Two Plus Two Publishing LLC Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 06-13-2017, 03:17 PM   #4576
wil318466
Carpal \'Tunnel
 
wil318466's Avatar
 
Join Date: Mar 2010
Location: Trumpland
Posts: 18,670
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by jalexand42 View Post
So in PA, you can save state income tax (~3%) on a $28k annual contribution to 529 accounts (assuming you are married & filing jointly). So basically saving $850 in income tax, assuming you plan to save for kid(s) college. I personally have taken advantage of this where I live until I built up my target in 529 accounts for my kids.

Why would you not want to max out 401k? *confused*

You should also almost certainly be doing a backdoor Roth for you/spouse, depending on what IRA assets you currently have.

The other thing that's a no brainer for high income is using a HSA health plan and treating your HSA account like it's an IRA (in other words, not reimbursing for medical costs, instead investing the max HSA contribution annually).

The above + significant charitable giving is exactly the things I do personally. Beyond that, I have no ideas and I feel your tax pain.
So I'd have to invest 28k to save 850? Ouch, lol.


What is the limit on the HSA contribution? I'll look into it. By no means am I trying to do anything unethical I'm just trying to optimize my tax strategy. I'm really concerned about it more as I get older.

As far as not wanting to max 401k, that is partly because we are house shopping and would rather have more cash on hand. We actually lost a bid on a house due to the other having more cash. I didn't realize that could happen. I'm still confused over that, actually. The reasoning was the chance of the deal falling through with the other family was less, so they took their offer over ours.

All of this is actually aggravating. Bleh.
wil318466 is offline   Reply With Quote
Old 06-13-2017, 03:18 PM   #4577
cannabusto
veteran
 
Join Date: Jan 2013
Posts: 3,477
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by spaceman Bryce View Post
jalexand42, isn't it also possible that an average investor might only have time to research a few companies and my understanding is that in the long run a copmpanies success in stocks is largely tied to its growth and profit. i mean obviously i could be wrong but thats what i think.
You don't need to know a goddamn thing about a single company. Just do some sort of easy set it and forget it index funds and you'll be invested in the broader national/global economy. Maybe a target date or a 3 fund portfolio. You can learn more about these things itt and with Google.
cannabusto is offline   Reply With Quote
Old 06-13-2017, 04:19 PM   #4578
gangip
veteran
 
Join Date: Jun 2008
Posts: 2,836
Re: General investing questions, newbie queries and thoughts megathread

Is it ever worth putting money into a taxable account instead of a tax sheltered account if I think there's a reasonable chance I'll want the money at some point before I'm 59.5?

I ask cause I'm having trouble evaluating the equity loss from the withdrawal penalty on early SEP / HSA distributions. Is there a calcultor that can solve for something like: "If there's an X% chance you'll need the money before 59.5 then put it in taxable"? (Obv would need to estimate tax bracket and expected returns)
gangip is online now   Reply With Quote
Old 06-13-2017, 05:47 PM   #4579
wil318466
Carpal \'Tunnel
 
wil318466's Avatar
 
Join Date: Mar 2010
Location: Trumpland
Posts: 18,670
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by cannabusto View Post
You don't need to know a goddamn thing about a single company. Just do some sort of easy set it and forget it index funds and you'll be invested in the broader national/global economy. Maybe a target date or a 3 fund portfolio. You can learn more about these things itt and with Google.
Agreed.
wil318466 is offline   Reply With Quote
Old 06-14-2017, 10:38 AM   #4580
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by wil318466 View Post
So I'd have to invest 28k to save 850? Ouch, lol.
Yeah, but that's upside if you would save for your kids' college anyway. For me, that's why I did it. The savings was similar in my state.


Quote:
Originally Posted by wil318466 View Post
What is the limit on the HSA contribution? I'll look into it. By no means am I trying to do anything unethical I'm just trying to optimize my tax strategy. I'm really concerned about it more as I get older.
$6750 this year if you have family coverage.

