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Inner Light posted:REITs did better than a broad index or nah? SP500 was a 28% gain YOY in 2021. VGSLX was up 40% last year. REITs had a bonkers year.
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Jan 11, 2022 15:22
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SA-Anon posted:So reading about Series I bonds... I-Bonds are essentially the best safe bonds you can buy right now for the following reasons:
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Jan 11, 2022 18:55
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Residency Evil posted:Any chance you can discuss this a bit more in this thread? You probably see these investments in client’s portfolios. Do they not perform well individually or in aggregate? I would imagine there’s some premium to having illiquidity in an investment. Is it simply the fact that many of the same caveats apply with picking individual stocks? The biggest issue I saw in my short time dealing with these types of things were the LPs that poo poo out huge amounts of capital gains at random times, and the K1s that didn't come in until May, causing a bunch of issues with underpaid taxes and a complete inability to plan for taxes properly since the gains don't get reported until after year end. They can sell the properties at any time and you have no say in it,, you're just an LP along for the ride. The tax reporting is a nightmare, tracking basis is a nightmare, your CPA will hate you and rightfully will charge you an arm and a leg to deal with it. https://www.thetaxadviser.com/issues/2019/apr/publicly-traded-partnerships-tax-treatment-investors.html Read it all, be careful what you invest in, know that you're probably not going to do better than an index and despite their promises of reportable active tax losses, you may have weird years of gains that gently caress up all the benefits.
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Jan 12, 2022 08:25
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moana posted:The biggest issue I saw in my short time dealing with these types of things were the LPs that poo poo out huge amounts of capital gains at random times, and the K1s that didn't come in until May, causing a bunch of issues with underpaid taxes and a complete inability to plan for taxes properly since the gains don't get reported until after year end. They can sell the properties at any time and you have no say in it,, you're just an LP along for the ride. The tax reporting is a nightmare, tracking basis is a nightmare, your CPA will hate you and rightfully will charge you an arm and a leg to deal with it. In my more naive years I invested in a few publicly traded LPs without fully realizing what I was getting into. They are a massive loving pain in the rear end. Every year I was held up on filing my taxes waiting on schedule K1s to arrive just before the filing deadline, and then having to decipher the drat things and get surprised by their effects on my taxes was a nightmare. Despite good gains I sold out all of them just to be done with the god drat hassle of it all. I learned way too much about obscure tax reporting rules than I ever wanted to know. I got to deduct fun things like "oil and gas exploration expenses" and "natural resource depletion", as well as pay for surprise capital gains for the "sale of mineral rights". I got to claim foreign tax exemptions on income streams I didn't even know I had. I also paid federal income tax on income streams I didn't even know I had. Because when you're a "partner" of an LP it all flows in to your personal tax return. Thankfully and annoyingly it was all chump change dollar amounts with an overall minimal impact to my taxes, but I had to deal with it regardless. Stuff like TurboTax nominally supports filing K1s, but in actuality it's a no-man's land. Every year I had to dive in to the actual forms manually and debug and fix poo poo in order to file. I don't even know if I did it all correctly but I'm too small of a fish to audit and I don't even care if I over/underpaid by $20 or whatever. 0/10 absolutely do not recommend. I guess maybe if it's in your IRA to avoid the tax nightmare, but that aside these things are complicated and you probably don't understand what you're getting into. Good loving riddance, and thanks for triggering those repressed memories. DON'T DO IT. Guinness fucked around with this message at 08:46 on Jan 12, 2022 |
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Jan 12, 2022 08:37
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Yeah, like my boss was a cpa for years and still could not decipher some of the poo poo they did on the K1. Stuff in the wrong boxes, the classification codes completely wrong or more likely just labelled as ZZ, "other" aka "we aren't going to tell you wtf this is, you figure it out by going back through the last five years of basis history". Crucial information buried as a comment to an optional box on the third page of the K1 notes, like not even in the schedule itself. Just horrendous reporting. And that's just the K1, the annual reports of performance were equally obfuscated. Edit: anyone with one of these was automatically extended to October, there was no way we would ever get it done for April.
