Five Awesome Questions From You

LMM loves listener questions. If you’re wondering, other people are too and doing a five questions episodes allows us to reach more of you. Today we have five awesome questions from you.

Today we will answer your five awesome questions about individual stocks, student loans, the 4% rule, You Need a Budget, and investing 101.

1. Hey LMM!

I have a question about investing. I am using Betterment right now and hoping to start a Vanguard account soon. If I own VTI in Betterment and I own VTI in my Vanguard, is there any point to buying single stocks in Apple or Amazon or another company that is in the VTI fund since I already own those companies in my VTI funds?

KaeLee

There are some pros and cons to each. A good reason to own shares in a company outside of a fund is the possibility of more significant gains when that company has a good year. Say you have $1,000 in a fund, you might only have $50 of Apple within that fund.

Then Apple has a big year, you only get the gains from that $50. If you had $1,000 of Apple outside the fund, you get the gains from that $1,000. Is there is a company that you feel strongly about? Go ahead and buy individual shares after doing your due diligence.

A downside is that you when you have a fund through a company like Betterment, they do tax loss harvesting for you. We thoroughly explained tax loss harvesting here. Owning individual shares outside of Betterment can mean that you lose the benefits of tax loss harvesting.

Owning individual shares might also cause you to obsess over how that company is doing, continually checking the news to see how the stock is doing. The opposite of our “set it and forget it” investing philosophy.

2. Hi Guys,

I started listening to you guys about two weeks and was wondering if you can help me with my student loan dilemma. I have a 0% APR credit card and want to use it pay my student loan of $11,000. But Great Lakes who holds the loan won’t take a credit card payment.

It has to be a debit card or secured credit card. I tried a company that refinances loans you mentioned in an add, but I didn’t graduate from the school I went to and didn’t qualify.

Ricardo

A 0% APR credit card can be great if you carry a balance on another card. It allows you to work on getting the balance paid off without paying interest. But read the fine print. Once the 0% APR period runs out, you could be paying a higher interest rate than you were on the original credit card. Be sure to pay the balance off in full before the APR goes up.

The reason your student loan company won’t allow you to pay with a credit card may be that they don’t want to pay the processing fee. They also take more risk, when you pay from your bank account, that’s your money, and once you’ve made the payment, you can’t get the money back.

A credit card company may have ways to claw back a payment. It also may have something to do with a great loophole some people have used to get around the rules about having student loans discharged in a bankruptcy.

Some people were paying their loans with their credit cards and then declaring bankruptcy. Credit card debt can be discharged in bankruptcy, so this may be Great Lakes way of closing a loophole.

Refinancing your student loans through SoFi or LendKey is a great option, but as you found out, not everyone with student loans is eligible for those companies. Look into refinancing through Citizens Bank. The average borrower saves $1,