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Re: Way OT: investments in 401K
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Posted by Matt from CT on August 01, 2004 at 10:21:18 from (24.177.13.32):
In Reply to: Way OT: investments in 401K posted by Kurt (mi) on August 01, 2004 at 04:10:03:
>I just looked on the yahoo search and Ford
>preferred stock pays 7.4%annually for the
>dividend. (not bad) Anything with a fixed interest rate like that will get a discount/premium to make the interest competetive with current rates. Say the current rate for long term investments like that is 5%. And you have Ford preferred with a face value of $100 paying 7.4% interest. The market will say take that $7.40 and say, "You know, that's 5% on $148..." so the shares will sell for a premium of $48 over face value giving you 5% returns. That's essentially how bonds get priced, and preffered stock is similiar to a bond but with no set redemption time. If the 7.4% is the actual, market adjusted interest rate then that's what the market figures it's worth comparing the risk to the returns. As for wiseoldguy and Real Estate...have to say many of my grandparents made good money buying land in my area and down in Florida years ago. Family is still sitting on a large parcel in Florida that's currently appraised at $300,000 but will bring ten times that much once sewers now 1/2 mile away go by it. But they also worked locally and had more time to putter around. I barely have enough time to maintain my own home between 50+ hour work weeks a 45 minute commute away!
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