Search found 543 matches

by cresive
Mon Jan 29, 2024 7:02 am
Forum: Investing - Theory, News & General
Topic: REITS As A Supplement to Bonds in Retirement
Replies: 77
Views: 7840

Re: REITS As A Supplement to Bonds in Retirement

Can you provide more specifics? What portion of your total funds do your income funds comprise? What are the AA in your other funds?
by cresive
Sun Jan 28, 2024 5:38 pm
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Re: Roth Conversion and (2nd time) double checking what an investment advisor has said

Thank you everyone for your excellent replies and insightful information. This is exactly what I needed and I appreciate you guys/gals for the help. Ben The standard way to segregate pre tax and after tax in a traditional IRA is to roll pretax into a 401(k). This does not follow pro rata rules, as only pretax can go into a 401(k). Can you not do this? You certainly can sell your bonds on the secondary market (and take whatever interest rate hit), roll into 401(k).and rebuy them. Or funds. I had considered this option, but I do have some long-term bonds that I would take a hit on if I could sell them. I was also a bit hesitant to move all my money from my t-IRA to my TSP. However, I was mulling your exact option. Right now, I think I will t...
by cresive
Sun Jan 28, 2024 10:52 am
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Re: Roth Conversion and (2nd time) double checking what an investment advisor has said

Thank you everyone for your excellent replies and insightful information. This is exactly what I needed and I appreciate you guys/gals for the help.

Ben
by cresive
Sun Jan 28, 2024 10:49 am
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Re: Roth Conversion and (2nd time) double checking what an investment advisor has said

Your after tax basis in $, not percents, is recalculated each year based on the contributions/withdrawals that took place during the year. So after the first year of converting 7,000 out of 700,000, you have $6930 left as the basis which carries over to the following year, since you weren't taxed on $70 that came out. States will tax you on the same number as federal taxes. Because the feds are smart and track your basis as $, there is nothing to optimize, each year that money comes out, you are not taxed on a tiny piece of it. The growth in the IRA is not taxed until it comes out, but when it comes out, it will be taxed as ordinary income, not at the more favorable capital gains rate. I think this only works out (and then only marginally)...
by cresive
Sun Jan 28, 2024 10:48 am
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Re: Roth Conversion and (2nd time) double checking what an investment advisor has said

Instead of a backdoor Roth, we have chosen to use that $7k annually to pay taxes on Roth conversions instead. Same effect, much simpler thought process. If you're 58, you have 17 years before RMDs. And note that you do not need to convert ALL of the IRA to Roth; it's worth leaving enough in traditional that you can have ~ $100k annually in income, and then be subject to the 0-12% federal brackets, given the standard deduction. So I would choose a figure for conversion, based on the cash you have to pay the taxes now. For us, that's been ~ $25k annually. That has kept us in the 22% bracket, and we'll be done by the time my spouse reaches age 63, and the IRMAA snapshot for premiums. Excellent suggestion!! So simple it eluded me. Thanks for t...
by cresive
Sat Jan 27, 2024 8:38 am
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Re: Roth Conversion and (2nd time) double checking what an investment advisor has said

Hello, I need to revisit my questions about Roth conversions. This time, my questions arise from advice from a FA that I can’t corroborate on my own. The scenario involves the pro rata rule and converting after-tax contributions into a traditional IRA to a Roth account. Below are the facts, as explained by my FA. Given: Traditional IRA account balance: $700,000 (used for simplicity) New traditional IRA account created for Roth conversions. Input $7,000 of after-tax money. Marginal tax rate = 18% Action: Contribute $7,000 into separate t-IRA and perform a Roth conversion. Due to pro rata rules, the conversion is subject to taxes as follows: a. 7,000/700,000 = 1% which means 99% of conversion is subject to taxes at marginal rate. This means:...
by cresive
Sat Jan 27, 2024 7:55 am
Forum: Personal Investments
Topic: Roth Conversion and (2nd time) double checking what an investment advisor has said
Replies: 22
Views: 2056

Roth Conversion and (2nd time) double checking what an investment advisor has said

