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I don't say avoision
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Jun 13, 2019 14:17
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For taxable accounts, how does one combine the idea of yearly rebalancing, by selling well-performing assets to buy more of the cheapo poor performing assets, with the idea of tax-loss harvesting, where you sell your losers to offset the taxed gains? Seems like those two imperatives are at odd with each other. Most of the time you'd be paying gain taxes, you wouldn't be selling losers.
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Jun 13, 2019 21:14
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DreadCthulhu posted:For taxable accounts, how does one combine the idea of yearly rebalancing, by selling well-performing assets to buy more of the cheapo poor performing assets, with the idea of tax-loss harvesting, where you sell your losers to offset the taxed gains? They are separate ideas and you can do both at the same time. The only difference is when you tax loss harvest you replace the thing you sold with something similar but legally different enough for tax purposes, and when you sell a winner as a byproduct of rebalancing you buy whatever actually different thing you need to rebalance. Ideally you would sell enough of both types to rebalance AND declare a net $3,000 (married) loss for the year, but that's not really possible after an 11 year bull market.
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Jun 13, 2019 21:24
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I'd only rebalance with fresh money in a taxable account, I would not sell assets to maintain a target mix.
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Jun 13, 2019 21:24
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Droo posted:They are separate ideas and you can do both at the same time. The only difference is when you tax loss harvest you replace the thing you sold with something similar but legally different enough for tax purposes, and when you sell a winner as a byproduct of rebalancing you buy whatever actually different thing you need to rebalance. Ideally you would sell enough of both types to rebalance AND declare a net $3,000 (married) loss for the year, but that's not really possible after an 11 year bull market. Not sure I totally understand that, but it sounds like I should grok it. Mind making an example? Kylaer posted:I'd only rebalance with fresh money in a taxable account, I would not sell assets to maintain a target mix. For sure, I'm simply exploring a FIRE situation where there is no fresh money coming in, and I need the portfolio to not become too risky or too conservative because it hasn't been rebalanced in a while. Technically I could just use withdrawals as "rebalancing", by trimming the winners, but I live frugally enough where there'd still be plenty of rebalancing to do even after I've set enough money aside to pay the bills.
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Jun 13, 2019 21:33
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Ideally your total portfolio, which we are saying includes significant non-tax-advantaged assets, should be arranged such that the least tax-efficient assets are in your tax-advantaged accounts and the most tax-efficient assets are in your non-advantaged accounts. Then, on the occasion where you need to rebalance, you're probably not simultaneously selling and buying in your non-advantaged accounts. Either you're buying only, to increase allocation in that asset class; or you're selling to reduce allocation; and either way, the tax consequence is secondary and there's no dilemma to resolve.
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Jun 13, 2019 21:41
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So I was closing in on making a taxable account... and I happened to get a letter in the mail today telling me my employer now offers a Roth 401(k) option. Of course the letter didn't really give any details and our HR dept is a joke. I already have an emergency fund in a HYSA, protecting me for a year of full unemployment. I max out my Roth IRA to 6k / yr I max out my Traditional 401(k) to 19k /yr Assuming I have additional money to save (long term), there's no reason to not put it in this Roth 401(k), right? Just want to make sure I'm not missing anything obvious. Also if I were to leave the company, I assume I can roll those funds into my normal Roth IRA without issue?
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Jun 14, 2019 03:07
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A Roth 401k shares the same contribution limit of your traditional 401k, same way IRAs do. Now if instead you mean that you have an after-tax (but not Roth) contribution option that allows you to exceed the 19k limit with taxed, unadvantaged dollars, as well as a plan that offers the ability to do in-service rollovers, then you have access to the coveted “Roth megabackdoor”.
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Jun 14, 2019 03:11
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Guinness posted:A Roth 401k shares the same contribution limit of your traditional 401k, same way IRAs do. My letter says "Announcing the Roth-After Tax Option! Roth 401(k) gives you the option to make additional contributions to your retirement account that can then lead to tax-free income in retirement starting July 1st, 2019."
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Jun 14, 2019 03:31
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So I signed up for a credit union. I want to cancel my Chase bank account, including the credit card I have on file. I was just curious what the best way to do it would be? Should I pay off all the credit card debts in Chase bank then cancel it and then sign up for a credit card under the credit union? Or should I sign up for a credit card from the credit union first and then cancel the Chase credit card once the credit union one is mailed to me (I assume this will hit my credit hard?)
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Jun 14, 2019 04:14
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Do you really want to get rid of the Chase card? Unless it has a fee, I'd just leave it on with no balance until they end up canceling it. Or does this have to do with the arbitration thing/other shady things Chase is doing?
