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pseudanonymous posted:How do I um... do investing as like a retail investor. I don't have access to a Bloomberg terminal anymore or any of my models or anything like what the gently caress do I go on yahoo finance and use search terms? Just index. Yes you know the tax implications, but no, you don’t know why you should even be doing this in the first place.
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Apr 13, 2022 16:54
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FPS_Sage posted:On the subject of I-Bonds, is there any reason to wait until May to purchase them? Basically it seems like a given the floating inflation rate will go up (even more than it is today), but is the fixed rate component expected to change as well? I see that recently the fixed rate has been 0.0%, but it would be nice over the life of the bond if it was increased to a few tenths of a percent. I wouldn’t wait. The fixed rate likely won’t rise until 10-year TIPS start having a substantially positive real yield. It is still negative. Anything can happen but if you wait until May, you miss 7.12% yield for 6 months and go directly to 9.62%. If you buy before May, you get 7.12% for 6 months and 9.62% for six months after that. I think the odds are good that you are better off buying before end of month.
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Apr 16, 2022 16:19
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Duckman2008 posted:Question on said I Bonds: It's 7% for 6 months starting April 1st (you even get that extra 20-ish days if you bought later in the month). You'll get the 7% for a full six months before it goes to 9%.
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May 2, 2022 16:35
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Ersatz posted:A quick follow-up question: I previously sold VTSAX shares using average cost (it was the default and I wasn't thinking about tax loss harvesting). Your previous lots (before switching to SpecID) will be forever averaged. Your new lots will be accurate to each purchase. You can still tax loss harvest the old lots, but they will have the pre-switch average cost, so depending on what that cost is, you can still choose to tax loss harvest.
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May 12, 2022 16:29
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fourwood posted:As far as wash sale rules go, there seems to be some IRS guidance that buying into an IRA would run afoul of wash sale rules. I'm well beyond 30 days from doing a Roth backdoor so that's not a problem, but I definitely am buying various index funds twice a month through a 401k and an HSA, and from what I can see there's no specific IRS guidance on those. Obviously not looking for financial advice ( My opinion? Don't worry about it. 401k's being controlled by an administrator seems intentionally left out of the guidelines, but there are of course accountants who believe otherwise. But after decades of no guidance from the IRS and zero evidence of enforcement of this, I think worrying about this is not worth it.
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May 13, 2022 17:15
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) but has anyone avoided trying to do some tax loss harvesting because of retirement account contributions?
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Forgetting about your intention, the wash sale rule is very simple and clear, and is more about the timing and the "identical-ness" of the security you are rebuying. Leperflesh posted:I think if you did something like: Sell XYZ in your brokerage account, immediately buy that many shares of XYZ in your IRA, then 31 days later sell it in your IRA and buy it back in your brokerage account, you have technically used the IRA to perform a wash sale and gotten to tax loss harvest XYZ while never actually being out of the security. Right, that's pretty blatant... Leperflesh posted:But if you're just... moving your stock holding from your brokerage account to your IRA, for long-term holding, that's fine. There's no "taxable basis" for the shares in the IRA because there's no future date on which you sell them and then look at the purchase price and calculate a short or long term taxable capital gain. But that is still a wash sale IF you claimed a loss. Just because your intention was to hold it for the longterm doesn't change the very simple wash sale rule. IRS guidelines are clear. In fact, this is the worst thing you can do. If you do a wash sale in your taxable, it's actually not that bad since the wash is actually added to your basis of the replacement shares for when you eventually sell. If you do the IRA as a wash, you have no basis, as you said, which means you never get that loss back. Again, a pretty clear case that is often talked about in tax circles. fourwood is talking about 401k's, not IRA's. In 401k's, you can just leave your contributions as-is and not overthink what you are doing in your taxable account. The IRS specifically left 401k's out for this reason... it's somewhat controlled by an administrator, designed to be set-it-and-forget-it, and have no history of going after anyone who does this. 80k fucked around with this message at 17:58 on May 13, 2022 |
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May 13, 2022 17:56
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Leperflesh posted:But 401(k)s aren't mentioned at all. The implication is that you treat them like a normal account and adjust cost basis, even though cost basis is irrelevant within a 401(k)? Or, are we to understand that the IRS does not consider it a wash sale at all? The IRS has no guidelines, so there are really no implications. Practically speaking, you almost certainly will not be in trouble leaving some automatic contributions going during the time a loss is taken in your taxable account. My opinion is... just don't worry about it at all. The IRS excluded 401k's for a reason, presumably to avoid this headache on an account that they expect most people not to think about, and has had decades to make guidelines on it, and choose not to worry about it. I suggest we all do the same and don't worry about it.