Quote:
Originally Posted by wil318466 View Post
As far as not wanting to max 401k, that is partly because we are house shopping and would rather have more cash on hand. We actually lost a bid on a house due to the other having more cash. I didn't realize that could happen. I'm still confused over that, actually. The reasoning was the chance of the deal falling through with the other family was less, so they took their offer over ours.

All of this is actually aggravating. Bleh.
Meh. Sounds bubble-ish and I definitely wouldn't be super happy at sitting on a pile of cash towards bubble housing behaviors vs. maxing my 401k. Obviously you know your cash flow and timing of getting this excess money. The key is obviously not to miss maxing it out for 2017.
jalexand42 is offline   Reply With Quote
Old 06-14-2017, 10:56 AM   #4581
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by gangip View Post
Is it ever worth putting money into a taxable account instead of a tax sheltered account if I think there's a reasonable chance I'll want the money at some point before I'm 59.5?

I ask cause I'm having trouble evaluating the equity loss from the withdrawal penalty on early SEP / HSA distributions. Is there a calcultor that can solve for something like: "If there's an X% chance you'll need the money before 59.5 then put it in taxable"? (Obv would need to estimate tax bracket and expected returns)
It totally can make sense, especially if you are concerned you need access to the money. Long term taxable account investing is pretty awesome if you are buying indexes and holding for decades.

That being said, tax advantaged accounts, are still going to be better for most people, all things being equal. One advantage of a Roth is that you can withdraw your already taxed contributions without penalty (not earnings).

IMO, if you have the income to do it, creating three piles of retirement money is the ideal scenario. For example, I have:

1. 401k/HSA accounts (pre-tax contributions) - I'll pay taxes on all of this when I withdraw. 401k subject to mandatory withdrawals.
2. Roth IRA's (largely backdoor roth contributions) - No taxes, can withdraw contributions at any time, no mandatory withdrawals.
3. After tax account - Capital gains rates in the long run. Obviously I pay on dividends now. Can withdraw anytime, no mandatory.

The advantage of this pre-retirement is obviously you do have access to some money if you have a crisis. I'm obviously hoping to never do that.

In retirement, the advantage of multiple buckets is you can structure your income in a way to hopefully minimize or eliminate income taxes (depending on the income you need). If you keep your income in the 15% bracket (under current law), you don't owe ANY capital gains taxes.


In terms of order of retirement focused savings, my simplified ordering advice:

1. Take advantage of any employer match.
2. Maximize contribution to HSA, *IF* you can invest the money and *IF* you can fund medical expenses out of pocket, keeping this account fully invested. This is potentially 100% tax free investing if you save it for medical expenses in retirement. Even if you by some miracle don't have medical expenses in retirement, you can still withdraw like it's an IRA at retirement age.
3. Maximize tax-advantaged 401k/IRA contributions. Roth vs. Traditional would depend on income and projected income in retirement. It might make sense to split contributions if possible if you are borderline on which to do.
4. Backdoor Roth (if applicable to your situation)
5. 529 accounts if you want to save for kids college.
6. Taxable account.
jalexand42 is offline   Reply With Quote
Old 06-14-2017, 03:19 PM   #4582
gangip
veteran
 
Join Date: Jun 2008
Posts: 2,836
Re: General investing questions, newbie queries and thoughts megathread

Thanks for the response! Two kind of nit picky questions:

For the early withdrawal penalties on retirement accounts (apparently 10% for SEP / 20% for HSA), is the penalty applied on the total sum of the money which includes the initial investment or is the penalty just applied to the capital gains?

In retirement if I have 0 income and want to withdraw large amounts from a retirement fund, do those withdrawals count toward my taxable income bracket? Like if I withdraw 100k in a year from a SEP IRA but make $0 from a job does that technically mean I'm in the <15% bracket and don't owe any taxes on the 100k withdrawl?
gangip is online now   Reply With Quote
Old 06-14-2017, 03:41 PM   #4583
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by gangip View Post
Thanks for the response! Two kind of nit picky questions:

For the early withdrawal penalties on retirement accounts (apparently 10% for SEP / 20% for HSA), is the penalty applied on the total sum of the money which includes the initial investment or is the penalty just applied to the capital gains?

