Bogleheads.org

Hello, I'm seeking advice on the optimal HSA strategy, assuming you max out all retirements accounts. First, recognize that the 'optimal' strategy depends on your life-long medical expenses. Therefore you can't actually execute optimal since we don't know the future. Second – and this is something not often brought up – pulling money out of the HSA and investing it in taxable can sometimes be better than keeping it in the HSA in a future where you do not exhaust your HSA with medical expenses and you bequeath it to a taxable entity (non-spouse individual) or you eventually choose to withdrawal from it paying regular income taxes when you have no more receipts to reimburse. There are the following competing forces that determine the better ...

(see IRS Publication 560, Chapter 5 worksheets/tables). If your spouse’s net s/e earnings are the $25k max in your example, your spouse could not make the contributions in your example of $28,550 ($22,500 employEE and $6,050 employER). Thank you, very helpful. I was not aware of the 50% difference between employee net income and employee 401k contribution limitation. As such, it sounds like 100% contribution is possible up to net income (after SEP tax is paid) of the 401k individual contribution limit. Between there and the total limit (66k currently), the contribution max is essentially 50% and then 25% (once employer contribution reaches 25% of net income). In our case, the 22,500 limit will likely be high enough that no additional net i...

Just wanted to check my understanding and plan with the hive mind. Relavent info: MFJ, 22% marginal tax bracket Max his 401k Max his Roth IRA Max her Spousal IRA / Roth IRA (to stay at the top of 0% LTCG bracket) Company stock that needs to be diversified: ~80k NQSO expire in 2025-2027, ~60k in old ESPP/RSU shares before I started selling ASAP with ~25% (15k) gain Wife is starting a part-time gig from home (not real-estate), with no employees and anticipated annual income of 15k-25k. Our plan is: Open a solo 401k through Fidelity Deposit as much income as possible: This should be up to 22,500 for personal contribution (after paying payroll / self employment tax), and up to 25% of total profit as a contribution from the business. I anticipat...

OP,
Sealing an air passage between one floor and an attic once cables are pulled is also a fire safety issue in addition to preventing critters. With a clear air passageway, it can become a chimney and draft hot flames up to catch the attic on fire, reducing the time to flashover. Don’t skip this step.

We purchased a home this year and moved a few months ago. For various personal and life reasons, we haven’t gotten our old place on the market yet. Are there any options or something similar I could purchase to effectively buy insurance against faster than expected rising interest rates which could be correlated with a reduction in future sales price?

I’m kinda at the point where I’d rather spend $5k now to avert faster than expected 30-year mortgage rate rises causing a sales price to dip $25k, and then if it doesn’t happen, I just eat the $5k as cost of the insurance. It would relieve stress and help me breathe at night through the holidays and get things done by Jan/Feb timeframe.

how are you navigating these times as an employee or in management? I've been lying low so far through COVID. Two weeks ago, I got an additional in-person nudge that "the expectation of all employees is that office occupancy should now be at pre-COVID levels". I don't see this changing given our company leadership. I have two 5-year-olds. The last 2.5 years has allowed me to grow up with them. I have found this is incredibly valuable. I also hate driving, I do not want to move, and my current home is about 50 minutes drive each way. I will stick it out for the next two months driving in, getting less done, and being mostly miserable simply because of how bonus / profit sharing vests and then start looking for remote gigs at the n...

I've been comfortable with 100% equity allocation so far (coming up on mid-40s, 15-20 years prior to retirement). I'm fairly risk tolerant, but the 'bond tent' concept to manage SOR risk of early retirement and increasing equity allocation thereafter does make sense and match with our longer term financial goals (manage risks, but maximize long-term growth and assets to donate or bequeath given needs are satisfied). Given that we seem to be in a rising rate environment, I'm wondering whether it might at some point make sense to accelerate transitioning to some bond allocation in advance of my original plan, which would have waited until 5-10 years before retirement to start buying bonds. If long term rates go up significantly, would it make...

