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Cha-ching, it's the [Financial Literacy] thread

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Posts

  • MugsleyMugsley Registered User regular
    Yeah I'm waiting for the Space ETF to open up. If anything than I can see what it's holding. The space companies I know about are by and large still private so I get confused when I look.

  • VishNubVishNub Registered User regular
    edited February 8
    Tax question: I lived and worked for most of the year for a company in Texas. I lived and worked for about one month in Mass. for a different company, which is based in Mass.

    Texas has no state income tax. Mass does.

    Do I owe state income tax to Mass based on my whole year's income, or just the income earned while I was living and working here?

    edit: actually it looks like Mass just multiplies total income by the fraction of days you lived in the state, regardless of where the money was earned.
    But, another complication, they don't seem to consider the possibility that my wife didn't move yet, so all of her income was earned in TX.

    Maybe it makes more sense to file separately this year...

    VishNub on
  • HedgethornHedgethorn Associate Professor of Historical Hobby Horses In the Lions' DenRegistered User regular
    edited February 8
    VishNub wrote: »
    Tax question: I lived and worked for most of the year for a company in Texas. I lived and worked for about one month in Mass. for a different company, which is based in Mass.

    Texas has no state income tax. Mass does.

    Do I owe state income tax to Mass based on my whole year's income, or just the income earned while I was living and working here?

    Generally* state income taxes only apply to income earned while living or working within that state. Most states have a separate form to fill out for partial year returns that will involve you starting with your total income for the year and then subtracting out the income earned elsewhere.

    *I say generally because I don't know the rules for all 50 states.

    Edit: Here's the Massachusetts site giving information for partial-year tax returns: https://www.mass.gov/guides/personal-income-tax-for-part-year-residents

    Hedgethorn on
    ElvenshaeVishNubBlackDragon480
  • MugsleyMugsley Registered User regular
    VishNub wrote: »
    Tax question: I lived and worked for most of the year for a company in Texas. I lived and worked for about one month in Mass. for a different company, which is based in Mass.

    Texas has no state income tax. Mass does.

    Do I owe state income tax to Mass based on my whole year's income, or just the income earned while I was living and working here?

    edit: actually it looks like Mass just multiplies total income by the fraction of days you lived in the state, regardless of where the money was earned.
    But, another complication, they don't seem to consider the possibility that my wife didn't move yet, so all of her income was earned in TX.

    Maybe it makes more sense to file separately this year...

    100% pay a CPA. It's worth it for this situation. Use a firm and not Liberty or H&R Block which tend to just have people using tax prep programs.

    VishNubDisruptedCapitalistDarklyreSleep
  • DisruptedCapitalistDisruptedCapitalist screaming Registered User regular
    Nrrgghhh. I was looking at my car loan info on my bank website and imagining paying it off after I refinanced my mortgage. On a lark I clicked on the payoff button to see what kind of paperwork would be required to pay off the loan, but no, that button actually instantly transferred money from my savings and paid off the loan.

    Luckily I had more than enough in my savings but now it's probably going to screw up my credit rating just when I was trying to refinance my mortgage. Hopefully the refinance agency doesn't notice or care about a large transfer just before closing. :bigfrown:

    Update on this: Luckily they didn't care given the stage we're at now. Their only concern now is that there is enough liquidity to cover the closing costs. So we are all set to close next week! Phew!

    monikerJragghenQuidgodmodeDarklyreCauldwebguy20JedocjkylefultonmRahmanithatassemblyguyHedgethornElvenshaeHefflingJengo
  • MugsleyMugsley Registered User regular
    The power of compounding interest:
    In 2018, I crossed the milestone of my lifetime TSP contributions being less than half of my overall balance.
    My annual statement for 2020 shows that my lifetime TSP contributions are now 1/3 of the balance.

    It took for Goddamn ever, but the money is finally starting to work for itself (ok it always did, but now it's noticeable)

    schussmRahmaniJragghenmonikerElvenshaeIncenjucarDarklyreFoolOnTheHillShadowhopejkylefulton
  • tinwhiskerstinwhiskers Registered User regular
    Has anyone here done the buy a rental property thing? Since we haven't done any trips, ate out at all, or really done much of anything for the last year, our savings account is getting pretty nice. And I'm just wondering if that makes more sense than just dumping the cash into a brokerage account, esp with interest rates so low for the next couple years.