In retirement if I have 0 income and want to withdraw large amounts from a retirement fund, do those withdrawals count toward my taxable income bracket? Like if I withdraw 100k in a year from a SEP IRA but make $0 from a job does that technically mean I'm in the <15% bracket and don't owe any taxes on the 100k withdrawl?
Penalties are most likely on the entire withdrawal amount. Plus you would owe taxes on any pre-tax contributions & gains.

It depends on where you withdraw from. If it's from a Roth, no it's not taxable. If it's from a Traditional/401k, it's income. If it's from a taxable account, any gains would be taxed as income, based on capital gains rates. So for instance if you are married and your only income is $50k in long term capital gains from a taxable account = no taxes.
jalexand42 is offline   Reply With Quote
Old 06-16-2017, 01:25 PM   #4584
FrankyRizzo
adept
 
Join Date: Sep 2011
Location: NJ
Posts: 807
Re: General investing questions, newbie queries and thoughts megathread

n00b questions...

my company doesnt offer 401k. i currently have investments in a mutual fund and a roth ira that i max every year. i would like to know if i should be doing anything else such as trading individual stocks. i keep looking into crypto currency and i just..dont..get it.

id like to do something short term. i have thought about a CD but literally clueless.
FrankyRizzo is offline   Reply With Quote
Old 06-16-2017, 03:14 PM   #4585
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by FrankyRizzo View Post
n00b questions...

my company doesnt offer 401k. i currently have investments in a mutual fund and a roth ira that i max every year. i would like to know if i should be doing anything else such as trading individual stocks. i keep looking into crypto currency and i just..dont..get it.

id like to do something short term. i have thought about a CD but literally clueless.
Keep maxing Roth. What mutual funds do you have?

Don't do individual stocks/crypto. Open a taxable account with Vanguard and buy a Target Date fund with excess funds over the IRA contribution. Once you get into a job with an investment option, then this advice would change.
jalexand42 is offline   Reply With Quote
Old 06-16-2017, 04:44 PM   #4586
Cranberry Tea
Pooh-Bah
 
Cranberry Tea's Avatar
 
Join Date: Jan 2009
Location: Ohio
Posts: 5,561
Re: General investing questions, newbie queries and thoughts megathread

Company I work for is offering a 5% employee discount on buying company stock. I know it's bad to own stock in the company you work for, but does the discount make it worth it if it's only a small part of my portfolio?

Also, why does the company even offer these kinds of promotions?
Cranberry Tea is offline   Reply With Quote
Old 06-16-2017, 06:44 PM   #4587
bware
self-banned
 
bware's Avatar
 
Join Date: Feb 2009
Location: ♫
Posts: 5,414
Re: General investing questions, newbie queries and thoughts megathread

To increase the demand for the stock and increase the price.

How long do you have to own it before you can sell it?
bware is offline   Reply With Quote
Old 06-16-2017, 07:24 PM   #4588
wil318466
Carpal \'Tunnel
 
wil318466's Avatar
 
Join Date: Mar 2010
Location: Trumpland
Posts: 18,670
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by FrankyRizzo View Post
n00b questions...

my company doesnt offer 401k. i currently have investments in a mutual fund and a roth ira that i max every year. i would like to know if i should be doing anything else such as trading individual stocks. i keep looking into crypto currency and i just..dont..get it.

id like to do something short term. i have thought about a CD but literally clueless.
If your company doesn't offer 401k, max out your own IRA or Roth IRA. Put the money in a vanguard low cost index fund. Total stock market index or Target retirements are fine.

