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Cheese Thief posted:About to drop a chunky five figures in the retirement fund. Not sure what to do. Just choose indexes that relate to stock, market, and overseas funds? I work really hard for this so I hate being so uninformed about where I put it. 80% in TSLA and the rest you let your CPA pick.
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Feb 9, 2022 03:48
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CubicalSucrose posted:You say 5 figures - is this two IRAs? Also read the OP. I just have the Roth IRA and this will be the first year to contribute more than the $6k. I don't have access to 401k. I read the OP and saw the short PDF that was recommended, a few years ago and bought 1/3 bonds, 1/3 overseas, 1/3 stock market index fund. Later I read here in this thread that 1/3 bond holding is way too much. I'll reread the Get Rich Slowly pamphlet again when I have a few days off. I was sort of planning to just pick whatever Vanguard has available for Overseas and Stock indexes.
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Feb 9, 2022 03:54
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A target date fund might be appropriate for you. They are diversified between US stock, international stock, and bonds, but manage the mix for you automatically. The fund will gradually shift to a greater bond allocation as it gets closer to the target date. It's really buy-and-forget, with the only proviso that you should not buy them in a taxable account, only tax-advantaged retirement accounts like your Roth IRA. Vanguard Target Retirement Funds Bogleheads wiki article about them
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Feb 9, 2022 05:25
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If you're investing with someone other than Vanguard, other brokerages' target date funds are fine too, just make sure they have the word "Index" in the name somewhere. For example, you would choose "Freedom Index Fund 2050" instead of "Freedom Fund 2050" among Fidelity's target date offerings. Same goes for Schwab.
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Feb 9, 2022 05:40
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Cheese Thief posted:I just have the Roth IRA and this will be the first year to contribute more than the $6k. sorry, but just to clarify, do you mean you'll be investing in a taxable brokerage as well as the roth ira, or that you're maxing the roth for tax year 2021 and 2022 and the same time, or something else? because as far as i know the 6k annual contribution limit is a hard cap
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Feb 9, 2022 06:30
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GhostofJohnMuir posted:sorry, but just to clarify, do you mean you'll be investing in a taxable brokerage as well as the roth ira, or that you're maxing the roth for tax year 2021 and 2022 and the same time, or something else? because as far as i know the 6k annual contribution limit is a hard cap This is where I'm confused. Because to be frank, I want to add 30 grand to my Vanguard account. The 6k into the 2021 Roth is understood. I don't know how to get a tax advantage status for the remaining contributions. I really wanted to bring my retirement fund to six figures this year but I'll have to do some reading as to how taxes figure in.
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Feb 9, 2022 12:41
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if you don't have access to a 401(k) or 403(b) and you're not self employed in some way that allows you to open an individual 401(k) or a SIMPLE IRA then you have maximized your tax advantaged space and you are forced to use a taxable ordinary brokerage account. All the taxability means is that a) you've already paid income taxes on the money you contribute b) that you pay short term or long term capital gains taxes on any realized gains or losses (typically as a result of sales of shares) and that c) you pay income taxes on dividends. DO NOT hold target date funds in a taxable brokerage account.
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Feb 9, 2022 13:30
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Cheese Thief posted:This is where I'm confused. Because to be frank, I want to add 30 grand to my Vanguard account. The 6k into the 2021 Roth is understood. I don't know how to get a tax advantage status for the remaining contributions. I really wanted to bring my retirement fund to six figures this year but I'll have to do some reading as to how taxes figure in. Do you have a 401k via your work ?
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Feb 9, 2022 15:06
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Where are good places to put taxable investments? I'm looking at a 3 fund with VTSAX VTIAX VBTLX The dividends seem manageable for taxes.
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Feb 9, 2022 16:38
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Salami Surgeon posted:Where are good places to put taxable investments? I'm looking at a 3 fund with
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Feb 9, 2022 17:11
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Got it! Thanks!quote:And if you've used up all your tax-advantaged space and still want to save more, read the Boglehead wiki page on tax-efficient fund placement!
