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Mercedes-Benz First Class Demand Notes

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  • Mercedes-Benz First Class Demand Notes

    I received an "investment opportunity" on behalf of Mercedes-Benz Financial Services in the mail today. They are offering First Class Demand Notes to qualified accredited investors at 1.6% APR. The letter claims that you maintain total liquidity. They directed me to firstclassdemandnotes.com/begin to register. I'm not particularly interested since I am getting 3.0% on up to $15k from my checking account at LMCU, but was curious if anyone has seen this or has any thoughts.

  • #2
    Sounds terrible, 1.6%. A muni fund would be much better.

    Comment


    • #3
      Better return than a CD, and more liquid than a bond if it's really a demand note.  Not sure how big a risk Daimler is these days.

      Comment


      • #4




        Better return than a CD, and more liquid than a bond if it’s really a demand note.  Not sure how big a risk Daimler is these days.
        Click to expand...


        If there is any risk or hassle whatsoever, how could it be better than 1.0% at Ally? For 0.6% difference?

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        • #5
          Not better or more liquid than a bond fund, less concentrated, no single entity risk. Daimler doesnt have much risk if they can price their bonds at 1.6%. Just not enough money. They are just trying to get basically free money (less than inflation) from yield starved investors.

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          • #6







            Better return than a CD, and more liquid than a bond if it’s really a demand note.  Not sure how big a risk Daimler is these days.
            Click to expand…


            If there is any risk or hassle whatsoever, how could it be better than 1.0% at Ally? For 0.6% difference?
            Click to expand...


            Well it's a 60% better return, for starters.

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            • #7




              Not better or more liquid than a bond fund, less concentrated, no single entity risk. Daimler doesnt have much risk if they can price their bonds at 1.6%. Just not enough money. They are just trying to get basically free money (less than inflation) from yield starved investors.
              Click to expand...


              Sure you can sell a bond or bond fund, but it's a volatile investment and there are transaction costs.

              Generally speaking you can't get your money from the maker of a bond until it matures.  Otherwise you have to sell the bond and incur transaction costs and take any loss that there might be.

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              • #8







                Not better or more liquid than a bond fund, less concentrated, no single entity risk. Daimler doesnt have much risk if they can price their bonds at 1.6%. Just not enough money. They are just trying to get basically free money (less than inflation) from yield starved investors.
                Click to expand…


                Sure you can sell a bond or bond fund, but it’s a volatile investment and there are transaction costs.

                Generally speaking you can’t get your money from the maker of a bond until it matures.  Otherwise you have to sell the bond and incur transaction costs and take any loss that there might be.
                Click to expand...


                Muni bond funds arent traditionally very volatile, nor high yield investments, but tax effective far better than whats available out there.

                As far as transaction costs, if you're not taking advantage of free trading platforms that are readily available...try it out, you may like it. I only pay the SEC cost in my main retirement account (10-30 cents a trade) and around a dollar or so in my taxable held at a different institution.

                Comment


                • #9










                  Not better or more liquid than a bond fund, less concentrated, no single entity risk. Daimler doesnt have much risk if they can price their bonds at 1.6%. Just not enough money. They are just trying to get basically free money (less than inflation) from yield starved investors.
                  Click to expand…


                  Sure you can sell a bond or bond fund, but it’s a volatile investment and there are transaction costs.

                  Generally speaking you can’t get your money from the maker of a bond until it matures.  Otherwise you have to sell the bond and incur transaction costs and take any loss that there might be.
                  Click to expand…


                  Muni bond funds arent traditionally very volatile, nor high yield investments, but tax effective far better than whats available out there.

                  As far as transaction costs, if you’re not taking advantage of free trading platforms that are readily available…try it out, you may like it. I only pay the SEC cost in my main retirement account (10-30 cents a trade) and around a dollar or so in my taxable held at a different institution.
                  Click to expand...


                  I think I agree with you that for most people this isn't terribly attractive.

                  But to simplify and generalize is to miss out on a lot of the nuance that makes this attractive to a certain niche of investors.

                  Comment


                  • #10




                    I think I agree with you that for most people this isn’t terribly attractive.

                    But to simplify and generalize is to miss out on a lot of the nuance that makes this attractive to a certain niche of investors.
                    Click to expand...


                    I think that most people simply have tunnel vision. The OP wasnt considering this or likely even shopping around to see where they could get a negative real return single entity product in the world, they simply looked into it after they have been marketed too. Then people start to consider the marketed offer, without, and this is the crazy part...considering all alternative opportunities for that capital and the risks/benefits of each of them in comparison.

                    People do this with houses, cars, funds, jobs, locations, etc...it seems odd to me. I start that way as well, wow! look at x deal on y. But then I assess what I am apparently willing to pay, and then search for the maximum utility of that amount of money in the sector I'm looking at. Do you think most people realize a new Accord and a 3 series are similarly priced? I always laugh when the big fancy truck guys call people in cheap mercedes or bmw's snobs when their trucks are at times double the cost.

                    If you're in the EU and cant get government backed treasuries that have a positive yield than this may be an opportunity, if your tax adjusted costs associated with buying maybe US debt doesnt beat the effective yield out. I assumed the OP was in america though.

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                    • #11
                      pretty much classic example of a product sold, not bought.

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