[quote=earlyretirement][quote=AN]ER, the way I see it, at least these “investors” are trying to get themselves financially independent or at least increase their spending pot. I would say they’re one step better than those who just use credit card to buy junk.[/quote]
Wait. Are you actually saying you don’t find anything wrong with small time retail investors using their credit cards to fund their investment accounts and stock purchases or the speculative currency markets????
It sounds like the Commodities Futures Trading Commission is also probably going to ban credit cards so it sounds like it’s an issue there as well.
AN, do you find anything wrong with the case I listed of a guy using credit card cash advance checks depositing these into his margin trading account and using it to trade and buy/sell stocks?
Everyone in life is trying to get themselves “financially independent but most reasonable people don’t gamble like this. I mean, what limits do you have on how far is too far? I didn’t expect anyone to try to justify someone using their credit cards to sink it in the stock market so I have to admit this surprises me.
What about someone that takes out a HELOC and sinks it in the stock market? If this guy is trying to “increase his spending pot” is it ok or justified?[/quote]
Depends if he can beat the APR.
Funny you should mention this.
About a year ago I was chatting with my former coworker at a large stable company… We were talking about the financial mess people are in and somehow we talked about returns and open enrollment on ESPP (employee stock purchase plan). He mentioned that he wishes he could participate, and I asked him why he couldn’t.
He mentioned his spouse went back to school, he has a mortgage, a new kid, and if that it would be a very tight short term cash flow issue if he were to use is post-tax dollars and contribute to the ESPP plan deferral.
I jokingly said “dude, you’re way to financially prudish…Why don’t you adopt some of the more creative american financial ingenuity and get a balance transfer from a credit card you don’t use for 1%, and use that balance transfer for your day to day bill, and meanwhile withhold more of your paycheck toward your ESPP. You work at a stable company, for which your company stock is virtually dead as a doorknob in terms of volatility regardless of what the market is doing, and you get 20% off of the FMV of the stock between the 6 months offering period…And the time it takes for the shares to vest and when they end up in your account is at most a 2 day trading period, and the shares will be granted after any planned earnings announcrment….so it’s unlikely you’ll see a -20% within that 2 days…”
Dead silence… I thought I offended the guy by going too far, so I changed the subject and that was the end of it…So I thought.
6 months later, he calls me back up and says, “hey, I ended up getting my ESPP shares and just sold them for 20% minus costs…”
I was like, I thought you said you would have cashflow issues, and didn’t want to do it. What did you do, max out your CC?
He was like “No. Even better…I thought about what you said…So I went to schwab and took out a no cost Heloc @ 4%, and withdrew enough to cover my day to day bills while I contributed the maximum I could to my ESPP… 6months later, I sold the shares the day after I vested when the shares were deposited into my account for 20% on the spot gain, and immediately I paid off the small Heloc balance the next few days…And for this period I have some cash to cash flow until closer to the end of this period, and I’ll draw from my Heloc again for about 3 months and pay it back..Next year I won’t have to anymore…And you know what, I think I might even be able to report my interest charges on my Heloc as an investment interest expense…”
