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Art as an investment can work if you exclusively buy expensive works made by artists that are already extremely famous, and then store them in perfect climate controlled warehouses. I know for a fact that the Getty family does this, for example. I don't know about the tax evasion part, you owe capital gains on the gains in value from art you buy when you sell it, just like any other asset. Like any asset class, it's important to be diversified within the class, avoid the junk categories of assets in that class, reduce your transaction and overhead costs (by economies of scale in this case), and ideally be very rich and well-connected so you have access to the best possible markets for both buying and selling.
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Sep 29, 2023 01:10
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Antillie posted:I have yet to see any compelling data suggesting that art is somehow a better long term investment than a simple total stock market index fund. In fact I haven't seen any data suggesting that it even works as an uncorrelated asset like bonds. There is a use case, but the use case is a combination of 1) Tax evasion: Legally you have to pay capital gains taxes on things you sold at a profit, but with art you can donate (as a deductible, but at the higher "post gains" price) do like-kind exchanges (again, avoiding capital gains), and sell fractionally (through places like masterworks, which if you put money into, then congrats, you are helping some rich person do tax avoidance) 2) Functioning as a status symbol, to use for your social gatherings of "elites" 3) Being, like gold, not particularly correlated with the movement of the stock market, and for the "top" end of the art market, having higher returns than gold Of course, Masterworks at best gets you 3, but with ridiculous fees of a hedgefund, without the regulation of normal financial services. MegaZeroX fucked around with this message at 01:26 on Sep 29, 2023 |
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Sep 29, 2023 01:19
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It’s also extremely easy to “lose” artwork, or sell real artwork for cash/gold/art/whatever and hang onto the perfect replica for ages and ages and then “oh gosh! My $1mm painting is a replica?! I guess I’ll write down a loss of $1mm!” After receiving $1mm of off-the-books cash 20 years prior. Then some dealer buys the real artpiece from an “anonymous” dealer years later and the laundering starts anew Or good ol’ insurance scams jokes fucked around with this message at 01:26 on Sep 29, 2023 |
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Sep 29, 2023 01:22
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Leperflesh posted:I don't know about the tax evasion part, you owe capital gains on the gains in value from art you buy when you sell it, just like any other asset. Gotta leverage free trade zones around ports: https://www.sothebysinstitute.com/news-and-events/news/free-trade-zones-the-art-market-the-logistics-behind-a-multibillion-dollar-industry
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Sep 29, 2023 03:11
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Leperflesh posted:I don't know about the tax evasion part, I think the tax evasion part comes from storing the art in special freeport facilities. They are basically special economic zones where lower or no taxes/customs/duties/etc apply. The freeport facility in Geneva has >1M works of art with a value of $100B, per Wikipedia.
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Sep 29, 2023 03:21
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I thought freeports were something made up for Tenet lol
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Sep 29, 2023 03:30
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Boris Galerkin posted:I thought freeports were something made up for Tenet lol We have such sights to show you. That halon gas fire suppression system is s real thing too I used to work in treasury at a bank and the room where the actual physical mortgage documents (about 4b worth) had a same system.
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Sep 29, 2023 05:37
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Boris Galerkin posted:I thought freeports were something made up for Tenet lol There was a whole art world scandal involving them a while back. The Bouvier Affair. There was a New Yorker article about it I vaguely remember reading: https://www.newyorker.com/magazine/2016/02/08/the-bouvier-affair. Serious_Cyclone posted:The Plain Bagel did a pretty good video about Masterworks here: https://www.youtube.com/watch?v=6ojOkPmm8lw Ah, gotta save this and watch later.
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Sep 29, 2023 16:07
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I used to work in a server room that had a halon gas fire suppression system. They are super common in data centers as water and electronics don't play nicely together. We were always told that if the fire alarm ever went off we had about ten seconds to get out of the room if we wanted to continue being able to breath.
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Sep 29, 2023 16:20
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5 year TIPS @ >2.3% real seems like a good buy for intermediate term cash? I am redeeming some 0% I Bonds next week. edit: next 5 yr TIPS auction date is Oct 12 drk fucked around with this message at 16:55 on Sep 29, 2023 |
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Sep 29, 2023 16:45
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e: nvm
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Sep 29, 2023 16:58
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drk posted:5 year TIPS @ >2.3% real seems like a good buy for intermediate term cash? I'd definitely go for them over i-bonds right now. I guess a lot depends on what you expect the average inflation rate to be, but I suppose another way of looking at it is that the inflation rate doesn't matter so much. If it's low, your buying power is increasing, and if it's high your buying power is also increasing by about the same amount (you do get taxed on the interest earned to offset inflation, so it's not exactly the same). 5 year treasury rate is 4.6%, so it seems like the market is estimating 2.3% inflation for the next 5 years.