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Jan 12, 2022 08:52
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Guinness posted:I guess maybe if it's in your IRA to avoid the tax nightmare I believe that you have to be very careful with this because some of these can generate UBTI or other things you don't want in an IRA.
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Jan 12, 2022 15:06
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moana posted:REITs are fine as an index, I have lots in my Roth account. But yes, with the ptp syndicates, it's basically picking active managers and our clients had crappier returns than just picking an index REIT. I imagine a lot of that has to do with the fact that the really good active managers don't need outside people investing in their funds, same as with regular stock funds. The tax losses are something I'm particularly interested in, but it sounds like that may not be even a guarantee.  Guinness posted:In my more naive years I invested in a few publicly traded LPs without fully realizing what I was getting into. They are a massive loving pain in the rear end. moana posted:Yeah, like my boss was a cpa for years and still could not decipher some of the poo poo they did on the K1. Stuff in the wrong boxes, the classification codes completely wrong or more likely just labelled as ZZ, "other" aka "we aren't going to tell you wtf this is, you figure it out by going back through the last five years of basis history". Crucial information buried as a comment to an optional box on the third page of the K1 notes, like not even in the schedule itself. Just horrendous reporting. And that's just the K1, the annual reports of performance were equally obfuscated. Thanks guys, that's a good perspective. The tax stuff has always been something that I've read about as being a potential PITA, but chalked it up to people being whiny ("How hard could it be?"). I'll continue staying away and ask this question again in a few years. 
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Jan 12, 2022 15:57
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Perhaps an unpopular opinion in this thread: REITs are lame because they are helping price an entire generation out of home ownership. I guess you could get into commercial REITs, but they are also not super great for small businesses either. Now to return to figuring out where to put my 2022 Roth IRA contributions, which will be likely be in index funds that are also invested in morally questionable companies.
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Jan 12, 2022 18:02
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Partnership taxation can be one of the most complex areas of the US tax code. I know nothing about the investment options you're discussing, but I know enough about taxes that I'd personally avoid partnership tax issues if possible.
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Jan 12, 2022 18:10
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Chad Sexington posted:Perhaps an unpopular opinion in this thread: REITs are lame because they are helping price an entire generation out of home ownership. I guess you could get into commercial REITs, but they are also not super great for small businesses either. there's a lot of diversity in "REITs". two of the three biggest US REITs build and manage nationwide cell tower networks. not exactly relevant to home ownership or small businesses.
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Jan 12, 2022 18:19
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Chad Sexington posted:Perhaps an unpopular opinion in this thread: REITs are lame because they are helping price an entire generation out of home ownership. I guess you could get into commercial REITs, but they are also not super great for small businesses either. pmchem posted:there's a lot of diversity in "REITs". two of the three biggest US REITs build and manage nationwide cell tower networks. not exactly relevant to home ownership or small businesses. Yeah - and single family homes are notoriously bad Investments, so reit funds tend to be about 15% residential at most. Boring old retail office industrial and Specialty are the real cash cows
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Jan 12, 2022 18:33
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Chad Sexington posted:Perhaps an unpopular opinion in this thread: REITs are lame because they are helping price an entire generation out of home ownership. I guess you could get into commercial REITs, but they are also not super great for small businesses either.
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Jan 12, 2022 19:29
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I put a portion of my savings into a REIT when I was saving to buy a house. The thought was that it would track real estate prices so I'd at least have a chunk of money following the market. I took it out once I bought a house. Not sure if dumb or not but it was like $10k in limbo so who knows.