Quote:
Originally Posted by Cranberry Tea View Post
Company I work for is offering a 5% employee discount on buying company stock. I know it's bad to own stock in the company you work for, but does the discount make it worth it if it's only a small part of my portfolio?

Also, why does the company even offer these kinds of promotions?
Look at the rules of how long you must hold on to it. My old company did that too. We could sell it after 60 or 90 days, from what I remember. Almost everyone I knew who worked there bought into the program and sold the shares the day they were eligible to make a small profit. So 4 times a year (it was a quarterly program) we would all log in and sell our shares.

Companies do it to promote ownership in the company by employees. They think it adds loyalty to the company internally, too.
wil318466 is offline   Reply With Quote
Old 06-17-2017, 12:36 PM   #4589
bahbahmickey
Carpal \'Tunnel
 
Join Date: Mar 2011
Location: UTG-3
Posts: 8,688
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by Cranberry Tea View Post
Company I work for is offering a 5% employee discount on buying company stock. I know it's bad to own stock in the company you work for, but does the discount make it worth it if it's only a small part of my portfolio?

Also, why does the company even offer these kinds of promotions?
Owning the stock of the company you work at is not bad in many situations. Not sure where you got that.
bahbahmickey is offline   Reply With Quote
Old 06-17-2017, 02:14 PM   #4590
BrianTheMick2
Need a ride?
 
Join Date: May 2012
Posts: 14,072
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by bahbahmickey View Post
Owning the stock of the company you work at is not bad in many situations. Not sure where you got that.
Concentrating rather than diversifying risk is generally thought to be unwise.
BrianTheMick2 is offline   Reply With Quote
Old 06-17-2017, 05:16 PM   #4591
wil318466
Carpal \'Tunnel
 
wil318466's Avatar
 
Join Date: Mar 2010
Location: Trumpland
Posts: 18,670
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by bahbahmickey View Post
Owning the stock of the company you work at is not bad in many situations. Not sure where you got that.
It's been considered "bad" due to previously awful situations like bear Stearns, Lehman, worldcom and Enron. Essentially the idea was you didn't want to take a double hit, company goes down AND you lose your investment money. So you don't lose everything in one swell foop.

Or, in enrons case go-to jail.

I guess 5% or so would be ok.
wil318466 is offline   Reply With Quote
Old 06-18-2017, 03:35 AM   #4592
Barrin6
Carpal \'Tunnel
 
Barrin6's Avatar
 
Join Date: Dec 2005
Location: beyond legal blindness
Posts: 6,632
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by unfrgvn View Post
On a $100,000 investment over 40 years it's ~$40,000. Might be nothing to you but most investors would like to have it in their account.
Could someone explain the math behind this statement?
Barrin6 is offline   Reply With Quote
Old 06-18-2017, 09:34 AM   #4593
bahbahmickey
Carpal \'Tunnel
 
Join Date: Mar 2011
Location: UTG-3
Posts: 8,688
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by wil318466 View Post
It's been considered "bad" due to previously awful situations like bear Stearns, Lehman, worldcom and Enron. Essentially the idea was you didn't want to take a double hit, company goes down AND you lose your investment money. So you don't lose everything in one swell foop.

Or, in enrons case go-to jail.

I guess 5% or so would be ok.
I understood the argument. I just disagree with it. There are of course examples of companies that have done really bad and if an employee worked there then they got screwed by losing their job plus having there net worth go down.