    I have a friend who does it locally, but IDK that I would trust his advice. I know his method is basically to buy dumps, get them habitable, remortgage them, and then rent them out. And I don't know if I have the risk tolerance to be holding 10 mortgages or w/e even if they payments are super low.

    6ylyzxlir2dz.png
  • JragghenJragghen Registered User regular
    Not in the states. My wife and I own some investment property in her native country, but it's a bit unique circumstances (island that should get a bridge connection within the near future), and property we could afford in cash, so no mortgage.

    I think that if we move to another place we might see if we can finagle keeping our current one too, but... Honestly, seeing the problems our country has with landlords, etc, there's a part of me that recognizes that it might be the best decision for us individually if it came to that, but I don't know if I'd like being part of that proverbial class.

  • asurasur Registered User regular
    Has anyone here done the buy a rental property thing? Since we haven't done any trips, ate out at all, or really done much of anything for the last year, our savings account is getting pretty nice. And I'm just wondering if that makes more sense than just dumping the cash into a brokerage account, esp with interest rates so low for the next couple years.

    I have a friend who does it locally, but IDK that I would trust his advice. I know his method is basically to buy dumps, get them habitable, remortgage them, and then rent them out. And I don't know if I have the risk tolerance to be holding 10 mortgages or w/e even if they payments are super low.

    You should only buy rental property if you want to be a landlord, which is a job. The amount of work can vary widely from minimal while you have a good tenant to a full-time job if you have multiple terrible tenants and/or vacation rentals.

    RE return is mediocre compared to equities unless you're highly leveraged. It's also not necessarily true that where you live is a good place to buy a rental property which adds complexity. Generally the best places have high rent to mortgage ratios.

    OrcamonikerBlackDragon480Shadowhope
  • evilmrhenryevilmrhenry Registered User regular
    Has anyone here done the buy a rental property thing? Since we haven't done any trips, ate out at all, or really done much of anything for the last year, our savings account is getting pretty nice. And I'm just wondering if that makes more sense than just dumping the cash into a brokerage account, esp with interest rates so low for the next couple years.

    I have a friend who does it locally, but IDK that I would trust his advice. I know his method is basically to buy dumps, get them habitable, remortgage them, and then rent them out. And I don't know if I have the risk tolerance to be holding 10 mortgages or w/e even if they payments are super low.

    I looked into it, and there's basically two ways to do it:
    1) Use a management company, let them take care of anything that comes up. The downside is that this cuts directly into your earnings.
    2) Learn home repair, and manage things personally. The benefit here is that you aren't paying a management company per month, and for minor stuff you can repair it yourself instead of hiring a handyman. This gives you better returns than a management company could provide. The downside is that this is a job, not an investment.

    In the end, I don't think it's worth it. The returns aren't that great, considering that this is a rather risky investment. One big repair could wipe out all your earnings for the year, or you could have trouble finding tenants for a few months, and that's before you start looking at stuff like 2020, where the entire economy goes weird for over a year. Consider that all your properties would (presumably) be located within the same geographic region, and even if you heavily mortgage the properties, you quickly need to have hundreds of thousands of dollars stored in the properties. If I may offer an analogy, consider buying $200,000 dollars of stock of a single company. That's obviously a bad idea unless you're super rich, because it's too volatile. (Except it's worse, because it's difficult to buy and sell this stock, and some stock may have hidden issues.)

    Point is, unless you actually want a new job, just buy index funds.

  • StarZapperStarZapper Vermont, Bizzaro world.Registered User regular
    Has anyone here done the buy a rental property thing? Since we haven't done any trips, ate out at all, or really done much of anything for the last year, our savings account is getting pretty nice. And I'm just wondering if that makes more sense than just dumping the cash into a brokerage account, esp with interest rates so low for the next couple years.

    I have a friend who does it locally, but IDK that I would trust his advice. I know his method is basically to buy dumps, get them habitable, remortgage them, and then rent them out. And I don't know if I have the risk tolerance to be holding 10 mortgages or w/e even if they payments are super low.

    It really depends on the particular details if it's a good investment or not. I do know people who have made a fortune renting property, on the other hand I know quite a few who haven't. How much the property costs, the mortgage rates, the condition it's in, the income stream it can bring in and finally how much work you're willing to do yourself will be the variables here of if it's worth it. Many times it isn't, sometimes it is. Like any investment it's a risk.