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Jan 12, 2022 19:53
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For reference, VGSLX / VNQ (Vanguard's REIT, no idea if it's the best/worst/decent) holds Specialty at 37% - Data centers, wireless and broadcast equipment, golf courses, self-storage, movie theaters, casinos, farmland.... (tiny whisper) private prisons and mental health facilities. Specialty REITs should be broken into more categories as they have a ton of overlap, represent over a third of the entire sector, and can also include combinations of the other categories. Residential at 15% - Note that residential is overwhelmingly apartments, mobile homes, and student housing. See note at the bottom about single-family Industrial at 12% - Warehouses, distribution, factories, etc Retail at 10% - everything from a freestanding Starbucks grocery stores and regional malls Office at 7% - everybody knows office buildings Healthcare at 7% - lots of overlap with office but also hospitals, senior living, nursing etc RE Services at 5% - Property management, developers, mortgage REITs, etc Diversified at 3% - All of the above, but most common combos are Retal/office/industrial, and medial/office. Diversified REITs and Specialty REITs have a lot of overlap but most choose to qualify as Specialty Hotels & Resorts at 2% - A ton of hotels & resorts end up in "Specialty" REITs so this is understating them by a substantial amount I rounded everything so that only adds up to 98% A note about Single-family holdings. There are only two major holdings in the benchmark that VGSLX tracks. Invitation Homes is about 1.3% of VGSLX and owns 80,000 mid-grade homes, primarily in CA, WA, CO, Vegas, AZ, TX, FL, and the deep-deep south American Homes 4 Rent is about 0.6% of VGSLX and owns low quality homes in 22 states. They own about 60,000 homes, primarily in Atlanta, Dallas-Fort Worth, and Charlotte NC There are a handful of other companies with single-family exposure that altogether represent less than 0.5% of VGSLX, including Zillow and Redfin Single-family homes have high expenses, low net income, and their value is primarily from appreciation & eventual resale. They aren't helpful for the typical REIT goal of providing dividends, but they are VERY helpful in letting REITs do some clever accounting. Their low net income, high expenses, and high depreciation are a godsend to the balance sheet. REITs are required by law to pay 90% of their taxable income as dividends to shareholders, but being able to load some depreciation and capital expenditures lets them control the size of their dividends when they have a strategic need to. So tl;dr, REITs barely interact with single-family homes and are primarily broadcast equipment, self-storage, apartments, data centers, retail, office, industrial
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Jan 12, 2022 21:26
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a dingus posted:I put a portion of my savings into a REIT when I was saving to buy a house. The thought was that it would track real estate prices so I'd at least have a chunk of money following the market. I took it out once I bought a house. Not sure if dumb or not but it was like $10k in limbo so who knows. Comparing the largest REIT benchmark to home values and the two largest SFR invesetors over the past 5 years, VGSLX +34% National Median Home Values +50% American Homes 4 Rent +101% Invitation Homes +111%
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Jan 12, 2022 21:34
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Quick question: As mentioned here in the past, I rolled an IRA from a brokerage into my 401k last year. I did this by selling all investments in the IRA, having a check sent to me, and mailing the check plus a form to the 401k provider. A month later they mailed me another check for $.07, from interest on the cash while the check was in the mail. I assumed at the time that I could just ignore that check, instead of going through the same paperwork again just for $.07. Was I correct?
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Jan 12, 2022 23:36
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Tax calculations are rounded to the nearest dollar.
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Jan 12, 2022 23:43
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I think I might have over-contributed to my IRA last year. Will Vanguard twig to this at some point and tell me how much I'm over and how much I need to withdraw before April 15th? Or do I have to figure it out on my own?
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Jan 13, 2022 01:57
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I’m opening a Roth i401k,and trying to figure out what Vanguard fund to choose. I’m 35, no debt, no kids, house paid off if any of that matters. My Roth IRA is 100% stocks (planning on just adding I Bonds each year) in the form of Advantis ETFs. Given that SCV has historically outperformed growth and the S&P, is there a real benefit to allocating according to market weight? For reference, this is my planned IRA. AVUV Avantis U.S. Small Cap Value ETF 30% AVDV Avantis International Small Cap Val ETF 14% AVES Avantis Emerging Markets Value ETF 12% AVLV Avantis US Large Cap Value ETF 30% AVIV Avantis International Large Cap Val ETF 14%
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Jan 13, 2022 19:02
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Valicious posted:I’m opening a Roth i401k,and trying to figure out what Vanguard fund to choose. I’m 35, no debt, no kids, house paid off if any of that matters. My small/value/internation/EM weighting is similar to yours. It's fine. Market weighting is fine too. The most important thing is to pick a strategy you can stick with. A lot of people abandoned value and international last year because they couldn't handle it. They then justify it by saying they are simplifying their portfolio or "I agree with Bogle", but it's just weakness and performance chasing. If you won't do that, then you can go anywhere from market weighting to extreme factor tilting and anywhere in between.