Hello, I need to revisit my questions about Roth conversions. This time, my questions arise from advice from a FA that I can’t corroborate on my own. The scenario involves the pro rata rule and converting after-tax contributions into a traditional IRA to a Roth account. Below are the facts, as explained by my FA. Given: Traditional IRA account balance: $700,000 (used for simplicity) New traditional IRA account created for Roth conversions. Input $7,000 of after-tax money. Marginal tax rate = 18% Action: Contribute $7,000 into separate t-IRA and perform a Roth conversion. Due to pro rata rules, the conversion is subject to taxes as follows: a. 7,000/700,000 = 1% which means 99% of conversion is subject to taxes at marginal rate. This means: ...
by cresive
Sat Jan 20, 2024 9:57 am
Forum: Personal Finance (Not Investing)
Topic: help with Roth conversion
Replies: 6
Views: 730

Re: help with Roth conversion

All your traditional IRA's are considered for taxability when doing Roth conversions. Creating additional IRA accounts just for the conversion does not solve the problem. (Legally, you have one traditional IRA. The fact that you might have different accounts for it, even perhaps at different institutions, has no effect.) If the advisor was really suggesting creating another account for a backdoor Roth process, then he is wrong. Your large traditional IRA will still be pro-rated with your backdoor conversion. Thank you for your quick reply. Your statements are what I thought was the situation. Therefore, the only real way to do the Roth conversion is to move all my pre-tax money into my TSP to zero out all traditional investments. This is s...
by cresive
Sat Jan 20, 2024 9:38 am
Forum: Personal Finance (Not Investing)
Topic: help with Roth conversion
Replies: 6
Views: 730

help with Roth conversion

Thank you in advance for reading my post. I have a couple questions regarding a back door Roth conversion I am considering. I thought I was ineligible for a Roth conversion, but after meeting with my Fidelity rep this week, I was presented with a scenario that I did not know was possible. I have a traditional IRA with Fidelity that has well north of $500K in it. I thought that having the funds in a traditional IRA would obviate or at least severely complicate doing a Roth conversion. I was considering moving the t-IRA funds to my TSP account to enable the Roth, but that was a large undertaking. However, my advisor said that if I create a second t-IRA whose sole purpose is to act as a pass-through account for Roth conversion, I can remove th...
by cresive
Sun Dec 10, 2023 8:25 am
Forum: Personal Investments
Topic: Help with brokerage account
Replies: 5
Views: 616

Help with brokerage account

Hello, I have a question about how to best manage investments in my brokerage account. Currently, I have invested in two ETFs which I chose due to the tax management benefits. The majority of my funds are in a domestic total stock account (VTI) and the remainder are in an international total stock account (IXUS). I have T-bills, I bonds, etc. as ballast for the 100% equity exposure outside of my brokerage account. I am looking to invest in individual stocks, such as Coca Cola, Microsoft, Amazon, etc. Do you have any tips on how to effectively manage taxes any gains or dividends using individual stocks? Is there a way to set these stocks up as a dividend reinvestment plan so that I can maintain the tax-advantages of owning the ETFs? Are ther...
by cresive
Fri Dec 08, 2023 8:12 am
Forum: Personal Investments
Topic: Help with Treasury Bills.....
Replies: 5
Views: 654

Re: Help with Treasury Bills.....

It's a matter of perspective. Technically, yes. You get paid the interest when the bill matures. You are 100% correct on that point. But what you're really doing is you're buying the bill at a discount and that interest brings it back up to face value. So, if you're investing $10,000 in a 6 month bill at a 5% yield, you'll pay $9850 for the bill and net $250 once the bill matures. However, there seems to be a misunderstanding - your Treasury position does not compound (unless you reinvest the principle and interest), and you will not earn interest monthly. In your totally not-reality based model, breaking up the payment would yield the same results if the consecutive 4 week yields were the same as the 6 month yield (they're not). Rates als...
by cresive
Fri Dec 08, 2023 8:11 am
Forum: Personal Investments
Topic: Help with Treasury Bills.....
Replies: 5
Views: 654

Re: Help with Treasury Bills.....

Never mind, I finally found the equation to calculate my answer. I don't know how to pull my post, so please don't bother unless you have some good insight that I could use.

Thanks,
Ben
by cresive
Fri Dec 08, 2023 7:50 am
Forum: Personal Investments
Topic: Help with Treasury Bills.....
Replies: 5
Views: 654

Help with Treasury Bills.....