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Feb 9, 2022 17:20
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Cheese Thief posted:This is where I'm confused. Because to be frank, I want to add 30 grand to my Vanguard account. The 6k into the 2021 Roth is understood. I don't know how to get a tax advantage status for the remaining contributions. I really wanted to bring my retirement fund to six figures this year but I'll have to do some reading as to how taxes figure in. I made this for the thread, years ago. I think it's comprehensive. It's basically every option available for paying less or no tax on a long-term investment:  You can and should save that $30k. After funding your own IRA ($6k max contributions annually), and your spouse's IRA if you have a spouse, these are your remaining options for tax-advantage, and then after that, you're probably looking at a form of savings for which you'll be taxed on your gains at your long-term capital gains tax rate.
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Feb 9, 2022 18:56
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the only thing that i think is really missing there is whether various things are subject to income taxes or capital gains taxes
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Feb 9, 2022 18:58
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Leperflesh posted:I made this for the thread, years ago. I think it's comprehensive. It's basically every option available for paying less or no tax on a long-term investment: smdh how is cash stuffed in your mattress not in the tax-free withdrawal section
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Feb 9, 2022 19:09
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pmchem posted:smdh If you can somehow get that stash of cash to gain in value against the dollar, you'll have to pay capital gains taxes on it. Or to put it another way, you owe capital gains taxes on your $0 of returns.
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Feb 9, 2022 19:28
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Leperflesh posted:If you can somehow get that stash of cash to gain in value against the dollar, you'll have to pay capital gains taxes on it. Or to put it another way, you owe capital gains taxes on your $0 of returns. kind of my joke, physical holding of your native fiat currency will never have returns to tax
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Feb 9, 2022 19:37
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So if I have dual citizenship (or just a foreign bank account) is the country that lost out on exchange rate that year going to charge me for my other bank account?
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Feb 9, 2022 19:43
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pmchem posted:kind of my joke, physical holding of your native fiat currency will never have returns to tax Instead it'll just lose value to inflation which is an even more punishing tax.
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Feb 9, 2022 21:32
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Cheese Thief posted:This is where I'm confused. Because to be frank, I want to add 30 grand to my Vanguard account. The 6k into the 2021 Roth is understood. I don't know how to get a tax advantage status for the remaining contributions. I really wanted to bring my retirement fund to six figures this year but I'll have to do some reading as to how taxes figure in. KYOON GRIFFEY JR posted:if you don't have access to a 401(k) or 403(b) and you're not self employed in some way that allows you to open an individual 401(k) or a SIMPLE IRA then you have maximized your tax advantaged space and you are forced to use a taxable ordinary brokerage account. cheese thief, KYOON GRIFFEY JR's post spot-on, but i do want to add that you may possibly have access to more tax advantaged space even if your employment situation doesn't offer any. if you have what's known as a high deductible health plan (on the aca markets these tend to be the bronze plans and their equivalents), you are eligible to contribute to a health savings account. while typically this account is thought of as a tax advantaged savings account for folks who would have to pay a high deductible if they need catastrophic care, you are allowed to hold equities, bonds and other investments vehicles in the account, and hsa's can be a very useful resource for retirement investing if you have access. the contribution limit is lower than an ira (the 2022 limit is $3,650 single, $7,300 jointly), but depending on how the account is used it can be potentially triple tax advantaged. you pay no tax on contributions, like a traditional ira, no tax on dividends and capital gains kept in the account, like a traditional and roth ira, and pay no taxes on distributions if they are used for qualified medical expenses, like a roth. after age 65, non-qualified distributions aren't penalized but are taxed as income, like a trad ira. typically, retirement involves very large medical expenses, and you could potentially be paying for that with completely tax free money. if you qualify, i would look into starting one with a low cost, investment focused hsa administrator. fidelity fits that bill, though there are other options. please note that california and new jersey do not currently recognize hsa as a tax advantaged account, so if you are a resident of either state you would still need to pay state taxes on any contributions, dividends, and capital gains GhostofJohnMuir fucked around with this message at 01:29 on Feb 10, 2022 |
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Feb 10, 2022 01:26
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I was wondering if someone who is knowledgeable about arcane Roth IRA withdrawal rules could confirm my line of thought here. From what I've read, for purposes of withdrawals Roth IRA funds are classified and taken out in order of 1) Contributions -> 2) Conversions -> 3) Earnings. Even if taken before age 59 1/2, there are no taxes or penalties if you take out contribution funds (if you've had the Roth IRA open at least 5 years), however there frequently taxes and penalties if you take out earnings. With conversions (including funds from Backdoor Conversions) there is no taxes or penalties as long as the funds were converted at least 5 years ago? Website guides seem a little unclear on that last point.
