Here's my net worth....I max everything out.....now what?

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RangerHD
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Here's my net worth....I max everything out.....now what?

Post by RangerHD » Fri Jan 26, 2018 9:11 pm

I am 41, wife is 37, kid is 3

Right below the higher bracket with all the pretax investing and what not. - not sure where we will fall this year with new bracket
Both of us work.
We both max out 401k - I have Vanguard 2045 and she has American Funds 2045 - Combined we have close to the "mark" in these accounts.
I max out family HSA annually - Balance is $15,500 and invested in 5 vanguard funds...I Just did a shotgun approach here.
Just started back door Roths maxed out for 2015, 2016, and 2017. - Total Roth assets are growing - this includes previous priory year non back door Roths.
I also have 6 individual stocks in after tax accounts at $58,000 as of today.

Total market investments is a good amount.

Complete annual horsepower going in market each year is now maxed out including our employer match.

I have quite a bit in cash. Around 1/2 of it in a CD paying 3% at penfed.org that matures in 1 year. - It was a windfall and I didn't know what to do.

We owe on the house at 2.8% interest. House is worth $400K. House be paid off in 10 years if we stick to normal schedule.

No car payment no credit cards.

I own 90 acres that only costs me $350 a year in taxes but it produces no income but a ton of enjoyment. It is worth about $200K

I own an apartment building. I put down 20% and owe $156K at 4.25% interest.

Pops just passed and I will inherit about 100K in cash and stock and we have a house to sell that I anticipate getting $125K for my part.

Now what? Still have leftover cash. Still want to contribute more from our paychecks on a systematic basis.

I have read on here for 6 hours and my eyes are bleeding. I see the common themes....should I just take another $1k to $2k per month and put it in a 2045 mutual fund? I now nothing about tax beneficial investing. I just don't know what to do....but whatever it is we figure out I want to do, I want to do it for the next 20 years. I would like to have the option of retiring in 20 years.

When I add up everything I have of value, real estate, cash, equipment, investments etc. best I can tell my net worth is over 1 million.

Please help....I am disciplined most of the time.
Last edited by RangerHD on Thu Feb 01, 2018 7:22 pm, edited 1 time in total.

OldSport
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Re: Here's my net worth....I max everything out.....now what?

Post by OldSport » Fri Jan 26, 2018 11:15 pm

What are your goals? When do you want to retire? How much do you want to live on each year in retirement?

You are in a great position and better off than probably at least ~98% of Americans your age.

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Watty
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Re: Here's my net worth....I max everything out.....now what?

Post by Watty » Fri Jan 26, 2018 11:23 pm

RangerHD wrote:
Fri Jan 26, 2018 9:11 pm
Now what? Still have leftover cash. ...
Pay off the house then worry about investing your "mortgage payment" each month once it is paid off.

College savings for the kid.

Investing in a taxable account is not all that bad if you are careful about what funds you have in the taxable account.

https://www.bogleheads.org/wiki/Tax-eff ... _placement

Take a hard look at if it is time to start spending more on the "now" side of the "now vs later" choices and start doing things like traveling more. Be cautious about doing things that will have a lot of ongoing expenses. For example if you take a cruise that is a one time expense. If you buy a boat that will commit you to high ongoing expenses.

JBTX
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Re: Here's my net worth....I max everything out.....now what?

Post by JBTX » Fri Jan 26, 2018 11:26 pm

RangerHD wrote:
Fri Jan 26, 2018 9:11 pm
I am 41, wife is 37, kid is 3

Right below the 33% bracket with all the pretax investing and what not. - not sure where we will fall this year with new bracket
Both of us work.
We both max out 401k - I have Vanguard 2045 and she has American Funds 2045 - Combined we have roughly $741K in these accounts.
I max out family HSA $6,900 annually - Balance is $15,500 and invested in 5 vanguard funds...I Just did a shotgun approach here.
Just started back door Roths maxed out for 2015, 2016, and 2017. - Total Roth asserts $59,000 - this includes previous priory year non back door Roths.
I also have 6 individual stocks in after tax accounts at $58,500 as of today.

Total market investments is $881,584.17

Complete annual horsepower going in market each year is now at $68,100 including our employer match.

I have $460,000 in cash. Around 1/2 of it in a CD paying 3% at penfed.org that matures in 1 year. - It was a windfall and I didn't know what to do.

We owe $245K on the house at 2.8% interest. House is worth $400K. House be paid off in 10 years if we stick to normal schedule.

No car payment no credit cards.

I own 90 acres that only costs me $350 a year in taxes but it produces no income but a ton of enjoyment. It is worth about $200K

I own an apartment building. I put down 20% and owe $156K at 4.25% interest.

