Search found 149 matches

by Magnetar
Sat Apr 11, 2020 8:51 am
Forum: Personal Investments
Topic: More aggressive 529 with downturn?
Replies: 9
Views: 906

Re: More aggressive 529 with downturn?

I did this exact thing a week ago. I took the opportunity to try to juice my returns by moving one of my 529 accounts from interest accumulation to high growth. I figured I am gambling with the money, but, I will make up the shortfall if need be. My plan is to move the money back to interest accumulation by the end of the year.
by Magnetar
Mon May 20, 2019 2:04 pm
Forum: Personal Consumer Issues
Topic: Disposing of Residential Landscaping Rocks, Concrete, etc...
Replies: 22
Views: 2510

Re: Disposing of Residential Landscaping Rocks, Concrete, etc...

I had a 17x10 foot 4" thick concrete slap to dump last year. I found a concrete supplier that would take it for $100 but I had to get it there. All options for me renting trucks turned into to much money. I asked a local landscaper and he took it for $200.
by Magnetar
Mon May 20, 2019 11:29 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

***Update*** They recently added Vanguard Retirement Income to my 401K. Now my question is Retirement Income or JPMorgan Core Plus Bond R6? Any ideas? Thanks. Asset Allocation. At age 55 with 7-10 years until retirement I suggest around 40% bonds or other fixed income. I suggest around 20-30% of stocks in international stocks. That works out to about 40% bonds, 15% international stocks, and 55% domestic stocks. Asset allocation is a very personal decision which you must make based on your own ability, willingness and need to take risk. Portfolio. A switch to Vanguard Target Retirement Income Fund (VTINX) in your 401k gives an asset allocation of 31% bonds, 19% international stocks, and 60% domestic stocks. That's fairly reasonable for age ...
by Magnetar
Mon May 20, 2019 9:42 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

Bump for updated info
by Magnetar
Mon May 20, 2019 9:36 am
Forum: Personal Consumer Issues
Topic: Tired of gas grills rusting out...
Replies: 120
Views: 25763

Re: Tired of gas grills rusting out...

I used to buy the sub-$200 grills that would rotate on sale at Lowe’s/Home Depot. In 7-8 years I went through 2 of those (rusted out burners on both). The first one I tried to order replacement parts for, but found it was based in China and the parts plus shipping would have cost almost as much as the grill itself. The second one, (different brand) when the burners rusted out I tried to contact the manufacturer to order replacement parts and found that they were out of business—probably because they made crappy grills. When we moved across the country 4.5 years ago, I went to buy another grill at Home Depot. It was the fall and I ended up buying a Weber Genesis that I’ve had since then that was a floor model and about $200 off regular pric...
by Magnetar
Sun May 05, 2019 12:30 pm
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

Morningstar total return (1993-2019), JCPUX vs VBTLX vs VTSAX . This may help you see the effects of expense ratio, bond duration and credit quality over 26 years. The effects are not as great as some suppose. This total return graph is after fees and expense ratios. In my opinion the primary purpose of a bond allocation is portfolio safety, to mitigate the effects of stock market volatility. Both JPMorgan Core Plus Bond Fund R6 (JCPUX???) ER 0.42% and Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.05% held up well compared to the stock market during both the housing crash of 2007-09 and dotcom crash of 2000-02. But VBTLX did better. I would not hesitate to use JPMorgan Core Plus Bond Fund R6 (JCPUX???) ER 0.42% in a 401...
by Magnetar
Sat May 04, 2019 2:39 pm
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

lakpr wrote: Sat May 04, 2019 2:19 pm
Magnetar wrote: Sat May 04, 2019 2:11 pm My traditional IRA is 100% Total Bond with no more contributions allowed. I guess the part I'm struggling with is 100% Retirement 2020 only increases my bond exposure by about 10%. I'll be at about 80/20 instead of 60/40.
That is today, right? What happens if you will add another $19000 max to the 401k next year? What happens if you add another $19k to VBTLX in a taxable fund?
Yes. But only 30% of my 401K contribution will be going to Total Bond. The other 70% is going to funds I have no interest in. I also don't think adding money to VBTLX in taxable is a wise move due to my tax bracket.
by Magnetar
Sat May 04, 2019 2:33 pm
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

ruralavalon wrote: Sat May 04, 2019 2:21 pm What is your tax bracket, both federal and state?
24% Fed / 6.5% state
by Magnetar
Sat May 04, 2019 2:11 pm
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

