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drk posted:Isnt every total market US stock fund going to look pretty similar to that? VTI has the same top holdings with only one difference. Of course the top holdings are going to be large cap and currently they are also tech-heavy, but thats a reflection of the market, not an investment decision by the fund managers. Yeah, I guess that's true. I thought VTI was a bit closer to blend than growth, but apparently not. In that case, I suppose splitting between ESGV and VTI shouldn't be all that noticeable performance-wise. It's still nice to have VTI's added diversification of twice as many holdings. Now I remember why I added a value tilt... runawayturtles fucked around with this message at 21:18 on Oct 10, 2023 |
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Oct 10, 2023 21:14
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Subvisual Haze posted:Look on the bright side, most provisions of the TCJA will expire at the end of 2025, I'm sure the debates on whether to renew which parts will be delightful. "There is no more SALT/Mortage Interest deduction limitations..." And there was much rejoicing "But also the old AMT exemption phaseouts are back" 
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Oct 10, 2023 21:31
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Subvisual Haze posted:Look on the bright side, most provisions of the TCJA will expire at the end of 2025, I'm sure the debates on whether to renew which parts will be delightful. All the more reason to cram away as many Roth dollars as possible before tax rates (probably?) go back up at the start of 2026. That's my plan anyway. I'll turn 44 in 2026 and that is when I plan to ease off the rIRA a bit and do a bit more spending.
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Oct 10, 2023 22:30
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Thanks all. Per kind goon recommendations, I invested $6,500 into my Roth IRA account, the remainder will invested/rebalanced (in the case of the ESG I already have) to 85% VTI/15% VEU. I decided to skip the bond diversification; with a 25 year time horizon and ~80% of my earnings ahead of me, I'm not too worried about volatility. jokes posted:Keep in mind that larger American stocks are largely global stocks, so you're probably overweighting international exposure as-is but I'm sure everyone has different ideas of what 'international exposure' means. For me, it's access to consumers in foreign markets but some people would argue it's more of a focus on infrastructure development and identifying key developing markets or something. I prefer to let Coca-Cola figure that poo poo out for me. I'm also weirdly supportive of domestic stocks, though, and personally put almost all my money into VTI and equivalents. Didn't even think of the Roth component, I'll be sticking $6,500 into my Vanguard Roth IRA account to start with. CubicalSucrose posted:25 years is long enough that 100% VTI is probably better. No issues with your plan that haven't been pointed out already. Consider a target date fund, maybe.
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Oct 10, 2023 23:03
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Leperflesh posted:I'm in a high cost of living area (california). The standard deduction for married filing jointly is now $27,700. My wife and I still aren't there yet. I mean, yes, you do have to compare the difference between the scenarios to see how much of a benefit you're getting by itemizing. But to say that it would be "shocking" to itemize seemed surprising to me. It doesn't take much between property taxes and state income taxes to hit the $10k SALT deduction limit, plus mortgage interest. Your scenario included mortgage interest plus $10k deductions which is only SALT. If you don't have any other charitable deductions then I guess that's where you'd land, but I would hope people would have more than $0 for that line item.
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Oct 10, 2023 23:06
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Muir posted:charitable deductions Do people philanthropy for tax breaks or to feel good or to gain power or something else
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Oct 10, 2023 23:16
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Yeah I forgot about state income tax. My state doesn't have that so I'm not used to accounting for it.
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Oct 10, 2023 23:21
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Everyone should have a line item of at least $250 for charitable deductions, regardless of their views on philanthropy.
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Oct 10, 2023 23:22
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Epitope posted:Do people philanthropy for tax breaks or to feel good or to gain power or something else Yes
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Oct 10, 2023 23:29
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Epitope posted:Do people philanthropy for tax breaks or to feel good or to gain power or something else People give money to charity to help those charities, which are usually good. GoGoGadgetChris posted:Everyone should have a line item of at least $250 for charitable deductions, regardless of their views on philanthropy. Don't do tax fraud
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Oct 10, 2023 23:36
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Leperflesh posted:I'm in a high cost of living area (california). The standard deduction for married filing jointly is now $27,700. My wife and I still aren't there yet. What are some good deductions I can use. edit: I'm just annoyed with deductions because after doing it diligently for 5 or so years and always having the standard deduction being more, I have given up itemizing.
