MJ DeMarco
I followed the science; all I found was money.
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How I Got An 11% Guaranteed Return
Don't let the number's scare you in this example. There might be opportunities for this in your life with your mortgage, investment loans, or car loans.
I just closed on refinancing my home. The transaction will yield me an 11% guaranteed yearly return. Here's how:
My outstanding mortgage balance was $998,000 @ 5.88% I/O
Payment: $4893/mo.
I got my lender to lower the rate to 4.5% if I came in with some of my own money.
So I refinanced the loan to $798,000 @ 4.5% I/O
New Payment: $2992/mo.
I now save $1,901 per month at a cost of $203,643. This is a yearly yield of 11.2% less the opportunity cost of the $203,000 which sadly was earning <.2% in a tax-free money market fund.
So in effect, I *invested* this $203,000 out of a lower yielding investment and dumped it into a higher yield one. I spent $203,000 and generated a $1,900/monthly savings -- raising net cash flow -- that annualized yield is 11.2% -- and it is guaranteed.
As investors in anything, you should always be on the look out on strategies that will improve your cash flow. While true Fastlane strategies focus on the INCOME side, the EXPENSE side always has it's opportunities as well.
Also, this is a great example of the power of compound interest when dealing with LARGER numbers.
:fastlane:
Don't let the number's scare you in this example. There might be opportunities for this in your life with your mortgage, investment loans, or car loans.
I just closed on refinancing my home. The transaction will yield me an 11% guaranteed yearly return. Here's how:
My outstanding mortgage balance was $998,000 @ 5.88% I/O
Payment: $4893/mo.
I got my lender to lower the rate to 4.5% if I came in with some of my own money.
So I refinanced the loan to $798,000 @ 4.5% I/O
New Payment: $2992/mo.
I now save $1,901 per month at a cost of $203,643. This is a yearly yield of 11.2% less the opportunity cost of the $203,000 which sadly was earning <.2% in a tax-free money market fund.
So in effect, I *invested* this $203,000 out of a lower yielding investment and dumped it into a higher yield one. I spent $203,000 and generated a $1,900/monthly savings -- raising net cash flow -- that annualized yield is 11.2% -- and it is guaranteed.
As investors in anything, you should always be on the look out on strategies that will improve your cash flow. While true Fastlane strategies focus on the INCOME side, the EXPENSE side always has it's opportunities as well.
Also, this is a great example of the power of compound interest when dealing with LARGER numbers.
:fastlane:
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You hit a wall because the best advice isn't free—it's earned. Since 2007, MJ DeMarco has been active here daily (99.9% active rate), building a war room for entrepreneurs who refuse to settle for mediocrity.
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