  • QuidQuid I don't... what... hnnng Registered User regular
    We're planning to rent our house when we move, but we're in an area filled with military/government workers by a constantly expanding base that brings in more. It's rare for houses to stay on the market more than a couple weeks.

    Even then I'm not looking to profit from the rent itself, just get someone to pay the house's mortgage.

    Mugsley
  • SimpsoniaSimpsonia Registered User regular
    edited February 22
    Has anyone here done the buy a rental property thing? Since we haven't done any trips, ate out at all, or really done much of anything for the last year, our savings account is getting pretty nice. And I'm just wondering if that makes more sense than just dumping the cash into a brokerage account, esp with interest rates so low for the next couple years.

    I have a friend who does it locally, but IDK that I would trust his advice. I know his method is basically to buy dumps, get them habitable, remortgage them, and then rent them out. And I don't know if I have the risk tolerance to be holding 10 mortgages or w/e even if they payments are super low.

    I am a landlord in that instead of buying a condo in my home major metro city, I bought a 3-flat building. We live in one unit and rent out the others. As others have said, there are a ton of factors that can affect whether it's profitable (or merely not actively losing money) or not. The biggest would be accurately assessing your potential income (you'd need a good handle on the local rental market) and an accurate view of your costs. Most landlords who fail are usually in that situation because they didn't get an accurate view of their costs vs potential income. The problem is having the experience and understanding to fully account for all of those 'hidden' costs.

    For me, it's a loss every year, but a loss that is significantly less than the alternative (renting or buying a non-income generating property). It's likely fairly profitable when you consider long-term property value growth, but that's not something you should consider in the short term. Also my costs are lowered because I'm pretty dang handy. Although I'm currently in a professional white collar job, my step-dad was a contractor so I grew up on the job-site and can do a lot on my own.

    The BiggerPockets forums has probably the biggest community dedicated to small landlords, small to medium-time flippers, "house hackers", and associated professional (real-estate, tax, attorneys) and a good place to check out if you're seriously interested.

    Simpsonia on
    CauldQuidJebus314ElvenshaeMugsleyDarklyrePantsB
  • HedgethornHedgethorn Associate Professor of Historical Hobby Horses In the Lions' DenRegistered User regular
    I rented out my previous house to a friend-of-a-friend for a couple years before selling it. I had a good experience, but only because I knew (well enough) the tenants in advance, the house was in
    a reasonable state of repair already, and between myself and the tenant we were able to take care most of the minor maintenance without any significant heartache.

    My one piece of advice is that if you're not paying a management company, you'll want to have the numbers of a reliable plumber and handyman that isn't always swamped with work and whom you can get ahold of on short notice. Even more so than your own house, you want to be able to take care of emergency repairs quickly, and since you're not living on site you need someone who can work around your tenant's availability.

    BlackDragon480Quid
  • ChaosHatChaosHat Trick of the lightRegistered User regular
    edited April 8
    Hi finance thread! I have a question.

    So tax loss harvesting. I get the concept behind it. Sell it at a loss, buy something similar with the money, bank that sweet sweet loss money in the mean time. My question is, if you're long term holding, the items will probably rarely (if ever) get below your original cost basis barring once in a decade style market corrections, so...this will rarely happen/matter? Is tax loss harvesting meant to be something that's dynamically done all the time? If so, this seems kind of risky as you may never be able to buy the position back at a good rate, it just smacks of timing the market. If you could sell one S&P 500 index for an identical one (sell vanguard buy schwab), I could see it but since that's illegal...

    It just seems like trying to nickle and dime your way and a lot of effort for no guarantees and fairly modest payoffs.

    ChaosHat on
  • JragghenJragghen Registered User regular
    By my understanding, it's more an opportunistic thing utilized towards the end of the calendar year.

    You've sold a bunch of stocks and have $10,000 worth of capital gains and it's late December. But you own a tooooooon of other stocks, and it so happens that in stock A which is...I dunno, a pharmaceutical stock is down from when you happened to purchase it, and you own enough that if you sold it your capital loss would be $9000. So you sell it, and use the proceeds from the sale to buy a different pharmaceutical stock - I think it's after 30 days - with the understanding that stocks in a given industry frequently rise and fall together (despite competing with one another, so some might outperform others). Now your capital gains for the year are only $1000 instead of $10000.

