"wealthy people do not pay interest"

[corn18]

I guess I'm not following. The idea of Chapter 11 is to find a path to pay back the debt.

Are you saying that whomever the company is named after is morally responsible for the entirety of the debt of the company, which had thousands of shareholders ?

And are you going to pay back this discharged debt with interest? For so, what amount? And when? This is precisely the purpose of Chapter 11...

I think the term you are looking for is fiduciary duty. And yes, the Chairman, President and CEO has fiduciary duty.

[TexasHusker]

I think the term you are looking for is fiduciary duty. And yes, the Chairman, President and CEO has fiduciary duty.

He has a legal fiduciary obligation to the company and its shareholders. No CEO is assuming personal responsibility for the company's liabilities...that is asinine.

[sv2007]

Are you saying that whomever the company is named after is morally - and personally - responsible for the entirety of the debt of the company, which has thousands of owners (shareholders) ?

Call me old fashioned, but essentially yes. Majority shareholder should be held accountable by law (a bankruptcy of separate legal entity controlled by somebody is irresponsible and should pass onto that person's personal accounts), but failing that, it is up to that person's character to make right.

[corn18]

He has a legal fiduciary obligation to the company and its shareholders. No CEO is assuming personal responsibility for the company's liabilities...that is asinine.

Was I being obtuse? A corporate officer has a fiduciary responsibility to the shareholders. If he fails to meet that responsibility, he can and should be removed by the shareholders and / or the board of directors.

[TexasHusker]

Call me old fashioned, but essentially yes. Majority shareholder should be held accountable by law (a bankruptcy of separate legal entity controlled by somebody is irresponsible and should pass onto that person's personal accounts), but failing that, it is up to that person's character to make right.

While that is a good and noble policy, it would effectively shut down corporations, partnerships, and LLCs. No person in their right mind would sign on for such.

[Singuy]

I'm in. Can you point me to a vehicle paying sufficient interest to make an infant a multi-millionaire by age 60? I need to get my kids hooked up.

30 year US Treasury is paying a solid 2.71%. That means my money will double every 27 years !

Investing 500/month since an infant till 60 at 7% return in an index fund that you hate so much will yield 5.4 million.

Investing 500/month from 18-65 will get you 2.2 million.

If you make a reasonable salary, 500/month shouldn't be too hard to cough up.

[sv2007]

Investing 500/month from 18-65 will get you 2.2 million.
If you make a reasonable salary, 500/month shouldn't be too hard to cough up.

$500/month was pretty much impossible for my @ 18.
Let's see, I was working as a life guard at YMCA back then at $10-$12/hr depending on which pool I guarded. AND only summer months too.

Too rosy, what'd I get if I start at 30 and at 6%? (which I think will be the conservative age for most people and a more conservative ROI; note: forward outlook should always be more conservative).

[TexasHusker]

Investing 500/month since an infant till 60 at 7% return in an index fund that you hate so much will yield 5.4 million.

Investing 500/month from 18-65 will get you 2.2 million.

If you make a reasonable salary, 500/month shouldn't be too hard to cough up.

That's not the quite the same as compound interest. That's reinvested dividends and capital gains. And if you're investing an index fund, you are a fractional owner of hundreds of publicly-traded companies that are...leveraging.

Unless you are buying junk bonds, there is no such thing these days as 7% interest.

I don't hate index funds; they are simply a mediocre investment, by design. If you want mediocre, index funds are your ticket.

[Singuy]

That's not the quite the same as compound interest. That's reinvested dividends and capital gains. And if you're investing an index fund, you are a fractional owner of hundreds of publicly-traded companies that are...leveraging.

Unless you are buying junk bonds, there is no such thing these days as 7% interest.

I don't hate index funds; they are simply a mediocre investment, by design. If you want mediocre, index funds are your ticket.

It doesn't matter that the company you invested in is leveraging. They know what they are doing unlike yourself, which can get you to leverage the wrong way.

Muni bonds are yielding 5% and their default rate is 0.41%..which is pretty much never. Reinvestment is the same as "compounding interest"..you are compounding your yields for exponential growth.

There are a few ways to get beyond 7%..REIT yield almost 10% the past 20 years.

[Singuy]

$500/month was pretty much impossible for my @ 18.
Let's see, I was working as a life guard at YMCA back then at $10-$12/hr depending on which pool I guarded. AND only summer months too.

Too rosy, what'd I get if I start at 30 and at 6%? (which I think will be the conservative age for most people and a more conservative ROI; note: forward outlook should always be more conservative).

Well you can work at MCDs full time and get some roommates while going to school. I know many people are doing that.

[corn18]

That's not the quite the same as compound interest. That's reinvested dividends and capital gains. And if you're investing an index fund, you are a fractional owner of hundreds of publicly-traded companies that are...leveraging.

Unless you are buying junk bonds, there is no such thing these days as 7% interest.

I don't hate index funds; they are simply a mediocre investment, by design. If you want mediocre, index funds are your ticket.

You focus on returns, I focus on risk. I am willing to accept lower returns for lower risk. I took my risks in my career so I could end up where I am. I would prefer to keep my hard gotten gains and not risk it all on something I know nothing about. If that makes me mediocre, then so be it.

[TexasHusker]

It doesn't matter that the company you invested in is leveraging. They know what they are doing unlike yourself, which can get you to leverage the wrong way.

Muni bonds are yielding 5% and their default rate is 0.41%..which is pretty much never. Reinvestment is the same as "compounding interest"..you are compounding your yields for exponential growth.

There are a few ways to get beyond 7%..REIT yield almost 10% the past 20 years.

I gotcha. I was thinking you were referring to interest. Tough to find anything over 7% unless you go the junk bonds route.

And you're right, I probably have no idea what I am doing. You sound like my wife.

[TexasHusker]

You focus on returns, I focus on risk. I am willing to accept lower returns for lower risk. I took my risks in my career so I could end up where I am. I would prefer to keep my hard gotten gains and not risk it all on something I know nothing about. If that makes me mediocre, then so be it.

Everyone's situation is different. Everyone's objectives are different. If you are in capital preservation mode, with the opportunity of some gains, I think index funds are a decent choice. Although a protracted bear maket is looming in my humble opinion.

[sv2007]

If you are in capital preservation mode, with the opportunity of some gains, I think index funds are a decent choice. Although a protracted bear maket is looming in my humble opinion.

That goes counter to normal recommendations. Protection from down market is precisely what preservation guards against, so most would recommend fixed income.

[TexasHusker]

That goes counter to normal recommendations. Protection from down market is precisely what preservation guards against, so most would recommend fixed income.

I'm beginning to think that every post runs counter...

All I stated is that it was a decent choice for preservation - meaning you could do a lot worse. Most fixed income vehicles aren't even matching inflation, which means they are more "bleed to death slowly" vehicles.