Pops just passed and I will inherit about 100K in cash and stock and we have a house to sell that I anticipate getting $125K for my part.

Now what? Still have leftover cash. Still want to contribute more from our paychecks on a systematic basis.

I have read on here for 6 hours and my eyes are bleeding. I see the common themes....should I just take another $1k to $2k per month and put it in a 2045 mutual fund? I now nothing about tax beneficial investing. I just don't know what to do....but whatever it is we figure out I want to do, I want to do it for the next 20 years. I would like to have the option of retiring in 20 years.

When I add up everything I have of value, real estate, cash, equipment, investments etc. best I can tell my net worth is 1.79 million.

Please help....I am disciplined most of the time.
Overall you are in great shape. Congrats!

What sort of asset allocation are you going for? Something like a 70 stocks /30 bonds would be typical for your age, plus or minus 10 pts depending on your level of risk tolerance.

Things I would consider:

Move some portion of my retirement accounts to bond index funds. Let's say 30%, or approx $300k.

Then invest $100k to $200k some in a taxable account, primarily in stocks. Maybe some in municipal bond funds.
Consider paying off your apartment building loan, either right away, or paying it off on a monthly basis.
Consider paying off your mortgage when your CD matures, or at least start paying off extra principal each month.
Keep $100-$150k in cash and cash equivalents (online savings accounts, ibonds, CD's, etc)

Also, see if wife has any index fund options instead of American Funds, which probably has some annual fees associated with it.

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Re: Here's my net worth....I max everything out.....now what?

Post by Tyler Aspect » Sat Jan 27, 2018 12:48 am

I agree that based where you are financially you might want to hold a portfolio of 70% stock / 30% bond. Your Target Retirement 2045 is 90% stock / 10% bond though.

How best to fix that depends on what fund options your and your wife's 401k program contains.
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Re: Here's my net worth....I max everything out.....now what?

Post by bearcub » Sat Jan 27, 2018 4:34 am

After I maxed everything out I joined the EE Savings bond program at work. Every 2 weeks one would come in the mail. Before I retired they discontinued it.

MNS CA
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Re: Here's my net worth....I max everything out.....now what?

Post by MNS CA » Sat Jan 27, 2018 5:32 am

Max out your 529 plan contributions. You might get a state tax deduction and the money will grow tax free as long as you use it for education expenses, including either private school or college or graduate school. You can frontload it to, several years of contributions all at once.

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camillus
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Re: Here's my net worth....I max everything out.....now what?

Post by camillus » Sat Jan 27, 2018 5:38 am

What I would do:

1) Identify how much cash I'd like to hold for emergencies and comfort.
2) Use all other cash to pay down various mortgages.
3) Learn about asset allocation and placing different asset classes in the proper tax advantaged spaces.
4) Abandon target date funds and implement strategies learned under #3.
5) Begin taxable investing with gusto.

chevca
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Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Sat Jan 27, 2018 7:41 am

camillus wrote:
Sat Jan 27, 2018 5:38 am
What I would do:

1) Identify how much cash I'd like to hold for emergencies and comfort.
2) Use all other cash to pay down various mortgages.
3) Learn about asset allocation and placing different asset classes in the proper tax advantaged spaces.
4) Abandon target date funds and implement strategies learned under #3.
5) Begin taxable investing with gusto.
+1

That's exactly the order I would go in, if in OP's situation.

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Re: Here's my net worth....I max everything out.....now what?

Post by ChowYunPhat » Sat Jan 27, 2018 8:21 am

Welcome to the forum RangerHD and glad to hear you are not satisfied with the success you've already enjoyed. It takes a lot of hard work to be as productive as you've been thus far in life. Bravo.

Agree with many of the other posters on managing your excess cash and CDs once they mature. Recommend either Vanguard or Fidelity to start with a taxable account, and Fidelity if a little extra guidance at a brick and mortar facility is helpful to you. There are a ton of threads on what investments to select. At 41, staying out of the market over a 20-30 horizon is more harmful than good.

Good luck to you, and congrats on your success.
A wise man and his money are friends forever...

Agggm
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Re: Here's my net worth....I max everything out.....now what?

Post by Agggm » Sat Jan 27, 2018 8:32 am

chevca wrote:
Sat Jan 27, 2018 7:41 am
camillus wrote:
Sat Jan 27, 2018 5:38 am
What I would do:

1) Identify how much cash I'd like to hold for emergencies and comfort.
2) Use all other cash to pay down various mortgages.
3) Learn about asset allocation and placing different asset classes in the proper tax advantaged spaces.
4) Abandon target date funds and implement strategies learned under #3.
5) Begin taxable investing with gusto.
+1

That's exactly the order I would go in, if in OP's situation.
+1
Save #2.