Hello and thank you for reading my post. I can seem to get enough coffee this morning for my brain to function and a question is nagging me that I can’t seem to figure out or let go. I am researching T-bills because I live in a high tax state, so the lack of SALTs is very attractive. I am looking into how T-bills pay interest and can’t seem to understand a simple concept. The way I read it, the interest from T-bills is only paid out after the bill matures—i.e. a 4 wk bill will pay after a month and a 26 wk bill will pay after about 6 months. What I am stuck with is how best to utilize the bills. Assuming no change in interest rates over a 6-month period, and the same interest rate between all T-bills, am I better off buying 6 x 4-week T-bil...
by cresive
Sun Nov 05, 2023 9:30 am
Forum: Personal Investments
Topic: "SALT" reduction [State and Local Tax]
Replies: 12
Views: 3022

Re: "SALT" reduction

"but the interest is not taxed by the county and state governments which is really high where I live." What county in Virgina taxes income? Sorry, I live in Montgomery County, MD. Income and sales taxes are both state and county. I believe income taxes are 5.75% state and 3.2% county. I am a Howard County resident myself, with a large taxable account, so I have similar issues. There is no low-cost MD-only municipal bond fund, and the extra cost of a high-cost MD muni fund would be more than the tax savings compared to a low-cost national fund of comparable risk. Therefore, unless you want to hold individual MD munis, your best investment choice for taxable fixed income is a Treasury fund. (If you are in the 32% or higher bracket,...
by cresive
Sat Nov 04, 2023 7:44 am
Forum: Personal Investments
Topic: "SALT" reduction [State and Local Tax]
Replies: 12
Views: 3022

Re: "SALT" reduction

smitcat wrote: Fri Nov 03, 2023 9:39 am "but the interest is not taxed by the county and state governments which is really high where I live."
What county in Virgina taxes income?
Sorry, I live in Montgomery County, MD. Income and sales taxes are both state and county. I believe income taxes are 5.75% state and 3.2% county.
by cresive
Fri Nov 03, 2023 9:35 am
Forum: Personal Investments
Topic: "SALT" reduction [State and Local Tax]
Replies: 12
Views: 3022

Re: "SALT" reduction

rockstar wrote: Fri Nov 03, 2023 9:29 amMax HSA.
Great suggestions! Unfortunately, I am ineligible for an HSA.
by cresive
Fri Nov 03, 2023 9:21 am
Forum: Personal Investments
Topic: "SALT" reduction [State and Local Tax]
Replies: 12
Views: 3022

"SALT" reduction [State and Local Tax]

Hello everyone and thank you for reading my post. I am hoping to pick the collective brain trust on Bogleheads to help me optimize my savings with regard to state and local taxes (SALTs). I am looking to optimize my tax efficiency in my taxable savings accounts. I don’t have millions in my taxable accounts, so I am looking for smaller funds to help me save. Up to now, I have been using I bonds, which I like for the lack of SALTs, to build a “bond” ladder for my first years in retirement. I have also been utilizing T-bills for similar reasons (see below). Are there any other tools to help reduce SALTs? Currently, I have the following accounts: Credit Union: I have a checking account that I use as a pass-through to pay bills, etc. I also have...
by cresive
Tue May 09, 2023 6:13 pm
Forum: Personal Finance (Not Investing)
Topic: When I'm 84..... [spending plan during retirement]
Replies: 10
Views: 1793

Re: When I'm 84..... [spending plan during retirement]

1moreyr wrote: Tue May 09, 2023 3:33 pm I have a good friend who's parents were very poor and needed to be in a facility. they got government help and were placed in a facility.
it wasn't a place I would have wanted my parents (or my dog) in.

so yes, there is help but you have to decide if you want it and that takes money typically to make that decision
My apologies. I should have made it clear that good health care insurance and LTC-I are included in the plan. I was speaking more to spending on lifestyle expenses. If you are sure you have your back end relatively funded, you can go crazy, again within reason, on the front end.
by cresive
Tue May 09, 2023 8:58 am
Forum: Personal Investments
Topic: EE Bond
Replies: 5
Views: 722

Re: EE Bond

GreatAmericanShrike wrote: Tue May 09, 2023 8:47 am My $25 series EE savings bond bought 06-01-1993 matures 06-01-2023. I have already converted it into Treasury Direct. The Treasury Direct website says:
If you moved your EE bond into a TreasuryDirect account, we pay you for the bond as soon as it reaches 30 years and stops earning interest.

What do they mean by "pay you"? Are they going to do a direct deposit or hold it in Treasury Direct?
It probably means that the proceeds (principal plus interest) will be deposited into the bank account associated with your TD account. Have you set that up yet?

Ben
by cresive
Tue May 09, 2023 8:55 am
Forum: Personal Finance (Not Investing)
Topic: When I'm 84..... [spending plan during retirement]
Replies: 10
Views: 1793

Re: When I'm 84.....