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Jun 14, 2019 04:29
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punk rebel ecks posted:So I signed up for a credit union. I want to cancel my Chase bank account, including the credit card I have on file. I was just curious what the best way to do it would be? Why do you want to cancel the card? If you can handle credit responsibly, it's likely in your best interest to leave it open to keep your AAoA high and overall util lower.
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Jun 14, 2019 04:29
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The Rev posted:My letter says "Announcing the Roth-After Tax Option! Roth 401(k) gives you the option to make additional contributions to your retirement account that can then lead to tax-free income in retirement starting July 1st, 2019." Who administers your plan? Please say Fidelity or Vanguard.
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Jun 14, 2019 04:52
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CubicalSucrose posted:Why do you want to cancel the card? If you can handle credit responsibly, it's likely in your best interest to leave it open to keep your AAoA high and overall util lower. I want to cancel the card because it is with Chase bank (who I am closing my checking account), and I want credit card with my credit union.
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Jun 14, 2019 05:17
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Just leave it open and don't use it assuming it has no fees.
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Jun 14, 2019 06:31
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punk rebel ecks posted:I want to cancel the card because it is with Chase bank (who I am closing my checking account), and I want credit card with my credit union. I closed my bank of america account that I used when I was young and it caused my credit score to tank around 40 points because of the age of my remaining accounts. I highly recommend you leave it open and cut up your credit card instead, I regret closing mine. (Unless they charge a monthly/annual fee, in which case you don't have much choice)
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Jun 14, 2019 11:49
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H110Hawk posted:Who administers your plan? Please say Fidelity or Vanguard. Sadly neither, Voya.
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Jun 14, 2019 11:55
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FateFree posted:I closed my bank of america account that I used when I was young and it caused my credit score to tank around 40 points because of the age of my remaining accounts. I highly recommend you leave it open and cut up your credit card instead, I regret closing mine. (Unless they charge a monthly/annual fee, in which case you don't have much choice) This. Also, wanting your credit card to be with the same institution as your checking account isn't a good reason to go closing down everything else. Shopping around for the best rates and rewards and whatnot is always going to bring up a wide variety of institutions. The credit union/bank with the best high interest rate savings accounts might have poo poo credit card options. The place with the best credit card options may offer terrible interest rates on personal, auto, and home loans. Different places excel in different areas, so you should always shop around for each specific thing you want to do. Nerdwallet has comprehensive lists of all the different options where you can narrow things down based on whatever criteria you set. Don't be afraid to have accounts open with multiple places.
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Jun 14, 2019 12:07
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Couple of questions: 1. Is early withdrawal of 401k taxed as income as opposed to cap gains? 2. Is it fair to say that even if you do have to do early withdrawal, if you have company 401k matching, you might as well max that since it's effectively free money? Worst case you pay the extra 10% penalty fee + taxes?
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Jun 14, 2019 12:14
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The Rev posted:Sadly neither, Voya. Yeah I'm sad my company switched to Voya recently. I mean it was from John Hancock, so it's a positive shift, but Fidelity or vanguard would have been so much better.
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Jun 14, 2019 12:51
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DreadCthulhu posted:Couple of questions: 1. Any withdrawal, early or otherwise, from a 401k is taxed as income. You don't get any capital gains treatment with 401k money. 2. Yes, matching contributions are free money.
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Jun 14, 2019 13:07
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DreadCthulhu posted:Couple of questions: 1. Yes. 2. If you have a company match you might as well get the match, and if you know you're going to be withdrawing early, you could always do a Roth conversion 5 years prior and then withdraw it with no penalty. There are ways to avoid eating the penalty.
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Jun 14, 2019 13:18
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Nice, thanks for explaining! On an unrelated note, is there a portfolio rebalancing calculator that people here prefer to use? e.g. once I year I want to sell / buy across 10-12 asset to make sure I'm back to the planned allocation, is there something that can tell me exactly how many units of what I own to sell / buy to get there?
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Jun 14, 2019 14:17
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At what portfolio value do people actually start to rebalance. I tend to just purchase the sector that needs more and I don't have an exact science to it. I am up to about $250K in the market and feel like maybe that is the point to have more of a plan.
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Jun 14, 2019 14:20
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DreadCthulhu posted:Nice, thanks for explaining! spwrozek posted:At what portfolio value do people actually start to rebalance. I tend to just purchase the sector that needs more and I don't have an exact science to it. I am up to about $250K in the market and feel like maybe that is the point to have more of a plan.
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Jun 14, 2019 14:27
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FateFree posted:I closed my bank of america account that I used when I was young and it caused my credit score to tank around 40 points because of the age of my remaining accounts. I highly recommend you leave it open and cut up your credit card instead, I regret closing mine. (Unless they charge a monthly/annual fee, in which case you don't have much choice) Counter: if you already have a good credit score and don't plan on getting a mortgage in the next few years, it won't matter.