I think you are looking at it as a “now and today” solution. Also needlessly focused about the purity of the solution Firstly, the little bit of international bonds and TIPS you will gain if you choose Retirement 2020 (5% if the portfolio) barely moves the needle. Same thing with 6% of international stocks. You can easily counteract these effects, perhaps in a short time like 1 year, if you overweight the domestic stocks in your taxable account (either sell taxable international or buy domestic stocks) and adding more bonds in your IRA and future contributions to 401k. Perfection is the enemy of the good .... and patience and staying the course is the key. My traditional IRA is 100% Total Bond with no more contributions allowed. I guess th...
by Magnetar
Sat May 04, 2019 1:53 pm
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

lakpr wrote: Sat May 04, 2019 1:40 pm As was pointed out, JPM Core Bond fund has an average credit quality if BBB, whereas the Vanguard Total Bond Index fund (which you will get indirectly through the Retirement 2020 fund) has an average credit quality of AA. Hope that lets you make a decision.
That is the basis of my question. I can go 100% JPMorgan in the 401K. This would get me to my asset allocation. The problem is credit quality and expense ratio. My other alternative is to use Retirement 2020, but I would only get 30% of that money into Total Bond, the other 70% would be stocks and international bond and TIPs, assets I don't need.
by Magnetar
Sat May 04, 2019 10:57 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

Asset Allocation. At age 55 with 7-10 years until retirement I suggest around 40% bonds or other fixed income. I suggest around 20-30% of stocks in international stocks. That works out to about 40% bonds, 15% international stocks, and 55% domestic stocks. Asset allocation is a very personal decision which you must make based on your own ability, willingness and need to take risk. Example portfolio. My suggestion for a portfolio as follows. The asset allocation is 49% bonds, 15% international stocks, and 55% domestic stocks. The percentages stated are percentages of the total portfolio, not percentages of any particular account. The suggestion is to switch both existing balances and new contributions to the funds indicated. : Taxable (60% o...
by Magnetar
Sat May 04, 2019 10:23 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

It looks like you are in a 90:10 portfolio currently across all your investments. Also, is the "IRA" you mentioned, is it a Roth IRA or a traditional IRA? For someone age 55, using the "Age-10 to Age-15" rule, you should have at least 40% in bonds, perhaps 45%. For simplicity let's assume 60:40 ratio stocks to bonds. So the only change required in your portfolio would be to move everything within your 401k from S&P 500 index into a Bond fund. The JPM Core Plus Bond fund is slightly expensive at 0.42% but not terrible. That said, surely you have any "Vanguard Target Retirement Income Fund" or older-than-2020 retirement funds that you perhaps can obtain at a lower expense ratio? If there aren't, and you put ...
by Magnetar
Sat May 04, 2019 9:17 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Re: Help me with my 401K Choices

ruralavalon wrote: Sat May 04, 2019 9:04 am A little more information is needed.
Thanks. Edited the post. Hope that helps.
by Magnetar
Sat May 04, 2019 8:33 am
Forum: Personal Investments
Topic: Help me with my 401K Choices
Replies: 22
Views: 1451

Help me with my 401K Choices

Hi, I am looking for some help in selecting funds in my 401K. I am 55 and am looking to retire in 7-10 years. Present Portfolio is: Taxable (60% overall): 70% Vanguard Total Stock 30% Vanguard Total Intl IRA (10% overall) 100% Vanguard Total Bond 401K (30% overall) 100% Vanguard 500 Idx Adm Exp 0.04%. The other choices I have in the 401K are: JPMorgan Core Plus Bond R6 Exp: 0.42% Vanguard Target Rtmt 2020 Inv Exp: 0.13% Vanguard Infl-Prot Secs Adm Exp: 0.10% Retirement 2020 makeup is: Vanguard Total Stock Market Index Fund Investor Shares 31.40% Vanguard Total Bond Market II Index Fund Investor Shares† 29.30% Vanguard Total International Stock Index Fund Investor Shares 20.90% Vanguard Total International Bond Index Fund 12.40% Vanguard Sho...
by Magnetar
Thu Jul 12, 2018 8:31 pm
Forum: Personal Finance (Not Investing)
Topic: Gifting Appreciated Stock to College Student - 2018 version
Replies: 12
Views: 1838

Re: Gifting Appreciated Stock to College Student - 2018 version

Nate79 wrote: Thu Jul 12, 2018 8:12 pm Is the child going to school year round and no more living at home? The costs listed so far are only the costs for room and board for school. No mention if they are coming home in the summer.
The child will be coming home for the summer.
by Magnetar
Thu Jul 12, 2018 8:29 pm
Forum: Personal Finance (Not Investing)
Topic: Gifting Appreciated Stock to College Student - 2018 version
Replies: 12
Views: 1838

Re: Gifting Appreciated Stock to College Student - 2018 version

47Percent wrote: Thu Jul 12, 2018 7:48 pm Dear OP.