1moreyr wrote: Tue May 09, 2023 8:51 am can you help me understand what you mean by "social capital?"

is this social security and any other government support? or something else?
Sorry,
Too much vernacular. Social Capital = Social Security, pensions, etc. Basically stable income that will last until your demise.
by cresive
Tue May 09, 2023 8:49 am
Forum: Personal Finance (Not Investing)
Topic: When I'm 84..... [spending plan during retirement]
Replies: 10
Views: 1793

When I'm 84..... [spending plan during retirement]

Hello I have a retirement concept that may have been covered, but if not, I would love to get your perspectives. I am about 5-7 years out from retirement and am building concepts about my decumulation phase. I have been looking at my spending plan and plan to use a time segmentation scenario very similar to a bucket system on steroids. I have been contemplating my spending to balance saving for when I am old and can’t take of myself versus enjoying my funds when I am younger and able to go on some adventures, etc. I did a quick exercise that gave me some clarity on my spending plans. I wanted to pass this through the group to make sure I am not way off base. In my exercise, I visualized my life in various go-go, slow-go and no -go phases. I...
by cresive
Sat May 06, 2023 9:00 am
Forum: Personal Investments
Topic: Are Fixed Indexed Annuities worth considering?
Replies: 35
Views: 4839

Re: Reframed perspective on Fixed-Indexed Annuities

Hello, First off, I have read the multiple damning statements on fixed-indexed annuities (FIAs) and Equity-Indexed Annuities. I understand, and agree, that an FIA is a ridiculous choice compared to just going with a simple passive equity-indexed fund. However, I am wondering if there is a place for FIAs when you compare its return against a bond fund. I have found that my bond funds tend to correlate with my equity funds during a market down turn. They also haven’t performed the best over the last few years. I have been speaking with a fiduciary that was sponsored by my workplace. He used the typical sales pitches to sell the FIA, but he seemed to make sense if I want to use the FIA as a parallel tool to balance my equity exposure, compare...
by cresive
Fri May 05, 2023 8:39 am
Forum: Personal Investments
Topic: Are Fixed Indexed Annuities worth considering?
Replies: 35
Views: 4839

Reframed perspective on Fixed-Indexed Annuities

Hello, First off, I have read the multiple damning statements on fixed-indexed annuities (FIAs) and Equity-Indexed Annuities. I understand, and agree, that an FIA is a ridiculous choice compared to just going with a simple passive equity-indexed fund. However, I am wondering if there is a place for FIAs when you compare its return against a bond fund. I have found that my bond funds tend to correlate with my equity funds during a market down turn. They also haven’t performed the best over the last few years. I have been speaking with a fiduciary that was sponsored by my workplace. He used the typical sales pitches to sell the FIA, but he seemed to make sense if I want to use the FIA as a parallel tool to balance my equity exposure, compared...
by cresive
Mon Feb 27, 2023 8:05 am
Forum: Personal Investments
Topic: Sunday morning cogitation: when is a financial advisor worth it?
Replies: 32
Views: 2544

Re: Sunday morning cogitation: when is a financial advisor worth it?

Wannaretireearly wrote: Sun Feb 26, 2023 8:53 am I’m starting to work with a new Fido advisor. So far so good, we are on the same page.

I had the convo this week, and I was brutally honest that other Fido advisors had led me to a non Fiduciary path. This particular advisor actually took the time to really assess our goals and get a good idea about our expenses. Not try to direct me to something that benefits Fido!

I’ve persevered with Fido advisors cos my first one was great (but retired!) and second, it’s free & I have the majority of my NW there so I expect some decent service. I also would like to set this up so that DW has an actual person to talk to in case I get hit by a bus!
Fido? Is that fidelity advisor?
by cresive
Mon Feb 27, 2023 8:03 am
Forum: Personal Investments
Topic: Sunday morning cogitation: when is a financial advisor worth it?
Replies: 32
Views: 2544

Re: Sunday morning cogitation: when is a financial advisor worth it?

dbr wrote: Sun Feb 26, 2023 8:50 am A thought is that if a person in retirement estimates their margin of safety as keeping withdrawals down at 4% of original portfolio value, then a 1% AUM takes away 25% of the income available from portfolio withdrawals. It seems to me paying that is insane. Retirement would be the worst time to penalize one's self with costs.
Good point, well made.
by cresive
Sun Feb 26, 2023 7:53 am
Forum: Personal Investments
Topic: Sunday morning cogitation: when is a financial advisor worth it?
Replies: 32
Views: 2544

Sunday morning cogitation: when is a financial advisor worth it?