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Sep 29, 2023 18:09
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I think my favorite thing about art as an investment is that we've created a system where the art is too valuable to ever be displayed again. It's exactly why all those artists made all those works! To be kept away from the eyes of the poor!
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Sep 30, 2023 07:03
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Asking for a friend, US personal tax makes my head spin. I think USGAAP for life insurance policies was easier to digest 😄. The scenario: High-earner has always maximized available 4-whatever plan. Employer folds up latest entity into parent company, closing old plan (403b iirc) for which they gets a trad IRA. I assume (but will check) the relevant deductions for the 403b deposits were made before the IRA. Trying to determine how best to handle this money. Would this money be backdoor-able rothable? I'm thinking no since it's still pre-tax (if deductions taken). Or does it count as traditional IRA deposits without IRA deductions? They are otherwise over the limits for roth or the trade deduction, which just leaves taxable accounts (oh boohoo!), if I've understood the flowcharts right. Would this account then get in the way of otherwise trying to backdoor Roth the yearly limit in a different account, via the pro-rata rules? The fund options in the trade IRA are quite bad. Can these accounts be transferred to a different trad IRA? IRA feels like a misnomer given its through an employer? If it can't be backdoored or transferred it is effectively stuck, right? 10% penalty on top of usual income tax to remove?
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Oct 2, 2023 01:46
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Antillie posted:I used to work in a server room that had a halon gas fire suppression system. They are super common in data centers as water and electronics don't play nicely together. We were always told that if the fire alarm ever went off we had about ten seconds to get out of the room if we wanted to continue being able to breath. It’s possible to survive a halon drop but you don’t want to risk it. The drop creates hurricane force winds inside the room. I worked in a server room once where it had gone off the year prior and they showed me where a pen pierced the cement wall.
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Oct 2, 2023 02:08
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At the University of Texas at Austin, one of the libraries has major historical artifacts like an original Gutenberg Bible. Instead of water or potentially reactive or damaging chemicals like halon, they have a system which gives you something like 30 or 60 seconds to reach a designated refuge area, and then they evacuate all the air in the room to deprive the fire of oxygen.
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Oct 2, 2023 13:44
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SpelledBackwards posted:At the University of Texas at Austin, one of the libraries has major historical artifacts like an original Gutenberg Bible. Instead of water or potentially reactive or damaging chemicals like halon, they have a system which gives you something like 30 or 60 seconds to reach a designated refuge area, and then they evacuate all the air in the room to deprive the fire of oxygen. what a way to go that would be
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Oct 2, 2023 14:39
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There are also data center fire suppression systems that use deionized water and turn it into a fine mist to smother the fire. Since the water is non conductive the mist doesn't damage the equipment.
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Oct 2, 2023 14:39
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Jenkl posted:Asking for a friend, US personal tax makes my head spin. I think USGAAP for life insurance policies was easier to digest 😄. It sounds like the employer terminated the plan entirely and set up an individual IRA for your friend. If the employer is still contributing to that IRA then it is probably something more like a SIMPLE IRA. If it's truly an individual IRA they would probably be allowed to move those funds to a better IRA provider. It wouldn't be "backdoorable" per se, but your friend is probably allowed to convert the funds in that IRA to a Roth IRA account, which results in taxes but no 10% penalty. They can do this partially each year, or all at once. If they maintain a balance it does get in the way of backdoor Roth due to the pro-rata rules. Converting those funds might or might not make sense to do, depending on their individual situation. Budgeting a few thousand dollars each year to pay for conversion taxes can potentially achieve a better ROI than investing those funds in a taxable account.
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Oct 2, 2023 15:30
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SpelledBackwards posted:At the University of Texas at Austin, one of the libraries has major historical artifacts like an original Gutenberg Bible. Instead of water or potentially reactive or damaging chemicals like halon, they have a system which gives you something like 30 or 60 seconds to reach a designated refuge area, and then they evacuate all the air in the room to deprive the fire of oxygen. Wasn't this in a Dan Brown book?