    So yeah, there's definitely a "timing the market" involved in that you're betting that the value of the pharmaceutical stock will not change significantly within those 30 days. Generally speaking I'd say it's only a strategy utilized by people with millions of dollars in the market so over large enough numbers, the amount of money saved via that method is much larger than the variance in the market.

  • MugsleyMugsley Registered User regular
    edited April 8
    Tax loss harvesting is typically used to offset short term capital gains, so it means little with regards to long term holds.

    Also, mutual fund managers may tax loss harvest within a fund to offset tax impacts (so it's largely invisible to fund owners).

    https://www.investopedia.com/terms/t/taxgainlossharvesting.asp

    https://www.fool.com/knowledge-center/what-is-tax-loss-harvesting.aspx

    So what are you asking? What's the point? Or something else?

    If you're holding a fund, you'll likely never see anything related to tax loss harvesting. And long term gains taxes are minimal when compared to short term gains taxes. Also if you're using a vehicle like an IRA, it won't count as income until you withdraw (or never, if it's a Roth)

    Mugsley on
  • ChaosHatChaosHat Trick of the lightRegistered User regular
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

  • DarklyreDarklyre Registered User regular
    ChaosHat wrote: »
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

    It can still be of use, though it depends on how much you have in your taxable brokerage accounts. You can buy an index ETF for something like the domestic US market, and it goes down, you can tax loss harvest it by switching to something different like an S&P500 ETF. You can't do it for structurally identical ETFs (Vanguard and Schwab S&P500 ETFs, for example) but different indexes are enough to make it work.

  • ChaosHatChaosHat Trick of the lightRegistered User regular
    Darklyre wrote: »
    ChaosHat wrote: »
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

    It can still be of use, though it depends on how much you have in your taxable brokerage accounts. You can buy an index ETF for something like the domestic US market, and it goes down, you can tax loss harvest it by switching to something different like an S&P500 ETF. You can't do it for structurally identical ETFs (Vanguard and Schwab S&P500 ETFs, for example) but different indexes are enough to make it work.

    Right, it just seems like there's a lot of work for a ton of gain? I know you can roll over the losses for a few years but if I'm looking at not withdrawing money from my personal brokerage account for ten+ years it seems like it all comes out in the wash. I could keep accruing losses but it doesn't do anything until I cash out for some gains. I guess if you're okay with just the portfolio change (s&p to say, russell etfs) then whatever you just sit on it but if you want to buy back into that original ETF there's no guarantee it isn't higher than when you sold after 30 days.

  • JragghenJragghen Registered User regular
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    ElvenshaeMugsleymonikergodmode
  • monikermoniker Registered User regular
    Jragghen wrote: »
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    Also, you need more commas than I've currently got on my accounts.

    Elvenshae
  • DarklyreDarklyre Registered User regular
    Jragghen wrote: »
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    Some brokerages have robo advisors that can automate it (Wealthfront does IIRC). The fees for a robo account aren't crazy high so if you have a decent chunk of change in there it might be worth doing.

  • Marty81Marty81 Registered User regular
    moniker wrote: »
    Jragghen wrote: »
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    Also, you need more commas than I've currently got on my accounts.

    I really don't get this line of reasoning. It's something anyone with any amount of money in a taxable brokerage account can do. (There's no point in doing it in an IRA.)

    lazegamer
  • CauldCauld Registered User regular
    Marty81 wrote: »
    moniker wrote: »
    Jragghen wrote: »
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    Also, you need more commas than I've currently got on my accounts.

    I really don't get this line of reasoning. It's something anyone with any amount of money in a taxable brokerage account can do. (There's no point in doing it in an IRA.)

    Personally, even if it's easy to execute the trades I probably wouldn't bother unless the potential loss was over 1k. Easier to get to a number that's worth the trouble when your starting balance is large. Kind of how I'm not super concerned about saving $0.05 on a gallon of milk, but if I was an ice cream factory or something, that would be a big deal.

    Jragghen
  • monikermoniker Registered User regular
    Marty81 wrote: »
    moniker wrote: »
    Jragghen wrote: »
    I'd look at it as something someone who has someone else manage their accounts will do, not something individuals by and large would do for themselves.

    Also, you need more commas than I've currently got on my accounts.

    I really don't get this line of reasoning. It's something anyone with any amount of money in a taxable brokerage account can do. (There's no point in doing it in an IRA.)

    I'd rather not spend hours of research and sweating about timing trades over maybe $14.00 in taxes. That time has a cost, too.