Good Morning, Okay, It’s Sunday Morning and the caffeine is kicking in so I apologize in advance. However, I was reading the threads on the value of an investment advisor and a controversial thought entered my head. I agree, if you are in your 30’s and pick a simple balance of passive ETFs/mutual funds, you don’t need an advisor helping himself to 1% of your AUM. Over the course of 30 years, this can be a LOT of money. However, what about as you enter into later years of retirement? The effect on overall asset growth may not be as significant and it may offer a valuable service. Hear me out. If my life plan works, I am about 7 years away from retiring (at age 67). What I am speaking to is my later years in retirement. As I transition from m...
by cresive
Sat Oct 29, 2022 9:28 am
Forum: Personal Investments
Topic: Help with new TSP Contribution Limits
Replies: 6
Views: 905

Re: Help with new TSP Contribution Limits

stan1 wrote: Sat Oct 29, 2022 8:55 am What is your current federal and state tax rate?

There often is not an optimal answer in a situation like yours because we can't predict the future. I think your approach of doing some Traditional TSP and some Roth TSP contributions is a good one. I'd put the additional contributions into your Roth since your Traditional balance is much higher than your Roth balance, especially if you are planning to leave the Roth balances to your heirs.
My effective tax rate is about 16% federal. I have no idea how to calculate MD taxes. Thanks for your input. I was considering such an option, but glad to hear other opinion to help with confidence.

Ben
by cresive
Sat Oct 29, 2022 8:52 am
Forum: Personal Finance (Not Investing)
Topic: Real world expenses changes after retirement
Replies: 36
Views: 5366

Re: Real world expenses changes after retirement

Great Information, thank you!!!
by cresive
Sat Oct 29, 2022 8:49 am
Forum: Personal Investments
Topic: Help with new TSP Contribution Limits
Replies: 6
Views: 905

Help with new TSP Contribution Limits

Good morning, I have been wracking my brain as to what to do with the new TSP contribution limits. The new limits will enable me to make an additional $3,000/yr. contribution. However, I am (over)thinking whether to increase my TSP contribution to keep up with the maximal levels, or add the additional funds to my brokerage account. In my mind, I have already accumulated sufficient tax-advantaged account balances (see below) projected to support my retirement. However, I want to maximize my retirement funds where possible. My struggle is to try to build a tax-agile retirement, which will include building up my ROTH and brokerage balances. Since I live in a HCOL, my compromise is to maximize my traditional TSP ($20,500) year and add the catch...
by cresive
Fri Jun 03, 2022 11:08 am
Forum: Personal Finance (Not Investing)
Topic: Real world expenses changes after retirement
Replies: 36
Views: 5366

Re: Real world expenses changes after retirement

It all depends completely upon the individual. In my experience: The employment period outflows that always go down: FICA and medicare taxes Contributions to tax-advantaged retirement plans Commuting costs (may be replaced by increased leisure travel) Professional education expenses, union or professional dues and subscriptions Disability insurance The employment period outflows that usually go down: Work clothing and dry cleaning Lunch out, morning coffees Life insurance Existing outflows that often increase in retirement or new retirement outflows: Leisure travel Dining out Hobbies and activities Medical expenses as one ages Home and auto maintenance and home improvement (if one outsources previous DIY tasks) Charitable giving Spending o...
by cresive
Fri Jun 03, 2022 9:31 am
Forum: Personal Finance (Not Investing)
Topic: Real world expenses changes after retirement
Replies: 36
Views: 5366

Real world expenses changes after retirement

Hello, I have a real-world experience question concerning the proposed decrease in expenses after you retire. Excluding saving for retirement and FICA taxes, which obviously go away, do other real-life expenses go away or are they replaced with retirement expenses? For instance, many work expenses such as work suits, commuting and possibly lunches don’t really go away. My job has a casual dress code, so I basically wear my normal wardrobe, therefore I would realize no real change. My commute isn’t too large and will probably be replaced by driving to lunch or hobbies, again = no change. I don’t really buy lunch too often, and will probably eat out with friends about the same rate after I retire. What have those who have actually retired exp...
by cresive
Fri Jun 03, 2022 9:13 am
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Re: Retirement Mistakes