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Feb 10, 2022 20:06
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Yep, you can read up on the 5 year "seasoning" on lots of the FIRE blogs. They like to create a Roth conversion ladder, where each year you convert another chunk and then you can withdraw it in 5 years penalty free.
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Feb 10, 2022 21:09
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moana posted:Yep, you can read up on the 5 year "seasoning" on lots of the FIRE blogs. They like to create a Roth conversion ladder, where each year you convert another chunk and then you can withdraw it in 5 years penalty free. Ah, good to know, thank you! One more: Roth 401k funds can be rolled over into a Roth IRA with relatively little hassle after you leave a job from what I understand. In that case, those Roth 401k funds retain their contribution/conversion amounts as they mix into the Roth IRA, correct? My workplace just allowed after-tax 401 contribution and in-plan conversions. So I could theoretically: 1) right now contribute after tax dollars into my 401k 2) my plan does an automatic "in plan conversion" to convert that money into converted Roth 401k funds 3) At a later date I leave my job and I rollover the Roth 401k into my Roth IRA 4) The previously converted funds can be withdrawn tax/penalty free as long as they've seasoned for 5 years, following the Roth IRA rules
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Feb 10, 2022 21:32
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Subvisual Haze posted:Ah, good to know, thank you! You might be able to do step 3 before leaving your job, might depend on your plan. e; f, b - This is my go-to Roth layer resource - https://fitaxguy.com/roth-ira-withdrawals/ Separately, mid-trip report. I shelled out way too much cash to attend this year's "WCICON" hosted by the White Coat Investor. Not the most thread-aligned action, but it sparked a vacation that has been quite nice. Just got done hearing thread-favorite Bill Bernstein give a keynote talk on financial history, pretty neat. Bubbles and all that. Nothing novel but was a cool experience in person. Favorite bit: Dr. William Bernstein, PhD MD posted:The reason why the word 'guru' is used is because the word 'charlatan' is so hard to spell.
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Feb 10, 2022 21:53
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I just topped off my roth for 2022. Are there any good articles/guides out there for Roth strategy vs traditional trading portfolio strategy? should I be more open to risk because of the potential tax-free gains?
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Feb 11, 2022 00:23
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FistEnergy posted:I just topped off my roth for 2022. Are there any good articles/guides out there for Roth strategy vs traditional trading portfolio strategy? should I be more open to risk because of the potential tax-free gains? You portfolio includes all of your accounts. Tax advantaged or not. In my opinion what you should be looking for in your roth is which part of your portfolio would best take advantage of the tax treatment of a roth. It has to be a wholistic approach, and the other things you are investing in matters. If you want a safe set it and forget it that is more aggressive (since higher grown in a roth is desirable since you don't pay taxes on it on the way out) choose something like a target date that is well past your actual target retirement date. Or if you have aggressive investments as part of your portfolio put the most aggressive ones in there. But its really hard to give advice in a vacuum of what you have/what is your strategy.
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Feb 11, 2022 00:41
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Motronic posted:You portfolio includes all of your accounts. Tax advantaged or not. I have a mid-six figure Fidelity 401k that is full of Blackrock 2045 Lifepath. I have a daytrading account of around 100k that is also fairly risk-averse (navSPACs), and a Roth that currently stands at about 20k. Since the majority of my portfolio is hands-off and/or conservative, I was thinking about SPY or something similar for my roth. I want something with more risk/reward than the rest of my portfolio but I'm definitely on the more cautious end of the spectrum.
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Feb 11, 2022 01:00
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FistEnergy posted:I have a daytrading account...but I'm definitely on the more cautious end of the spectrum. This feels awkward... But yeah VTI or target date fund or whatever, I guess?