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May 13, 2022 19:02
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pmchem posted:Since we're talking taxes, here's a hypothetical sequence: I'm pretty sure this is OK. There used to be a waiting period for certain types of recharacterizations that no longer apply and people still remember them. But there shouldn't be any rule now. Honestly, I would probably lose sleep hoping the 1099-R's are not messed up next year, but there shouldn't be any issue doing what you are proposing.
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May 13, 2022 21:51
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Leperflesh posted:Ah yeah there's also this little ordinary income offset. If you're already using a tax preparer, might be worth calling them up to see if you can do this. You can, it's all part of the worksheet, and it's pretty awesome. The 2008-2009 financial crisis gave me a decade where I had an annual $3K deduction I could take on my taxes. I got so used to it that I couldn't believe it when I used it up. A small silver lining to having taken devastating losses during the GFC.
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May 18, 2022 22:38
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pmchem posted:And if not, how do you square purchasing them right now with the conventional wisdom in this thread "not to time the market"? I-Bonds are not “the market” though. Market forces impact the fixed rate that the treasury assigns to current available bonds, but from a market perspective, they have been mispriced for years. If institutional investors could load up on I-Bonds and they were sold at auction and secondary markets, the fixed rate would have been bid way down years ago. And those types of inflation protected bonds exist… they are called TIPS and their real rates have been substantially worse than I-Bonds with more risk (I-Bond has very low duration risk due to cheap put option in initial years after a very short holding period). Loading up on TIPS beyond your designated asset allocation due to sudden fear of inflation is market timing. I-Bonds are different as long as you are not replacing equities with them. In answer to your question though, I have been buying max $10k for myself and my wife every year for around 6 years now.
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May 29, 2022 16:23
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withak posted:Your company doesn't cut off automatically at contribution limits? I would think most do. It's not that simple, since $61K includes your pretax, your match, your profit sharing contributions, everything. It'd be bad to be cut-off prematurely, since you still want to squeeze in your non-mega-backdoor contributions/matches. In short, you should plan carefully ahead of time.
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Oct 21, 2022 20:23
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The Leck posted:I found out that my dad was apparently into them WAY before they were cool and has some from the early 2000s with non-zero fixed rates. I hadn’t heard of them before BFC started getting into them. If it's super early 2000's (like literally 2000/2001), those may be around 3.5% fixed rate which is such an insane deal. I have some non-zero fixed rates from 2018/2019 (a whopping 0.5%).
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Oct 29, 2022 23:02
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dpkg chopra posted:Robinhood has announced they’re launching an IRA with a “1% match”, no employer needed. Brokerage accounts are not insured like FDIC, because your assets are held in accounts that cannot be touched. SIPC is there for when a brokerage fraudulently misappropriates your assets, which many consider a non-issue in today's heavily regulated and audited industry. Otherwise, it'd be a huge problem for even regular folks who have rolled over or otherwise accumulated sizeable retirement savings. In other words, spreading a multi-million dollar portfolio (which is much higher than the SIPC limit) across multiple brokerages is rarely recommended as would be the case with FDIC/NCUA-insured savings accounts. It's two very different things.
