|
Also you'd have sold your $100 of crypto when it was worth $1000 and thought that was the absolute peak, instead of holding it for another 8 years or whatever.
|
#
?
Aug 12, 2022 23:12
|
|
|
|
| # ? Jun 8, 2024 14:58 |
|
|
I have a lot of techy/engineering friends and out of all of them (myself included) only one was smart/dumb/privileged enough to buy and hold btc long enough to matter significantly
|
|
#
?
Aug 13, 2022 19:43
|
|
|
Ubiquitus posted:I have a lot of techy/engineering friends and out of all of them (myself included) only one was smart/dumb/privileged enough to buy and hold btc long enough to matter significantly How much have they sold? That's one of the final great filters of Crypto Millionaires - they genuinely believe it's worth more as crypto than as fiat, whether it's at $0.01 or $100,000 per BTC They'll usually sell off enough to buy a house for a couple million (begrudgingly, as the House Cartel doesn't accept crypto) and keep the rest on their flash drives, forever
|
|
#
?
Aug 13, 2022 19:49
|
|
|
Duckman2008 posted:Wrong , you missed out on the value of NFTs and Bitcoin. Oh is this where that advice comes from to always set aside at least 15% of your salary for retiremenfts?
|
|
#
?
Aug 14, 2022 12:56
|
|
|
Long term investing and retirement - set aside 15% of your salary for Bitcoin and NFTs
|
|
#
?
Aug 14, 2022 13:04
|
|
|
Residency Evil posted:Long term investing and retirement - set aside 150% of your salary for Bitcoin and NFTs
|
|
#
?
Aug 14, 2022 20:01
|
|
|
My 401k contributions are on track to be maxed for the year. I've been making Roth 401k/after-tax 401k contributions. HSA is maxed, wife's 401k contribution is also on track to be maxed. I've done regular backdoor Roth contributions for my wife and I as well this year, we will continue doing so. My 401k provider doesn't do in-service conversions or distributions, so I can't do a mega backdoor Roth. Should I just continue with the regular + Roth 401k and backdooring or is there some other strategy I should look at for "please tax me less" retirement savings? I feel like we're doing everything right, this is just refining a bit.
|
|
#
?
Aug 16, 2022 15:38
|
|
|
MJP posted:My 401k contributions are on track to be maxed for the year. I've been making Roth 401k/after-tax 401k contributions. HSA is maxed, wife's 401k contribution is also on track to be maxed. I've done regular backdoor Roth contributions for my wife and I as well this year, we will continue doing so. HSA and 529 are the next two options. Beyond that, shove "extra" money into a brokerage account. Congrats on winning the game and being in "good problems to have" territory.
|
|
#
?
Aug 16, 2022 16:37
|
|
|
When you get down to ordinary brokerage account as a place you're putting retirement savings, you can start looking at using that space for tax-efficient investments within your overall asset allocation across your portfolio. For example, if part of your asset allocation is bonds, you can place tax-free government bonds in your brokerage and keep stocks etc. in your tax-advantaged accounts. Just googling for an example, BATEX has an ER of .05 and is mostly Federal tax free "high yield" munis. Leperflesh fucked around with this message at 17:03 on Aug 16, 2022 |
|
#
?
Aug 16, 2022 16:56
|
|
|
Yeah, I have a bunch in a post-tax account from the many years where I was dumb. I was doing just the 401k match, maaaybe like 1% more, and putting the rest into a regular Boglehead portfolio. I stopped putting cash into post-tax in I think 2017-2018, and the two or three times I've talked to fiduciaries was "just leave it as is, maybe use it for your annual backdoor IRA". We're gonna kick a bunch to our hopefully-soon-to-arrive niece's 529 but we have no kids ourselves nor plans for it. Other than some situation where I just hurl 1/3rd of that post-tax brokerage at the mortgage to kill it way early, excess $ destined for post-tax brokerage is basically going into VNJTX for now, VNJUX when we hit the cost of entry. I do keep looking at the "just end the mortgage NOW" idea but we've been good at refi'ing it over the years - 4.0% 30-year in 2012 when we first bought, then 2.375% to cash out some equity and redo the kitchen in 2020, and again at 2.25% 15-year last year after paying down the cash-out. I keep calculating what would happen if I did this, and we'd do pretty drat well, but "I am not a fan of debt" is no good reason to eliminate reliable, locked-in, affordable debt.
|
|
#
?