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Oct 2, 2023 15:50
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esquilax posted:It sounds like the employer terminated the plan entirely and set up an individual IRA for your friend. If the employer is still contributing to that IRA then it is probably something more like a SIMPLE IRA. It's definitely a Trad IRA. No further contributions to that plan are coming - their current contributions are into different plans with a different provider. Gonna repeat what you're saying back to make sure I'm understanding it: If I am converting, the contribution limit is not relevant, so I could convert the entire account into a Roth IRA. As a conversion it triggers tax but not the penalty. Whether or not this would be a good idea depends on a lot of factors, namely tax now vs. expected tax later - I can do that math. Even if they decided not to convert to a Roth, the option of moving to a different provider for the Trad IRA should be there at least. Looking at the website they do not make it easy. Once this (the only) IRA is zeroed, they can then do a backdoor Roth strategy simply, contributing the limit, taking no deduction, and then emptying the IRA each year into Roth via a roll-over. The roll-over vs. conversion lingo is important here, right? Attempting backdoor Roth without zeroing the current IRA is allowed but then the pro-rat-a rules apply and limit the benefits. A first step for this person will be to open an account somewhere as their Roth IRA, to receive the funds. They are surely going to be interested in low-cost index ETFs. Are the big names the place to go for these accounts? Vanguard, Blackrock? Simple to use would be ideal. Or should I be looking at banks?
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Oct 2, 2023 17:10
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Something doesn't sound correct, why would an IRA restrict your investment options?
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Oct 2, 2023 17:18
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Jenkl posted:It's definitely a Trad IRA. No further contributions to that plan are coming - their current contributions are into different plans with a different provider. The best option, if available, would likely be to roll the funds that are currently in a traditional IRA into the new employer plan (if the new plan is decent). Then they end up with no taxes and an open backdoor. Just have to find out if the new plan allows this.
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Oct 2, 2023 17:35
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Residency Evil posted:Wasn't this in a Dan Brown book?
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Oct 2, 2023 17:37
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This is why I'm here! Haha. So it is an Empower Premiere Traditional IRA. When I looked into the funds available it was a limited list. This is what I'm used to seeing in Canada for self-directed retirement accounts through employers, so it made sense. Maybe there were more options I missed? Let me tell you, paying 1% for a target date fund is blasphemy. The new plan provider options are about 0.35% so a lot more palatable. Edit: runawayturtles posted:The best option, if available, would likely be to roll the funds that are currently in a traditional IRA into the new employer plan (if the new plan is decent). Then they end up with no taxes and an open backdoor. Just have to find out if the new plan allows this. Oh yes I like this time to start digging into what's allowed!
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Oct 2, 2023 17:37
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Jenkl posted:It's definitely a Trad IRA. No further contributions to that plan are coming - their current contributions are into different plans with a different provider. That's roughly it, though I'm not a financial advisor and no one here is aware of the full situation. Rollover and conversion are separate terms. It gets technical to the point where I don't know everything but in general "conversion" is the term used when you are moving money from a traditional IRA to a Roth IRA in a taxable event or while backdooring. "Rollover" is typically used when you just move money with no tax implications, such as moving money from one 401k to another or to an IRA. If allowed, rolling over this IRA money into a new employer plan is also a potential option. The main other pieces to consider in whether to convert trad to Roth besides taxes now vs taxes later is the potential earnings on the cost of paying the taxes now (taking into account tax drag), and the value of using backdoor Roth in the future. Lots of people use Schwab and Fidelity and Vanguard for IRAs and I've heard good things.
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Oct 2, 2023 17:41
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Your IRA is yours. Do a rollover to move the account to Fidelity or Vanguard and then invest it in whatever you want.
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Oct 2, 2023 17:47
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Apologies, I'm positive this must have come up before but I couldn't find it through thread searches. Does anybody use vanguard's auto-loss harvesting service? I think I understand the principles it's working under and am concerned it might limit growth for stocks in the bundle that turnarounds after falling. But admittedly I'm not fully versed. Is that something to be worried about or is it just straight check box, receive tax deduction?
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Oct 2, 2023 19:59
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Subvisual Haze posted:Something doesn't sound correct, why would an IRA restrict your investment options? Some IRA providers are crap. For example if you have an IRA with T Rowe Price they will only let you invest it in their in house actively managed mutual funds.
