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SiGmA_X posted:I would opt to not deduct my IRA contributions anyway. Tax now on a smaller amount or tax later on a larger amount. This advice may be fine provided that you are doing this in a Roth IRA rather than having nondeductible contributions in a traditional IRA.
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Sep 21, 2014 16:56
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Celot posted:So... just keep a balance in your traditional IRA and offset your backdooring by a year, and save 50% on taxes? No. With an IRA, you can make some non-deductible contributions. When converting a traditional to a Roth, your conversion is tax-free in the ratio of your after-tax contributions to the value of your IRAs. Let's say you have $45k in your IRA with no non-deductible contributions. You then make a $5k non-deductible contribution, so your IRA is now at $50k. Let's say you want to convert $20k to a Roth. Your tax-free amount is 10% ($5k/$50k) or $2k, so you pay taxes on $18k. Incidentally, you have "used up" the $2k in non-deductible contributions, leaving you with $3k for future conversions or withdrawals. The way backdooring works is if you earn too much to directly contribute to a Roth IRA, you make a non-deductible contriution to a traditional IRA and then immediately convert it to a Roth. Because of the rule of non-deductible contributions above, it doesn't work if you have a balance in IRAs. If you have no IRA balance, make a non-deductible contribution to your IRA and convert it. It's not deductible, the conversion is not taxable, and you have effectively engineered a Roth contribution. That is a backdoor contribution.
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Oct 20, 2014 13:24
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With the SEP she can only contribute 20% of her earnings into it. Depending on what she is making and plans to make in self employment income, would a SIMPLE IRA work?
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Oct 24, 2014 12:00
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ScaerCroe posted:I have had a sizable investment in a Natural Gas/Coal mining and exploration company for ~20 years, and it has done quite well for me long term. However, I do not believe that it is a market that is sustainable long term, nor something I can continue to invest in morally. My basic goal is to slowly divest from it over the course of a number of years, and possibly reinvest in a 'Green' Mutual Fund of some sort. Well, you can die and the beneficiaries of your estate will get a basis increase. I'm sure you can find someone to help make it look like an accident. On a serious note, given that we are nearly in December, there are great opportunities to spread the gain over two years by selling half in December and half in January. Spreading over more years opens up to diminishing marginal returns from the longer spread and increased risk that the company's stock price may tank before you can diversify your position.
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Nov 25, 2014 01:10
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etalian posted:That's a hilariously bad concept forcing employees to buy company stock through a retirement plan. Imagine what that does to the stock price, and consequently, executive options compensation! Personally, in that situation, I would utilize a traditional or Roth IRA and use the 401(k) only up to the 5% match. At least, you're gambling the company stock with house money.
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Nov 27, 2014 23:16
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Gold and a Pager posted:I have a few thousand in a taxable Vanguard fund (VTSMX) that I want to liquidate and use as part of my 2015 Roth IRA contribution. I'm not too concerned about the tax implications, but if I want the taxes to hit me this year, I will have to sell it before Dec. 31, 2014 and then buy shares of whatever I want for my IRA in 2015, right? You need to sell in 2014 for it to hit your 2014 return. But beware of selliing and buying it in your Roth within 30 days of each other, if you have a loss.
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Dec 2, 2014 12:51
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80k posted:Check this one out... one of their worst fiascos in an otherwise boring and core fund asset class: How the gently caress did that fund earn two stars from Morningstar?
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Dec 19, 2014 01:32
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etalian posted:Well some stock pickers would argue that the lack of a dividend is good, if the company uses the money instead to make capital improvements and hence hopefully increase share growth over time. From a investor standpoint having more share growth without a dividend is also much more tax efficient in the long run since you only get taxed at selling time. Reasonable people could disagree, but I'm of the opinion that a company that starts issuing dividends is now a company that has limited room for growth. For a truly mature company, such as a utility company, it's not a problem, but I'm personally worried that the share buyback craze of publicly-traded companies of all shapes and sizes and is crippling companies in the long term. A mature company that takes, perhaps, one-third of earnings and distributes it to shareholders is one that could be balancing the current desires or requirements of shareholders while preserving enough cash within the company to fund future growth. The share price of a company is theoretically based on future potential income (including dividends). If the company is distributing much more than one-third of earnings to shareholders, there is likely not enough left in the company to invest in future projects, which would limit the future value of the company.