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RangerHD
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Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sat Jan 27, 2018 10:00 am

Thanks everyone. You made me feel proud. I am not unsatisfied with my performance but I am paralyzed with the cash...good problem to have...but it paralyzes me and I have some more coming when we finish settling up the estate.

I want the ability to retire in 20....not sure I will but the ability would be great...if I can do it sooner all the better. The wife is a licensed professionals and she can go part time....I am in admin and it is basically a 40 hours a week career or nothing unless I go the part time consulting route later in life.

I live in a rural area that is depressed. My 400K home will still be worth $400K in 20 years...possibly less...not many around here can buy a hose for that much. In addition to not knowing what to do with the cash I also kept waiting on that "deal" that I might want to get into....another farm that produces income and enjoyment etc. But in our depressed area there just is not a lot going on around here. The market and investing and time is the best way for someone like me to build wealth.

I think for me and my ability to sleep well would be to take cash and set a time frame and invest it in increments over time versus sticking a large amount in all at once. Even though I have a long time, I just think that would be better for my "psych"

Someone said gusto in taxable accounts....like what? I don't know much about after tax investing and what to invest in and how important it is I stay conscious of tax focused investing.

Several have mentioned the knocking the mortgage on house and apartments. We were completely debt free in 2012 when I paid my other house off and I found myself creeping up my lifestyle....we bought another house in 2013 and went back into debt and I have been concerned about my discipline with extra cash each month. After reading on here saw an idea posted by someone that In order for me to be dsicliplined with that I would 100% need to get the old mortgage payment that we are used to paying on an auto invest program so I could eliminate the temptation to go buy another tractor or ATV....or I could keep making the me payments and taking the cash I already have and split it up and DCA it over time.

I just don't know what to do....and I am really glad for the encouragement...I just found this forum and I actually felt bad at where I was after reading all the success stories on here.

One little story.....my mom was working on me really hard to save and stay out of the sun...in my early late teens early 20s. She gave me $2,000 to put in a Roth IRA...I put it in Janus 20 I think...in 1998 or 1999. Right before the dot come burst.....It got down to like $700. I still have it in the exact same place (it isn't in janus 20 cause they shut that down I think) and it is worth $3,600 as of yesterday.

Anyway, any more advice please keep it coming.

pindevil
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Re: Here's my net worth....I max everything out.....now what?

Post by pindevil » Sat Jan 27, 2018 10:17 am

RangerHD wrote:
Sat Jan 27, 2018 10:00 am
Someone said gusto in taxable accounts....like what? I don't know much about after tax investing and what to invest in and how important it is I stay conscious of tax focused investing.
Check out the tax efficiency section and start a taxable account at vanguard or anywhere else with low expenses.
https://www.bogleheads.org/wiki/Tax-eff ... _placement

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simplesimon
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Re: Here's my net worth....I max everything out.....now what?

Post by simplesimon » Sat Jan 27, 2018 10:36 am

RangerHD wrote:
Sat Jan 27, 2018 10:00 am
I want the ability to retire in 20....not sure I will but the ability would be great...if I can do it sooner all the better.
You live in a rural low-cost of living area, have household income of about $200k, $1.79m net worth of which over $1m is in cash or marketable securities. Do you mean you'd like the ability to retire in 20 days or 20 years? I'm afraid to ask what kind of expenses you have that wouldn't allow you to retire today.

What do you enjoy doing? Do you have a lot of free time even while you work? Look up something called consumption smoothing, which might help you spend and enjoy today while saving for tomorrow.

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Toons
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Re: Here's my net worth....I max everything out.....now what?

Post by Toons » Sat Jan 27, 2018 10:39 am

"460,000 cash"
Pay off the house ,,
and the apartment .



:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Topic Author
RangerHD
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Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sat Jan 27, 2018 10:48 am

simplesimon wrote:
Sat Jan 27, 2018 10:36 am
RangerHD wrote:
Sat Jan 27, 2018 10:00 am
I want the ability to retire in 20....not sure I will but the ability would be great...if I can do it sooner all the better.
You live in a rural low-cost of living area, have household income of about $200k, net worth of which over 1/2 is in cash or marketable securities. Do you mean you'd like the ability to retire in 20 days or 20 years? I'm afraid to ask what kind of expenses you have that wouldn't allow you to retire today.

What do you enjoy doing? Do you have a lot of free time even while you work? Look up something called consumption smoothing, which might help you spend and enjoy today while saving for tomorrow.
Thanks...we make a nice combined salary.