1. I don’t want to have to manage everything, especially if I am sailing the Mediterranean for the summer. 2. As I get to my no-go years, I want another, competent set of eyes watching my bottom line. However, I don’t think I will hire a financial advisor until I run into these situations. I can use the $10K/year for sailing lessons until then. The second mistake was holding too many long-term investments later in life. My retirement is comfortably funded, so when I mapped out my last buckets (years 10+), I planned to leave them quite equity heavy. This article has me second-guessing this plan. Also, I do see their arguments that you don’t really need the increased return and you certainly don’t need the downside of being stock heavy. I am...
by cresive
Sat Apr 09, 2022 9:27 am
Forum: Personal Investments
Topic: Question on Back-Door Roth Contributions
Replies: 2
Views: 308

Question on Back-Door Roth Contributions

Hello All, I know this has probably been covered, but I need some clarification. I have just recently passed the threshold of contributing to a Roth IRA. Currently, I am buying the maximum of I bonds as my alternative to Roth contributions. I like the I bonds, but would prefer to continue with my Roth. I was hoping to explore how to do a back-door Roth. First off, am I able to do one if I already have a traditional IRA? I have about $500K in a traditional IRA that I can move to my TSP funds if needed. I suspect the answer is no. I do have a Roth option in my TSP, but liked adding to my Roth IRA in addition to the TSP. My concept of back-door Roth is this: 1. Move ALL my traditional IRA money to another type of tax-sheltered account. This wi...
by cresive
Mon Apr 04, 2022 12:45 pm
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Re: Retirement Mistakes

I am a big believer in bucket strategy's, but I do admit that it is only mental accounting. Just one of many withdrawal strategy's that will most likely be successful, but will make you believe in your brain that failure isn't possible. I like the bucket strategy for personal reasons. I will have to admit, I am still working out the kinks in the concept, but like the idea of putting away cash for sequence of returns risk. After the first 5-6 years, I don't have a real concept of how to manage a bucket system. What also increased my fondness for the bucket system came from a personality test I did last year. I did a few self-evaluations from Wade Pfau's new book, including a RISA profile. My profile said I would probably align with a "...
by cresive
Mon Apr 04, 2022 12:33 pm
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Re: Retirement Mistakes

willthrill81 wrote: Sat Apr 02, 2022 7:20 pm If you merely want 'eyes' on your portfolio, especially as you age, then a good CPA can do that and won't charge you an AUM fee.

Many have the ability and willingness to be very aggressive with much of their portfolio well into retirement and are investing for those who will survive them. This is a perfectly plausible idea, and anyone who says that they should not invest this way merely because they do not personally 'need' to is just plain wrong.
Great point!!!
Thanks,
Ben
by cresive
Mon Apr 04, 2022 12:32 pm
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Re: Retirement Mistakes

I apologize for not having the reference, but I ran into some old notes from an article I recently read while I was cleaning off my desk. The article addressed the biggest retirement mistakes people make. There were the usual: Starting to save too late, not paying attention to health, etc. However, two stood out to me and I would love some feedback. The first was paying too much for a financial advisor. IF you have a $1MM account and pay the average (1% of AUM) you are paying $10,000/year. If all you get is a 1-hour review of your situation then you are paying too much. Even if the advisor spends 6 hours in addition to work up a game plan, you are still paying him about $1,430/hr. I am a go-it-yourself retirement planner, but I do want to ...
by cresive
Mon Apr 04, 2022 12:22 pm
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Re: Retirement Mistakes

I apologize for not having the reference, but I ran into some old notes from an article I recently read while I was cleaning off my desk. The article addressed the biggest retirement mistakes people make. There were the usual: Starting to save too late, not paying attention to health, etc. However, two stood out to me and I would love some feedback. The first was paying too much for a financial advisor. IF you have a $1MM account and pay the average (1% of AUM) you are paying $10,000/year. If all you get is a 1-hour review of your situation then you are paying too much. Even if the advisor spends 6 hours in addition to work up a game plan, you are still paying him about $1,430/hr. I am a go-it-yourself retirement planner, but I do want to ...
by cresive
Fri Apr 01, 2022 2:08 pm
Forum: Investing - Theory, News & General
Topic: Problem with Saving Roth for last in Retirement
Replies: 19
Views: 4433

Re: Problem with Saving Roth for last in Retirement

Thanks for the answers. ALL good points. I am glad to hear that I am not the only one thinking the blended approach has merit.