    OrcaDoodmannmcdermottJragghenElvenshaeShadowhopeAphostileQuidrndmhero
  • TertieeTertiee Registered User regular
    edited April 10
    ChaosHat wrote: »
    Darklyre wrote: »
    ChaosHat wrote: »
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

    It can still be of use, though it depends on how much you have in your taxable brokerage accounts. You can buy an index ETF for something like the domestic US market, and it goes down, you can tax loss harvest it by switching to something different like an S&P500 ETF. You can't do it for structurally identical ETFs (Vanguard and Schwab S&P500 ETFs, for example) but different indexes are enough to make it work.

    Right, it just seems like there's a lot of work for a ton of gain? I know you can roll over the losses for a few years but if I'm looking at not withdrawing money from my personal brokerage account for ten+ years it seems like it all comes out in the wash. I could keep accruing losses but it doesn't do anything until I cash out for some gains. I guess if you're okay with just the portfolio change (s&p to say, russell etfs) then whatever you just sit on it but if you want to buy back into that original ETF there's no guarantee it isn't higher than when you sold after 30 days.

    With a buy and hold portfolio the benefit would be reducing your taxable income by up to $3000/year so you could lower your tax bill by your marginal tax rate * 3000 every year. As mentioned above if you're doing this yourself I'd only do it for large drops in the market based off some dollar loss threshold. For the fund switch you're right in that you have to be content sticking with the alternate fund potentially for years.

    Also note that though wash sale rules state you can't take the loss and re-buy something "substantially identical" as the thing you sold within 30 days I have yet to see specific guidance on this for index funds. One notable example that might give you pause is that the robo-advisor Wealthfront publicly states it swaps Vanguard Total Stock Market with Schwab US Broad Market for its automatic tax loss harvesting system. The two funds follow different indices but have a 99% correlation. So either this correlation is fine or they are daring a legal battle with the IRS.

    Tertiee on
  • ChaosHatChaosHat Trick of the lightRegistered User regular
    Tertiee wrote: »
    ChaosHat wrote: »
    Darklyre wrote: »
    ChaosHat wrote: »
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

    It can still be of use, though it depends on how much you have in your taxable brokerage accounts. You can buy an index ETF for something like the domestic US market, and it goes down, you can tax loss harvest it by switching to something different like an S&P500 ETF. You can't do it for structurally identical ETFs (Vanguard and Schwab S&P500 ETFs, for example) but different indexes are enough to make it work.

    Right, it just seems like there's a lot of work for a ton of gain? I know you can roll over the losses for a few years but if I'm looking at not withdrawing money from my personal brokerage account for ten+ years it seems like it all comes out in the wash. I could keep accruing losses but it doesn't do anything until I cash out for some gains. I guess if you're okay with just the portfolio change (s&p to say, russell etfs) then whatever you just sit on it but if you want to buy back into that original ETF there's no guarantee it isn't higher than when you sold after 30 days.

    With a buy and hold portfolio the benefit would be reducing your taxable income by up to $3000/year so you could lower your tax bill by your marginal tax rate * 3000 every year. As mentioned above if you're doing this yourself I'd only do it for large drops in the market based off some dollar loss threshold. For the fund switch you're right in that you have to be content sticking with the alternate fund potentially for years.

    Also note that though wash sale rules state you can't take the loss and re-buy something "substantially identical" as the thing you sold within 30 days I have yet to see specific guidance on this for index funds. One notable example that might give you pause is that the robo-advisor Wealthfront publicly states it swaps Vanguard Total Stock Market with Schwab US Broad Market for its automatic tax loss harvesting system. The two funds follow different indices but have a 99% correlation. So either this correlation is fine or they are daring a legal battle with the IRS.

    Ah, because short term capital gains is just income tax. That makes sense. You would just have to remember to stop doing this for a year if you ever wanted to cash out at the long term capital gains rate.

  • PantsBPantsB Registered User regular
    rndmhero wrote: »
    moniker wrote: »
    Aphostile wrote: »
    I believe the standard was 3 months if you believe your employment to be stable, 6-12 months if you don't believe that.

    2 years is a lot of emergency savings to not be invested...

    Is there such a thing as stable employment anymore?

    Sure. An RN may lose a job at a particular employer, but the universal demand for nurses means they are extremely likely to be able to find work elsewhere within a couple of months. In that scenario, keeping 1-2 years expenses in cash is probably not ideal.