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Oct 10, 2023 23:36
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Epitope posted:Do people philanthropy for tax breaks or to feel good or to gain power or something else Are you really asking why someone would donate to a charity? Smashing Link posted:What are some good deductions I can use. Besides taxes, mortgage interest, and charitable donations, there's not too much left after the TCJA. Un-reimbursed medical expenses that total more than 7.5% of your AGI, if it applies. Muir fucked around with this message at 00:03 on Oct 11, 2023 |
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Oct 10, 2023 23:59
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Muir posted:Are you really asking why someone would donate to a charity? Yes? In the past I've regularly kicked 50 bucks to this or that charity. Now I'm older and have more money and I'm not really sure what I should do as far as giving. So poking this thread to see what my peers do. We were working on a bigger gift thing, but it fell through. I kinda want to find something like that to do. Not just pile up a retirement account to donate to the nursing home or geriatric docs or whatever
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Oct 11, 2023 00:04
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It would be a lot nicer if charitable contributions was its own deduction line instead of being rolled into competing against the standard deduction. Because in my own case I could donate ~$10k to charity and get zero tax benefit just based on how the large standard deduction works.
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Oct 11, 2023 00:07
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Epitope posted:Yes? In the past I've regularly kicked 50 bucks to this or that charity. Now I'm older and have more money and I'm not really sure what I should do as far as giving. So poking this thread to see what my peers do. We were working on a bigger gift thing, but it fell through. I kinda want to find something like that to do. Not just pile up a retirement account to donate to the nursing home or geriatric docs or whatever Pick a thing you like, then donate to a charitable org that does the thing you like. I donate to food pantries, an lgbtq+ org, and a medical debt org, because I think that those are things that should be funded. I like being fed, I like being accepted for / safe in my sexual/gender identity, and I like not being in debt. You can do this for just about any thing, there's probably a charity for it.
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Oct 11, 2023 00:09
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Epitope posted:Yes? In the past I've regularly kicked 50 bucks to this or that charity. Now I'm older and have more money and I'm not really sure what I should do as far as giving. So poking this thread to see what my peers do. We were working on a bigger gift thing, but it fell through. I kinda want to find something like that to do. Not just pile up a retirement account to donate to the nursing home or geriatric docs or whatever If you end up with a big retirement account you can gift to charities directly from it. My folks are doing that with a good chunk of their RMDs that they don't need.
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Oct 11, 2023 00:22
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KYOON GRIFFEY JR posted:If you end up with a big retirement account you can gift to charities directly from it. My folks are doing that with a good chunk of their RMDs that they don't need. Definitely looking at donor advised funds, bequests, things like that. But also think there are needs out there today, so maybe don't want to delay everything. Finding that balance
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Oct 11, 2023 00:29
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Happiness Commando posted:Pick a thing you like, then donate to a charitable org that does the thing you like. Happiness Commando is doing charity correctly.
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Oct 11, 2023 00:30
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If you are at an awkward spot where your mortgage plus any charitable giving is not larger than the standard deduction, consider doing lump-sum giving every other year. That may get you over the standard deduction every other year if you don't mind the slightly extra work to plan it out.
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Oct 11, 2023 00:31
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You don't have to donate clothes to juice your charitable donation. I cleaned my closet out with a bunch of old clothes and poo poo and got a receipt for like $200 of a donation. Donate poo poo you don't use, new or used, y'all! It's always a good idea and almost always financially prudent.
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Oct 11, 2023 00:36
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TurboTax (I know, boo) has something called "It's Deductible" built in which claims to use a totally amazing proprietary formula to provide fair market values for donated items, presumably values less likely to throw huge red flags with the IRS. I wouldn't buy it just for that but if you plan on donating a bunch of stuff it might help squeeze out a higher deduction.