Ben
by cresive
Fri Apr 01, 2022 2:06 pm
Forum: Personal Investments
Topic: Retirement Mistakes
Replies: 115
Views: 29080

Retirement Mistakes

I apologize for not having the reference, but I ran into some old notes from an article I recently read while I was cleaning off my desk. The article addressed the biggest retirement mistakes people make. There were the usual: Starting to save too late, not paying attention to health, etc. However, two stood out to me and I would love some feedback. The first was paying too much for a financial advisor. IF you have a $1MM account and pay the average (1% of AUM) you are paying $10,000/year. If all you get is a 1-hour review of your situation then you are paying too much. Even if the advisor spends 6 hours in addition to work up a game plan, you are still paying him about $1,430/hr. I am a go-it-yourself retirement planner, but I do want to g...
by cresive
Mon Mar 14, 2022 7:02 pm
Forum: Personal Finance (Not Investing)
Topic: mortgage paid off - extra monthly cash
Replies: 49
Views: 6429

Re: mortgage paid off - extra monthly cash

First off, congratulations on paying off your mortgage!!!

As for how I manage taxes, etc I opened an online savings account, linked to my checking account, where I put away money to cover just such issues. I used the account to save for the tax bill (due in November) and a little extra for any issues. I had a condo and was always prepared for an assessment. You could keep part of your emergency fund specific to home repairs, etc.

I would also max our my 401K as you don't have interest payments to deduct from your taxes. Reducing your salary via the pre-tax savings is a good way to lower your burden.

I can give you my checking account number if you need another place to stash your extra loot!!

Ben
by cresive
Mon Mar 14, 2022 6:57 pm
Forum: Investing - Theory, News & General
Topic: Problem with Saving Roth for last in Retirement
Replies: 19
Views: 4433

Problem with Saving Roth for last in Retirement

Hello, I have been giving some thought to sequence of tapping retirement funds (brokerage > Tax Deferred> tax exempt). I am perplexed about how such a scenario could result in a terrible mistake. That is, by taking money from your brokerage accounts, then traditional IRAs THEN Roth IRA fund you may really miss out. Take an example of someone with sufficient retirement funds in the three accounts above. He judiciously taps funds in a conservative manner. He also enjoys a classic Go-Go, Slow-Go, No-Go retirement. During his Go-Go years, he taps mostly his brokerage and a little of his trad IRA and maintains this sequence into his Slow-Go years, eventually tapping mostly trad IRA funds. As he enters his No-Go years, he becomes more of a home b...
by cresive
Tue Mar 08, 2022 11:41 am
Forum: Personal Investments
Topic: How are Mutual Funds/ETF taxed in Retirement
Replies: 4
Views: 532

How are Mutual Funds/ETF taxed in Retirement

Hello,

I have been researching this all morning. I have confirmed that if you sell stocks, after meeting specific holding requirements, that are held in a brokerage account the profits are taxed as capital gains--i.e. rates of 0%, 15% and 20%. I have also found out that if you claim dividend income from the long-held stocks (minimum of 60 days prior and post dividend declaration), you are also taxed at the capital gain rate.

My question is, what if I tap dividend income from an ETF (or mutual fund) held in my brokerage account? Is that considered long-term capital gains if I have held the ETF for many years? If the ETF is in a traditional IRA, is that taxed as normal income?

Thank you for your time,
Ben
by cresive
Thu Feb 10, 2022 1:35 pm
Forum: Investing - Theory, News & General
Topic: Fun article comparing Vanguard, Fidelity and Schwabb
Replies: 8
Views: 4897

Fun article comparing Vanguard, Fidelity and Schwabb

this is a fun read comparing the three biggest finance companies. No clear winner, but a nice review of the companies.

Ben


Here is the link:

https://www.msn.com/en-us/news/finance- ... ocid=Money
by cresive
Wed Feb 09, 2022 1:36 pm
Forum: Personal Consumer Issues
Topic: Why Fed Employee Maximum doesn’t include locality?
Replies: 6
Views: 749

Re: Why Fed Employee Maximum doesn’t include locality?

Without all the information on your case, I assume you are a GS15 with a high enough step level to bump into the caveat statement on the GS web page:

"* Rate limited to the rate for level IV of the Executive Schedule (5 U.S.C. 5304 (g)(1))."