    While not 1:1, the funds you keep in cash rather than more efficient mechanisms should take into account how hard it is likely to be for you to find comparable employment.

    My wife (an RN) and me a programmer. Programmers traditionally have very little long term security but I work for the same company in similar capacities (ignoring advamcement) for 14+ years. My company is a 50+ year old software company that has never had layoffs. There is still stable employment, you just might have to get paid less (I make <90k when there are a lot of peogrammers in 6 figures).(My wife has me beat at 16+ years)

    11793-1.png
    day9gosu.png
    QEDMF xbl: PantsB G+
  • TertieeTertiee Registered User regular
    ChaosHat wrote: »
    Tertiee wrote: »
    ChaosHat wrote: »
    Darklyre wrote: »
    ChaosHat wrote: »
    Yeah, what is the point I guess was my question. So it does seem of minimal/no value for my strategy (buy index funds hold forever).

    It can still be of use, though it depends on how much you have in your taxable brokerage accounts. You can buy an index ETF for something like the domestic US market, and it goes down, you can tax loss harvest it by switching to something different like an S&P500 ETF. You can't do it for structurally identical ETFs (Vanguard and Schwab S&P500 ETFs, for example) but different indexes are enough to make it work.

    Right, it just seems like there's a lot of work for a ton of gain? I know you can roll over the losses for a few years but if I'm looking at not withdrawing money from my personal brokerage account for ten+ years it seems like it all comes out in the wash. I could keep accruing losses but it doesn't do anything until I cash out for some gains. I guess if you're okay with just the portfolio change (s&p to say, russell etfs) then whatever you just sit on it but if you want to buy back into that original ETF there's no guarantee it isn't higher than when you sold after 30 days.

    With a buy and hold portfolio the benefit would be reducing your taxable income by up to $3000/year so you could lower your tax bill by your marginal tax rate * 3000 every year. As mentioned above if you're doing this yourself I'd only do it for large drops in the market based off some dollar loss threshold. For the fund switch you're right in that you have to be content sticking with the alternate fund potentially for years.

    Also note that though wash sale rules state you can't take the loss and re-buy something "substantially identical" as the thing you sold within 30 days I have yet to see specific guidance on this for index funds. One notable example that might give you pause is that the robo-advisor Wealthfront publicly states it swaps Vanguard Total Stock Market with Schwab US Broad Market for its automatic tax loss harvesting system. The two funds follow different indices but have a 99% correlation. So either this correlation is fine or they are daring a legal battle with the IRS.

    Ah, because short term capital gains is just income tax. That makes sense. You would just have to remember to stop doing this for a year if you ever wanted to cash out at the long term capital gains rate.

    Yes, though to clarify there's no limit of offsetting short term gains with short term losses. The 3k limit is applying losses to non-investment income. For example your income is 50k. In one year you have 4k in ST gains and 9k in ST losses for a sum of -5k. For tax filing your income is reduced to 47k and the remaining losses of 2k are carried forward to next year.

    Cauld
  • MugsleyMugsley Registered User regular
    You guys remember when we had that 25-30% "dip" last March? My rolling 12-month return rate is 53% right now

    JragghenChanusthatassemblyguyDoodmannStarZapperElvenshaelazegamerShadowhopeDarklyre
  • ZekZek Registered User regular
    So I've got almost all my savings in Vanguard, mostly letting it ride on VFIAX which has been doing very well lately, but I don't know wtf I'm doing and I'm concerned that it could crash at some point because my investing decisions are based on nothing in particular. I'm wondering if getting an ongoing financial advisor is worthwhile - Vanguard's own "Personal Advisor Services" charges 0.30% per year which to me sounds like a lot of money just to get advice, but the internet buzz seems to suggest it's a pretty low rate. Could someone help explain to me if/how these services pay for themselves? For someone who wants to reliably maximize their gains while putting zero thought into it, is this a prudent investment?

  • CauldCauld Registered User regular
    Zek wrote: »
    So I've got almost all my savings in Vanguard, mostly letting it ride on VFIAX which has been doing very well lately, but I don't know wtf I'm doing and I'm concerned that it could crash at some point because my investing decisions are based on nothing in particular. I'm wondering if getting an ongoing financial advisor is worthwhile - Vanguard's own "Personal Advisor Services" charges 0.30% per year which to me sounds like a lot of money just to get advice, but the internet buzz seems to suggest it's a pretty low rate. Could someone help explain to me if/how these services pay for themselves? For someone who wants to reliably maximize their gains while putting zero thought into it, is this a prudent investment?