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Oct 11, 2023 09:27
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I'm confused by bonds and coupon rates. I was trying to buy some treasury bonds this morning. Referring to the screenshot below, the first treasury bill has a coupon of 0.000, go down a bit and there's one with a coupon of 2.125. What is the difference between coupon and YTM? Wouldn't I want the bill with the higher coupon? Why would I buy a bill with a 0.000 coupon? 
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Oct 11, 2023 16:13
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Muir posted:I mean, yes, you do have to compare the difference between the scenarios to see how much of a benefit you're getting by itemizing. But to say that it would be "shocking" to itemize seemed surprising to me. It doesn't take much between property taxes and state income taxes to hit the $10k SALT deduction limit, plus mortgage interest. Your scenario included mortgage interest plus $10k deductions which is only SALT. If you don't have any other charitable deductions then I guess that's where you'd land, but I would hope people would have more than $0 for that line item. https://www.usatoday.com/story/mone...s%20%245%2C508. Looks like for the income ranges we're talking about, a back of the envelope figure for charitable donations is around 4k to 5k a year.
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Oct 11, 2023 16:36
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Ignore the TIPS at the end of the list, that is a different kind of security. Note that you are purchasing these bonds on the secondary market. The US government issued these securities to someone, and those someones are now choosing to sell the securities on the open market. Yield to maturity is the total yield for a bond. It allows you to compare across bonds sold at different prices, different coupon rates, and different terms. You will note that all of the securities on offer here other than the TIPS have roughly similar YTM; they are functionally interchangeable assuming you hold them to maturity, and that means they have the same risk profile. On types of bonds: Zero Coupon Bonds are generally short term bonds that are sold at a discount to the face value. The Treasury issues Zeros for short term debt maturing in 52 weeks or less. In your table the first row, US Treasury BILL 04/11/2024, shows a price of $97.31. That means that you'll pay $97.31 dollars for a bond with a face value of $100. On 4/11/2024, you'll redeem that bond for $100 and your total profit will be $2.69. Coupon Bonds are generally longer term bonds that are sold at face value on the primary market and pay interest periodically according to the coupon rate. The Treasury issues coupon bonds for debt maturing in 2 to 30 years. When you buy say, 10 year T-Note at issue from the Treasury Department you pay $100 face for a bond with a fixed coupon rate. You then receive the coupon rate paid in installments every 6 months. When the bond is due, you will redeem the bond and receive face value. So why are the coupon rates different in the table below? Well, some of the securities are T-Bills, which are zero coupon bonds, and some are notes, which are coupon bonds. Then, among the T-Notes, those bonds all originated at different auctions for different durations and therefore have different coupon rates that were defined at issue. However, a Treasury note issued 9.5 years ago at 2.125% with six months to maturity has the same risk profile as a current-issue 6 month T-bill at ~5.5% YTM. If both securities are sold at face, everyone would obviously buy the T-Bill since its YTM is 5.5% and the T-note YTM is half its coupon rate. In order for someone to buy the 10-year T-Note, it must be discounted heavily from face. The "Price" column is priced vs face value of $100, and you'll notice that if the coupon rate is higher, the price is higher, and if the coupon rate is lower, the price is lower. The combination of price, interest rate, and duration give you yield to maturity, and so all of these bonds have very similar YTM because they all have exactly the same risk profile. The big time TLDR on this is that other than the TIPS, which is a different kind of creature, any of these Treasury securities will return about 5.5% YTM over the next six months ish. It doesn't matter which lot you buy because on the secondary market similar time-to-maturity treasuries always have the same YTM.
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Oct 11, 2023 16:46
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Awkward Davies posted:I'm confused by bonds and coupon rates. I was trying to buy some treasury bonds this morning. Referring to the screenshot below, the first treasury bill has a coupon of 0.000, go down a bit and there's one with a coupon of 2.125. YTM calculates the total yield by factoring in both the difference of price between buying and eventual maturity as well as coupon payments you receive along the way. Usually the bond market is pretty efficient and buying prices will adjust such that YTM comes out around the same regardless of the bond's coupon amount.