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Jun 14, 2019 14:52
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FateFree posted:I closed my bank of america account that I used when I was young and it caused my credit score to tank around 40 points because of the age of my remaining accounts. I highly recommend you leave it open and cut up your credit card instead, I regret closing mine. (Unless they charge a monthly/annual fee, in which case you don't have much choice) My issue is how will I pay for my credit card at Chase Bank of I don't have a Chase checking account?
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Jun 14, 2019 16:42
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punk rebel ecks posted:I don't have any type of fee. I pay my Chase card using my credit union’s billpay.
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Jun 14, 2019 16:44
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This is so loving stupid. Why would my credit score take a hit if I cancel my credit card after completely paying it off!?
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Jun 14, 2019 16:51
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punk rebel ecks posted:This is so loving stupid. Why would my credit score take a hit if I cancel my credit card after completely paying it off!? It reduces the average age of your accounts, which is part of your score. If you’re not planning to get a loan in the near future I don’t think it matters much, but I’m no expert.
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Jun 14, 2019 16:55
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DreadCthulhu posted:Not sure I totally understand that, but it sounds like I should grok it. Mind making an example? Target allocation: 3 even holdings, 100k each Current allocation: Asset 1: 50k (-50%) Asset 2: 100k (no change) Asset 3: 150k (+50%) Actions: Sell $50,000 of asset 3, incur $16,667 capital gain Sell $20,000** of asset 1, incur $20,000 loss Buy $70,000 of asset 1 alternative Now you have your balanced portfolio again, you offset the gains by harvesting losses and you harvested enough losses to also take a $3,000 deduction against other income this year. The only difference is you own $70k of Vanguard Large Cap ETF instead of Vanguard S&P 500 ETF for awhile. **at least, you could also sell all of it and accrue carry forward losses for future tax years
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Jun 14, 2019 17:01
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punk rebel ecks posted:I don't have any type of fee. On the chase.com website for my card I just linked my non-chase bank checking account and I pay that way.
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Jun 14, 2019 17:04
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tangy yet delightful posted:On the chase.com website for my card I just linked my non-chase bank checking account and I pay that way. Okay, I'll do that then. Thanks.
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Jun 14, 2019 17:08
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punk rebel ecks posted:This is so loving stupid. Why would my credit score take a hit if I cancel my credit card after completely paying it off!? There are two things that happen when you get a new credit card. First, you get a hit because you've just applied for and gotten a new line of credit. This will go away in a few months. Second, you get a hit because the average age of your accounts has gone down. This takes longer to go away. You will eventually get a benefit to having that amount of additional credit (as long as you pay it off every month) because that means you have a larger total amount of credit and you are utilizing a lower percentage of it. If you close your old card, you take a hit on two fronts: first, your average account age drops even more, because you're losing an older line in addition to adding a new one. Second, you are lowering your total amount of available credit and thus your utilization percentage won't go down. If you don't have an annual fee with your Chase card you're better off to keep it and not use it. Chase will be able to accept electronic payment from your new bank or you can use eBills to pay it off from your bank directly, and you get the benefits of unused, old credit. All that said, if you're not applying for a loan in the next year or so this is mainly academic. The vast majority of your credit score just comes from paying everything off and not paying late. We're just cautioning you because there will be a hit caused by this and that can mess with loans.
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Jun 14, 2019 17:20
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punk rebel ecks posted:I don't have any type of fee. Wait, all this time you thought you had to have a bank account with the card issuer to pay its credit card? I have like ten cards, that would drive me insane. I don't mean for that to sound as obnoxious as it does, but there's a lot to learn and this thread will help- ask away.
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Jun 14, 2019 17:25
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Or the newbie thread, perhaps. That one is worth some quick reading, at least!
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Jun 14, 2019 17:30
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punk rebel ecks posted:Okay, I'll do that then. Thanks. You don't need to do that either. Just stop using the card.
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Jun 14, 2019 17:32
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Brain Curry posted:It reduces the average age of your accounts, which is part of your score. If you’re not planning to get a loan in the near future I don’t think it matters much, but I’m no expert. Yep, don't cancel any cards, just throw them in a box and let them collect dust. A few years ago I made that rookie mistake and lowered my average age of credit a whole bunch for no reason.
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Jun 14, 2019 17:35
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Great responses all around. The just I'm getting is that it would be best to just get a new credit card from the credit union? My credit score won't take that much of a big hit if I get a new credit card and don't use the old one?
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Jun 14, 2019 17:40
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That's what most people do. Just ghost your old card.
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Jun 14, 2019 17:44
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