Please look at the Forbes article link I posted in a prior post. It looks like you would be an ideal candidate to use that strategy.

The $500 dependent tax credit you would be giving up will be dwarfed by the additional benefit your son would be reaping.
I will. Thanks.
by Magnetar
Wed Jul 11, 2018 9:48 pm
Forum: Personal Finance (Not Investing)
Topic: Gifting Appreciated Stock to College Student - 2018 version
Replies: 12
Views: 1838

Re: Gifting Appreciated Stock to College Student - 2018 version

Ok. So the responses are getting a little confusing because there are so many different facts that can affect the tax calculations. -How old will the son be on Dec 31? [ He will be 21 ] -Will the son be a full time student for at least part of 5 months of the year? [ Yes. ] -Would the parents qualify for the AOTC if the son was a dependent? [. No ] -How much capital gain would be associated with the gifted stock? [ about $8000. ] -Would the parents pay taxes on the capital gains otherwise? At what rate? [Yes. 15% ] To clarify one point: -There is a distinction between earned and unearned income. This does not matter for determining dependency (whatever that means under the new law.) However, it does affect whether or not the kiddie tax app...
by Magnetar
Tue Jul 10, 2018 11:25 pm
Forum: Personal Finance (Not Investing)
Topic: Gifting Appreciated Stock to College Student - 2018 version
Replies: 12
Views: 1838

Gifting Appreciated Stock to College Student - 2018 version

Hi,
I am looking for some guidance in gifting some appreciated stock to my son college student.
His expenses are:
Tuition $8000
Room and board about $10000

He will have earned income of about $2500 and a $7500 student loan.

That seems to me to show he pays for more than 50% of his support. If this is true, I would like to donate some appreciated stock to him to cover the rest of his expenses. He would then sell the stock under his own tax rates and be able to apply AOTC to lower his taxes even more.

Does this make any sense?
Thanks
by Magnetar
Tue Jul 10, 2018 10:58 pm
Forum: Personal Finance (Not Investing)
Topic: Are joint accounts part of an Estate?
Replies: 8
Views: 2264

Re:

I agree with Chaz. Your mother has nothing to do with this contract as I see it. Simply return the car to the lessor and have your attorney explain there are no assets in the estate. The lessor can then file a claim against the estate if it wishes. This is not intended to be legal advice and should not be considered as such. John Hi All, It's been a while. I hope to stay more engaged this time. In case this helps someone else, I continued to press my attorney and he finally agreed I was correct. The lessor repossessed the car and sold it at auction. They then harassed my mother for the difference. She politely answered that it was my father's car and he had no assets. This went on for years, but eventually it was dropped. Thanks for everyo...
by Magnetar
Sat Jan 26, 2013 2:41 pm
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

You should request a return of her contribution soon, because any earnings on the contribution will have to be added to your 2012 tax return on line 15b because the contribution was made IN 2012. There will also be a 10% penalty on the earnings portion only unless she is over 59.5. You will know the earnings amount from looking at her statements, since the 1099R will not be issued until Jan, 2014 and will be coded to show that the earnings were taxable in 2012. An explanatory statement about the contribution and return of contribution should be included on your 2012 return as well. Note that she does not have an excess contribution, but a return of contribution and excess contribution distributions are handled the same way. Thanks for the ...
by Magnetar
Sat Jan 19, 2013 2:23 pm
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

This whole "covered, eligible, uncovered" thing can be quite misleading. During Bush the Younger's term, the deductibility of health insurance premiums by self-employed people who also had an employer which "provided" a health plan the participation in which was voluntary, was changed several times over the 8 years. The argument was the same - if you are eligible to participate, does one's voluntary choice NOT to participate mean that one was not "covered". Some years the IRS said yes and others they said no. At this point he has received a letter. Now it is time for him to state his case. To paraphrase someone, sometimes the IRS will say yes and sometimes they will say no. There is no reason for him to give u...
by Magnetar
Tue Nov 27, 2012 6:49 pm
Forum: Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 1235