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Oct 2, 2023 20:16
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Sardonik posted:Apologies, I'm positive this must have come up before but I couldn't find it through thread searches. Does anybody use vanguard's auto-loss harvesting service? I think I understand the principles it's working under and am concerned it might limit growth for stocks in the bundle that turnarounds after falling. But admittedly I'm not fully versed. Is that something to be worried about or is it just straight check box, receive tax deduction? Tax loss harvesting should be swapping between two nearly identical funds, such as two total US market funds that follow slightly different indexes. So, you shouldnt lose out on any potential gains. Keep in mind that while tax harvesting can lower your current taxes, it does so by lowering your cost basis and *increasing* your taxes in the future. This sort of tax deferral is almost always a good thing, but I think a lot of people that engage in loss harvesting see it as a pure tax reduction, not the deferral that is is. This is slightly complicated if you use losses now to offset normal income, but pay long term capital gains on the profits in the future. In that case it would be both a partial tax reduction and a tax deferral (assuming capital gains taxes remain lower than normal income taxes long term, which is unknowable).
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Oct 2, 2023 20:19
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Jenkl posted:A first step for this person will be to open an account somewhere as their Roth IRA, to receive the funds. They are surely going to be interested in low-cost index ETFs. Are the big names the place to go for these accounts? Vanguard, Blackrock? Simple to use would be ideal. Or should I be looking at banks? Fidelity, Vanguard, and Schwab are the big three. I use Fidelity personally for everything (ira, utma, 401k, roth ira, taxable brokerage) and I am quite happy with them.
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Oct 2, 2023 20:20
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drk posted:Tax loss harvesting should be swapping between two nearly identical funds, such as two total US market funds that follow slightly different indexes. So, you shouldnt lose out on any potential gains. That makes sense, thank you!
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Oct 2, 2023 20:26
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Jenkl posted:This is why I'm here! Haha. Let me clarify just a little bit. A "Traditional IRA" is really just an account type. You can open one at any provider, and the good providers give you access to the entire world of investing options. The expense ratios on each investment are what they are - so VTSAX has a 0.04% expense ratio no matter if you buy it in an Fidelity IRA or a Schwab IRA or wherever. But Each provider can both put restrictions on what they allow you to purchase, and, tack on additional fees. They can add expenses on a per-investment basis, they can also add annual or recurring fees, etc. A lot of the really lovely ones do this. There's no reason to put up with it for an IRA. The providers we are recommending - Vanguard, Fidelity, Schwab - do not tack on additional fees, and offer the full range of investments that any long-term investor should be paying attention to. Stocks, bonds, mutual funds, ETF versions of those funds, and so forth. So your friend's IRA that their former employer opened for them at Empower is just via that provider, and can be rolled over to any other provider at any time. It'd still be a traditional IRA. This is a separate consideration to the ones already discussed by other posters, like, should this be converted to a Roth IRA, and/or does the employee have an employer offering a retirement plan that accepts inbound rollovers (this is often not available), to get all the money out of Trad IRAs to enable the backdoor Roth IRA option. It's also possible that Empower will charge a fee to perform the rollover, although those fees are bullshit and worth being angry about.
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Oct 2, 2023 20:32
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drainpipe posted:Also difficult: sticking to your investments even when they are doing bad. On that note, can somebody let me know if I'm a complete idiot or panicking over nothing: I've got the majority of my taxable account (fidelity) in a simple 3 fund ETF spread as follows: AGG (bond) 10% IXUS (international) 20% ITOT (domestic) 70% Is this a reasonable choice of funds (30+ year time horizon) or should I rethink my approach/invest in a different manner? I'm just noticing that I'm not seeing a lot of growth (had these really terrible actively invested funds with 1-2% annual fees and rebalanced into Fidelity in mid 2021) and am realizing that I've seen an overall net loss and am probably overthinking this. Thank you. Aside from this I'm actively maxing out 401k, purchasing max i-bonds for spouse and myself and backdoor Roth and saving additional excess into a HYSA, just not liking the overall red this account is currently colored.