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Oct 11, 2023 16:48
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KYOON GRIFFEY JR posted:Ignore the TIPS at the end of the list, that is a different kind of security. Subvisual Haze posted:For zeroes or stripped bonds the entire profit is at the end when they mature, no little coupon payments along the way. You buy the bond at a discount price today, you get paid back $1000 when it matures, the difference between the buying price and maturity are your earnings. Super helpful and informative, thank you both!
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Oct 11, 2023 16:52
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Oh interesting, on Fidelity they sell treasuries in blocks of $1000 face-value/maturity but they're still listed in price as per $100. I guess if you go through TreasuryDirect you can buy in blocks of $100 though.
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Oct 11, 2023 17:06
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KYOON GRIFFEY JR posted:Ignore the TIPS at the end of the list, that is a different kind of security. Actually, follow up: Is it bad to buy bonds on the secondary market? Light Googling indicates that it may be an issue of trust, as everything is sold OTC? But is that a concern when buying treasury bills from a large institution like Schwab? Is it better to just buy them directly from TreasuryDirect?
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Oct 11, 2023 17:39
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Awkward Davies posted:Actually, follow up: I would not be worried at all about buying treasuries on the secondary market from one of the large US brokers. Treasury direct has no secondary market, so you can only buy new issues (auctions).
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Oct 11, 2023 17:49
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It's perfectly fine to buy treasuries on the secondary market through your brokerage. Treasury Direct sucks and should be avoided. edit: you can always buy new issue treasuries at auction through Schwab. Go to "Trade" drop down and "Bonds" and then on the bonds landing page you can click on a tiny link under the offerings table that says "Treasury Auctions" - you can then subscribe to the week's auctions. There is a link to the auction calendar; Schwab will only show you the week's auctions in advance. Not all durations of treasuries are auctioned on the same days so you should look at the link to "upcoming treasuries auctions" which takes you to a stupendously official PDF of a table from the treasury department. Tomorrow, for instance, there is still availability through Schwab for new issue four and eight week bills, and also for 30 year Treasury Bonds with a 4.125% coupon rate. Note that going to new issue means you don't know your discount to face on bills in advance; you'll get the market yield which is determined at auction. KYOON GRIFFEY JR fucked around with this message at 18:33 on Oct 11, 2023 |
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Oct 11, 2023 18:02
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The only reason you'd want to not buy treasuries on the secondary market would be if there's a fee, really. Otherwise the market adjusts the yield to match the spot rate by offering it at a premium/discount. This is partially what happened to Silicon Valley Bank -- they had treasuries that had really low market value, meaning they could only sell them at a huge discount to match the yield of other treasuries currently in the market. e: I guess a broker could pull some poo poo and try to shave off a few bps by timing orders or something, I've only ever hosed with treasury direct so I don't know. jokes fucked around with this message at 18:24 on Oct 11, 2023 |
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Oct 11, 2023 18:22
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I'm not the original poster, but while we're on the subject, can someone explain to me how accrued interest works there? Even if it's basically "just ignore it and pay attention to YTM, the broker takes care of it."