    What is it you're looking to change or improve? The whole point of an index fund is that you don't "need to know what you're doing". Unless you're planning on a big change soon (like buying a home or retiring) I'd just keep throwing all my money into an index fund.

    Doodmannmonikerthatassemblyguy
  • monikermoniker Registered User regular
    Cauld wrote: »
    Zek wrote: »
    So I've got almost all my savings in Vanguard, mostly letting it ride on VFIAX which has been doing very well lately, but I don't know wtf I'm doing and I'm concerned that it could crash at some point because my investing decisions are based on nothing in particular. I'm wondering if getting an ongoing financial advisor is worthwhile - Vanguard's own "Personal Advisor Services" charges 0.30% per year which to me sounds like a lot of money just to get advice, but the internet buzz seems to suggest it's a pretty low rate. Could someone help explain to me if/how these services pay for themselves? For someone who wants to reliably maximize their gains while putting zero thought into it, is this a prudent investment?

    What is it you're looking to change or improve? The whole point of an index fund is that you don't "need to know what you're doing". Unless you're planning on a big change soon (like buying a home or retiring) I'd just keep throwing all my money into an index fund.

    If you're uncomfortable with the risk spread it out to a bond index fund as well. Like, maybe 80/20, but otherwise you should just not pay attention to the market unless you plan on needing the money within a ~year or so.

    Also, maybe consider swapping out to VTSAX instead since it's whole market rather than the S&P500 specifically. They basically track each other more or less, but you don't have to worry about the macro impact you're having on company 499 and 501.

    thatassemblyguySimpsonia
  • zekebeauzekebeau Registered User regular
    @Zek Since you say you don't know what your doing, here is some helpful background. Quick yahoo finance shows VFIAX is a large blended index fund, which means it has a very large variety of stocks held within it, so if in aggregate those very diversified group of stocks go up, VFIAX goes up. This is what people talk about when they say "market rate" or "professionals rarely beat the market." That in aggregate, do the stocks in the stock market move up or down. Now VFIAX is not going to own every stock in the stock market, but these large index funds tend to hold a very good and broad number of stocks, so it is comparable to the whole market.

    There is no reason to think this one fund will crash. Now it is possible for a large swath of companies to crash (or one really, really big one to crash hard enough to outweigh the others in VFIAX), but the chances are you would be hit by the crash no matter what unless you just got really lucky. Markets tend to recover, that's why when you have index funds or a large diversified group of stocks, people say don't sell in a crash it will come back, because as long as people like money markets will eventually creep back up.

    If you just put all your stuff in a single index, that is not a bad strategy. If you want a personal advisor, it sounds like that .3% a year is that .3% of your account will be paid to the advisor for the year. So if you have 200k, you are paying $600 a year to have this guy on hand. However, most advisors just get a mix of index funds in order to be more or less risky (depending on the client), they don't watch your stuff to make sure it avoids tanking and they only rearrange their funds a couple times a year at max, so you may not feel you are getting much out of them, and they likely won't increase your gains too much or at all. But if you want someone you can call and ask for advise on market related things (or IRAs or even retirement planning) they can be good to have.

    Does that shed some light?

    Shadowhope
  • ZekZek Registered User regular
    Cauld wrote: »
    Zek wrote: »
    So I've got almost all my savings in Vanguard, mostly letting it ride on VFIAX which has been doing very well lately, but I don't know wtf I'm doing and I'm concerned that it could crash at some point because my investing decisions are based on nothing in particular. I'm wondering if getting an ongoing financial advisor is worthwhile - Vanguard's own "Personal Advisor Services" charges 0.30% per year which to me sounds like a lot of money just to get advice, but the internet buzz seems to suggest it's a pretty low rate. Could someone help explain to me if/how these services pay for themselves? For someone who wants to reliably maximize their gains while putting zero thought into it, is this a prudent investment?

    What is it you're looking to change or improve? The whole point of an index fund is that you don't "need to know what you're doing". Unless you're planning on a big change soon (like buying a home or retiring) I'd just keep throwing all my money into an index fund.

    TLDR, I'm quite financially well-off for my age but I'm getting pretty burnt out on my career and am weighing my exit options. It might be possible for me to retire on my investments' interest with maybe some part time income. But it's hard to find investment advice for this scenario when I'm not in my 50s. I'm young so I can make risky investments, but not too risky because I'm trying to live off the interest. I think they have a free consult, maybe I'll just borrow their advice and not sign up for anything?