Aug 17, 2022 02:30
|
|
|
Leperflesh posted:When you get down to ordinary brokerage account as a place you're putting retirement savings, you can start looking at using that space for tax-efficient investments within your overall asset allocation across your portfolio. For example, if part of your asset allocation is bonds, you can place tax-free government bonds in your brokerage and keep stocks etc. in your tax-advantaged accounts. Pretty sure munis are wasted if you're not in the highest marginal bracket.
|
|
#
?
Aug 17, 2022 02:51
|
|
|
MJP posted:Yeah, I have a bunch in a post-tax account from the many years where I was dumb. I was doing just the 401k match, maaaybe like 1% more, and putting the rest into a regular Boglehead portfolio. I stopped putting cash into post-tax in I think 2017-2018, and the two or three times I've talked to fiduciaries was "just leave it as is, maybe use it for your annual backdoor IRA". When you are a responsible saver, it's ok to make decisions that make you feel better like paying off your mortgage. You may or may not be doing the absolute perfect investing strategy, but the whole point of saving is to put yourself in a spot where you can do things just because you want to.
|
|
#
?
Aug 17, 2022 02:59
|
|
|
Anyone have experience with evaluating lump sum vs continuing payouts for a long term disability claim? A family member was lucky enough to have good LTD insurance and is unlucky enough to need it. After several years of payments, confirmation that they were still disabled etc, the company sent a letter offering a lump sum payout of 65% of the present value of anticipated future monthly benefits. We're wrapping our heads around what this offer means, and I'm wondering if anyone has any resources they can point me to, or basic questions we should be asking ourselves to decide whether this offer is worth entertaining at all.
|
|
#
?
Aug 17, 2022 20:32
|
|
|
doingitwrong posted:Anyone have experience with evaluating lump sum vs continuing payouts for a long term disability claim? The math on NPV analysis is fairly basic but the real questions are about that individual. They’re making this off because they think it is in the company’s financial interest so I’m skeptical you would want to accept it.
|
|
#
?
Aug 17, 2022 20:38
|
|
|
Eyes Only posted:Pretty sure munis are wasted if you're not in the highest marginal bracket. How so? Ordinarily you'd pay tax on ordinary dividends at your top marginal rate, and qualified dividends at one of: 20%, 15% or 0% LTCG rate depending on your income. I believe the dividend payouts from a mutual fund held for over a year are qualified dividends, and anyone making over about $40k (individual) or $83k (married) will owe at least the 15% rate. You'll also pay tax on the churn in a mutual fund (see the debacle on that one vanguard target retirement date fund last year) and funds intended for use as tax efficient investments also try to avoid excessive churn, but will always still have at least a little so there'll still be at least a little tax burden from them even if they're 100% in tax-free munis. Am I missing something?
|
|
#
?
Aug 17, 2022 20:43
|
|
|
Muni bonds have less return (usually 30-40%) than taxable bonds so you better be crossing those tax rate thresholds to make up the difference. They also pay interest so they qualified div/cap gains rates don’t really apply. There’s more to it but that’s the quick and dirty I’ll type while on my phone and making dinner.
|
|
#
?
Aug 17, 2022 23:46
|
|
|
Leperflesh posted:How so? Ordinarily you'd pay tax on ordinary dividends at your top marginal rate, and qualified dividends at one of: 20%, 15% or 0% LTCG rate depending on your income. Muni bonds and other tax free instruments are going to trade at a premium over their tax disadvantaged equivalents. The amount of the premium (in an efficient market) is going to be slightly less than the tax savings. Because the tax savings is different depending on your tax bracket, the premium will always be bid up by people paying the highest marginal rate (again assuming an efficient market and risk adjustment), because those bonds are more valuable to them. For example, someone paying a 20% marginal rate will be willing to pay something like an 18% premium to come out 2% ahead. Someone else with a 25% rate will be willing to pay a 23% premium to get the same benefit. The person who benefits most will always outbid someone who benefits less, which drives the price up to the point where the Muni bond has negetive value compared to a regular bond for anyone in a lower tax bracket.
|
|
#
?