Yes there is a good amount in cash or securities. We spend too much to retire...

It is tempting to pay off the house and apartment....but I have heard it is always good to have cash.
Last edited by RangerHD on Thu Feb 01, 2018 7:25 pm, edited 2 times in total.

RRAAYY3
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Re: Here's my net worth....I max everything out.....now what?

Post by RRAAYY3 » Sat Jan 27, 2018 10:52 am

Turn these windfalls into debt eliminators than keep doing exactly what you are doing

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simplesimon
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Re: Here's my net worth....I max everything out.....now what?

Post by simplesimon » Sat Jan 27, 2018 10:57 am

RangerHD wrote:
Sat Jan 27, 2018 10:48 am

It is tempting to pay off the house and apartment....but I have heard it is always good to have cash.
I've heard landlords should have ~12 months of operating expenses in cash...what does that translate to for you?

By eliminating your debt you're going to boost your monthly cash flow, eliminate unnecessary interest, and simplify your finances.

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RangerHD
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Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sat Jan 27, 2018 11:12 am

RRAAYY3 wrote:
Sat Jan 27, 2018 10:52 am
Turn these windfalls into debt eliminators than keep doing exactly what you are doing
Okay, is that the general consensus here?

Pay off house and apartment.
Last edited by RangerHD on Thu Feb 01, 2018 7:25 pm, edited 1 time in total.

chevca
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Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Sat Jan 27, 2018 11:17 am

I would, just to simplify and get rid of debt. You're probably not getting much benefit from either with new tax law and your income being too high for the rental property deductions. I'd just knock 'em out and increase cash flow. You're already saving about $70k/year. How much would that be without those monthly payments?

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RangerHD
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Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sat Jan 27, 2018 11:19 am

Including the apartments my monthly payment is about $3,000....I don't have statements in front of me.

This is my first year of having the apartment. What do you mean I can not get deductions for the apartment?

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Re: Here's my net worth....I max everything out.....now what?

Post by Olemiss540 » Sat Jan 27, 2018 11:27 am

Agggm wrote:
Sat Jan 27, 2018 8:32 am
chevca wrote:
Sat Jan 27, 2018 7:41 am
camillus wrote:
Sat Jan 27, 2018 5:38 am
What I would do:

1) Identify how much cash I'd like to hold for emergencies and comfort.
2) Use all other cash to pay down various mortgages.
3) Learn about asset allocation and placing different asset classes in the proper tax advantaged spaces.
4) Abandon target date funds and implement strategies learned under #3.
5) Begin taxable investing with gusto.
+1

That's exactly the order I would go in, if in OP's situation.
+1
Save #2.
+3.

I would do #1 & #2 quickly and then take 2 or 3 months to study around here in taxable investing before shoving the rest in and implementing 3, 4, and 5. Retire in 20 years? Ha!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

chevca
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Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Sat Jan 27, 2018 11:27 am

Your income is too high to take all the yearly deductions. They get deferred or delayed. I'm not totally in the know about it. It's not like they're gone forever, but you can't use them until later... upon sale maybe?

chevca
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Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Sat Jan 27, 2018 11:34 am

RangerHD wrote:
Sat Jan 27, 2018 11:19 am
Including the apartments my monthly payment is about $3,000....I don't have statements in front of me.

This is my first year of having the apartment. What do you mean I can not get deductions for the apartment?
https://www.nolo.com/legal-encyclopedia ... osses.html

I believe the limits are higher now? But, you're still likely well over the limits for the deductions.

jodydavis
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Re: Here's my net worth....I max everything out.....now what?

Post by jodydavis » Sat Jan 27, 2018 11:45 am

After tax investing doesn't have to be any more complicated than your pre-tax investing. You've already invested a lot into your pre-tax 401k. If you are comfortable with that, then do the same with your post-tax money. You can even invest in the exact same funds.

The only additional complication is that with your taxable accounts, you need to be aware of the tax consequences. Basically, that means avoiding funds that generate taxable income (e.g. bond funds, high-dividend funds) and focus more on funds that generate growth (e.g. low-cost stock index funds) or are tax advantaged (e.g. muni bond funds). If you want to get a bit more complicated, then once you figure out your ideal asset allocation, use the 401k space to hold your bond funds, and the rest of your 401k + after tax space to hold index funds. Other than that, it's not really that different.

To the extent you are paralyzed by having lots of cash, look up "dollar cost averaging" in this forum. It's essentially what you have already stated - putting the money into the market more gradually over time (say a year or two), so you don't risk putting it all in right before a downturn.