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Jan 13, 2022 19:10
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Valicious posted:I’m opening a Roth i401k,and trying to figure out what Vanguard fund to choose. I’m 35, no debt, no kids, house paid off if any of that matters. A 100% equity market-weighted Vanguard fund is VTI.
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Jan 13, 2022 19:11
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80k posted:My small/value/internation/EM weighting is similar to yours. It's fine. Market weighting is fine too. The most important thing is to pick a strategy you can stick with. A lot of people abandoned value and international last year because they couldn't handle it. They then justify it by saying they are simplifying their portfolio or "I agree with Bogle", but it's just weakness and performance chasing. If you won't do that, then you can go anywhere from market weighting to extreme factor tilting and anywhere in between. If only holding VTI or VT works for that person then thats fine, but yeah having at least some international or other diversification at least gives you something you can buy thats cheap relative to the US market. With US going up so much the last couple of years, I've been putting a larger portion of my money into ex-US funds just to keep up with my target allocation because its constantly lagging behind. But I feel good about that because I don't feel like I'm overpaying for US stocks. I assume at some point in the future, things will reverse. It's only been like 2 weeks so this is meaningless, but YTD VXUS has outperformed VTI 
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Jan 13, 2022 19:49
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Or maybe the small cap value cat is now out of the bag and it's just priced in. No one will be able to tell for a long time. I still like the idea of a value tilt though, just because I like the idea of value investing.
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Jan 13, 2022 20:25
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I always think about the following article whenever the question of whether the value premium is dead or if international is still worth investing in pops up: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You. TLDR: much of the overperformance of US vs international or growth vs value can be attributed to increased valuations of US growth stocks over time. Thus, it's not that the US has significantly performed better than international on fundamentals, but that US stocks has gotten more expensive. This obviously makes the past performance of US stocks great and is awesome when you are holding those stocks from the beginning, but it's not a good thing to rely on going forward. The same story goes with growth vs value. I hold both international and small cap value as diversifiers, but in reasonable quantities (about 45% of my equities between the two of them) so that if their underperformance continues, it's not the end of the world.
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Jan 13, 2022 20:46
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I’m not sure I want 60% of my portfolio to be in the US, so I may fiddle with the percentages. Something like Market Weight with AVLV -3%, AVIV +3% or something
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Jan 13, 2022 22:58
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runawayturtles posted:Or maybe the small cap value cat is now out of the bag and it's just priced in. No one will be able to tell for a long time. I dunno... if SCV was out of the bag in the mid 2000's, it's been put back in and stomped deep into the bag with a vengeance. The value spread vs growth is the largest in history (even more than the late 90's). And that spread is also extremely large overseas. Don't quote me, but I think Europe has an even bigger growth value spread than the US right now.
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Jan 13, 2022 23:16
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Turns out my job offers a Roth 401k option (in addition to the traditional 401k. I know the decision criteria is around tax rate - if my taxes are higher now than I expect at retirement, Roth makes more sense. But how can we know today what tax rates will be in 30 years?