Aug 18, 2022 00:07
|
|
|
Ungratek posted:Muni bonds have less return (usually 30-40%) than taxable bonds so you better be crossing those tax rate thresholds to make up the difference. If you have enough space in your tax free/deferred space for your bond allocation, does it make sense to switch to muni bonds, even if you're above those short term rates?
|
|
#
?
Aug 18, 2022 00:14
|
|
|
Residency Evil posted:If you have enough space in your tax free/deferred space for your bond allocation, does it make sense to switch to muni bonds, even if you're above those short term rates? They are lower yield typically, so.....no. At least as far as I've seen this is the case. Their benefits are priced in, so if you're not using them for their benefits it seems like a bad idea.
|
|
#
?
Aug 18, 2022 00:18
|
|
|
I Like Jell-O posted:Muni bonds and other tax free instruments are going to trade at a premium over their tax disadvantaged equivalents. The amount of the premium (in an efficient market) is going to be slightly less than the tax savings. Because the tax savings is different depending on your tax bracket, the premium will always be bid up by people paying the highest marginal rate (again assuming an efficient market and risk adjustment), because those bonds are more valuable to them. But we are not talking about buying individual bonds, we're talking about a bond fund. Not an ETF, but a mutual fund, which always trades at NAV, not at some market premium. You buy the fund at its current price and then later (like when or during retirement*) you sell some of it at its then-current price and whatever premium is there comes out in the wash. Right? I confess I've never dabbled in these before, but if a large fund is buying munis at issuance and holding to maturity they're getting a real yield and reporting that real yield to investors; it can be compared to a non-tax-free bond fund's risk profile to calculate comparative real returns, yeah? *The dividend income is added to your social security income when calculating how much, if any, of your SS income is taxable. This could matter, so be careful holding tax free muni bonds once you start collecting social security.
|
|
#
?
Aug 18, 2022 00:27
|
|
|
doingitwrong posted:Anyone have experience with evaluating lump sum vs continuing payouts for a long term disability claim? I work in the Defined Benefit business (traditional pensions) and a large part of what I do is work with actuaries who do valuation work like this. The answer really is "it depends." Not to be harsh but does your family member expect to die in the next 5 years? If yes, then the answer is obviously to take the Lump Sum. If not, then see below The conversion calc relies on Interest rates (a lower rate means a higher lump sum) and what life expectancy table is used (longer longevity = larger lump sum). I'm assuming you don't want to go through all that so probably the easiest way to get a ballpark idea if it's a good deal or not is to call an insurance company ask them for a quote to convert the offered Lump sum to a single life annuity. If the quote is less than what he's getting from the current payout, then it's not worth it.
|
|
#
?
Aug 18, 2022 00:55
|
|
|
Leperflesh posted:But we are not talking about buying individual bonds, we're talking about a bond fund. Not an ETF, but a mutual fund, which always trades at NAV, not at some market premium. You buy the fund at its current price and then later (like when or during retirement*) you sell some of it at its then-current price and whatever premium is there comes out in the wash. To follow on this, what makes this analysis not also apply to ETFs?
|
|
#
?
Aug 18, 2022 01:58
|
|
|
Leperflesh posted:But we are not talking about buying individual bonds, we're talking about a bond fund. Not an ETF, but a mutual fund, which always trades at NAV, not at some market premium. You buy the fund at its current price and then later (like when or during retirement*) you sell some of it at its then-current price and whatever premium is there comes out in the wash. Bonds get confusing. Bond funds still need to buy the underlying bonds, so it doesn't matter if you buy the bond yourself or if you pay someone else to buy it for you. Bond funds add diversification, which reduces a certain kind of risk, but that risk reduction is completely independent of the tax status, so it's irrelevant to this discussion. Strictly speaking, you don't pay a premium for Muni bonds, you accept a discount on risk adjusted returns. I used premium because it's how I think of it, and it all comes out the same in the end. Imagine two hypothetical identical bonds from the same institution with identical risk profiles and terms, except one is tax free. The institution will put those on the open market at the lowest interest rate that they will sell at. There is effectively an auction among all the buyers with the winner being the buyer willing to accept the lowest interest rate on the bond. Buyers of the tax free bond will be willing to accept a lower return on the bond because the tax free status makes the bond inherently worth more. The question is, how much less return is a buyer willing to accept to gain that tax advantage? People in a higher tax bracket will always accept a lower return compared to those in a lower bracket, because the tax status is worth more to them. That's why the return on tax free bonds is priced based on those that benefit most. If you are not in the highest tax bracket, buying a tax free bond means you're accepting lower return for the same amount of risk as equivalent bonds that get taxed normally. That's the definition of a bad investment.
|
|
#
?