This sounds like a reasonable idea to me. Two thoughts: Be sure you understand the in-plan conversion rules and the Roth 5-year rule if you are within five years of 59.5 years old. The real benefit of this is actually that the earnings from the eligible expense money with receipts you now have in the HSA will instead grow (also differed) in the Roth. This provides three benefits: (1) easier to handle receipt documentation; (2) withdrawals of earnings on this converted principal after age 59.5 are tax-free instead of taxed at your marginal rate; and (3) tax implications to heirs is more flexible with Roth account money than HSA money, unless the intended beneficiary is a charity or spouse in which case it doesn’t really matter (until the sam...

If you want about 3 hours of toaster audio review content to make you laugh, check this out:
https://www.caseyliss.com/2015/9/10/sir ... n-toasters

John Siracusa's final recommendation is the Breville 650 XL:
https://hypercritical.co/2020/08/31/good-products

The reason that losing the ability to drive in most of the USA is terrifying is that most places we live are car-dependent. Even if you’re willing to walk long distances in our unpleasant environment, walking is becoming more dangerous as vehicle speeds increase. Would your parents be interested in moving to a location where not driving wasn’t a large loss of access to the goods and services they need?

This is precisely why I will absolutely ensure that I move to an area that is not car-dependent once I retire. It’s non-negotiable. A move at 60/65 is much easier than at 80/85.

I'm mortgage shopping. So far, I've gotten the following rate quotes (all with zero points, credit score is 760+): Local mortgage broker (who real estate agent uses) 6.25% USAA 5.75% (and buy downs are slightly cheaper than 1 point = 0.25%. e.g.: 1.625pts = 5.25%) aimloan.com 5.25% Questions: Why are these rates so much different from each other? Can an 'internet' loan actually close on time? Aimloans claims 21 days, but I don't know whether to trust that. I really don't want to lose this house over $80 a month from a 0.25-0.5% interest rate difference Are there any 'reputable' online lenders who can close quickly (30 days) whose final approved rate sheets would not be ignored if given to a local broker to try to match? Or will they just ig...

I’ll just offer that Ames may be one of the small college towns where having a car during your stay might be more hassle than it’s worth. Their bus system is one of the best in the nation for such a small town, with busses arriving every 10-20 minutes on most routes:

https://www.cyride.com/

No idea what the best way to get from Ames to/from nearby airports though.

As others have said, ROI from property investors comes from rents. If housing appreciated as fast as the SP500 (normalized to 1984 below - earliest data on median income), a median home today would cost 5.3 million dollars in January 2021 (it was 393k as of January 2021)



Data pulled from FRED.

Note though that there was two decades (1964-1984) where home price and SP500 total return tracked each other.

Nobody knows nothing. But I sure hope home prices don’t outpace income long term so that my grandchildren can live in something other than a cardboard box.

I could be wildly wrong, but as a near-40-year-old, if long term rates go in an upward trajectory, I’ll make lemonade out of lemons. Once they get over 8-10%, I might be in my 50s and just at the right time to migrate from 100% stocks to something like 70/30 or 60/40 to provide a bond tent 5-15 years before retirement. That would give me SOR protection and upside opportunity if inflation moderates.

I would certainly start loading up 20k on ibonds every year once the flat rate exceeds 6-7% (though since they haven’t inflation indexed that 10k/year limit, it may be negligible at that point).

Cash.app taxes isn’t bad (they purchased it from Credit Karma), but it will put him on mailing lists.

If he has time and is inclined, I’d actually recommend he fill out a paper return manually. It will teach him a lot about our tax code and the various tax credits and deductions available so he can optimize his tax situation over the next decade.

Just thinking out loud here: If: Investment A has a market expected tax rate of 15% (so you realize 85% of growth) Investment B has a market expected tax rate of 30% (so you realize 70% of growth) Would one expect investment B to provide higher return for the same risk? And if so, are there arbitrage opportunities to hold assets in Roth accounts that are taxed at higher rates when held in taxable? I know this is related to the basis of tax efficient fund placement, but that’s not what I’m asking. Rather, for instance, I’m wondering whether there might be options strategies (or another financial vehicle) which would be at risk-parity with owning an underlying stock, but because of their short-term capital gains taxation in taxable accounts, ...