Re: 401K Bond Choices

NYnative wrote:I don't think you can purchase Ibonds in a 401K or an IRA. They are only sold electronically directly by the Treasury. The 401K or an IRA would be unable to purchase them.
Hi NYnative,
I assumed that Grok meant I should buy them outside the 401K in an effort to increase my tax deferred space.
Regards
by Magnetar
Tue Nov 27, 2012 6:13 pm
Forum: Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 1235

Re: 401K Bond Choices

grok87 wrote:
Magnetar wrote:Thanks for the replies. I am not crazy about using an active bond fund, but it is the only one I can use to increase my tax deferred space.
Well don't forget about Ibonds. they are a much better deal right now than Pimco REal return, and they are tax deferred.
cheers,
Thanks, Grok
Good point. I will add to them also
by Magnetar
Mon Nov 26, 2012 6:39 pm
Forum: Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 1235

Re: 401K Bond Choices

Thanks for the replies. I am not crazy about using an active bond fund, but it is the only one I can use to increase my tax deferred space.
by Magnetar
Sun Nov 25, 2012 4:08 pm
Forum: Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 1235

401K Bond Choices

Hi All,
I will be able to join my company's 401K in about 3 months. I have limited tax deferred space and would like to use the 401K to build up my bond position. The only two bond choices are:
PIMCO Real Return D (0.85%)
PIMCO Total Return Instl (0.46%)
Presently, all of my bond allocation is in Vanguard Total Bond. I am leaning towards investing in PIMCO Total Return. Any thoughts?
Thanks
by Magnetar
Sat Oct 20, 2012 12:12 pm
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

OK, that doesn't seem very difficult. If I take it out, do I need to remove any gains that the $5000 generated since 2009? This could get really complicated. Any withdrawal (*any*) that you make at this point from that account will be reported to you as a "distribution" in the year you make the withdrawal. It will be up to you to correctly report to the IRS the nature of the distribution, since the custodian will likely check the "taxability = undetermined" box on the 1099R they issue you at year-end, which gets them completely off the hook. Ferreting out the "gains" portion alone can be tough if the custodian can't do it for you. I guess I'd support SScritic's suggestion that you challenge the IRS and see if ...
by Magnetar
Sat Oct 20, 2012 11:55 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

Since the rest of her IRA is deductible, do I need to take the $5000 out? Maybe you might want to take it out but it isn't required, you just can't deduct it if you make too much money. Anyone no matter how high their income can contribute to an IRA, the only limits are on the deductibility of it. If you leave it in you will need to file an IRS form 8606 to keep track of the non-deductible basis in the IRA forever. When you take money out in retirement you can deduct the after-tax contribution cost basis pro-rata from your yearly draw. It's just the contribution amount, all earnings on it are taxed. It's not that hard to keep track of. DW has a mixed deductible/non-deductible contribution IRA like this. JW Thanks. Is the non-deductible bas...
by Magnetar
Sat Oct 20, 2012 11:39 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

Since the rest of her IRA is deductible, do I need to take the $5000 out? Maybe you might want to take it out but it isn't required, you just can't deduct it if you make too much money. Anyone no matter how high their income can contribute to an IRA, the only limits are on the deductibility of it. If you leave it in you will need to file an IRS form 8606 to keep track of the non-deductible basis in the IRA forever. When you take money out in retirement you can deduct the after-tax contribution cost basis pro-rata from your yearly draw. It's just the contribution amount, all earnings on it are taxed. It's not that hard to keep track of. DW has a mixed deductible/non-deductible contribution IRA like this. JW Thanks. Is the non-deductible bas...
by Magnetar
Sat Oct 20, 2012 11:38 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

sscritic wrote:
Magnetar wrote: I will send the letter in to the IRS stating that she wasn't covered and wait for their response.
Are you indirectly telling us that she was in a defined contribution plan?
The letter from the company says "...Box 13 on your 2012 W-2 Form was appropriately checked because you were eligible for a retirement plan. Our records indicate that you did not participate."

I figure I will send this letter to the IRS and see what they say.
by Magnetar
Sat Oct 20, 2012 11:15 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

Thanks to everyone for the help. This board is really a great asset.
by Magnetar
Sat Oct 20, 2012 11:14 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

dbr wrote:
sscritic wrote: I think the company goofed when they checked the box for someone who was not an active participant. Now I have to get ready for my saturday morning soaps (yes, some run on the weekends), so I will let you read the details on the active participant rules yourself (forget pub 590).

