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If it were the economy would collapse.
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Jan 7, 2022 16:30
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SamDabbers posted:Debt is terrible. One of the best life lessons you can teach your kids, starting from a young age, is how to save and avoid debt. They're bombarded with messaging to consume more and live the life they deserve just like the rest of us, and will need education to recognize and reject that. It's a shame that personal finance isn't a required part of getting a high school diploma. Totally agreed. Being free of educational debt at this point frees me up to save for retirement and my kids' college funds. We live a modest lifestyle for two people with graduate degrees but the freedom from anxiety is worth mucho $$$. Would be even better if my wife's loans were paid off but thankful we are at least able to meet our savings goals.
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Jan 7, 2022 16:32
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Im trying to get a 2nd job so that I can pay off my wifes student loans from grad school. Hopefully after a year I'll have them payed off and we can throw that extra $600 a month towards IRA accounts.
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Jan 7, 2022 16:54
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Residency Evil posted:Thanks for the advice everyone. I kind of calculated that front loading with 80k or so would let us "finish" college savings, but I wasn't sure if people had different thoughts about whether that was a good idea or not. Make sure you talk to an accountant if you're going to frontload. You can contribute up to 80k per kid (160k if married) without incurring gift tax liability, but you need to file a return to spread the gift prorata over five years.
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Jan 7, 2022 17:40
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KYOON GRIFFEY JR posted:debt is also a very useful and powerful tool that allows you to do such things as buy cars and houses. if used properly it can save you money. Use your chainsaw safely and for the job it was intended!
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Jan 7, 2022 17:44
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Ungratek posted:Make sure you talk to an accountant if you're going to frontload. You can contribute up to 80k per kid (160k if married) without incurring gift tax liability, but you need to file a return to spread the gift prorata over five years. Is there a special different kind of gift tax for 529 plans? You don't pay a penny in taxes until you hit your lifetime limit of like 12 million dollars. The annual exclusion is just for reporting
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Jan 7, 2022 17:46
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Ungratek posted:Make sure you talk to an accountant No I refuse.
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Jan 7, 2022 17:48
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Residency Evil posted:Thanks for the advice everyone. I kind of calculated that front loading with 80k or so would let us "finish" college savings, but I wasn't sure if people had different thoughts about whether that was a good idea or not.
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Jan 7, 2022 18:30
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GoGoGadgetChris posted:Is there a special different kind of gift tax for 529 plans? You don't pay a penny in taxes until you hit your lifetime limit of like 12 million dollars. The annual exclusion is just for reporting Anything over 16k is supposed to be reported since it incurs gift tax. You can use your lifetime exemption to absorb that amount (which everyone does). It still needs to be reported. There’s a separate provision for front loading 529s where they give you five years of exclusion and then spread it prorata over coming years
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Jan 7, 2022 18:30
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dexter6 posted:Debt is a tool, like a chainsaw. Chainsaws do somethings well, other things not so well. You can also kill yourself. 100%, but if someone came in and posted "chainsaws are terrible" that would be pretty absurd, wouldn't it!
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Jan 7, 2022 18:59
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Ungratek posted:Anything over 16k is supposed to be reported since it incurs gift tax. You can use your lifetime exemption to absorb that amount (which everyone does). It still needs to be reported. I mean, having $12.06M in lifetime exclusion is better than having $11.98M in lifetime exclusion, so your advice is good, but I just wanted to make sure nobody thought you would have to pay even 1 tiny penny in "gift taxes" for frontloading a 529
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Jan 7, 2022 19:01
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GoGoGadgetChris posted:I mean, having $12.06M in lifetime exclusion is better than having $11.98M in lifetime exclusion, so your advice is good, but I just wanted to make sure nobody thought you would have to pay even 1 tiny penny in "gift taxes" for frontloading a 529 Agreed there, just making sure people are aware of compliance
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Jan 7, 2022 19:33
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Vox Nihili posted:EE bonds are guaranteed to double in value after twenty years regardless of the associated rate. The old paper bonds had a face value equal to half of what was actually paid for them (i.e. you would pay $25 for a "$50 bond"), so they should be worth at least their face value now (or soon, for the 2002 bonds). Cool, thanks for the info. Yeah according to the treasurydirect calculator my 2002 bonds which are the last year I have them are now worth $52.04. So they haven't reached exactly 20 years yet but have all reached the magic double your money mark so I'll just cash them now. I don't see the value in holding on to them for another 6+ months just to squeeze out a little more interest. Plus I have some educational expenses I can use to reduce some of that interest I need to pay taxes for, looks like https://www.treasurydirect.gov/indiv/planning/plan_education.htm
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Jan 7, 2022 21:34
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KYOON GRIFFEY JR posted:100%, but if someone came in and posted "chainsaws are terrible" that would be pretty absurd, wouldn't it! I'll concede that borrowing is a useful tool in some situations, like buying a home or vehicle, but I will say that the anxiety of debt didn't subside for me until I passed the point of positive net worth, knowing that if I had to I could zero out my debt in an instant. Student debt is straight up terrible though, and I don't think people should have to drag that kind of ball and chain around in order to get an education.