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Oct 11, 2023 18:24
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There's three increases on your books when you buy bonds other than cash received as a coupon: the accretion (which is just the reverse of amortization of something, essentially the discount "amortized" by whatever the timeline looks like), accrued interest (which is the interest earned from a coupon rate that hasn't been received yet), and the unrealized gain/loss from the market (the discount/premium your bond commands on the secondary market). Example 1) You buy a zero-coupon treasury at $90 that has a face value of $100, maturing in a year. 6 months in, what do you have? You have a bond with $95 of accreted value. Example 2) You buy a treasury for $90 that has a face value of $100, maturing in a year, with a coupon of 10% paid semi-annually. 6 months in, what do you have? You have a bond with $95 of accreted value, AND ALSO $5 of interest paid on the 6th month. 9 months in, what do you have? You have a bond with $97.5 of accreted value, AND ALSO $5 of interest paid on the 6th month, AND ALSO $2.50 of accrued interest. Example 3) You buy a treasury for $90 that has a face value of $100, maturing in a year, with a coupon 10% paid semi-annually. 6 months in, the interest environment absolutely tanks and your bond is a hot commodity on the market. 6 months in, what do you have? You have a bond with $95 of accreted value, AND ALSO $5 of interest paid on the 6th month AND ALSO your bond is valued way above what you paid, meaning you can sell it at a premium on the secondary market, generating an "unrealized gain" in the valuation of your bond. Example 4) Your treasury has a low yield, and the interest rate environment rises. Investors on the secondary market won't buy your bond because they can simply buy a new bond at a higher yield directly from the treasury. They will buy your bond, however, if you offered it at a steep enough discount that they enjoy the same yield as a new bond. The market value of your bond is extremely low, so you carry a large unrealized loss on your books until you sell it. If, instead, you held it to a maturity that unrealized loss would actually be a gain. So, in essence, it doesn't matter where you buy a treasury as the market adjusts the secondary market to account for the changes in interest rates and also the secondary market doesn't matter if you intend to hold it to maturity, making the yield-to-maturity number the only important number if you don't intend to sell. jokes fucked around with this message at 18:38 on Oct 11, 2023 |
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Oct 11, 2023 18:31
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KYOON GRIFFEY JR posted:Tomorrow, for instance, there is still availability through Schwab for new issue four and eight week bills, and also for 30 year Treasury Bonds with a 4.125% coupon rate. And also 5 year TIPS, which is looking like an excellent I Bond replacer (in many cases, at least) edit: auction starts tomorrow, not ends tomorrow
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Oct 11, 2023 18:39
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Subvisual Haze posted:Oh interesting, on Fidelity they sell treasuries in blocks of $1000 face-value/maturity but they're still listed in price as per $100. I guess if you go through TreasuryDirect you can buy in blocks of $100 though. Pretty standard everywhere, for what it's worth. Bond prices are quoted as a percentage of par.
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Oct 11, 2023 19:13
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The main thing to pay attention to in the secondary market is sometimes the search filter lists a high yield for a particular bond but if you dig deeper that yield is only available if you buy a certain minimum number of bonds. If you just blindly make an order for a quantity below that minimum it will find some for sale with a minimum at or lower than your desired quantity at (usually) a higher price and therefore less yield.
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Oct 12, 2023 22:35
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How do you approach long expiration date stock grants? My sister just started at a medical services who is not public, but say they will IPO in the next 24 months. She got a tranche of 10k stock options at $20 a share that take 48 months to fully vest and have a 10 year expiration. This seems crazy powerful. It doesn't seem like they do much of anything until IPO, but afterward when do we exercise and sell them? I'm tempted to just always exercise as they vest monthly if the market price is more than $20. This is all assuming the company is successful and the stock goes up, which is not a given. Her budget and plan won't rely on these options.
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Oct 13, 2023 03:01
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NQSOs in a not-yet public company are lottery tickets. Hang on to them and see if her number comes up. Extracting maximal dollars from the time value of the option generally means waiting 'till expiration to exercise.
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Oct 13, 2023 04:20
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Xenoborg posted:How do you approach long expiration date stock grants? My sister just started at a medical services who is not public, but say they will IPO in the next 24 months. She got a tranche of 10k stock options at $20 a share that take 48 months to fully vest and have a 10 year expiration. This seems crazy powerful. It doesn't seem like they do much of anything until IPO, but afterward when do we exercise and sell them? I'm tempted to just always exercise as they vest monthly if the market price is more than $20. Here's a thing - https://github.com/jlevy/og-equity-compensation
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Oct 13, 2023 04:30
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SlapActionJackson posted:NQSOs in a not-yet public company are lottery tickets. Hang on to them and see if her number comes up. I wouldnt wait til expiration to exercise. For example, the IPOs of the past few years have done exceptionally terribly - a quick search says the median return for large 2020-2021 IPOs is currently -65%:  Also a company that says they "will IPO in the next 24 months" may be 24 months off indefinitely. If things are going well, why isnt the IPO already in progress?
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Oct 13, 2023 04:54
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