Edit added: P.S. Note that if it was a defined benefit plan, then she was covered even if no contributions were made. Details, details.
sscritic is probably right and I am wrong if the situation is that the company goofed.
I will send the letter in to the IRS stating that she wasn't covered and wait for their response.
by Magnetar
Sat Oct 20, 2012 10:11 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

BolderBoy wrote:
Magnetar wrote:
dbr wrote:Covered will mean eligible as indicated by the check box on the W-2.
So, that means I am losing a $5000 IRA deduction because she made $425 in wages?

Yes. That is the Catch-22 I was referring to.
Since the rest of her IRA is deductible, do I need to take the $5000 out?
by Magnetar
Sat Oct 20, 2012 10:08 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

dbr wrote:Covered will mean eligible as indicated by the check box on the W-2.
So, that means I am losing a $5000 IRA deduction because she made $425 in wages?
by Magnetar
Sat Oct 20, 2012 10:05 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

earlyout wrote:If you haven't done so, I'd encourage you to read IRS Publication 590.
Thanks, I did read it.

From IRS 590: "You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. See How Much Can You Deduct , later."

But, I am not sure if "covered" means elgible or participated.
by Magnetar
Sat Oct 20, 2012 10:00 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

The W-2 may not have been correct. You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a: Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year ; ... Box 13 on the Form W-2 you receive from your employer should contain a check in the “Retirement plan” box if you are covered. If you are still not certain, check with your (or your spouse’s) employer. Did the company contribute to the plan for her? You should have checked with the employer at the time and asked for a corrected W-2 if no contributions were made. Their computer...
by Magnetar
Sat Oct 20, 2012 9:58 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Re: Spousal IRA - IRS question

Do you fall under the exceptions quoted in this article from "Smartmoney": "A nonworking spouse can make a deductible IRA contribution of up to $5,000 for 2012 ($6,000 if age 50 or older as of 12/31/12) as long as the couple files a joint return, and the working spouse has enough earned income to cover the contribution. Yes, joint return. I have enough income to cover contributions However, the deductibility of the nonworking spouse's contribution for 2012 is phased out for couples with adjusted gross income (AGI) between $173,000 and $183,000, provided that the working spouse is covered by a qualified retirement plan (via a job or self-employment). The working spouse, me, was not covered by a retirement account. I also made...
by Magnetar
Sat Oct 20, 2012 9:36 am
Forum: Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 8552

Spousal IRA - IRS question

Hi All,
I just got a notice from the IRS that they are not allowing the $5000 Spousal IRA deduction I took in 2010 because my wife was eligible for a retirement plan at work. On her W2, the box for was checked for retirement plan. She only made $425 working part time and didn't contribute to the plan. Does that mean I lose the IRA deduction?
Thanks.
by Magnetar
Thu Mar 08, 2012 9:45 am
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 2101

Re: How is paying down a loan like a bond?

Thanks to everyone for helping me understand this concept.

This forum is great.
by Magnetar
Thu Mar 08, 2012 9:44 am
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 2101

Re: How is paying down a loan like a bond?

rrosenkoetter wrote:Look at your mortgage statement... Say you're paying $1000 in interest in every month...

You pay down the loan by $50k... Now you're only paying $800 a month in interest. You're gaining $200 a month on your "investment" of $50k which is 5%. Your net worth is increasing by $200 more a month...

If you put that $50k in a 2% bond fund, your net worth would increase by $83 a month instead.
Thank you. That was what I have been struggling with. I think I understand the concept.
by Magnetar
Thu Mar 08, 2012 8:07 am
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 2101

Re: How is paying down a loan like a bond?

Thanks for all the informative replies.

Vanguard long term treasury has a 15 year duration and a 2.41% yield. I have a mortgage that has 20 years left at 5%, I would guess, based on my reading, it would make more sense for me to use extra money to pay down the mortgage than invest in the bond fund.
by Magnetar
Wed Mar 07, 2012 12:41 pm
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 2101

How is paying down a loan like a bond?

What a wonderful place to get information.

I have read numerous posts about how paying down a loan is like owning a bond of the same interest rate. I don't understand this.
For example, If I have a loan that is 10 years at 5%, should I pay this down before I invest in a bond? Assuming bond yields around 2.5%. I think people say that paying down the loan would be like getting a 5% return. Isn't this only true for the duration of the loan? After the loan is paid off, then what? If I invest in a bond, wouldn't I continue to get the bond rate for the duration of the bond and then have the money when it redeems?

