FAFSA for "Upper Middle Class"?

BCEagle91 · May 25, 2009, 3:08pm

It isn’t the same investment. The $5 million dollar investor does not
have access to the same investment. You can add all of the qualifiers
that you want to but it isn’t the same investment. This does answer
your original question. There are other answers too but they are so
obvious that I won’t bother with the answers here.

The rest of your comments are irrelevant.

siserune · May 25, 2009, 3:46pm

The fact that rich guy can throw away some of his returns to replicate the payout of poor guy’s investment is not an example of a disadvantage. 
The time and money costs of finding and administrating multiple 250K (or similar size) CDs, by the way, is much lower per dollar than for the 5K investor.

Yes, he has access to superior ones, at lower cost. That was the point. It is generally a consequence of greater wealth, which was also the point.

I didn’t ask the question you recently invented. I did make an assertion which is visibly substantiated in your example (rich guy getting higher returns, having lower per dollar transaction costs in time and money). You raised some point about an FDIC partial-doomsday scenario that you refuse to substantiate, claiming that it changes the calculations but declining to challenge the fact that in such a situation it’s the 5K-guy who gets hosed more than the 5-millionaire. If and when you have a specific scenario to discuss, your claims can be evaluated. Until then, you are peddling mush.

BCEagle91 · May 25, 2009, 4:07pm

You’re twisting and turning again. You asked for an investment that
could be done with $5,000 that can’t be done with $5 million.

You’re twisting and turning again. You asked for an investment that
could be done with $5,000 that can’t be done with $5 million.

You’re twisting and turning again. You asked for an investment that
could be done with $5,000 that can’t be done with $5 million.

You’re twisting and turning again. You asked for an investment that
could be done with $5,000 that can’t be done with $5 million.

limbwalker · May 25, 2009, 5:53pm

Sorry, latecomer here, but:

*“although we are comfortable we are not wealthy…” *

How on earth can someone with a household AGI of $450K even bring themselves to type something like this??? I can’t believe how out of touch some folks are.

Look, I’m not trying to be mean here but I “tuned in” to this thread wondering if my wife and I fell into the “upper” middle class category as well. If $450K/year is considered ANY kind of middle class, maybe I’m the one who’s out of touch.

And no, a household with $450K AGI has no business receiving aid and I hope the colleges see it that way too.

Good grief!

John.

applicannot · May 25, 2009, 7:04pm

Especially when they can fork over $30,000 per year in private school fees (especially because they probably live in an affluent area with good schools… not not necessarily). Alas, we still had 33 pages discussing this.

cptofthehouse · May 25, 2009, 7:39pm

There are households with a$450K AGI needing aid if they are going to be able to send their kid to certain colleges. And at that income level, they feel they should send their kids to the colleges of their choices.

But you are absolutely right that it is not at all ANY kind of middle class.

My H works with someone with a half million AGI. Half their money goes to taxes. Both have been married before, and one of them has big child support payments. They have a handicapped child. They have 5 kids among them, yours, mine, ours. Their house is a million dollar home they bought 10 years ago, and it is a split level house on a quarter acre that is no great shakes. But it is convenient to both of their commutes, they are in a good school district and near exes so the kids can be shared. Their mortgage payment is about $9K a month. They are perpetually short of funds, and their life styles are not a whole lot different then folks I knew in the midwest who did not make 6 figures. College is going to be an issue.

I feel blessed that I have always had enough money to meet basic needs +. When we were at little over subsistence level, it was easy for me to budget. Had a safe place to live, paid the few but necessary bills. Not much left, but we were able to make ends meet and a bit over as well. But as we made more money, there were more decisions to be made that were not as obvious. We were much more skilled than most people in budgeting having come from responsible families. But once the most primary needs are met, it becomes more difficult to address the secondary, tertiary and other levels. That is when it becomes ever so easy to make mistakes. In many ways it is better to fling the money to the winds and spend away on junk rather than making long term type commitments because you can quit the frivolous spending but you are locked in to things like houses, schools, etc that make it much more difficult to withdraw.

So, yes, I absolutely agree that it is better to have more money than less, but it does complicate the decision and it is easier to make mistake because of the many factors to address.

limbwalker · May 25, 2009, 7:58pm

Sorry cpt, but I can’t follow that kind of logic. Anyone has the same options available to them - sell what they have and move. I just switched jobs and my wife started a new career at 40 so we could relocated back to Texas. It’s difficult, but certainly not impossible. It’s a lot harder to change mindsets than zip codes. Once the money starts flowing, most folks feel “entitled” to it and that’s where the problems begin. Humility usually goes out the window.

My mother has an undergrad and two grad. degrees in unrelated fields, but raised 5 kids by herself without help. She lives in a home she paid $1,500 cash for (seriously) and has remodeled with her very own 67 year old hands. Meanwhile, she’s bought up half the homes in the small town she lives in and still has never made more than $15K/year in her entire life. The people you describe would not blink to spend that much on accessories for their Hummer. It’s a mindset that requires a reality check that unfortunately most will never get.