I am talking a small percent of ones liquid net worth (10% or less).
bahbahmickey is offline   Reply With Quote
Old 06-18-2017, 09:40 AM   #4594
unfrgvn
old hand
 
unfrgvn's Avatar
 
Join Date: Jan 2004
Location: Easy Street
Posts: 1,731
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by Barrin6 View Post
Could someone explain the math behind this statement?
I believe we were talking about the difference between a .11% expense ratio and .04% expense ratio, or a difference in return of .07% a year. I used this calculator:
http://www.calculator.net/future-value-calculator.html

and figured out the difference between a 7% return compounded over 40 years and a 6.93% return. It was ~ $40,000. The higher the return, the bigger the difference, ie the difference at 12% and 11.93% is ~ $300,000. But if you can compound a $100,000 investment at 12% for 40 years you may not care, since you would have $9 mill.
unfrgvn is offline   Reply With Quote
Old 06-18-2017, 11:44 AM   #4595
bahbahmickey
Carpal \'Tunnel
 
Join Date: Mar 2011
Location: UTG-3
Posts: 8,688
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by unfrgvn View Post
I believe we were talking about the difference between a .11% expense ratio and .04% expense ratio, or a difference in return of .07% a year. I used this calculator:
http://www.calculator.net/future-value-calculator.html

and figured out the difference between a 7% return compounded over 40 years and a 6.93% return. It was ~ $40,000. The higher the return, the bigger the difference, ie the difference at 12% and 11.93% is ~ $300,000. But if you can compound a $100,000 investment at 12% for 40 years you may not care, since you would have $9 mill.
If I remember correctly the two expense ratios were talking about two totally different investments. The argument against this was based off of not making an investment decision on saving .07% a year.

This is similar to the way many poor business owners make a decision to save a few bucks by decreasing the quality of their product/service and forgetting that maximizing profits is what they should be focused on and not just minimizing costs.
bahbahmickey is offline   Reply With Quote
Old 06-18-2017, 11:54 AM   #4596
unfrgvn
old hand
 
unfrgvn's Avatar
 
Join Date: Jan 2004
Location: Easy Street
Posts: 1,731
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by bahbahmickey View Post
If I remember correctly the two expense ratios were talking about two totally different investments.
That may have been the larger discussion but my comment that was quoted related only to the 7 basis point difference being somewhat meaningful given a long enough time frame.
unfrgvn is offline   Reply With Quote
Old 06-19-2017, 01:45 AM   #4597
BrianTheMick2
Need a ride?
 
Join Date: May 2012
Posts: 14,072
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by wil318466 View Post
As far as not wanting to max 401k, that is partly because we are house shopping and would rather have more cash on hand. We actually lost a bid on a house due to the other having more cash. I didn't realize that could happen. I'm still confused over that, actually. The reasoning was the chance of the deal falling through with the other family was less, so they took their offer over ours.
You should probably wait to buy a house until mortgage rates are higher so you can claim a higher mortgage interest deduction
BrianTheMick2 is offline   Reply With Quote
Old 06-19-2017, 08:00 AM   #4598
bahbahmickey
Carpal \'Tunnel
 
Join Date: Mar 2011
Location: UTG-3
Posts: 8,688
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by unfrgvn View Post
That may have been the larger discussion but my comment that was quoted related only to the 7 basis point difference being somewhat meaningful given a long enough time frame.
Yeah fees can add up, but if we are looking at the original questions the difference in fees would have absolutely zero bearing on how I'd invest.
bahbahmickey is offline   Reply With Quote
Old 06-19-2017, 12:44 PM   #4599
Barrin6
Carpal \'Tunnel
 
Barrin6's Avatar
 
Join Date: Dec 2005
Location: beyond legal blindness
Posts: 6,632
Re: General investing questions, newbie queries and thoughts megathread

BP has a yield of 6.6%. Isn't that extremely high? I feel like it's too good to be true.
Barrin6 is offline   Reply With Quote
Old 06-19-2017, 03:39 PM   #4600
PokerFiend4LYFE
journeyman
 
Join Date: Feb 2013
Location: 5th Street
Posts: 395
Re: General investing questions, newbie queries and thoughts megathread

Quote:
Originally Posted by BrianTheMick2 View Post
You should probably wait to buy a house until mortgage rates are higher so you can claim a higher mortgage interest deduction
Isn't this going to be disbanded with the new administration's tax overhaul?
PokerFiend4LYFE is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 07:32 PM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Copyright ę 2008-2010, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online