  • CauldCauld Registered User regular
    Zek wrote: »
    Cauld wrote: »
    Zek wrote: »
    So I've got almost all my savings in Vanguard, mostly letting it ride on VFIAX which has been doing very well lately, but I don't know wtf I'm doing and I'm concerned that it could crash at some point because my investing decisions are based on nothing in particular. I'm wondering if getting an ongoing financial advisor is worthwhile - Vanguard's own "Personal Advisor Services" charges 0.30% per year which to me sounds like a lot of money just to get advice, but the internet buzz seems to suggest it's a pretty low rate. Could someone help explain to me if/how these services pay for themselves? For someone who wants to reliably maximize their gains while putting zero thought into it, is this a prudent investment?

    What is it you're looking to change or improve? The whole point of an index fund is that you don't "need to know what you're doing". Unless you're planning on a big change soon (like buying a home or retiring) I'd just keep throwing all my money into an index fund.

    TLDR, I'm quite financially well-off for my age but I'm getting pretty burnt out on my career and am weighing my exit options. It might be possible for me to retire on my investments' interest with maybe some part time income. But it's hard to find investment advice for this scenario when I'm not in my 50s. I'm young so I can make risky investments, but not too risky because I'm trying to live off the interest. I think they have a free consult, maybe I'll just borrow their advice and not sign up for anything?

    check out /r/financialindependence what you're talking about is coastfire, or baristafire I think. The basics is that you can generally count on a long term 4% return from what you have saved. You can lower the 4% to 3 or 3.5% if you want to be more conservative.

    mcdermottmoniker
  • PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
    4% has historically held up but can fail in some worst case scenarios. If you're young it can be a bit of a gamble, especially since you actually need 4% + inflation, with the + inflation part being very important over a 30, 40 year timeframe

    monikerCauld
  • ZekZek Registered User regular
    zekebeau wrote: »
    @Zek Since you say you don't know what your doing, here is some helpful background. Quick yahoo finance shows VFIAX is a large blended index fund, which means it has a very large variety of stocks held within it, so if in aggregate those very diversified group of stocks go up, VFIAX goes up. This is what people talk about when they say "market rate" or "professionals rarely beat the market." That in aggregate, do the stocks in the stock market move up or down. Now VFIAX is not going to own every stock in the stock market, but these large index funds tend to hold a very good and broad number of stocks, so it is comparable to the whole market.

    There is no reason to think this one fund will crash. Now it is possible for a large swath of companies to crash (or one really, really big one to crash hard enough to outweigh the others in VFIAX), but the chances are you would be hit by the crash no matter what unless you just got really lucky. Markets tend to recover, that's why when you have index funds or a large diversified group of stocks, people say don't sell in a crash it will come back, because as long as people like money markets will eventually creep back up.

    If you just put all your stuff in a single index, that is not a bad strategy. If you want a personal advisor, it sounds like that .3% a year is that .3% of your account will be paid to the advisor for the year. So if you have 200k, you are paying $600 a year to have this guy on hand. However, most advisors just get a mix of index funds in order to be more or less risky (depending on the client), they don't watch your stuff to make sure it avoids tanking and they only rearrange their funds a couple times a year at max, so you may not feel you are getting much out of them, and they likely won't increase your gains too much or at all. But if you want someone you can call and ask for advise on market related things (or IRAs or even retirement planning) they can be good to have.

    Does that shed some light?

    Thanks, yeah mostly I just want my savings to be secure while also not foolishly giving up on easy money because I was too conservative. I've definitely seen the risk inherent in VFIAX last year when it had a very large dip, but obviously that reflected the whole market and it did bounce right back even during the pandemic. Even if I were retired and living off that money at the time, that wouldn't have ruined me in the short term. It doesn't sound like I'll get dramatically better returns by handing it over to a professional so I'll just keep it simple and do some FIRE research.

  • monikermoniker Registered User regular
    If you're looking to live off of non-retirement investments the safest approach would be aiming for dividends so you don't touch your capital at all, rather than trying to have a safe withdrawal rate.

    It's just... to have a reasonable annual income off of dividends takes a couple $million at least.

    JragghenStarZapperjkylefultonIncenjucarDoodmann
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