Does anyone have any experience trying to reach customer service for Robinhood? I changed my phone number and now I'm locked out of my account as that was my only trusted device. They will only send verification codes via sms now, no more email. I've been sending them emails daily for over a week and also using their support function on their site, which also just sends emails. No chat option. No phone option.

https://jlcollinsnh.com/2020/03/09/t...omment-4225184

Has anybody read this article? It seems to me like it would make more sense for the author to just hold when the stock crashes as opposed to sell because he can avoid capital gain tax. It seems foolish. What am i missing?

It was a poorly written article as I’m sure you aren’t the only one with the take away that he sold so he could avoid capital gains. However, near the end he includes a readers question that essentially asked what you asked and his answer is that he sold not to avoid capital gains, but because he plans to purchase a house with that money in the near term future.

The author also recommends sitting in money market/cash for any amount of money that you plan on spending in the next 5 years. Anytime someone gives advice to people whose situation they don’t know about how much money they should have in cash/money market (whether it is a dollar amount or a number of months in expenses) you should know they are not worth listening to.

EDIT: I read a few more of his articles and he reminds me of Dave Ramsey and no that isn’t a compliment.

Good points. What about Dave Ramsey don't you like? I don't know too much about him beside watching a few episodes of his show. Any financial advisors or authors you have found a lot of value from and would recommend?

Bahabah, is correct. You need to know a ton about a person to know what they should do as far as investing goes. For instance, it is important to know whether someone hates money.

The five year thing is spot on, btw. Almost entirely regardless of the person's life details.

Like that author, dave, gives super generic advice that is good for some, decent for others and down right terrible for some. The problem with this is that when he gives this advice he acts like it is good advice for everyone.

He also uses terrible logic in a lot of what he does and it results in bad advice for most of his listeners. For instance I heard him recommend to some guy to pay off his mortgage that was at 2.75% instead of investing even though the guy had no other debt and 4x the amount to pay off the mortgage in non-retirement investments.

He also seems to recommend for everyone to keep 3-6 months expenses in cash/money market which is terrible advice to so many of his listeners.

Are you saying the author is spot on in saying people should keep 5 years of expenses liquid or I am spot in by saying that is nonsense.

There are maybe 4 special snowflakes in the entire world for whom individualized advice is necessary. For everyone else, the general advice is abso****inglutely perfect.

It isn't "terrible" advice for anyone. It is suboptimal for a small subset of people.

Given that he didn't say that, it is nonsense. Outside of your home, you should have all of your money in liquid assets (exceptions for those who own a business). Having money that you will spend in the next five years in volatile assets is a really dumb idea (except for the very few people who will perish at the end of five years if they don't get a medical operation that requires doubling their money in short order).

There are so many reasons why general advice like they pitch is bad I don't even know where to start. Do you really think everyone should be paying off their sub 3% mortgage even if it $100k and they have $1M in a well balanced portfolio?

These guys pound the table because they don't want listeners to pay .5-1% to a financial advisor then they are ok leaving 50+% in some peoples cases in cash in a emergency fund. That is beyond sub-optimal. In the case of some of their listeners they would be better off finding the most expensive advisor they can find and insisting paying him triple his advisory fee and still be better off over the next 10 years.

He said he is going to cash because he is going to buy a house with the proceeds of his mutual fund sale in 5 years and then defended the position when a reader questioned it.

I have a huge chunk of my net worth tied up in an illiquid investment, but at the time I made the investment it was around 10% of my net worth and has since grown to be a large chunk. However, I agree with you that it wouldn't be a good idea for most to take the risk that I did in an investment that is so illiquid.

I think this depends on what you consider volatile assets. As an example think of someone who thinks of themselves as an average risk taker with a million in liquid assets (cash, stocks, bonds, mutual funds, etc) who is retired and needs $2k/mo from their investments after their social security check and explain how you think they should be invested. You aren't saying they should have $120k in cash/money market right?

Is Dave Ramsey the guy who says don't use credit cards?

I feel like the advice he gives are for financially illiterate/irresponsible people who need easy dummy proof rules to follow that won't get them in trouble even if it is objectively very sub optimal for someone who is smart about money and investing.

In the case you give, it simply doesn't matter much at all whether they pay it off or don't.




If they have 50% in cash, it would be because they don't have sufficient assets to cover normal common life events. Covering normal common life events is simply more important. You get to maximize variance once you have normal common life events covered. Doing it before then is incredibly unwise.