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Dec 22, 2014 04:02
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District Selectman posted:It's also a fairly recent phenomenon that companies offer such low dividends, which is weird because in most ways, a dividend is kind of the point of investing. It's really weird to me that people look at dividends as a dirty word. Without a direct return of profits at some point, we're delving into stocks as speculation, because the only way to see a return on your capital is to sell it. That's baseball cards not business. When is it acceptable for your investments to actually start returning money to you, in exchange for the capital investment you made? I'd say any company in the S&P 500 is pretty mature. I didn't imply that dividends are bad, although I can understand why you read my comment that way. You must be one of the reasonable people who disagree with me  A company builds equity to generate returns, and they will often leverage the equity and increase debt load to fund growth, but the ability to do so has intrinsic limits. So when a company distributes its earnings as dividends, the money is no longer there to fund new growth. Worse yet, what you're seeing a lot of these days is share buybacks financed by debt, which is a double-hit on the ability to grow the company: a reduction in equity, and a use of the available leverage to do it. And share buybacks are used in part to permanently increase the share price without creating value -- reducing the denominator of the EPS equation. I'm not an anti-dividend person; I completely believe that a growing company that distributes a reasonable amount to shareholders can increase the cash distributed to shareholders in line with earnings. I am simply saying that there's a level of direct return to shareholder where a company is saying, "We can't generate growth, so here's your money for you to find someone who can," and that is what I see in a disturbingly large number of companies. District Selectman posted:I'm being a little pedantic because I just re-read 4 Pillars (and I don't even agree with all of it), but I do agree with his assessment of investment vs. speculation. Speculation is buying something for $X and hoping to sell for more than $X. An investment returns income at some point. If a stock never returns profits, its profitability relies on you selling to someone else for more than you paid. A stock with a dividend would never require this. You could simply hold your capital and live from its returns. The point isn't to have to sell your assets to make returns (that defeats the point of capitalism). First of all, remember that share buybacks are not considered dividends in this context, so the real direct return to shareholder is higher than what you state. And it's not everywhere where this is true: Australia has a dividend culture, but that is due to (1) a tax system that encourages companies to pay corporation tax and to distribute dividends, and (2) the superannuation program, being essentially a privatized social security program, creating investors out of the entire population. I will agree that markets like gold and bitcoin are pure speculation. But what about a house? Ten years ago, if you bought a house and lived in it for two years, it would have gone up in value by more than 10%. That, and the housing culture that grew up around this fact, was speculation. But now, it doesn't happen. If I buy a house, remodel and modernize the kitchen, finish the basement, and add a deck, I would have added value to this house. And I could and would and should expect a return on this. But if I don't do anything, it won't go up in value. It's a more normal market now. So where does this fit in with stocks? If a company is able to increase its share price by share buybacks or accounting gimmicks, or if we have a stock market fever like we had in the late-90s where P/E ratios grew far in excess of a stock's true value, then yes we have speculation. If a company is reinvesting in itself, creating new products and value and thereby increasing its earnings, then its increased share price comes from actual growth, which a shareholder would then receive the benefits of. I have not yet read 4 Pillars (it is the next thing on my reading list, honest!) so my definitions might be off. As described, bonds and preferred shares are mostly investments. Common shares are part-investment and part-speculation in the American stock market culture circa 2014, whereas 100 years ago they were probably mostly investments. Under such definitions, a house once was speculative but now could be an investment if you put effort into it. There seems to me to be a continuum between investment and speculation, rather than a wall between them. Let's face it, none of us would be "investing" in stocks in the long term if the only return was a 4% dividend; high quality 30 year corporate bonds are returning more than that. We are investing in stocks because of their ability to grow, which requires retaining and investing earnings for future growth.
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Dec 25, 2014 16:56
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crazyphil posted:I'm 28, so I am comfortable with a 100% stock allocation. It's really easy to say that you are comfortable with a 100% stock allocation, but how much did you lose in 2008? You're 28 now, meaning you were 21-22 in 2008, so you are likely to not have lost much, if anything at all, in the last major stock market tumble. Not everyone who says that they're comfortable with 100% stocks actually are comfortable with losing 50% of their retirement value. quote:My 401k (Thrift Savings Plan) is split 60/20/20 between the C/S/I funds (Stocks of large and medium-sized U.S. companies/Stocks of small to medium-sized U.S. companies (not included in the C Fund/International stocks of 21 developed countries). I have more than 2x as much there as my IRA. Piecing together your total investments, you are roughly 57% in S&P 500, 29% smaller companies, and 14% international. Compared to something like the stock portion of a Vanguard retirement fund, you are overweighted in smaller companies and underweighted in international. Do you have any specific reasoning behind where you have in the past decided where to invest, or any reasoning behind where you want to invest going forward, aside from your comfort with 100% stocks? Missing Donut fucked around with this message at 01:06 on Jan 1, 2015 |
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Jan 1, 2015 01:00
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SweetSassyMolassy posted:Speaking of diversification, If someone is just starting to save - and avoiding fees is the name of the game - and they were starting to open accounts with Vanguard should they: Or you can sign up for the e-delivery package to eliminate the $20 fee. edit: Wow I am beaten.
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Jan 29, 2015 01:32
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legsarerequired posted:Also, if anyone else in this thread is using Future Advisor, double-check their robo-advisor. Future Advisor said I have no international exposure in my retirement investments: That chart says you have 35% international: 28% in developed and 7% in emerging markets.
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Jul 10, 2017 13:14
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Xaris posted:Also that robo recommendation is loving kind of crazy That is my thought. I would question the algorithm that created that... mess.
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Aug 4, 2017 13:36
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Ixian posted:I'm cleaning up a taxable mutual fund brokerage account. Am I correct in assuming holding both VFIAX and VTSAX is somewhat pointless? Having both VTSAX and VFIAX just means you own the whole stock market plus you have a tilt to the large companies in the S&P 500. It's not pointless if that is your investment goal. Diversifying into bonds or other fixed income investments is tricky here. Bonds are tax inefficient unless you buy munis, which might not make sense in your tax bracket. Plus, if you would have to sell VTSAX or VFIAX to get into bonds that is a capital gain/loss event. If you have a 401(k) or an IRA, it might be best to overweight bonds there to make up for your stock-heavy taxable account. Otherwise bite the tax bullet.
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Aug 22, 2017 02:33
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Xenoborg posted:How do people fund their IRAs? In the last three months of the year, I let my cash position/emergency fund grow a bit, so I contribute it out in full in early January out of that fund. For me, since I have to backdoor it into a Roth, one funding transaction and one conversion keeps things as clean as they can be. What would you rather do with the money? Invest it in a taxable account and sell it for ST gains/losses? Play the ponies?
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Oct 19, 2017 23:42
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Xenoborg posted:Saving compared to Back loading its less depending on how much you are investing a month Right, and I roughly do the backloading system. I’m also fortunate that I have a higher contribution amount each month which lowers the market loss.
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Oct 20, 2017 02:53
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