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Jan 14, 2022 01:47
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Omne posted:Turns out my job offers a Roth 401k option (in addition to the traditional 401k. I know the decision criteria is around tax rate - if my taxes are higher now than I expect at retirement, Roth makes more sense. But how can we know today what tax rates will be in 30 years? It's the opposite. If today's tax rate is higher, you want trad for the bigger tax benefits now. In many cases it's a pretty tough guess. In some cases it's clearer though. 1) High income today and retiring early? Trad makes sense since you can do Roth conversions at negligible tax rates before RMDs and Social Security. 2) Nearing a more traditional retirement age and expecting a pretty sizeable combo of RMDs, Social Security, and/or one or more other pensions? Then Roth might be a clearer winner. Between that it's kind of a crapshoot. One approach is to try and get some sort of balance across your entire set of Roth vs Trad retirement accounts to ensure you're not making exactly the wrong decision, with the understanding you won't be optimal
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Jan 14, 2022 01:58
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Turns out that more I-Bonds were purchased in just December than had ever been purchased in an entire year before https://www.bloomberg.com/news/articles/2022-01-14/demand-explodes-for-inflation-protected-savings-bonds-in-u-s quote:Americans Stampede Into Inflation-Linked Bonds, Smashing Records quote:The December figure is $1 billion more than the previous full-year record, which came in 2018, when a jump in oil prices drove inflation toward 3%. Annual inflation is running now at a four-decade high of 7%, the result of booming consumer demand and supply-chain snarls sparked by the pandemic.
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Jan 15, 2022 14:33
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SpelledBackwards posted:Turns out that more I-Bonds were purchased in just December than had ever been purchased in an entire year before 278,000 people making maximum purchases, unless I dropped a zero somewhere. Compared to the total population and the total amount of money being invested it's still a very small amount. quote:the result of booming consumer demand and supply-chain snarls sparked by the pandemic 
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Jan 15, 2022 14:43
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I currently work full time at a job that does not offer a 401k. I'll max my Roth IRA this year and that's it for tax advantaged accounts. I've started adjuncting a course at a local university, which allows part time employees to invest in a 403b. Can I just use all of the money I get from treaching in a year (around $6000 post tax) and plow that into a 403b, on top of my IRA?
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Jan 15, 2022 20:32
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Isn't there some kind of program - I thought it was Betterment.com - that gave me some kind of Birds Eye View or Dashboard of all of my accounts, stocks, investment plans and savings?
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Jan 15, 2022 21:02
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Upgrade posted:I currently work full time at a job that does not offer a 401k. I'll max my Roth IRA this year and that's it for tax advantaged accounts. I've started adjuncting a course at a local university, which allows part time employees to invest in a 403b. Can I just use all of the money I get from treaching in a year (around $6000 post tax) and plow that into a 403b, on top of my IRA? Yes, this is a workable and good plan, assuming you don't need that money right now. And remember, you can contribute pre-tax money to the 403b, so the amount will likely be higher than 6k. Unless you particularly want to make Roth contributions.
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Jan 15, 2022 21:07
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Crosby B. Alfred posted:Isn't there some kind of program - I thought it was Betterment.com - that gave me some kind of Birds Eye View or Dashboard of all of my accounts, stocks, investment plans and savings? Personal Capital can do this, it's free. Spreadsheets are also free.
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Jan 15, 2022 21:12
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Crosby B. Alfred posted:Isn't there some kind of program - I thought it was Betterment.com - that gave me some kind of Birds Eye View or Dashboard of all of my accounts, stocks, investment plans and savings? Morningstar x-ray has a basic free function where you enter all of your funds and the number of shares of each and it spits out your cumulative allocations.
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Jan 15, 2022 21:16
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Kylaer posted:Yes, this is a workable and good plan, assuming you don't need that money right now. And remember, you can contribute pre-tax money to the 403b, so the amount will likely be higher than 6k. Unless you particularly want to make Roth contributions. OK, I am stupid. If I contribute my entire pre-tax salary... then taxes just aren't paid? Social security, income, etc? Can you do that?
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Jan 15, 2022 21:35
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FICA is always paid but not paying income tax now is kinda the point.
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Jan 15, 2022 21:48
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CubicalSucrose posted:Personal Capital can do this, it's free. Spreadsheets are also free. Now this is exactly what I was looking for... Thank you! Edit - If only this supported Treasury Direct and would finish linking my Fidelity Account. 
Gucci Loafers fucked around with this message at 23:06 on Jan 15, 2022 |
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Jan 15, 2022 22:05
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Crosby B. Alfred posted:Now this is exactly what I was looking for... Thank you!
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Jan 15, 2022 23:52
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FYI when you hit a certain net worth personal capital WILL call you to try to poach off you. I told them to stop calling me and they haven’t since.
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