Multiple Security Deposits - Dumb or no-brainer?

[jananth1]

Good call. You should also avoid negotiating on your next lease as well for the same reason

[aronchi]

I believe passively managed index funds and ETFs outperform actively managed investment vehicles, but that’s just my 2%.

[DailyDriven]

Five months later and back from the dead for your first post? Nice!

Whether the “formula is right” or not as I am not sure about the context, “what about the 8% return?” nonsense (or numbers just like it) comes up time and time again. What I said earlier on an MSD thread:

@DailyDriven

MSDs are usually the way to go but I know many people that have good reasons not to always use them.

One is if you plan on a potential lease transfer at some point it will narrow the number of people that can cough it up. Another depends on if you are a 1099/IC or if you own your company and how you structure your taxes/deductions as to actual expenses or mileage and how much you need for those deductions.

MSDs also need to be looked at along with what other debts and/or obligations you may have such as student loans, college or private school expenses for kids, paying for elderly parents, second homes or investment properties, etc. Obviously paying down other debts depending on the interest rate, etc. and having capital available for other opportunities or emergencies will make a difference depending on your personal financial situation.

Compounding interest (both ways), taxes and opportunity costs cannot be overlooked.

[bob75]

@C10H12N2O

Can you do better than 1.2% over that period on $8k invested somewhere?

Was replying to this but forgot to quote. The return on the MSD is based on the cap cost, not getting a similar APR return on the amount of the MSD.

[Jrouleau426]

How much are you saving over the length of the lease divided by the msds. Theres your roi. It’s untaxed also. Toyota trucks give around a 50% over 3 years on msds. Approx 75/mo savings on 5400 in msds. No brainer. I always recommend them if you have the cash sitting around. Highly unlikely it’s guaranteed to make 20%+ a year anywhere else unless you have cc debt or something at a high rate you should be paying off instead

Toyota is one of the more favorable banks to use msds with though. They’re borrowing dollars to convert to yen which is very favorable for them right now…