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Jan 7, 2022 23:10
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SamDabbers posted:Student debt is straight up terrible though, and I don't think people should have to drag that kind of ball and chain around in order to get an education. Well, yeah. People shouldn't be paying individually to get an education. It's a public service/good that benefits society. But that would be socialism (even though public k-12 somehow isn't) so we can't have that now.
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Jan 7, 2022 23:25
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Folks I'm looking for information on getting into the buying and selling of bonds. Mostly just so I can be knowledgeable for my parents, but also so that I can scalp bonds. Got any good resources other than investopedia about them, and how to research them?
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Jan 8, 2022 00:14
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silence_kit posted:Solve 1*(1+x)^20 = 2 also can be useful to remember the rule of 72: 72 / interest rate = very approximate doubling time so 72/x=20 years, which at a glance suggests a rate somewhere in the neighborhood of ~3.6% it gives a less accurate approximation as the interest rate increases, but very nice time saver for back of the envelope estimates
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Jan 8, 2022 02:00
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Residency Evil posted:Thanks for the advice everyone. I kind of calculated that front loading with 80k or so would let us "finish" college savings, but I wasn't sure if people had different thoughts about whether that was a good idea or not. Yeah. I think a ton of this comes down to personal experience, the type of grad school, the world after graduating, etc. This is probably a little too E/N for this forum, so I apologize in advance. When I left undergrad, grad school felt like the default choice which set me back a lot of years. It was a completely paid for STEM PhD (that I washed out of), but the opportunity cost was immense. I worry that dangling a no-questions-asked 529 for grad school makes some of those choices easier rather than smarter for kids and I'm not 100% convinced the majority of 23 year olds can make that choice wisely. I do appreciate the professional school perspective. It's very different from my own (but still probably one I'd fund from brokerage).
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Jan 8, 2022 06:43
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Wanted to follow up that my job did not give me 1.3 million dollars in shares. Was fun to dream of those giant golden cuffs. It’s a more believable $65,000 over four years. Still a nice little bonus. I feel silly but just need to take better notes.
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Jan 8, 2022 06:48
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cheese eats mouse posted:Wanted to follow up that my job did not give me 1.3 million dollars in shares. Was fun to dream of those giant golden cuffs. It’s a more believable $65,000 over four years. Still a nice little bonus. I believe I called $65K over 65K shares so please forward my winnings to my Bitcoin account. That's still definitely good! I just didn't really believe someone who had any questions to ask about RSUs would also be handed a million dollar grant. That's CEO or finance wizard territory.
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Jan 8, 2022 14:34
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Can someone help explain the 401k options for the self-employed? I want to open an account so I have access to another tax-advantaged space, but all the different types have me confused. Im the sole employee of my company.
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Jan 8, 2022 15:40
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dexter6 posted:Debt is a tool, like a chainsaw. Chainsaws do somethings well, other things not so well. You can also kill yourself. This is a fantastic analogy.
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Jan 8, 2022 15:43
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Use debt to carve up your enemies into manageable chunks?