I’m also an engineer, not an acoustician. But before going to engineering school, I worked in a recording studio for several years, helped them build out a new space, and did a lot of reading. If you want a good reference to get into the details, pick up a copy of Alton Everest’s “Sound Studio Construction on a Budget”. But sound isolation is highly non-linear. That essentially means two things: To prevent transmission through a barrier, you have to get 99.999% of the air gaps filled. To stop appreciably more sound once air gaps are minimized, you have to drastically increase the barrier’s impedance – through a combination of large increases of mass, decoupling transmission through rigid materials, and forcing multiple impedance (density) c...

I haven't (yet?) had 20% but it goes up every year for sure. In addition to what you mentioned, the deterioration in driving habits since the pandemic has set back crash statistics by 15 years or so. IMO, the proposition/assumption that ‘reckless driving’ is mainly to blame for increased crash damage and deaths is a lazy journalist-proffered ‘assumption as news’. The shifting of more vehicle miles traveled to periods of low congestion when speeds are higher is a much more reasonable hypothesis that will be tested as NHTSA releases data for 2021 and 2022. https://www.theguardian.com/us-news/2021/mar/04/us-sharp-increase-traffic-crash-deaths-2020 But likely the biggest impact to insurance rates is simply because the blue book value of used c...

One thing occurs to me: the typical advice is that TLH ‘makes sense’ if you later sell the asset at the same or lower tax bracket in the future.

Does the ‘value’ of carryover losses diminish with inflation such that the expected time horizon before selling gains should inform how beneficial taking excess losses might be?

Call me skeptical of insurance companies, but around 2008-2012, my insurance company kept ‘adjusting’ my home valuation up, suggesting I should insure it for more than market value and more than the real replacement cost. I had to manually go in and adjust the renewal proposal along with all sorts of warnings. Fast forward to the last three years as values have skyrocketed, build cost is through the roof, and I probably am slightly under-insured? They haven’t contacted me at all or attempted to revise it. Incentives are strange. My skeptical hat thinks home insurers were losing their bacon due to credit issues or something else in the aftermath of 2008 and were trying to squeeze premiums without ‘raising rates’, and now that money is free t...

Whenever I have to call a credit card fraud department, as soon as I get to the point in their prompt where they say something like ‘we understand this is irritating, but we at [credit card company] care deeply about protecting your liability.’ I always calmly interject:

“Please inform your manager that I believe that statement to be factually false. My cardmember agreement legally guards me from any liability. Fraud protection measures protect your company’s liability for fraudulent purchases, not mine. If you were honest about this and explained it in these terms, I’d understand. But I have little patience as a customer for my service provider lying to me. Thank you for assisting me, and have a nice day.”

One odd inconsistency occurs to me. We frequently see threads that address these two issues:

• Mitigating sequence of returns risk
• Optimizing social security start date

Don’t these impact each other? Why are they not analyzed together?

It seems the true risk trade-off for SS claiming age may be mitigating SOR risk by claiming early vs mitigating longevity risk by claiming late. The magnitude of these risks and therefore the wisdom of claiming early or late would be modified by retirement start age, allocation, and portfolio size versus expenses.

We are planning to move to a HCOL area … Paying cash by selling stock also is not great, due to the tax implications. We could, however, probably sell enough stock with minimal capital gains to cover a downpayment if we desired, with minimal tax implications. Given that you also stated you only have 25k of dividend income because much of the assets are in BRK, I think your hangup is actually an over-zealous desire for tax optimization given your situation. My thoughts which haven’t been brought up so far: Make sure you evaluate LTCG tax consequences based on your effective tax rate (average tax paid on all of your realized gains, not marginal rate of the last dollar) to liquidate to have enough cash to buy with cash. Then compare that to t...

nisiprius wrote: ↑Sun Feb 06, 2022 12:07 pm One of the longest known financial time series happens to be real estate, specifically housing in the wealth Amsterdam district of Herengracht, and it includes one period in which real estate crashed in inflation-adjusted real value and took about a century to recover. Keep that in mind when people say that real estate is an inflation hedge.

This is a great historical chart. It supports my conjecture: that housing real estate cannot simultaneously be a good investment and remain affordable to future generations.