Aug 18, 2022 02:44
|
|
|
Motronic posted:They are lower yield typically, so.....no. At least as far as I've seen this is the case. Here's this page on Bogleheads: https://www.bogleheads.org/wiki/Municipal_bonds#Role_in_a_portfolio quote:If you have filled up your tax-advantaged accounts with tax-inefficient assets (taxable bonds, REITs, commodities, etc), and you still need bonds to meet your desired stock/bond asset allocation, you might consider placing municipal bonds (or a mutual fund thereof) in your taxable account. What if I did want to say, save for a car, and wanted a tax advantaged way of doing so? Are muni bond funds the preferred way of investing? Because https://fundresearch.fidelity.com/mutual-funds/summary/67065L609  In any case, I've found that Muni Bonds pay ~5% or so. I'm looking at some Muni Bond Tax Equivalent Yield Calculators and the results seem like something I should maybe think about? Residency Evil fucked around with this message at 04:08 on Aug 18, 2022 |
|
#
?
Aug 18, 2022 03:53
|
|
|
I Like Jell-O posted:Bonds get confusing. Bond funds still need to buy the underlying bonds, so it doesn't matter if you buy the bond yourself or if you pay someone else to buy it for you. Bond funds add diversification, which reduces a certain kind of risk, but that risk reduction is completely independent of the tax status, so it's irrelevant to this discussion. I get this in theory, but I don't see it in the arithmetic. For example, my effective ordinary income tax rate (federal + state + local) is 40% and my effective tax rate on muni interest (state + local) is 10%. So I'm taking home 60% of taxable bond interest versus 90% of muni interest; this means that if the muni interest discount is less than 33%, I'm coming out ahead with munis, right? And comparing BND with VTEB (for example) over the past five years, I don't see any time the dividend yield discount ever got that big. I'm not in the top tax bracket, so what am I missing? raminasi fucked around with this message at 06:26 on Aug 18, 2022 |
|
#
?
Aug 18, 2022 04:15
|
|
|
daslog posted:The conversion calc relies on Interest rates (a lower rate means a higher lump sum) I played the guessing game with a pension from a former employer. The lump sum payout was a function of (among other things) some unknown-to-me interest rate. Lucky for me I pulled the trigger on the lump sum right before rates went up but every 3-6 months or so I had to make a decision to keep waiting or decide to take the payout.
|
|
#
?
Aug 18, 2022 05:46
|
|
|
I Like Jell-O posted:Bonds get confusing. Bond funds still need to buy the underlying bonds, so it doesn't matter if you buy the bond yourself or if you pay someone else to buy it for you. Bond funds add diversification, which reduces a certain kind of risk, but that risk reduction is completely independent of the tax status, so it's irrelevant to this discussion. OK I understand what you're saying now, but I think it relies on the efficient market always finding enough buyers in the top ltcg bracket to buy all muni bonds. raminasi posted:I get this in theory, but I don't see it in the arithmetic. For example, my effective ordinary income tax rate (federal + state + local) is 40% and my effective tax rate on muni interest (state + local) is 10%. So I'm taking home 60% of taxable bond interest versus 90% of muni interest; this means that if the muni interest discount is less than 33%, I'm coming out ahead with munis, right? And comparing BND with VTEB (for example) over the past five years, I don't see any time the dividend yield discount ever got that big. I'm not in the top tax bracket, so what am I missing? Be careful that you're not comparing identical risk profiles. If munis are consistently rated lower than treasuries, they should carry a higher rate of return just to compensate for that, before we consider the factor Jell-O is talking about.
|
|
#
?