Good luck! You are in good shape.
JD

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bligh
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Re: Here's my net worth....I max everything out.....now what?

Post by bligh » Sat Jan 27, 2018 11:47 am

Congratulations OP on being in such great shape financially.

+1 on the recommendations to go completely mortgage free with some of the cash you have. Yes the interest rate is low, but by not paying that low interest you are getting a guaranteed rate of return on your money. You are taking on no additional risk over having a mortgage (unless there are circumstances where you would consider defaulting on the mortgage) and you are getting a better return (by not having to pay interest) than holding the cash.

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nativenewenglander
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Re: Here's my net worth....I max everything out.....now what?

Post by nativenewenglander » Sat Jan 27, 2018 12:15 pm

RRAAYY3 wrote:
Sat Jan 27, 2018 10:52 am
Turn these windfalls into debt eliminators than keep doing exactly what you are doing
I'd follow these words and pay off your debts.
During 1998 I sold enough stocks to raise $50,000 and paid off my mortgage.
I was getting married that year and didn't want my new wife to worry about marrying into a guy with debt.
It was so refreshing to know it was ours free and clear.
You'll probably feel the same.

mortfree
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Re: Here's my net worth....I max everything out.....now what?

Post by mortfree » Sat Jan 27, 2018 12:20 pm

Pay off your house at least with the cash on hand.

Taxable investing is easy. If you believe in US companies/economy for the long haul then Put your money in Total US Stock fund (VTSAX is the mutual fund and VTI is the ETF- pick one). Add to it over the 20 years.

I’ll get in trouble for mentioning this but Berkshire Hathaway (BRKB) could be a good choice for taxable (IN ADDITION TO TOTAL US STOCK fund). I do that combo in my taxable accounts (along with a few individual stocks). I’ll stop there.


Enjoy!

stlutz
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Re: Here's my net worth....I max everything out.....now what?

Post by stlutz » Sat Jan 27, 2018 1:10 pm

Given that you are equity-heavy in your other accounts, it probably makes sense to be a little more conservative in your taxable account--something like 50/50 stocks and bonds. If you are looking for simplicity, I would look at 50% each in Vanguard Total US and Vanguard Total Internation, and then the bond portion in Vanguard Intermediate Term Tax Exempt. That would be a simple and tax efficient portfolio for your taxable account once you have your debt eliminated. And yes you can setup automatic purchases of these funds.

But I'd actually not take that advice immediately. You are pretty financially sophisticated already--you have multiple types of investments, you found about about the Pen Fed 3% CD deal several years back, you have successfully executed the backdoor Roth, you are utilizing low-cost investments. That leads me to believe you can get to where you can figure out the asset allocation piece on your own. Really the best recommendation I can give is not for specific funds but to pick up a couple of books like the Bogleheads Guide to Investing and then if you want more detail move onto Rick Ferri's All About Asset Allocation.

It doesn't have to be complicated (and really shouldn't be), but it's worth the time investment if you are a multi-millionaire. :moneybag

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BL
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Re: Here's my net worth....I max everything out.....now what?

Post by BL » Sat Jan 27, 2018 1:41 pm

The debt elimination sounds especially good for someone who is hesitant to invest.

For taxable, either Total Stock Market and/or Total International Stock Market are very tax-efficient, assuming you keep your AA (asset allocation) in line (cash or bonds ideally in tax-advantaged accounts, municipal bonds in taxable).

Another way, if you like to keep a target or other balanced fund in you work or IRA accounts, is the single Tax-Managed Fund (has ~1/2 stock funds and ~1/2 municipal bonds). It is simple and tax-efficient, but when you sell you sell both stocks and bonds which you may prefer not to do.

You might consider I-Bonds for 10k per person/year. Tax deferred until you sell, keeps up with inflation, tied up for 1 year, 3-mo. penalty for cashing in in < 5 years, taxes due when you sell or in 30 years.

MNS CA
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Re: Here's my net worth....I max everything out.....now what?

Post by MNS CA » Sun Jan 28, 2018 5:00 pm

How much is the rental income from the apartment and what are all the expenses?

If the interest and depreciation and property taxes and other expenses on the investment property are less than the rental income, those are going to most likely be business expenses that are deductible against the rental income, even if not fully deductible against your other income.

Your mortgage on your home might not be giving you that much in the way of tax benefits because it might make sense for you to take the standard deduction under the new tax law--you'll need to check with an accountant. But your home mortgage interest rate is pretty low to begin with.

Note: This is not tax or legal advice. Consult a lawyer or attorney.

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Re: Here's my net worth....I max everything out.....now what?