I think many people are deluded into thinking ‘real estate appreciates’ because of interest rate history for the last 40 years.

FrugalProfessor wrote: ↑Sat Feb 05, 2022 10:43 am
I understand the bonuses to be separate across IRA & taxable. $95k Roth transfer + $120k brokerage transfer does not equal a combined $215k transfer for purposes of the bonus. It would be handled separately.

Thanks. So optimal bonus strategy would be to initiate a single Roth IRA and a single CMA account, and fund both of them to 200k (400k total value). Doing so would yield 2x$600 bonus = $1200, with $600 deposited into each account after 180 days. Correct?

I may be short in both respects. Only around $140k in taxable available and $160k in Roth across accounts that I could transfer in via ACAT. So it looks like I’m limited to $250 bonus for each.

Is there a good primer for how to qualify for bonuses, etc?

I have a 95k Roth and 120k taxable (CMA) I wouldn’t mind moving over to get the bonus. But I’m confused about whether all bonus qualifying assets must be in the same account or if it is summed together for qualification, what determines which account the bonus will be deposited into (would prefer the Roth of course), and whether/how you have to sign up for a checking account to get the 75% boost. I’m generally confused by this fine print:

“Offer valid for new individual Merrill IRAs or Cash Management Accounts (CMAs). Offer is limited to one CMA and one IRA, with no more than two enrolled accounts per accountholder.”

Inflation eats into that discount some now, but it’s still better than cash back. However, if Citi eliminates the cash back option I will jump ship to BofA/Merril Edge 2.65% with a $100k IRA. I should move money to Merrill for the BOA card but am too lazy right now. You both should not wait and get on the BoA/Merrill Edge bandwagon now! I did this last year and now I am getting 2.62%, 3.50% or 5.25% cash back on all of my purchases (using 2-3 BoA CCs). I moved $100k+ in Vanguard ETFs. I think I will. Last time I checked I think ML didn’t have free stock transactions, but it looks like that is now free. My monthly spend on my ‘main’ card is around 2500/month, so the extra 0.62% should met me around $180 per year ($60 more than the gift card...

FIRWYW wrote: ↑Fri Feb 04, 2022 7:41 amOut of principle (and costs for the funds I want is slightly cheaper, but wasn’t enough reason before this), our funds go to fidelity.

We can buy Vanguard ETFs for free in Fido/Schwab accounts, right? And Fido will let you buy fractional shares. Seems like no downside other than potential (in normal interest rate times) to get better money market rates at Vanguard.

Hello, I have a Citi double cash credit card and wondering what is the best way to maximize the points. Am I missing anything here. If anybody is currently getting more than 1 cent per point, would you please share how you do it. Thanks Frugalneurologist I could care less about airline point games. That seems like a game dreamed up to make people who want to spend money on luxury (business / first class travel) feel like they are saving money when they are actually spending more. But I have bulk transferred all my points on Black Friday to thank you points for a 20% off Black Friday gift card sale they have run the last three years. One year it bought an iPhone for 20% discount (apple card) which isn’t achievable any other way. Another yea...

niagara_guy wrote: ↑Thu Feb 03, 2022 6:10 pm Anybody watching the Olympics without cable/satellite? I signed up for a free Peacock.com but it looks like there are no live Olympics there. Any other way to watch without paying? Anyone else sign up for pay Peacock and then cancel after one month?

The Olympics content require the $5/month Peacock tier. $10/month tier removed commercials.

Best and easiest $10 I’ve ever spent to make my family happy. I’ll cancel after it’s over.

The app and individual event video edits seems to be a bit better than the NBC Sports app was in 2020 for the summer Olympics.

Heck, I don’t even have a DAF yet, and this along with other Vangaurd moves is making me seriously consider moving my nascent taxable account currently at Vanguard to Fido or Schwab looking forward to a future DAF at those brokerages.