Problem with a LOT of folks in this country is that they’ve NEVER been truly hungry and had to wonder where their next meal is coming from. Or had to decide between food and bills. A few years of that, and all that “stuff” just won’t seem so da** important to them.

John.

calmom · May 26, 2009, 1:56am

A million dollar home wouldn’t have a mortgage payment of $9000 per month - that kind of payment (with a 30 year mortgage) will buy a $1.5 million mortgage. (Barack Obama is probably paying $7500/month on the mortgage of his Chicago home, financed for $1.32 million, 5.625% rate… and that house seems nice enough to me. Good school district, too.)

siserune · May 26, 2009, 4:06am

Which part of “replicate the payout” doesn’t answer your new, phony and dishonest issue about exact mathematical scaling from 5K to 5M?

And you tried but failed to give an example of such an investment, i.e., one where the 5M-investor is disadvantaged. When that example flopped and vague talk of FDIC defaults didn’t salvage it, you tried to change the subject by claiming that the question was not really about the issue raised repeatedly in this thread (is rich guy or poor guy advantaged, who has higher time value of money) but a new and phony question about whether all known investments can be exactly and mathematically scaled from 5K to 5M and using only a single instrument.

I have to say that, dishonest as that discussion strategy is, it is also bizarre. Most non-fungible investments (buy a house, purchase art, make loan to a particular business venture) have no scalability whatsoever. Nevertheless, rich investors (5M) have clear advantages over poor ones (5K) in real estate, art purchasing, and venture capital, including economies of scale in making similar investments, and this is not something that most participants in the economy would seriously dispute. Is it your claim that this advantage is an illusion with no economic basis, or that the advantage exists but we should ignore it (for instance, in setting tax or financial aid policy) simply because the investments don’t literally scale up from investor A’s portfolio to investor B’s?

BCEagle91 · May 26, 2009, 7:21am

Which part of “the same investment” don’t you understand?

You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

siserune · May 26, 2009, 7:57am

You are lying, and have been for the past several iterations. The first time you claimed that I “specifically asked about a $5 million CD”, that was merely a misquotation. The second, third and fifth time after you were corrected, it became a lie.

In any event, you appear not to understand the meaning of basic finance terms such as “replicate”, as in “replicate the payout”, and “hedging”. I suggest you learn before commenting further.

It was my original assumption that your comment about FDIC was an intelligent (even if incorrect) attempt to address replicability or lack thereof. I understand now that you were making only the brain-dead point that 5 million dollar CD’s aren’t usually sold. My bad.

siserune · May 26, 2009, 8:01am

“Replicate” is a standard finance term. Learning its meaning would answer your question.

BCEagle91 · May 26, 2009, 8:10am

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

siserune · May 26, 2009, 8:21am

No, you’re just lying. I will point out for the benefit of any onlookers, that there’s a very obvious reason why you continue to substitute your phrasing instead of quoting the questions I actually did ask.

BCEagle91 · May 26, 2009, 8:22am

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

siserune · May 26, 2009, 8:43am

Here’s the quick summary for those not wanting to wade through pages of infinite loop.

<ol>
<li>user Calmom pointed out, absolutely correctly, that financial aid is one of the few situations where poor are advantaged; the rich usually purchase at lower cost or are otherwise economically advantaged in the transaction.</li>
<li>I pointed out that time value of money is higher for the rich due to having more options per dollar; that there are few (if any) investments that rich guy can’t simulate or improve upon, per dollar, relative to poor guy. Transaction costs are lower, returns higher, or both.</li>
<li>BCeagle objects and eventually claims bank CDs as an opposite example, implicitly citing FDIC protection as an issue. I point out multiple CDs in multiple banks are an option.</li>
<li>BCeagle apparently concedes multiple CDs can simulate poor investor’s position (“yes, you can get multiple CDs”), citing only inconvenience as an objection (“a lot of running around”). Economic discussion shifts to back-and-forth on FDIC and other issues.</li>
<li>BCeagle now claims original issue was existence of 5 million dollar CDs. I deny this and he does not quote any postings defining this as the question.</li>
<li>BCeagle infinite posting loop re-iterating claim about $5M CD’s.</li>
</ol>

notrichenough · May 26, 2009, 9:07am

Yes, you two have quite the p***ing contest going on. Why don’t you move it to your own thread where the rest of us don’t have to see it?

Then we can get back to the class-bashing without distraction.

BCEagle91 · May 26, 2009, 9:38am

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

You asked for an investment that could be done with $5,000 that can’t
be done with $5 million. You’re twisting and turning again.

kayf · May 26, 2009, 9:44am

Siserune – I find part of the discussion nonsense. The poor person likely wont have much money to invest. And the middle income, even upper income person who hasnt saved wont either. Which to me is an issue with the schools eliminating loans, that it rewards not saving.

limbwalker · May 26, 2009, 3:17pm

And I thought we had pointless, time-wasting debates on our archery sites. Good grief!

John.

FAFSA for "Upper Middle Class"?

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