You can find more information here:

https://www.opm.gov/policy-data-oversig ... finitions/

Ben
by cresive
Thu Jan 20, 2022 12:55 pm
Forum: Personal Investments
Topic: Investing in I Bonds vs TIPS Index funds
Replies: 3
Views: 738

Re: Investing in I Bonds vs TIPS Index funds

Dear BHs Appreciate your help with the below queries: 1. Is investing in TIPS funds/ETFs (e.g., VTIP e.r. 0.04 or SCHP e.r. 0.05) also a good option to consider instead of I Bonds for part of the bond component of one's portfolio? 2. We have some money (beyond emergency funds) in our checking account sitting idle for the last several years. Although we have been contributing actively to 401k for the last 3 years and started our Roth contribution last year, we have not been able to invest this money in our checking account, for various reasons - including not want to incur a sudden loss of value in case we were to plan some career changes, including an early retirement. Given that this money is losing value to inflation, and also factoring ...
by cresive
Wed Jan 19, 2022 10:26 am
Forum: Investing - Theory, News & General
Topic: I and EE bonds vs. index
Replies: 53
Views: 4429

Re: I and EE bonds vs. index

jason2459 wrote: Wed Jan 19, 2022 10:24 am Are you sure a person is forced to redeem any of the bonds at 30 years?
I think what the poster meant was that the EE bonds no longer accrue interest after 30 years. IF you don't cash them, you have dead money.
by cresive
Wed Jan 19, 2022 10:24 am
Forum: Personal Investments
Topic: Help with TIPS mutual funds and ETFs
Replies: 1
Views: 302

Help with TIPS mutual funds and ETFs

Hello, I have a question as to how to review the performance of my TIPS mutual funds/ETFs. I understand the basics of how tips work: Return = Fixed rate + CPI. That is, if I buy $1,000 of TIPS in a 3% inflation environment and the TIP pays 2% then at the end of the term: Inflation adjustment: $1,000 + (1,000 * inflation) = $1,000 + $30, or $1,030. Return : Value * interest rate or $1,030 +(1,030 * 2%) = $1,050.60 While that seems like simple arithmetic calculations, it is complicated by the fact that you can have negative fluctuations before maturation of the bond. Also, How the heck do you follow this in a bond fund or ETF?! I am trying to figure out how my TIPS funds have performed compared to my other bond funds, Barclay’s Index fund. Fr...
by cresive
Sat Jan 08, 2022 8:24 am
Forum: Personal Investments
Topic: Question on TIPs
Replies: 4
Views: 936

Question on TIPs

Hello, I think I may have made a poor decision regarding treasury inflation protected securities (TIPS). In my retirement accounts, I am limited to bond funds, which lose money during rising interest rates. Since interest rates increase in response to inflation, I was thinking TIPS funds may offer some protection against loss due to increasing interest rates. A bit of history: Due to the low inflation of recent years, TIPS had horrible returns. Therefore, I moved all my “safe” money into a Barclays index bond funds. I was relatively happy with that. Given the recent increased inflation, and I predict an increase in interest rates, I have been rethinking TIPS. My Question: As usual, my thinking has led to confusion. The way I understand it, ...
by cresive
Tue Nov 30, 2021 9:03 am
Forum: Personal Investments
Topic: Estate question about I-bonds
Replies: 1
Views: 400

Estate question about I-bonds

Dear BH Readers,


Hello, and thank you for helping me on this subject. I have dabbled with I-bonds over the years, but as I approach my retirement date (2-7 years away), I am looking at them more seriously. I plan to buy as many I-bonds as I can afford after maximizing my TSP and Roth IRA contributions. I have read several threads on BH and one issue keeps popping up—how to explain a TD account to your heirs. Also, tax issues with estates. If I originally set up my TD account in the name of my living trust, does that help alleviate some of the tax issues? My successor trustee should be able to cash out I-bonds in a more tax-efficient way versus an executor of an estate. Am I missing something in that assumption?

Ben
by cresive
Mon Nov 08, 2021 8:11 am
Forum: Personal Investments
Topic: Question about TSP-I Fund
Replies: 13
Views: 1700

Re: Question about TSP-I Fund

On a second note, I am allocating 100% equities for all new contributions to my TSP. My TSP account is only a few years old, so the total balance isn’t high enough to matter. I have a Trad IRA and a 403B with enough allocated into bonds that more than cover my asset allocation. Among these three accounts, what goes where should be determined by the quality of the options. Does the 403(b) have equally good options in US stock, foreign stock, and bonds? If so, then you should probably hold bonds in your TSP, because the TSP G fund is better than anything you can get at retail. If not, there is likely more difference among the quality of options in the 403(b) than in either of the other accounts, so you should hold the best option there. Very...