Thanks in advance for your help.
by Magnetar
Fri May 06, 2011 3:56 pm
Forum: Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 1385

My understanding is that the reduction in basis (due to untaxed distributions being received from the MLP) will result in ordinary income when you sell the MLP. If the share price you receive when you sell is higher than the original purchase price (not the new basis), you will also have some capital gains. But I suspect you will have some ordinary income too. You cannot offset ordinary income with the AIG losses, except for the standard $3000 amount. Best wishes. Ordinary income or loss on sale is due to pass-through income reported to you on a K-1 by the MLP. Distributions are reductions of basis. Remember what you paid originally for an MLP is not your current basis because income and losses from the MLP and distributions all affect you...
by Magnetar
Fri May 06, 2011 3:55 pm
Forum: Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 1385

Re: Tax Implications of MLPs

I am in the process of simplifying my portfolio. I still own quite a bit of individual stocks that I would like to transition to Total Stock Market. I am probably in the 25-28% federal, about 7% state tax range. I bought some MLPs a couple of years ago and am sitting on large capital gains. I also was an avid reader of Kiplinger's magazine. They were picking the 10 best stocks for 200X and one of them was AIG. We all know how that turned out. So, I have a couple of questions: 1. Can I use my losses in AIG to offset my gains in the MLPs? 2. Would it be better to use AIG losses against my income? 3. Are the MLPS taxed at the 15% cap gains rate? Thanks. If you're sitting on large gains, most likely a good portion of them are going to be taxed...
by Magnetar
Fri May 06, 2011 3:52 pm
Forum: Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 1385

Wagnerjb wrote:My understanding is that the reduction in basis (due to untaxed distributions being received from the MLP) will result in ordinary income when you sell the MLP. If the share price you receive when you sell is higher than the original purchase price (not the new basis), you will also have some capital gains. But I suspect you will have some ordinary income too. You cannot offset ordinary income with the AIG losses, except for the standard $3000 amount.

Best wishes.
Thanks for the info. Does the capital gain get offset first?
by Magnetar
Fri May 06, 2011 1:37 pm
Forum: Personal Consumer Issues
Topic: Do you change the engine oil yourself?
Replies: 78
Views: 10125

I used to change my own oil. Now, I stop by a shop on my way to work, surf the internet on their wifi and spend about an additional $15 twice a year.
by Magnetar
Fri May 06, 2011 1:34 pm
Forum: Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 1385

Tax Implications of MLPs

I am in the process of simplifying my portfolio. I still own quite a bit of individual stocks that I would like to transition to Total Stock Market.
I am probably in the 25-28% federal, about 7% state tax range.

I bought some MLPs a couple of years ago and am sitting on large capital gains. I also was an avid reader of Kiplinger's magazine. They were picking the 10 best stocks for 200X and one of them was AIG. We all know how that turned out.

So, I have a couple of questions:
1. Can I use my losses in AIG to offset my gains in the MLPs?
2. Would it be better to use AIG losses against my income?
3. Are the MLPS taxed at the 15% cap gains rate?

Thanks.
by Magnetar
Wed Mar 02, 2011 4:09 pm
Forum: Personal Finance (Not Investing)
Topic: A simple way to dramatically increase tax-deferred space
Replies: 40
Views: 7579

SobeCane wrote:What's the penalty on taking any leftover money out of the 529 plan after the youngest kid is done with school?
I believe that the IRS imposes a 10% penalty.
by Magnetar
Wed Mar 02, 2011 3:46 pm
Forum: Personal Finance (Not Investing)
Topic: Selling a car to a dealer -- fix up at all?
Replies: 21
Views: 4162

I traded in an old minivan last year that was beaten to hell by my kids. I got it detailed for $100 before bringing it to the dealer. The dealer checked it out while I was on a test drive and the only thing he said was "That van is very clean. You must have taken good care of it". Not sure if it made him increase his offer. But, it was probably worth the $100 investment.
by Magnetar
Wed Mar 02, 2011 3:38 pm
Forum: Personal Finance (Not Investing)
Topic: A simple way to dramatically increase tax-deferred space
Replies: 40
Views: 7579

An interesting idea, but are you really increasing your tax deferred space? Your contributions will have to be used for college or face penalties.
by Magnetar
Thu Feb 17, 2011 3:11 pm
Forum: Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 3560

Thanks for all the help. This is truly a great site.

I will contact the transfer agent and see what they can tell me.
If that doesn't help, I will add up all my dividends from the previous years tax returns and use that as my basis.