Spend money in this order: Room: Choose the right size and shape room. Not cubic. Not square. Symmetric left/right. Isolated from external noise. Speakers (subwoofer is where you will see the most difference between cheap and good) Speaker Layout (5.1, 7.1, various Atmos setups) Some of the setups > 5.1 have 'overhead' speakers which are impressive and immersive, but only when watching movies with vertical sound information common (think: Star Wars). But #1 and #2 above matter way more than #3. If you're curious on subwoofers, good ones can be had for the mid-hundreds as long as your space isn't so huge that you need a really big one. I have a scratch & dent PB-1000 SVS sub and it is superb. Klipsch also makes some affordable options as...

Does this mean UBS will be modernizing and allow stop loss orders within my employer-mandated UBS ESPP account, and reduce their commission fees?

(They did reduce their commission from $20 to $5 about two years ago)

Besides, it’s highly likely you will massively overspend what you could possibly save in an HSA. If you don’t want to track receipts, you can wait until you’re old and need to pay for care. There's definitely something to this. Few will accumulate more than $300k or so in their HSA, and most will have significantly less. Spending that on healthcare in retirement shouldn't be a problem for most, and there are no RMDs on the funds to worry about. The biggest drawback of an HSA is the poor tax treatment for non-spousal heirs, who must take the entire balance as income in one year. Due to this, those who want to give to charity anyway may want to bequeath their HSA to a charity and leave other assets with better tax treatment to their heirs. I...

One thing that doesn't often get separated here is the (vast) difference between rural land and urban land speculation / holding. Rural: Value appreciation could be very limited. But it may provide non-investment benefits to your family and friends (hunting land, vacation home, etc.). If viewed as an expense, it could be an expense that holds its value. Or not. But if done to provide other benefits, it can be the best of both worlds. Urban: Value appreciation in a city that grows over the next 30 years is likely quite high - but predicting this can be very hard. Just ask someone from Detroit in 1960 when their population peaked. It is now roughly a third of the peak in 60s (https://www.visualcapitalist.com/10-most-populous-u-s-cities-1790/)...

This seems like a big deal to me. I’m just at the point of starting a taxable account. The threads on Schwab vs Fidelity vs Vanguard never answer these three questions, which seem imperative to know when choosing or switching brokerages, especially for a taxable account: What do their year-end summaries look like? How easy are these to use for tax reporting and basis recording? How long will basis information be available electronically? (Assuming they were purchased post 2010 reporting rules) What cost basis information will be sent and received by a future broker if I change brokers in the future? I realize all this can change in the future, but at least it’s a starting point. And I have no idea how different brokerages compare here. I al...

3M is more than most Americans will ever have, at any age. You’ve done great so far. It is all about expenses though. Using a super conservative SWR of 3% suggests you’ll likely be able to spend 90K every year when you retire, just from what you already have. You’re probably going to get 40-50K from social security at 70. So that’s quite a bit, really. That’s likely more than you spend now. This. Run your spend out at 3%, 3.5% and 4%. Then see if that allows you to live well (with your spend). If even at 3% you can, then, yes you can loosen up. If not, then no - keep saving. Of course, life is short and tomorrow is not promised to anyone. So, responsibly, loosen up in areas where you can and enjoy today. I’m not there yet, but my plan is t...

Teach them the difference in mathematics between a linear and exponential function.

The rest is tax optimization, which isn’t honestly very interesting, actionable, or likely to be the same for a 10 and 13 year old once they want to optimize. (Exception: use a Roth IRA now as they have any income)

Even if true, a $29k cost over 30 years is roughly a 7-8 basis point cost.

Show me an active fund that avoids this proposed cost and charges a fee of 10 basis points.


(This assumes 23k annual contribution, 6.2% return, or 6.13% return to ‘lose’ 29k at the ending balance)

We have budgeted this way for 18 years. We use Mvelopes instead of YNAB simply because YNAB didn’t exist back then, and Mvelopes did. The biggest benefit to me is that it puts everything into an equal monthly comparison so you can judge the value of it. For instance, I can tell you that we spend $800 a month on transportation which includes insurance, gas, registration, maintenance, and savings for replacing the cars (we currently have a 15 year old and a 10 year old car, $25k in savings to replace them, and I’m simply waiting for the auto inflation bubble to slow down). Likewise, we spend $275 a month on technology hardware. This covers phones once every four years, a desktop every 4-5 years, a laptop periodically, etc. Doing it this way r...