Post by Grt2bOutdoors » Sun Jan 28, 2018 5:17 pm

RangerHD wrote:
Sat Jan 27, 2018 11:19 am
Including the apartments my monthly payment is about $3,000....I don't have statements in front of me.

This is my first year of having the apartment. What do you mean I can not get deductions for the apartment?
Rental income offsets the cost of mortgage interest expense on rental properties - per Sch. E.

With the new tax law, the standard deduction of $24K per married couple will likely be better than deduction of a 2.8% mortgage with 10 years to go, you are mainly paying principal at this point. I'd pay the residential home mortgage off and leave the rental property to pay the mortgage and associated expenses. Keep the cash if you are anticipating making future investment moves within the next 5 years or so.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Here's my net worth....I max everything out.....now what?

Post by Grt2bOutdoors » Sun Jan 28, 2018 5:23 pm

chevca wrote:
Sat Jan 27, 2018 11:27 am
Your income is too high to take all the yearly deductions. They get deferred or delayed. I'm not totally in the know about it. It's not like they're gone forever, but you can't use them until later... upon sale maybe?
FYI - Rental income on investment properties is offset by mortgage interest expense, advertising expense (apt for rent), professional fees, maintenance, taxes, utilities,depreciation (basis/26.5 years MACRS). Basis in property can be increased by durable long-lived improvements made to property that are depreciated over time instead of being expensed like one would for replacing a light fixture. Any losses incurred whereby expenses are higher than rental income are deferred until either the year of property disposition/sale or the OP's annual income does not exceed $125K in AGI. This can be found on Schedule E.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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RangerHD
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Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sun Jan 28, 2018 7:19 pm

This is my first year with the apartments. I started renting in August. I built these myself....or directly hiring the construction workers.

This year I anticipate expenses along with depreciation to be more than income. In subsequent years I do not. I did purchase an expensive lawn mower that I was going to depreciate 50% this first year but I might not want to do that? I will have to check.

So to the last 3 posters....yes I think the new standard deduction will be higher than my itemized deductions from this point forward. So the rate will be a true rate.....it appears to you all as well that I should pay the mortgage off as well and then take my mortgage payment and save/invest...if I do this...pay the mortgage off...it is mandatory and mission critical that I save/invest in an automatic method....as I said last time I paid my house off I found myself creeping up my spending on luxury items etc. This is why I haven't paid the mortgage off yet is my fear of doing that. I am not sure why it didn't hit me or occur to me to invest even more in a taxable account on an ongoing basis. Part of my cash is earning 1.3% at GSBank...wich is not something else.
Last edited by RangerHD on Thu Feb 01, 2018 7:26 pm, edited 1 time in total.

Grt2bOutdoors
Posts: 21764
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Here's my net worth....I max everything out.....now what?

Post by Grt2bOutdoors » Sun Jan 28, 2018 7:27 pm

RangerHD wrote:
Sun Jan 28, 2018 7:19 pm


So to the last 3 posters....yes I think the new standard deduction will be higher than my itemized deductions from this point forward. So the 2.8% will be a true 2.8%.....it appears to you all as well that I should pay the mortgage off as well and then take my mortgage payment and save/invest...if I do this...pay the mortgage off...it is mandatory and mission critical that I save/invest in an automatic method....as I said last time I paid my house off I found myself creeping up my spending on luxury items etc. This is why I haven't paid the mortgage off yet is my fear of doing that. I am not sure why it didn't hit me or occur to me to invest even more in a taxable account on an ongoing basis. Part of my cash $208K is earning 1.3% at GSBank...wich is not something else.
If you don't already have one - open a taxable Vanguard account, go to account maintenance, select automatic investments, link your bank checking account to it - then direct vanguard to take from your checking account an amount that is equal to the amount of your current mortgage bill - invest it in a 3 fund portfolio using an asset allocation that will permit you to sleep well at night while your fund balance continues to grow over time. Out of sight, out of mind, once invested, you will likely not spend money that you do not have in your checking account/hands, nor will you be checking your account balance on an hourly/daily basis. That is what is called automatic investing.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
RangerHD
Posts: 22
Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sun Jan 28, 2018 7:51 pm

Grt2bOutdoors wrote:
Sun Jan 28, 2018 7:27 pm
RangerHD wrote:
Sun Jan 28, 2018 7:19 pm
If you don't already have one - open a taxable Vanguard account, go to account maintenance, select automatic investments, link your bank checking account to it - then direct vanguard to take from your checking account an amount that is equal to the amount of your current mortgage bill - invest it in a 3 fund portfolio using an asset allocation that will permit you to sleep well at night while your fund balance continues to grow over time. Out of sight, out of mind, once invested, you will likely not spend money that you do not have in your checking account/hands, nor will you be checking your account balance on an hourly/daily basis. That is what is called automatic investing.
I actually feel better that I have a plan now. This cash that has been sitting there (although a great problem to have) just didn't feel right but I sure didn't want to go "all in" at once. And waiting around here in my area that is economically depressed for some "good deal" to happen or "opportunity" just isn't likely going to happen. I've been paralyzed with it for quite some time now...glad I there is a plan in place.