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Dec 7, 2022 00:15
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GhostofJohnMuir posted:of course, as we all know there's no guarantee that avantis's secrete sauce ever manages to justify the extra bps Fair point, but it should be mentioned that there aren't any passive ETF's that are cheaper than them for several of their asset classes. - AVES (Avantis Emerging Market Value ETF) is 0.36%. The closest EM Value ETF in cost is Schwab's FNDE at 0.39%. - AVDV (Avantis International Small Cap Value ETF) is 0.36%. The closest Intl SC Value ETF in cost is Schwab's FNDC at 0.39%. - AVIV (Avantis International Large Cap Value ETF) is 0.25%. A popular international value ETF is iShares EFV ETF at 0.34%. The Invesco FTSE RAFI ones are even more expensive. Avantis is actually extremely good value when alternatives don't really exist, as is the case with some of these value tilted portfolios. The question isn't whether Avantis' active sauce is worth the extra bps. The question is whether the factor loading is worth it. If it is, Avantis is hard to beat in both methodology, factor loading, and cost. 80k fucked around with this message at 05:15 on Dec 7, 2022 |
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Dec 7, 2022 03:38
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Leperflesh posted:OK that's interesting, when I looked at a description of AVLV it looked like it was directly tracking the index, not using the index as a benchmark. .15% for a sort-of-active managed fund is not bad! I tend to agree. DFA has been around long enough that you can evaluate its performance mostly on factor loading and ER alone. The thing is, they do it very well, but I hesitate to believe that their "secrets" make a difference (patient trading, momentum-informed holding, profitability screens, IPO exclusions, etc). I think Avantis is offering the factor load and that "secret sauce" available at a price where you aren't really paying for the extras... so you are getting very good value if you want that factor loading. Myself, I am heavily invested in AVIV/AVDV/AVES/AVUV. I could probably live without AVUV, as I think the S&P 600 Value index and its ETF's/index funds are pretty awesome, but I feel like I am not paying much for a slightly deeper factor load. But AVDV and AVES? I've been wanting access to true value funds in those asset classes, and the RAFI fundamental-weighted stuff was not as pure of a play, and actually more expensive than the Avantis ETF's. The decision was easy for me.
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Dec 7, 2022 05:25
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pmchem posted:international is already heavy on value compared to US total market, but if you're looking for other exposure to international value or quality there are a handful of other reasonably liquid non-RAFI ETFs that do it: EFV, IQLT, IVLU, SCHY I was looking for pure value plays, so IQLT and SCHY were not ones I was interested in. EFV was my previous largest holding in this asset class. I did look into IVLU when it launched but its geographical weighting is quite different than the other benchmarks (being much heavier in Japan). Strangely, the RAFI ones, despite not being pure value plays, had a good factor profile and had the geographical weightings I was looking for, so I also owned PXF along with EFV. Until AVIV came out, which is: - cheaper than the others (including the iShares) - has the factor load I am looking for - has the geographical exposure I am looking for. I could live without AVIV, as EFV/PXF covered my needs before, but I do see AVIV as the best option out there in the asset class, and I was happy to switch over.
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Dec 7, 2022 17:48
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runawayturtles posted:Glad you mentioned this. I added a bit of a small cap value tilt to my portfolio last time I rebalanced, temporarily with VSIAX. It's not the greatest fund for this purpose though as it's almost mid cap. I didn't realize Vanguard had an S&P 600 value alternative in VIOV, because I just looked at mutual funds, and the equivalent there is institutional-only. So, that'll be worth considering in addition to AVUV when I switch. Little known fact, but Vanguard's Tax-Managed Small Cap (VTMSX) is a closet S&P 600 Index Fund. It's the fund I have held the longest and I am quite fond of it. It is not value, but the S&P600 index (non-Value version) actually has a slight value factor loading, and the S&P 600 Value index is even more valuey (naturally). I think VIOV/IJS are excellent proxies for US Small Value among the more mainstream options. And in taxable accounts, VIOO/IJR/VTMSX are probably best.
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Dec 9, 2022 00:50
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Velius posted:My dad has been retired for about 7 years now and has his retirement stuff at fidelity. He’s presently using one of their “managed” services and got irritated because the guy didn’t even know the ratio of bonds to stocks he had when they checked in. I guess I’m just asking if the process of taking RMDs and the like is complex enough that it’s burdensome enough to justify an advisor fees, or if just putting all his funds into a three fund portfolio and letting fidelity’s automation do the RMDs and taxes “unmanaged” is feasible. My dad is financially savvy but not tech savvy. RMD process at any of the big brokerages are super easy as long as you don't have any special requirements that require special calculation (i.e take all RMD's from one account at one brokerage and none at another). Sounds like all his stuff is at Fidelity... it will be super easy and automated and money can be automated to go to his bank account or something on a monthly basis. You'll get a 1099-R annually that is very easy to process with the most basic tax software.
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Dec 17, 2022 18:16
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Xenoborg posted:How do capital losses work with qualified dividends? Since they are different schedules it looks like they don't interact until the Qualified Dividends and Capitals Gains worksheet on 1099. Try the entire worksheet again... I am pretty sure it offsets ordinary income first.
