is fast -- I just feed in the numbers. It's quite easy. Try it
if you haven't done your taxes yet -- cheap -- $40.00.

Taxes...Is it October yet???

[Adam]

Yea, Its getting that time of year. I just through everythig I got at my accountants and let them figure it out, K-1, W-2, 1099's, statements out the wazoo, friggin F-15's, everything...lol