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Feb 11, 2022 01:44
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FistEnergy posted:I was thinking about SPY or something similar for my roth. Sao Paulo Yellow is definitely a riskier color but I think it can pay off on the right car. 
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Feb 11, 2022 01:47
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That hurts my eyes and I’m colorblind
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Feb 13, 2022 02:18
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I didn't even post the ugly angle though
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Feb 13, 2022 02:37
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My taxable holdings generated about 6% of their total value in capital gains this past year, which is annoying. its an “individually managed” account or whatever. I’m going to transition to some kind of passive 3 fund thing with vanguard soon. Is this acceptable or normal level of taxable events, or what I should expect when I switch to a typical taxable, passive 3 fund setup?
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Feb 13, 2022 19:26
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hobbez posted:My taxable holdings generated about 6% of their total value in capital gains this past year, which is annoying. its an “individually managed” account or whatever. I’m going to transition to some kind of passive 3 fund thing with vanguard soon. That seems very high. It looks like my Vanguard Brokerage account (filled only with boring index funds) generated about 2% of its value in dividends, split pretty equally between qualified/non-qualified dividends.
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Feb 13, 2022 19:32
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Are they dividends or are they capital gains? Are you holding target date funds or other similar mutual funds in your taxable? A bunch of them spit out unusually large amounts of capital gains this past year due to the transactions necessary to maintain target allocation. They are really not meant to be held in taxable accounts. Even passive index funds are better as ETFs than MFs in a taxable, generally. Passive index ETFs don't often generate much/any capital gains (until you sell), and dividends are about 2%ish, tops, on the major indices. Guinness fucked around with this message at 19:50 on Feb 13, 2022 |
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Feb 13, 2022 19:38
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Guinness posted:Are they dividends or are they capital gains? It's a mix of both. I'm not an expert at reading a 1099 but it looks like there was a lot of dividends and also a lot of "proceeds" above cost basis. Yes the account holds a fair amount of mutual funds, it's basically a Frankenstein's monster of bluechips and mutual funds from what I can tell. Just another reason to make the switch to the three fund. My uncle runs the "investment group" that runs this account so I've been dragging my feet even though they charge me stupid fees. It just needs to fuckin happen. This tax bill is gross. Must rip bandaid.
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Feb 13, 2022 19:49
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So they're trading/buying/selling constantly. That's how you end up with this. You already know what you need to do.
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Feb 13, 2022 19:55
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hobbez posted:My taxable holdings generated about 6% of their total value in capital gains this past year, which is annoying. its an “individually managed” account or whatever. I’m going to transition to some kind of passive 3 fund thing with vanguard soon. I just did my taxes a couple of hours ago. Last year, I received 0.4% of my total value in bonds in my Vanguard taxable account in capital gains distributions. I received 2% total value in bonds & stock index funds in dividends in the same taxable account. I didn't sell anything in the account last year.
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Feb 13, 2022 19:57
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Motronic posted:So they're trading/buying/selling constantly. That's how you end up with this. They probably collect a commission every time they add to your tax bill also.
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Feb 13, 2022 20:49
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Motronic posted:So they're trading/buying/selling constantly. That's how you end up with this. I e-mailed my tax guy, I'm making the move. I AM PAYING 1% FOR THIS LOL THATS THE "FRIENDS AND FAMILY RATE" What a racket.
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Feb 13, 2022 21:03
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hobbez posted:What a racket. Nearly the whole "financial advisor" industry is built around making managing money look more complicated and scary than it needs to be. A less financially literate person might look at your account and think "wow this is all so complicated, I'm sure glad my money guy handles it all for me!". And that's by design.
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Feb 13, 2022 21:09
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Guinness posted:Nearly the whole "financial advisor" industry is built around making managing money look more complicated and scary than it needs to be. The alternative is them setting you up in a sane 3-fund portfolio while once a year rebalancing after having a discussion about near to long term goals for 30-60 minutes to which the client would ask "what the hell am I paying you thins much for?" And that answer is "because you didn't want to educate yourself" or something like that. And even if you don't want to spend the time to figure it out/be entirely responsible for it on your own you go find someone like our resident FA or another one who is a fee only fiduciary rather than paying a percentage of your portfolio every year.
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Feb 13, 2022 21:46
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