Aug 18, 2022 06:58
|
|
|
spf3million posted:Why is that? Traditional pension plans have formulas that calculate an annuity payable at at 65. (something like 1.5% * years of Service * Monthly average pay)* Once that's calculated, it's an inverse relationship to convert it to an annuity because the Lump Sum is supposed to be the amount of money you need up front to replace that monthly income stream. A simplified extreme example: if the interest rate used to covert was 0.01% you would need a massive Lump Sum to create a stream of payments equal to your Single Life annuity. On the other hand, if interest rates are 50%, you need a much smaller Lump Sum to create a that same annuity amount. By Law, the actual conversion uses a 3 tiered interest rate but that's a whole additional mess.
|
|
#
?
Aug 18, 2022 11:54
|
|
|
daslog posted:Traditional pension plans have formulas that calculate an annuity payable at at 65. (something like 1.5% * years of Service * Monthly average pay)* Once that's calculated, it's an inverse relationship to convert it to an annuity because the Lump Sum is supposed to be the amount of money you need up front to replace that monthly income stream.
|
|
#
?
Aug 18, 2022 12:36
|
|
|
daslog posted:I work in the Defined Benefit business (traditional pensions) and a large part of what I do is work with actuaries who do valuation work like this. The answer really is "it depends." Not to be harsh but does your family member expect to die in the next 5 years? If yes, then the answer is obviously to take the Lump Sum. If not, then see below Thanks. This is clarifying & not harsh. No plans to die in the next 5 years. The condition is chronic but not life threatening. The company is calculating 65% value of present claim based on a 4.67% interest rate and 266 remaining months. I'll help them look into the single life annuity comparator. Just the sheer tax implications of a sudden jump in income for one year seem hard to overcome.
|
|
#
?
Aug 18, 2022 14:25
|
|
|
Whether or not the payout is taxable depends on who paid the insurance premiums, them or their employer. But lump sums are generally a worse deal because guess what, people will usially jump at a big pile of money rather than wait. I don't think I've ever evaluated an insurance/pension/annuity option where the lump sum ended up winning. Not saying it's impossible, just unlikely (unless you know you're gonna die early).
|
|
#
?
Aug 18, 2022 14:44
|
|
|
moana posted:Whether or not the payout is taxable depends on who paid the insurance premiums, them or their employer. Over the last 20+ years the assumed interest rates in those calculations have been higher than anyone could actually get as a no risk return which probably has made the lump sum worse than you could get as an individual. The life expectancy tables are pretty accurate so on the aggregate they are fair, but if you don’t have any known health issues then you are probably going to live longer than the mean for your age. Generally, the insurance companies view it as a wash, since they come out the same due to large numbers trending towards the mean, but as an individual you need to give some thought to your life expectancy based on family history and current health. Edit for clarification: when the insurance carrier calculates a lump sum, it’s usually a wash for the overall block. When JG Wentworth or another third party offers a lump sum to buy out of a payment stream, they’ve got a huge profit margin in the middle danielski fucked around with this message at 15:51 on Aug 18, 2022 |
|
#
?
Aug 18, 2022 15:43
|
|
|
Am I looking at these muni bonds the right/wrong way? I found a list of munis in my state that have a return of 5%. $100 is 100 * 1.05^5 is $127.60 after 5 years. The gains get taxed at 20%, and state taxes are at 4.55%. It seems like a muni bond with a 5% return, after taxes, would be very attractive. If you take that 127.6, and: 127.6 = 100 * x^5 * 0.8 * (1-.0455) Solving for x seems like you get a return of about 10.8%, which seems great. What am I missing? Am I understating the default risk of muni bonds?
|
|
#
?
Aug 18, 2022 15:58
|
|
|
Leperflesh posted:Be careful that you're not comparing identical risk profiles. If munis are consistently rated lower than treasuries, they should carry a higher rate of return just to compensate for that, before we consider the factor Jell-O is talking about. Ok, I'm embarrassed to admit that I didn't realize how much Treasury debt was in these whole-bond market funds/ETFs. Learning that does make me instantly skeptical of suggestions around the web to replace a typical bond fund with a muni fund if you're concerned about taxes, because none of them I've seen mention the different risk profile.
|
|
#
?