Oh, and I do not have a vanguard account. Just Edward Jones and E-Trade. Then some CD accounts and GSBanks as well as HSA administrators.
Last edited by RangerHD on Thu Feb 01, 2018 7:27 pm, edited 1 time in total.

TwstdSista
Posts: 996
Joined: Thu Nov 16, 2017 4:03 am

Re: Here's my net worth....I max everything out.....now what?

Post by TwstdSista » Sun Jan 28, 2018 7:55 pm

Oh goodness. Transfer the EJ account. Don't pay those fees!

(Just do a search on this site -- there's a "leaving Edward Jones" thread at least once a week, oftentimes more)

Topic Author
RangerHD
Posts: 22
Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Sun Jan 28, 2018 8:11 pm

One more thing I wanted to ad. The wife and I plan to live the rest of our lives in this house. We bought it in 2013. It was built in 2009.

chevca
Posts: 3053
Joined: Wed Jul 26, 2017 11:22 am

Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Mon Jan 29, 2018 9:39 am

Grt2bOutdoors wrote:
Sun Jan 28, 2018 5:23 pm
chevca wrote:
Sat Jan 27, 2018 11:27 am
Your income is too high to take all the yearly deductions. They get deferred or delayed. I'm not totally in the know about it. It's not like they're gone forever, but you can't use them until later... upon sale maybe?
FYI - Rental income on investment properties is offset by mortgage interest expense, advertising expense (apt for rent), professional fees, maintenance, taxes, utilities,depreciation (basis/26.5 years MACRS). Basis in property can be increased by durable long-lived improvements made to property that are depreciated over time instead of being expensed like one would for replacing a light fixture. Any losses incurred whereby expenses are higher than rental income are deferred until either the year of property disposition/sale or the OP's annual income does not exceed $125K in AGI. This can be found on Schedule E.
Were you informing me or the OP of this? I used to have a rental, so I'm familiar with all that. It's 27.5 years for the depreciation schedule, BTW.

I'm not familiar with the over $125k AGI folks and the delay/defer of the deductions and how that works. The OP makes $330k combined, so I'm guessing their AGI is a good bit over $125k.

chevca
Posts: 3053
Joined: Wed Jul 26, 2017 11:22 am

Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Mon Jan 29, 2018 9:46 am

RangerHD wrote:
Sun Jan 28, 2018 7:19 pm
This is my first year with the apartments. I started renting in August. I built these myself....or directly hiring the construction workers.

This year I anticipate expenses along with depreciation to be more than income. In subsequent years I do not. I did purchase an $18,000 lawn mower that I was going to depreciate 50% this first year but I might not want to do that? I will have to check.
Again, I don't think you will get to use all these deductions with your $330k income. And, you don't get to just pick what percentage you want to depreciate each year. It's all on different schedules depending on it it's a roof or siding or whatever. I think a lawnmower would be more of an expense than something you could depreciate anyway. Did you research anything about this before building the apartment building?

bltn
Posts: 604
Joined: Mon Feb 20, 2017 9:32 pm

Re: Here's my net worth....I max everything out.....now what?

Post by bltn » Mon Jan 29, 2018 10:56 am

Good idea to pay off the home mortgage and start putting the monthly house payment amount into an automated withdrawal account with Vanguard. Paying off the house is really going to feel good.
I would transfer the Edward Jones and Etrade accounts to Vanguard to simplify things. (I used to have seven different brokerage accounts but now only have a Vanguard and a Fidelity).
Also, putting 500 to 1000 a month into a 529 plan is just like funding a Roth. Tax free growth to take care of one of the biggest expenses in your future. ( If only there was a similar account for weddings!).
Recommend 60-70 percent of ongoing investments into stock index funds. Might as well take advantage of your youth in your investing career.
Keep going for 20 years. It will take more to retire well than a lot of people realize.
Good luck.
Last edited by bltn on Mon Jan 29, 2018 5:43 pm, edited 1 time in total.

DaftInvestor
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Joined: Wed Feb 19, 2014 10:11 am

Re: Here's my net worth....I max everything out.....now what?