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Oct 3, 2023 03:59
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early(-mid) 30s software engineer, single no kids, own a house, $200k in 401k. I have been maxing my 401k for a while now, which I know is suboptimal compared to IRA etc in a lot of cases, but an IRA also would mean paying taxes on my income (well-employed but non-FAANG software engineer) of course, and probably I think my current income is higher than my retirement income would be? but a friend pointed out to me a while back that your SS payments are also calculated by your top-35 highest-earning years too, and 401kmaxxing pulls those down too. But of course there's the question of when you take SS etc and if you have a lot of 401k then maybe you can retire early on that etc. But that means you're using earlier lower years for your SS income etc, and I have amplified this by 401kmaxxing earlier. is there some common guidance on IRA vs 401k (with SS income factored) for stemlords? what is a good rebalance threshold btw? I need to get into that habit. I am 89/11 vanguard 500/vanguard bonds, right now my two partitions are at +/- 2% but idk what would be a rational number to set the alert for. Paul MaudDib fucked around with this message at 04:26 on Oct 3, 2023 |
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Oct 3, 2023 04:09
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adnam posted:On that note, can somebody let me know if I'm a complete idiot or panicking over nothing: Beautiful, simple, elegant, and 30 years from now today's red will look like a blip.
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Oct 3, 2023 04:11
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Paul MaudDib posted:early(-mid) 30s software engineer, single no kids, own a house, $200k in 401k. I have been maxing my 401k for a while now, which I know is suboptimal compared to IRA etc in a lot of cases, but an IRA also would mean paying taxes on my income (well-employed but non-FAANG software engineer) of course, and probably I think my current income is higher than my retirement income would be? but a friend pointed out to me a while back that your SS payments are also calculated by your top-35 highest-earning years too, and 401kmaxxing pulls those down too. But of course there's the question of when you take SS etc and if you have a lot of 401k then maybe you can retire early on that etc. But that means you're using earlier lower years for your SS income etc, and I have amplified this by 401kmaxxing earlier. is there some common guidance on IRA vs 401k (with SS income factored) for stemlords? 401k deferrals don't reduce your FICA taxable income. You can optimize that analysis down to a nop.
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Oct 3, 2023 04:53
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SlapActionJackson posted:401k deferrals don't reduce your FICA taxable income. You can optimize that analysis down to a nop. forum posters cognitive load reduction act approved, you do not have to accept this guideline but you may not receive the cognitive load reduction promised therin Paul MaudDib fucked around with this message at 05:12 on Oct 3, 2023 |
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Oct 3, 2023 05:07
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adnam posted:On that note, can somebody let me know if I'm a complete idiot or panicking over nothing: As Space Fish says, this looks fine. I personally don't plan on holding bonds until about 10 years before I retire, but this is a "reasonable people may disagree" situation. I would suggest to slowly start increasing your bond share around 10 years before when you plan to retire until your retirement date, but that should be several decades down the line for you though. We are in a bear market (and have been since 2022), so a net loss is expected. The good news is this means stocks are "on sale" and will be beneficial in the long run. Don't be freaked out by continue to losing money, that will reverse eventually. Paul MaudDib posted:what is a good rebalance threshold btw? I need to get into that habit. I am 89/11 vanguard 500/vanguard bonds, right now my two partitions are at +/- 2% but idk what would be a rational number to set the alert for. A time threshold can be good enough. Rebalancing twice a year is fine based on historical data. Even annually or once every other year isn't too far off in performance, even for the "unlucky" cohorts. You can do threshold rebalancing if you want, but you really don't need to be that active.
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Oct 3, 2023 11:57
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Paul MaudDib posted:early(-mid) 30s software engineer, single no kids, own a house, $200k in 401k. I have been maxing my 401k for a while now, which I know is suboptimal compared to IRA etc in a lot of cases, but an IRA also would mean paying taxes on my income (well-employed but non-FAANG software engineer) of course, and probably I think my current income is higher than my retirement income would be? but a friend pointed out to me a while back that your SS payments are also calculated by your top-35 highest-earning years too, and 401kmaxxing pulls those down too. But of course there's the question of when you take SS etc and if you have a lot of 401k then maybe you can retire early on that etc. But that means you're using earlier lower years for your SS income etc, and I have amplified this by 401kmaxxing earlier. is there some common guidance on IRA vs 401k (with SS income factored) for stemlords? not sure what the STEM aspect has to do with it, but you can both contribute to your IRA and your 401(k) and you should, in fact, do so if you are a high earner. You probably make enough money that the appropriate course of action is to open a trad IRA and convert those contributions to a Roth IRA immediately. It is also likely that Social Security will be changed in some ways by the time you retire, so while it's decent to keep track of I would not depend on significant income from Social Security in retirement.
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Oct 3, 2023 12:28
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