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Reply to "First return after buying house- How much did you get back ?"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Yes rates are low now so you won't earn much in interest, per se, but why in the world would you loan your money to the govt. for free when you can engage in tax planning and keep it for yourself? That $1k example that I could have given the govt. at no return to me would have earned 8-12% if invested in my portfolio last yr. YMMV but I prefer to do it that way... remember too that if points are financed they must be amortized over the life of the loan, so very little deduction per year vs. a cash payment of points... [/quote] I think that's an apples and oranges comparison. Getting a refund is a perfectly sensible thing to do if the alternative to it was keeping the money in your checking account, or your online internet savings account, or some other short-term, safe investment vehicle. In fact, getting a refund is now the only way to get a paper i-bond and an i-bond is a great investment if you are looking for safe, liquid investments. If instead your plan is to put every spare nickel into the stock market then I agree getting a refund will involve a short delay in investing those dollars which may marginally reduce (or increase) your return (although anything other than an ACH transfer to a mutual fund would pretty much eat up the money in transaction costs).[/quote] I don't plan to put every spare nickel into the market, that was just an example (based on a mixed portfolio of stocks, bonds & money market funds that I own)... no critical short term money of ours ever goes into the market, that's for longer term investing. I agree that the i-bonds are safe but they're not very liquid so if you want to do that as a forced savings for the 1-5 yrs. you have to hold them that makes sense. For a shorter horizon I'd still rather have my money under my control rather than overpaying/overwitholding. You can't always figure it right but with a little time spent more often than not we avoid either large refunds or a large enough bill due to require estimated payments the next year. For those who can't save as they go, I guess overwitholding and getting the refund is one way to do it, I've just never seen that as a good approach. To each his or her own. :wink: [/quote]
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