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Dec 29, 2022 18:09
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Residency Evil posted:What are people’s opinions on Ibonds in 2023? Are they worth picking up again now that their interest rate is low(er)? I buy the max every year, but the question is always... do I wait until May (or even November) or take a chance that the 0.4% real rate is the best rate we will get this year?
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Dec 31, 2022 21:51
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Bremen posted:The I bond fixed rate and the federal reserve rate seem to have at least a minor correlation, so I strongly suspect not only will the fixed rate still be there in May but it will probably go up. Assuming inflation continues to fall the semi-annual rate may be considerably lower, though. This guy's blog is really the best for everything I-Bonds/EE-Bonds and TIPS: https://tipswatch.com/ I've been reading it for years and based on his previous posts, I'd be expecting a blog post very soon with a recommendation of whether to buy in January or wait. His advice has always been great. Here was last year's early January post: https://tipswatch.com/2022/01/04/i-bonds-a-very-simple-buying-guide-for-2022/ His assessment of what it would take for real rates to rise above zero was spot on. Very unlikely unless an unprecedented surge in real rates occured... which is what happened, and to an extent no one predicted. Starting from -0.97% at the time of that post to +1.57% for the 10 year TIPS yield (just checked Bloomberg)... that is an insane rise. So depite getting a better deal on fixed rates, in November, it was still the right call back in January given the information he had, and he also explained the head start you get with the huge variable rate you get for the 11 months that you would wait until November 2022.
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Jan 1, 2023 01:06
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movax posted:Out of curiosity I got curious about FSKAX / VTSAX holdings and it is infuriating to me to see loving Tesla up there in the Top 10 of each. I know they have to track the index they follow but still... Probably not in the Top 10 anymore. Those Top 10 holdings were based on TSLA at 11/30/2022, with a share price of $195, and it's now $113-ish. Not that it's much consolation since presumably we were all holding it back then as well.
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Jan 5, 2023 05:38
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SlapActionJackson posted:Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually? I have a friend with a Fidelity run 401k that allows the mega-backdoor, and he overcontributed. It's honestly not possible for custodian to be smart enough, since they have no idea what might be coming later in the year. For all they know, you wanted to hit the max $61k before the end of the year. My company solves this by having a limit occur in payroll for the after-tax contribution such that there is still plenty of space left. Basically, they stop us at $22,250 every year. That + employee deferrals (another $20.5k for 2022) + match (no one in our company will get more than $15k in matching and most people are much less) means everyone is well under the limit. Honestly I like it this way even if I give up some mega backdoor space.
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Jan 5, 2023 16:44
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surc posted:I maxed my IRA and did backdoor roth at the start of the year, but apparently because I hit "Convert all" instead of entering a $ amount, vanguard decided that it would apply interest after I hit convert but before they converted, then include that amount in the conversion. So I'm now $0.75 over the max contribution for my IRA now. Nah you're fine. Vanguard won't let you overcontribute. You contributed the max to a Traditional IRA which you won't be able to deduct. And then you converted it all to Roth. There is no limit on what you can convert. You had $0.75 of interest. So you that will be the earnings that you pay taxes on. So your taxable amount from the conversion will be $0.75, no additional 6% penalty needs to be paid.
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Jan 6, 2023 17:50
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spwrozek posted:they give zero poo poo about taxing your $1 of gains. I wouldn't even bother reporting it personally. You still have to enter the 1099-R correctly anyway so it’s not a matter of reporting $1 but a matter of reporting a $6001 with a $1 taxable amount. The IRS definitely gives a poo poo that that is done correctly.
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Jan 7, 2023 02:50
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spwrozek posted:You will not get a 1099-R for interest less than $10. The point is that the OP will not get a 1099-R for interest for any amount, less than $10 or more than $10. He will get a 1099-R showing a $6001 distribution (not interest) for the conversion. And then he will have to go through the process of declaring a basis of $6000 later on in the tax software. At no point does the idea of not reporting the $1 even come up, because it would take more effort to not declare it, because you must declare whatever distribution he sees in the 1099-R and do the later basis part correctly. He will end up with $1 taxable amount. There was never a $1 to "not bother reporting" in the first place, and it would be literally incorrect to report $1 of interest at any point in the process.