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Jan 8, 2022 15:50
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Valicious posted:Can someone help explain the 401k options for the self-employed? I want to open an account so I have access to another tax-advantaged space, but all the different types have me confused. Im the sole employee of my company. A solo 401k is relatively more complex than a regular multi employee plan in that there are additional limit(s?) on the employer contributions, IIRC there is a max on the employer side of up to 25% of net income. Take a quick look at this. https://investor.vanguard.com/accounts-plans/small-business-retirement-plans/individual-solo-401k
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Jan 8, 2022 19:25
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withak posted:Use debt to carve up your enemies into manageable chunks? Hostile takeover via leveraged buyout!
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Jan 8, 2022 20:50
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tumblr hype man posted:A solo 401k is relatively more complex than a regular multi employee plan in that there are additional limit(s?) on the employer contributions, IIRC there is a max on the employer side of up to 25% of net income. Can contribute as an employee and employer, and employers can contribute up to $59k. Wow, that’s definitely going to take some doing to max that out.
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Jan 8, 2022 22:01
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My brother has a decent amount of money in savings that he doesn't know what to do with. He already maxes his Roth IRA and contributes his 401K to the employer match. While increasing his 401K to the max might be the next logical step, his savings is mainly from an end of year bonus that is variable year-to-year. Some years it is five figures and other times he might not get a bonus. He currently budgets his money to have $300 in savings every month and increasing his 401K to the max would send him into the red. He was looking for something he can put $10 to $20K in. I saw I-bonds being mentioned. He was also thinking of opening an investment account and dumping $10K into it, but he wasn't sure which one to select. Thoughts?
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Jan 8, 2022 22:05
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Valicious posted:Can contribute as an employee and employer, and employers can contribute up to $59k. Wow, that’s definitely going to take some doing to max that out.
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Jan 8, 2022 22:30
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moana posted:You can also open a SIMPLE IRA if you know you're not going to put so much into it. But a solo401k is really easy to open nowadays, and the only reporting you do is once you hit $250k. You do need an EIN to open it. I was looking at the funds available at Vanguard, and I’m not sure what to pick. My IRA is 100% equities, so should I just pick the 2055 target date fund and be done with it?
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Jan 8, 2022 22:49
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Yes.
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Jan 8, 2022 22:50
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DTaeKim posted:My brother has a decent amount of money in savings that he doesn't know what to do with. He already maxes his Roth IRA and contributes his 401K to the employer match. While increasing his 401K to the max might be the next logical step, his savings is mainly from an end of year bonus that is variable year-to-year. Some years it is five figures and other times he might not get a bonus. He currently budgets his money to have $300 in savings every month and increasing his 401K to the max would send him into the red. He can always bump up his 401k contribution rate without maxing it out completely. The question of where to put his spare $10k-$20k is best answered by asking another question: what are his plans for that money, and his life plans in general? If he's planning to save up to buy a house in 5-10 years, for example, I-Bonds are a great way to get some reasonable returns with essentially no risk. If he's looking to maximize long-term returns and is OK with potentially losing most of the money, a taxable brokerage account plus index investing is probably the way to go.
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Jan 9, 2022 00:17
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I took a lump sum distribution from a former employer's defined benefit pension plan. I plan to roll this into my 401k with my current employer. I verified that my current plan allows this. One of the questions as part of the rollover asks whether the money being rolled in is pre-tax or post-tax. I'm 99% sure it is pre-tax since I never paid taxes on what the company put into the pension for me. Some googling doesn't disagree with this but it isn't entirely clear.
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Jan 9, 2022 22:55
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Is there a consensus good article I could email to someone to convince them that buying dull ETFs (eg. the S&P 500) is the best approach to long term investing rather than picking and choosing individual stocks? Googling around at the moment and I've found some choice quotes from Warren Buffet that may suffice, as he's often recommended simply investing in the S&P 500 (and won a bet against some hedge funds on this topic), but I thought I should ask here since the thread may have a real good, convincing article in their back pocket. My family (parents and brother) has a chunk of money they want to invest. They already have money with a manager, but this is a smaller side amount. They've asked for my help in creating a strategy to manage this money, so I feel I should weigh in with my opinion and at least float the notion that a substantial portion of this money should be in some collection of ETFs. I feel this is the best investment approach and also ensures I don't need to actively do anything. My Mom has done well in the past doing active investing, and so I know she's inclined to continue picking and choosing individual stocks with at least some part of this money. I don't want to cause any real family drama here, and so if Mom wants to actively pick and choose some stocks, sure, fine, but if I can convince people to limit the scale of that active trading to only a portion of the pool of money that would be great. No one is gonna lose their house or retirement if this money is invested poorly, but nonetheless it's enough that I'd be annoyed if it was managed poorly and went to waste. There's no reason that needs to happen.