Post by DaftInvestor » Mon Jan 29, 2018 11:00 am

Your title says you max everything out but I didn't see mention of a 529 plan for your 3-year old.
If you are looking for tax-free growth why not a 529 plan?
Also - if you want more tax-deferred you could also max out iBonds.

Topic Author
RangerHD
Posts: 22
Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Mon Jan 29, 2018 12:45 pm

chevca wrote:
Mon Jan 29, 2018 9:46 am
RangerHD wrote:
Sun Jan 28, 2018 7:19 pm
Did you research anything about this before building the apartment building?
I did...just not the first partial year where I will have a loss....subsequent years this will most likely be a non issue. With the market around here in our depressed area I do not anticipate much vacancy here as basically there is NOTHING (not much) around here to rent.

Thanks everyone, the process/transfer of funds is underway ! The new SALT deduction elimination etc. makes even more sense now. This conservatively gets me out of cash and into investing. So psychologically this strategy makes me feel really good on several different levels. I "feel" good now that I have a plan in place to execute.
Last edited by RangerHD on Thu Feb 01, 2018 7:28 pm, edited 1 time in total.

gotester2000
Posts: 620
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Re: Here's my net worth....I max everything out.....now what?

Post by gotester2000 » Mon Jan 29, 2018 1:38 pm

You have already enough to retire. Pay off the house and apartment mortgage. Spend reasonably and enjoy your life - dont give up work though or you will blow off everything. If you still have more money and cant put in the market invest in income producing real estate.

chevca
Posts: 3053
Joined: Wed Jul 26, 2017 11:22 am

Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Mon Jan 29, 2018 1:59 pm

How much land or yard is around the apartment building where an $18k lawn mower was needed anyway? :wink:

Topic Author
RangerHD
Posts: 22
Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Mon Jan 29, 2018 3:41 pm

chevca wrote:
Mon Jan 29, 2018 1:59 pm
How much land or yard is around the apartment building where a lawn mower was needed anyway? :wink:
It is actually a little Swiss Army Knife of lawn mowers.
Last edited by RangerHD on Thu Feb 01, 2018 7:29 pm, edited 1 time in total.

chevca
Posts: 3053
Joined: Wed Jul 26, 2017 11:22 am

Re: Here's my net worth....I max everything out.....now what?

Post by chevca » Mon Jan 29, 2018 4:21 pm

Nice, yeah, I'd call that more than a lawn mower. :beer

Raabe34
Posts: 262
Joined: Tue Apr 14, 2009 9:58 am

Re: Here's my net worth....I max everything out.....now what?

Post by Raabe34 » Mon Jan 29, 2018 5:24 pm

RangerHD wrote:
Mon Jan 29, 2018 3:41 pm
chevca wrote:
Mon Jan 29, 2018 1:59 pm
How much land or yard is around the apartment building where an $18k lawn mower was needed anyway? :wink:
It is actually a little Swiss Army Knife of lawn mowers. It is called a Kubota BX23s TLB. Tractor, Loader, Backhoe.....has a mowing deck on it. It is a lawn mower than can dig and lift stuff. I dug and buried all my down spouts, utility lines, moved pallets of building material, and spread 6 dump truck loads of dirt and finished graded the lawn. Now I mow the lawn with it as well as do snow removal and perform pesticide and herbicide applications with it.
This guy is great at self realization that if he doesn't form a plan to utilize the cash rolling in there will be way more of these toys around. FYI that tractor could have been rented for 1 year or less.

Topic Author
RangerHD
Posts: 22
Joined: Fri Jan 26, 2018 8:50 pm

Re: Here's my net worth....I max everything out.....now what?

Post by RangerHD » Mon Jan 29, 2018 7:22 pm

Guilty Raabe34.....one good thing about equipment - construction and farm - the depreciation isn't anything like a car or motorcycle. That lawn mower is the first brand new piece of equipment I have ever bought....the rest is used and I buy and sell for fun and try to make a buck or two.... but again brand new you will take a hit..

Anyway, opened the Vanguard account today. I called them on the phone and they won't let me hire one of their professionals for .3% unless I put $50K in there.... That wasn't in the plan so I reckon I'll go at this alone. Would it be a bad idea to keep it simple and do an after tax 2035? I think it has about 30% bonds. I am fairly heavy in equities on the rest of my investments.
Last edited by RangerHD on Thu Feb 01, 2018 7:29 pm, edited 1 time in total.

WhiteMaxima
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Re: Here's my net worth....I max everything out.....now what?

Post by WhiteMaxima » Mon Jan 29, 2018 7:29 pm

Sell the land. You can enjoy national park and forest forest at basically no cost. Pay off house and apt or invest in 3 vanguard fund folio.

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