Not sure if you follow the news, but some people who thought they were healthy and had stable incomes were wrong.



If he is planning on spending the money in the relative short-term (5-ish years), minimizing variance is smart. If he was planning on buying a house in 20 years, maximizing ev would be smart.



It doesn't matter that much other than how much you lose on entry and exit, along with the odds that you'd have to dump the investment at a bad time due to life/financial events.

10% isn't a big deal though (unless you were poor).



People who think they are risk tolerant (or risk averse) are wrong. Risk tolerance is much more of a mood than a trait.

Using your example, the person should have more than $120k in cash. At a spend rate of 2.4% of liquid assets they do not need to take much risk at all.

So, 98.3% of people...

He could say ask to lower your limit to $1k. Using cash is wasting 2-5%.

hahaha I see your point.

Paying down the mortgage is 100% the right default option. NOT paying down the mortgage only makes sense if your portfolio is 100% stocks, you want to take on more risk, AND you’re not sophisticated enough to get cheaper financing elsewhere (margin is sub 2%, and liquid options are sub 1% [eg selling SPX box spreads]). That’s a very small subset of people.

BRIAN,

A lot of what you’re saying is overly simplistic or flat-out wrong. Maximizing EV for example is never a sensible goal, no matter the timeframe.

It isn’t just credit cards he’s against it is all debt. In the last video I watched of his a relatively young guy with a high income was able to save $1.7M and Dave told him to pay off his mortgage of less than $200k that was less than 3% instead of investing it.

Where are you seeing margin rates below 2%?

As a counter to your point someone with $1M liquid and a $100k mortgage at 2.75% could invest 80% stocks and 20% bonds and still have a higher EV than someone who pays off the debt and invests the $900k remaining 80/20 as they otherwise would over the next 20 years. So it isn’t only people that check your 3 boxes that are better off not paying off the debt.

Interactive Brokers

Please show your work. Borrowing at 2.75% to invest in bonds yielding <2.75% (after-tax) is not +EV. And note that the fair comparison is 80/20 with 100K mortgage vs 90/10 with no mortgage.

I'm trying to use terms that bahabah can understand, since he seems to think that ev (presumably to paying for financial advice) is all that matters.

Maximizing expected compounded growth would even be ill-advised for an actual human. I'd have mentioned maximin, but it seemed unlikely to be met with understanding.

The only work that you should need is to answer the question if you think a 80/20 portfolio will outperform 2.75%. This individual is either going to invest $1M in 80/20 portfolio or $900k in the portfolio so we can remove the returns of the $900k in both cases and just focus on the mortgages negative return vs the expected positive return of the 80/20 portfolio over the next 20 years.

Damn. Can’t believe IB margin rates that low. I though everyone was 5%+.

Feel free to assume I know far more about personal finances than you.

I never pitched paying for financial advice. I just said that in that one example that person could way overpay for financial advice and be way better off, but that was only because the author is giving such bad advice.

Sure, you can contort the assumptions to fit your contrived scenario, but you're comparing apples and oranges. All you're proving is that a ~90/10 portfolio is expected to outperform 80/20.. which is trivially obvious.

Again, the actual fair comparison is paying down the 100k mortgage and selling bonds to get to ~90/10, vs. 80/20 with the 100k mortgage.

A: $800k stocks, $100k bonds
B: $800k stocks, $200k bonds, $100k mortgage

Unless you have a magical bond fund yielding >2.75% after-tax, A is superior.

You are the one comparing apples to oranges. If someone thinks the right amount of risk to take for them is 80/20 it is silly to say they should change their outlook to be 90/10 because it helps your argument. The theoretical person wants to be 80/20 - to suggest a more fair comparison is to change that person risk objective and portfolio balance is just wrong. Would you make the same argument that if that person wins the lottery for $100k they should all of sudden increase their risk to 90/10 as well since they have $1.1M instead of $1M?

80/20 plus a mortgage is not 80/20. The mortgage is effectively a negative bond position, making the true risk exposure (and therefore the fair comparison) ~90/10.

This is not even remotely true. You cannot simply focus on expected return. The variance of expected returns is extremely important. Oftentimes this is far more important than the expected returns. The guaranteed 2.75% return (by paying off the loan) is guaranteed and has zero variance.

This is why you would even consider putting 20% into bonds (or the equivalent into paying off loans) instead of putting it into leveraged etfs. You seem to recognize this is the case when mentioning 80/20, but not that paying off a loan also qualifies for the exact same thought process.