This might be a useful resource if you're interested getting an idea of transit reach vs commute time. I put a pin at the space needle, and here is an area within a 35 minute transit ride:



https://www.mapnificent.net

Pick two:

• Affordable
• Large lot with private undeveloped land
• Near many other things (that don’t have large lots)

Spend less time hoping for something that doesn’t exist and make the best decision you can.

A belief in the wisdom of indexing does not require a belief that choosing sub-sectors of the market (through indexing) can’t outperform the market. The question is whether it’s knowable which sectors will excel beyond others in advance. The main benefit of indexing is low cost investing. The theory of total market efficient market hypothesis investing being ideal is different from that IMO. Based on Callan Periodic Table of Returns, I do split up my investments some. That is primarily to give me confidence having a higher equity allocation than typical at my age without panicking, and for that purpose it works. https://www.callan.com/periodic-table/ There is in theory some rebalancing bonus by holding onto market sectors (or factors) at a ...

Just my guesses: - If they didn’t tell you beforehand, it’s probably because they expect you may want to break the lease and didn’t want you to break the lease before construction starts and leave them with months of lost rent before construction started. - You probably have leverage if you want to stay during construction. Leasing a home during construction could be hard. - You may have leverage to renegotiate the lease rate based on the shared vs private area arrangement. It is likely the owner has already factored this into their analysis of whether it makes financial sense to build the ADUs. My personal take: it’s probably a good thing in general for renters that the owner is building them. More homes = more supply = lower rents. Whethe...

This was produced in 2013. Not much has changed since then. That should give you a clue why you he US is very far behind the rest of the world on this:

https://www.npr.org/sections/money/2013 ... ur-economy

I get 2.35-2.5% with the Citi DoubleCash by redeeming for gift cards during their BF/CM sale each year.

(Ok, so it’s technically around 2.27 -2.4% back with current inflation since I ‘hold’ accumulated cash back for an average of six months)

I used to think these questions about long-term future tax issues were important.

In reality, save until your portfolio is large enough to provide a safe withdrawal rate at the level of spending you want to sustain for the rest of your life. Once you reach that goal, either keep working and give a lot of money away, or stop (or work for free non-profits, etc.) and retire.

There are so many ways to alleviate the ‘problem’ of too much in tax deferred that as long as you simply compute what your safe withdrawal rate would be each year if you retired then, you won’t get yourself into trouble.

Better to spend time enjoying life and investing in one’s family, friends, and community, IMO.

As with most things, it depends. This would be my suggested flow chart:

1. HSA first up to the amount of qualified medical expenses you have. This is because of you can’t max both, you can take the deduction, pull the money out, and then contribute it again within the same tax year.

2. Roth IRA If you are in the 0% tax bracket or eligible for savers credit if you contribute. Limit this bucket to the amount that achieves the max savers credit if you are not in the 0% marginal tax bracket.

3. HSA, until full or run out of money. For the other reasons stated in this thread.

The greatest quote on housing policy I’ve seen (unattributed):

Housing cannot be simultaneously a good investment (grows faster than inflation) and remain affordable (rise at or below inflation).

What’s scary is we have a society of people (not bogleheads) whose primary net worth is in their home. Therefore, you either hurt old people by allowing housing prices to collapse, or you hurt young people by allowing them to continue returns higher than inflation.

I took a greyhound bus this summer, and they emailed this FAQ, which I consider one of the most succinct and helpful mask summaries I’ve seen. Pasting below (with bold emphasis mine) because for some reason this FAQ doesn’t appear on their website: ——— Pop a mint, piece of gum in your mouth helps you feel less stuffy when wearing a mask. Spray your cloth mask with antibacterial laundry sanitizer to keep your mask smelling good. Opt for 100% cotton mask will allow you to breathe as easily as possible. Polyester or other fabrics (e.g. vinyl) make it harder to breathe. If your skin is sore from repeatedly wearing a mask that loops over the tops of your ears, try a mask that ties at the back of your head and base of your neck. Try out an ear gu...