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Jan 7, 2023 18:19
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I have used and have accounts at both Vanguard and Fidelity. At this point, I think you could go either way, but Fidelity lost my trust in 2007-2008 in a way that still puts Vanguard ahead, for me at least. Leading up to the GFC in 2008/2009, Fidelity bond funds had a lot of exposure to subprime loans. This wasn't just in their junk bond funds, but also their ultra-short and short bond fund that was supposed to be of the investment grade credit quality, as well as their Treasury inflation-protected securities fund, which was supposed to be all treasuries. You know how in the prospectuses, they always cover their asses with verbage that says "At least 80% of the funds will be invested in such-and-such way"? Well, Fidelity took that literally and actually had subprime exposure in funds that were supposed/implied to be 100% investment grade or even treasury funds. None of Vanguard's funds had this problem. This led me to believe that although the prospectuses are written similarly, Vanguard's (IMO) superior culture and reputation still matters. Fast forward to now, Fidelity's selection of stock and bond index funds are actually fantastic. They have even lower fees than Vanguard, and they also track their respective indices very well. In short, there isn't a lot of evidence that you have to worry about the scenario I described above. That said, Fidelity still has some evidence that they are trying to cater to the millennial/FOMO/YOLO crowd. This is evidenced by their reps participating in the Fidelity subreddit and answering stupid questions about shorts and loaning of shares for the GME "How do I know you are not part of a hedge fund conspiracy" crowd. Their beta interface looks like Robinhood. And they launched Fidelity Crypto recently. I'm not impressed with their direction. Honestly, I'm not convinced Vanguard's supposed decline in customer service and their inferior website/app makes Fidelity a superior choice.
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Jan 11, 2023 22:19
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KYOON GRIFFEY JR posted:Aren't you ignoring the fact that traditional 401(k) gains are taxed as income in the end and Roth IRA gains are untaxed? So you pay higher taxes on a small number now, but you pay zero taxes on a larger number in the future, versus paying no taxes now, but paying a lower tax rate on a large number in the future. That portion of the calculation is irrelevant, because you need to compare a higher starting amount in the Traditional vs Roth to begin with. Pretend you are unable to max out your 401k, so you contribute $10k Traditional. Under the same constraints, you would only be able to contribute, say $7k Roth. At retirement, the Traditional is a larger balance than the Roth and after taking the taxes on that higher value later, you'd be back down to the value of the Roth. But if you do max out your 401k ($22,000 or whatever), then you are effectively contributing more by doing Roth vs Traditional, so the end of balance calculation is unfair, because you have to take into account that you had more money to spend on the year you contributed and that is worth something. In the end of the day, it really is tax rate now vs tax rate later.
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Feb 16, 2023 21:55
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spwrozek posted:VMFXX is at 4.4% after ER. t-bill is at ~5% I believe. VMFXX should be considered 4.51%. The yield is already net of expenses.
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Mar 8, 2023 18:23
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runawayturtles posted:Just finished doing taxes and we owe a bunch, unlike last year. Seems like it's largely due to dividends from VTSAX/VTIAX as our taxable brokerage account gets larger. Yes, we add an extra withholding amount. We try to target around what we paid last year so that we are under the safe harbor guidelines so as to not pay underpayment penalties. International for the past decade has been bad in taxable for us, especially given our high state tax situation, living in OR. Higher dividend rate plus the lower qualified dividend amount has had quite an effect.
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Mar 13, 2023 02:38
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Thom ZombieForm posted:I’m bad with finances and need a gut check on these numbers. In following recommendations as lazily as possible, in Dec 2021 I started a “Schwab intelligent portfolio” brokerage account and put ~$200k in. As of today, I’ve accrued 10,700$ in interest/dividends, and $12,067 in investment losses, so I have less money than when I started. Yea, your timing was just unlucky, as December 2021 was pretty much the top of the market before a pretty significant stock and bond bear market. Any mix of stocks and bonds did bad in 2022 and has recovered a bit this year... so being down a small amount since December 2021 is normal. The only thing you could have done better is to continue contributing, especially through a market downturn like 2022.
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Jul 27, 2023 19:16
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Leperflesh posted:OK but a TIPS with two months left you can just hold to maturity right? The risk is if you are trading them, the value can drop before you want to sell? Trading TIPS before maturity subjects you to changes in real rates moreso than the inflation adjustment. Just like nominal bonds, market rates go up and down. With two months left, your sensitivity to real rates is extremely low, and TIPS are liquid enough that selling them a couple months early or holding to maturity won't be a big deal either way.
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Dec 1, 2023 19:33
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