What the heck does stock market interest really mean? - Posted by Michael Murray

Posted by Glenn on December 06, 1999 at 18:42:10:

I think it is the dividend divided by the price. This gives just the cash yield. Appreciation would be in addition to that. I would think that a better way to present to your sellar would be the figure that 80% of mutual funds, which are professionally managed (???) are outperformed by the S&P 500. So if he is inclined to invest in individual stocks, he would have to do as well as the top 20% to get the best yields. In addition, I would find a site which has historical data, and show him the market back starting in July 1997, when it really took a dip - point out to him that his investment in your arrangement is far less risky. Also, point out that the stock market is on its longest bull market in history, and that has got to end sometime within the term you are proposing (sooner not later).
Glenn

What the heck does stock market interest really mean? - Posted by Michael Murray

Posted by Michael Murray on December 06, 1999 at 18:21:53:

When we read that some stock or other is yielding X%, what exactly, does that mean? Is that a simple interest? Is it monthly or yearly? Is it considered compounded? I want to convince a seller to take back a mortgage and to show that he will yield more than the stock market. When I say he can yield 10% or better, I mean when considered as a 30 yr. amortization compounded monthly. How do I compare that to stock yields?
Thanks for your learned input,
Michael Murray

Re: What the heck does stock market interest really mean? - Posted by Harvey Carroll, Jr.

Posted by Harvey Carroll, Jr. on December 06, 1999 at 19:29:57:

Read one of the post about IRA’s when you first enter this site. It has a great discussion that helps in general.
As far as stocks the Dow and others have a basic annual rate of return. Usually a mortgage will yeild a higher return for a longer period of time. Granted if you owned some MS stock when it first started you would have done great; however, there a stocks that loose also. Like the IBM typewriters…
A Real Estate mortgage is very secure. If you don’t pay then they get the property back and get to keep what ever you paid them. You should also give them enough down payment in case they have to go to court and put up the property at a master commissoners sale to get their property back.
If they want to invest there money they get from you into stocks let them.
JR