Aug 18, 2022 16:00
|
|
|
My understanding is treasuries are considered lowest-risk, broadly munis are a little riskier, and corporate bonds riskier still. Detroit once defaulted on its muni bonds. It can happen. But the vast majority of municipalities have never defaulted. Bonds in general are still lower risk than stocks, of course. Most corporate.stocks are junior to those company 's bonds, meaning in a bankrupty bonds get paid first. Compared to stock risk, the difference in risk profile between treasuries and munis is small. If 85% of your portfolio is stocks, and you move the 15% thats in bonds from a total bond market fund to a tax free muni fund, yes you've increased risk both by dumping treasuries and by concentrating your bond allocation into a narrower asset class, but you've also dumped corporates, and you're only shifting 15% of your portfolio. Your whole portfolio's risk profile has barely changed. Remember the idea here is just micromanaging to save a few bucks in taxes, while there's people in this.thread who are 100% stocks and quite a few who are only 10% bonds, and those differences in allocation have a much bigger effect on the overall risk profile.
|
|
#
?
Aug 18, 2022 16:19
|
|
|
Keep in mind that default risk is not the only source of risk. Bond funds (and individual bonds) have another source of risk and that's interest rate risk. VGLT is down 22% from 1 year ago because of rising interest rates, and even though it's a treasury fund it can be more volatile and riskier than BND (which is only down 12%) due to the longer average duration of the bonds creating higher interest rate sensitivity.
esquilax fucked around with this message at 19:12 on Aug 18, 2022 |
|
#
?
Aug 18, 2022 19:06
|
|
|
Leperflesh posted:OK I understand what you're saying now, but I think it relies on the efficient market always finding enough buyers in the top ltcg bracket to buy all muni bonds. You're exactly right that efficient market is doing a lot of heavy lifting in my explanation. The real world has a bad habit of distorting things in unexpected ways. I'm far from an expert, but my hunch is that there's a pretty much endless supply of buyers in high tax brackets. Rich people have most of the money, right? It's also important to remember that price is a sliding scale, not bianary. While there's a finite market for Muni bonds with a (risk adjusted) 2% benefit for top tax payers, there is by definition a bigger market for bonds that give a (risk adjusted) 4% benefit. By the time the lower taxed buyers see any (risk adjusted) benefit, the higher tax payers are getting a pretty enticing (risk adjusted) benefit. This will tend to push the pricing into equilibrium, with the underlying demand moving the needle up or down a bit, but probably not to the point of benefiting anyone but the highest tax payers. On a risk adjusted basis at least. Leperflesh posted:Be careful that you're not comparing identical risk profiles. If munis are consistently rated lower than treasuries, they should carry a higher rate of return just to compensate for that, before we consider the factor Jell-O is talking about. Exactly, we're trying to compare two hypothetical bonds with identical risk profiles but different tax treatment. Because risk is hard to calculate and bonds issued by different institutions are never identical, this is basically a thought experiment. It's difficult even for experts to accurately assess risk. The perception of risk determines the interest on the bonds, with the tax treatment question modifying the interest after the fact. My argument is basically theoretical, and I acknowledge that there are real world factors that might change things. At the end of the day, however, it makes sense to me that if there are benefits to owning Muni bonds, rich people who benefit most are going to jump on it so hard that it becomes something of a suckers bet for anyone else.
|
|
#
?
Aug 19, 2022 06:12
|
|
|
moana posted:Whether or not the payout is taxable depends on who paid the insurance premiums, them or their employer. Example from my current pension. If I were to retire tomorrow I could elect to: - Take lump sum now currently valued at $59,759 - Start monthly payments now at $196/mo - Take lump sum in 2049 at $133,863 - Start monthly payments in 2049 at $698/mo Knee jerk is to take the lump sum now assuming you are going to invest it instead of spending it immediately.
|
|
#
?
Aug 19, 2022 13:24
|
|
|
An important piece of information is, are the monthly payments flat or do they go up every year by a few percent to counter inflation?
|
|
#
?
Aug 19, 2022 14:28
|
|
|
|
| # ? Jun 8, 2024 14:58 |
|
|
Re posting here since a lot of people here use Ally THF13 posted:Ally bank which has been recommended here a few times looks to have had some kind of breach. Lots of reported instances of fraud on debit cards, many of which had never been used. https://arstechnica.com/information-technology/2022/08/wave-of-debit-card-fraud-hits-ally-bank-customers-hacked-vendors/
|
|
#
?
Aug 19, 2022 20:55
|
|