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Jan 10, 2022 03:31
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Femtosecond posted:Is there a consensus good article I could email to someone to convince them that buying dull ETFs (eg. the S&P 500) is the best approach to long term investing rather than picking and choosing individual stocks? Freakenomics has an entire episode dedicated to our lord and savior Jack Bogle (may he rest in an index heaven funded peace). I didn’t re listen but I think this is it. https://freakonomics.com/podcast/stupidest-thing-can-money/
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Jan 10, 2022 03:48
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I apologize if this is the wrong thread, but I have a question about CFPs and I wasn't sure where else to put it. My girlfriend and I are in a good place financially (debt free, good incomes, contributing to retirement, etc), and we're trying to figure out what our next steps are. One option that she's exploring for herself is to work with a financial planner to help pull a plan together. I have no experience with this, and I was hoping to get an idea of what is "normal" for working with a CFP. I had imagined an hourly rate engagement where you spend a few hours with someone putting together a plan, reviewing what you already have, and so on. What we're finding is that most of the people in our area are doing yearly engagements with an annual fee of $5,000-$10,000, and it seems to be a broader offering including financial management. Is that standard? I have difficulty seeing how people who aren't truly wealthy can get enough additional value out of that to outweigh the yearly cost. I'd prefer to do this all ourselves, honestly, but she's not sure she's comfortable with it.
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Jan 10, 2022 17:17
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https://www.napfa.org/ The words you want to see for a financial advisor are "fee-based" and "fiduciary." For the situation you describe, you would want to pay a flat, one-time fee, walk through all your finances, circumstances, and goals with an advisor, and they would give you their recommended playbook for you to reach your goals, complete with explanations and justifications. Taking action on it would be up to you. There's a whole industry of advisors who operate on taking your money every year for the privilege of taking more of your money to invest in their own funds that, you guessed it, skim even more of your money. Pay for good advice that's looking out just for you, use it, and move on until you feel you would like good advice again.
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Jan 10, 2022 17:26
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Duckman2008 posted:Freakenomics has an entire episode dedicated to our lord and savior Jack Bogle (may he rest in an index heaven funded peace). This wasn't a bad conversation, the meat of it is about in the middle and I've slowly persuaded myself that this year I'm going to stop investing in individual stocks. I have the sneaking suspicion it's partially a hobby for a quite a few folks. I do however have the same question as the other poster - there has to be some kind of website that lists all of the bad investing advice right? I wish there was personal finance version of Climate Tipping Points that went through all the terrible ideas because I have one friend who's know taking a loan out of his 401k and using it to invest in Real Estate. Which sounds like a terrible idea? A quick search, to my surprise shows me that real estate isn't necessarily bad but you can get better returns elsewhere.
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Jan 10, 2022 17:40
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you ate my cat posted:I apologize if this is the wrong thread, but I have a question about CFPs and I wasn't sure where else to put it. My girlfriend and I are in a good place financially (debt free, good incomes, contributing to retirement, etc), and we're trying to figure out what our next steps are. One option that she's exploring for herself is to work with a financial planner to help pull a plan together.
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Jan 10, 2022 18:51
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moana posted:Garrett network is the list of hourly cfps, but most of them are as you described, and honestly there's not a huge amount of value in signing up with your situation. You can also ask around for cfps who do project based fees. Maybe try the XYPN site? Out of curiosity, are the Vanguard hourly CFPs any good, or are they just salesmen for Vanguard active management?
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Jan 10, 2022 18:52
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Residency Evil posted:Out of curiosity, are the Vanguard hourly CFPs any good, or are they just salesmen for Vanguard active management? RE, do you not have a cfp already?
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Jan 10, 2022 19:03
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