Author Topic: Use convenience check to invest in VTSAX and payoff before rate expires  (Read 820 times)

DoNorth

  • Stubble
  • **
  • Posts: 241
  • Age: 41
I took a job overseas 18 months ago and was allowed to receive 3 months pay as an advance and repay it over a year at no interest.  I invested the lump sum and finished repaying it about 4 months ago  While not quite as advantageous, I have a few convenience check offers that would allow me to invest $15000-$20000 with the one time 3% fee of $450-$600 and pay it back at 0% over 15 months.  850 credit score and more than enough income to pay it off in time so this is more of a lump sump investment vs. DCA over 15 months?  Currently maxing out 401k and IRAs and am now focusing on taxable investments.

talltexan

  • Magnum Stache
  • ******
  • Posts: 3789
Re: Use convenience check to invest in VTSAX and payoff before rate expires
« Reply #1 on: November 14, 2019, 02:27:11 PM »
Most of the time this works out.

Sometimes it doesn't. I believe VTSAX goes down 33% of the years. Are you able to handle looking at statements a year from now--when you'd be in the red--and making those payments? Not just financially, but emotionally?

BrightFIRE

  • Stubble
  • **
  • Posts: 223
  • Location: Philadelphia
Re: Use convenience check to invest in VTSAX and payoff before rate expires
« Reply #2 on: November 15, 2019, 11:16:43 AM »
I took a job overseas 18 months ago and was allowed to receive 3 months pay as an advance and repay it over a year at no interest.  I invested the lump sum and finished repaying it about 4 months ago  While not quite as advantageous, I have a few convenience check offers that would allow me to invest $15000-$20000 with the one time 3% fee of $450-$600 and pay it back at 0% over 15 months.  850 credit score and more than enough income to pay it off in time so this is more of a lump sump investment vs. DCA over 15 months?  Currently maxing out 401k and IRAs and am now focusing on taxable investments.

I did this 2 years ago to fully max 2 IRAs at the beginning of the year, but I had a 1% offer. I wouldn't bother with 3%, personally - that's the everyday offer, not the "you're a good customer" offer.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2946
Re: Use convenience check to invest in VTSAX and payoff before rate expires
« Reply #3 on: November 17, 2019, 12:41:51 AM »
If you're just starting out, maybe it's worth taking a risk to invest sooner.

Longer term, losing or quitting your job is a risk you should consider.  Longer term, your investments will probably be larger, and the 1.5 year loan trick will only add a tiny amount - while adding to the risk of repayment if you lose your job.  Some people discover the hard way that stock market crashes and job losses are more likely to occur together.  That's not a good time to sell investments to cover expenses.  But it's a risk that may or may not occur, so when you don't have any investments, maybe it's worth taking that risk to jump into investing with 1 year of income.