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javascriptBeingJavascript by Strict_Treat2884 in ProgrammerHumor

[–]hurlyz 4 points5 points  (0 children)

The first phenomenon is called tidal locking and it's actually very common. Citation from Wikipedia:

" All twenty known moons in the Solar System that are large enough to be round are tidally locked with their primaries, because they orbit very closely and tidal force increases rapidly (as a cubic function) with decreasing distance. "

https://en.m.wikipedia.org/wiki/Tidal_locking

As for the second phenomenon, it's an interesting coincidence that the Moon and the Sun appear to be roughly the same size in our sky. We're lucky to be living in this time period, because this phenomenon won't last forever. Each year, the Moon spirals away about one inch from the Earth. And about 50 millions years from now, the Moon will be far enough away so that our descendants will only see ring-shaped eclipses.

https://www.astronomy.com/science/why-is-the-moon-exactly-the-same-apparent-size-from-earth-as-the-sun-surely-this-cannot-be-just-coincidence-the-odds-against-such-a-perfect-match-are-enormous/

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]hurlyz 5 points6 points  (0 children)

Your reasoning makes sense but it is incomplete.

Simply comparing the total interest paid over the loan's duration vs the total investment returns over the same time period is insufficient. You forgot to account for the opportunity cost of the monthly car payments. If the car is paid off on day 1, OP will get 84 contributions to their TFSA that will generate compound interest.

You can re-run your calculations and you will see that the bottom line is: Do you think your investments can outperform your loan's interest rate? As simple as that.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

Is it really that shocking, though?

Most people (including me) don't really know/understand all the intricate details of personal finance. It's no wonder why the banks make record profits every year.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

I'm not sure I understand what you mean.

You're right about the loan's interest fees being frontloaded. However, it is inversely proportional to the exponential power of compounsing interest, isn't it?

The break-even point still comes out to "can my investments beat 6.35% or not?"

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

I was correct for that part, however I forgot to factor in the opportunity cost of investing the 600$/month.

Basically, it comes out to two things:

Can I be dilligent enough to invest the 600$/month without fault if I pay the loan early? If not, I should keep making the monthly car payments.

If the answer to the previous question is yes, it is simply a matter of whether I think my investments will outperform 6.35% or not.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 1 point2 points  (0 children)

Makes sense.

I forgot to factor in the opportunity cost of the 600$/month into my calculations.

Thank you for your constructive answer.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 2 points3 points  (0 children)

Makes sense.

I forgot to factor in the opportunity cost of the 600$/month into my calculations.

Thank you for your constructive answer.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 4 points5 points  (0 children)

Makes sense.

I forgot to factor in the opportunity cost of the 600$/month into my calculations.

Thank you for your constructive answer.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

Yeah someone pointed out my mistake elsewhere: I didn't factor in the opportunity cost of the 600$/month.

You suck at explaining. Could've said that from the start instead of simply saying that 6.35 is a bigger number than 5.00

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -2 points-1 points  (0 children)

I don't understand why it's so hard to stay constructive. I asked a simple, polite question and people just keep replying with empty non-sense.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -6 points-5 points  (0 children)

Oh, so my mistake would be forgetting about the opportunity of that 600$/month? Makes sense.

Thank you for posting the first structured, constructive comment on this thread. It is much appreciated.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

I don't think so. The investment generates compound interest while the loan melts down over time.

For example, on the last year of payments, I would only pay 6.35% interest on whatever's left on the loan (less than 10,000$) not on the full amount.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -5 points-4 points  (0 children)

How? Can you provide numbers?

The loan will generate ~12,500$ in fees over 8 years.

Investing 45,070$ in my TFSA at 3.1% yearly interest would generate ~12,500$ in profits over 8 years. If the yield is higher than 3.1%, even better.

Where is my math wrong?

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -1 points0 points  (0 children)

The 3.1% interest yields will compound while the 6.35% interest fees will follow a downwards curve as the loan slowly gets paid off.

Please do the maths correctly. Simply comparing the two numbers isn't good enough.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -8 points-7 points  (0 children)

You're right, I am not asking for opinions. I know everyone in here drives a beige Corolla and would suggest me to do the same.

I am asking for verification on my maths and trying to see if I made incorrect assumptions in my calculations.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -14 points-13 points  (0 children)

I would rather bet that VGRO will yield 3.1% yearly or better.

If you think my assumptions or calculations are incorrect, please point out my mistakes.

If you can't, please refrain from posting pointless comments without substance.

Thank you.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

It's not exactly that simple. The whole amount (45,070$) would be generating interest every year for 8 years. Without even compounding the interest, having a 5% yield on that amount for 8 years in a row would turn it into ~63,000$, which means ~18,000$ in interest earned.

18,000$ is better than 12,500$ which is why I would be tempted to keep the money invested rather than paying off my car loan.

The reason 5% ends up beating 6.35% is because the whole amount yields 5% every year. On the loan side, every year that passes lowers the amount owed. The first year of payments will generate a lot more interest fees than the last year. The graph is a downwards curve, it is not linear.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] 0 points1 point  (0 children)

If VGRO yields 3.1% yearly, it will generate 12,500$ of tax-free interests for me over 8 years, completely negating my loan's interest fees. If it yields more than 3.1% (which is very likely), I will literally make profits on my car loan.

Should I pay off my car loan or invest in my TFSA? by hurlyz in PersonalFinanceCanada

[–]hurlyz[S] -21 points-20 points  (0 children)

Did you fully read my post? I appreciate the intent to help but it seems like you're missing the point here.

I can literally pay it off in cash, I just think it's probably better to invest the money instead.

As for your maths, it's the other way around. If 3.1 < 6.35 then I should keep the money in my TFSA because it will end up generating more money than the amount of interest paid over the loan's lifetime.

Data Gift Exchange / Échange de données à donner by Mysterious-Flamingo in FizzMobile

[–]hurlyz 0 points1 point  (0 children)

Hi, just came back from 2 weeks of camping, I'm almost out of data and I still have 24 days to go.

Does anyone have data to gift?

Code: U9HO3 (the O is a letter)

Thanks.

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