$10 MM Net worth..need advise on growing to $20 MM

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Topic Author
PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

rufflesinc wrote: Mon Feb 03, 2025 6:17 am
Leesbro63 wrote: Mon Feb 03, 2025 6:12 am
“Of course you would have to pay taxes along the way” is sort of “Other than that, Mrs. Lincoln, how was the play?” thing.

Taxes could become punitive if we see 2022 type 9% inflation. Remember, taxes are not only on the 2.5% coupon, but also on the big principal adjustment. TIPS for a $10M taxable account is not a good idea, in my humble opinion.
op leaving to heirs means the stepped up basis rule would come into play and no capital gains taxes
i would be obliged if you can elaborate on "stepped up basis rule would come into play" as i am not familiar with this term...thank you
smitcat
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by smitcat »

PN5048PC wrote: Mon Feb 03, 2025 8:30 am
rufflesinc wrote: Mon Feb 03, 2025 6:17 am op leaving to heirs means the stepped up basis rule would come into play and no capital gains taxes
i would be obliged if you can elaborate on "stepped up basis rule would come into play" as i am not familiar with this term...thank you
Stepped up basis applies to the taxable account only upon the demise of current account holders (you and your spouse if any).
Stepped up basis does not help with the tax defferred accounts or with any tax drag on the taxable accounts between now and your demise.
Stepped up basis 'resets' the taxable LTCG to zero at the time of death.
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

PN5048PC wrote: Mon Feb 03, 2025 8:30 am
rufflesinc wrote: Mon Feb 03, 2025 6:17 am op leaving to heirs means the stepped up basis rule would come into play and no capital gains taxes
i would be obliged if you can elaborate on "stepped up basis rule would come into play" as i am not familiar with this term...thank you
Smitcat gave a great reply, just above. I strongly suggest that you spend time reading up on "step up in basis at death". This is a VERY important concept for someone with large wealth in a taxable account (versus IRA wealth which is taxed differently). The "step up" is part of the "secret sauce" in estate planning. You need to fully understand this! Of course anything can happen between now and 30+ years from now, but based on current tax law, this is an important thing to understand. By the way, kudos to you for your fantastic accumulation and management of your wealth. Understanding "the step up in basis" is your next step.
Topic Author
PN5048PC
Posts: 36
Joined: Sat Feb 01, 2025 1:15 pm

Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

Leesbro63 wrote: Mon Feb 03, 2025 9:04 am
PN5048PC wrote: Mon Feb 03, 2025 8:30 am i would be obliged if you can elaborate on "stepped up basis rule would come into play" as i am not familiar with this term...thank you
Smitcat gave a great reply, just above. I strongly suggest that you spend time reading up on "step up in basis at death". This is a VERY important concept for someone with large wealth in a taxable account (versus IRA wealth which is taxed differently). The "step up" is part of the "secret sauce" in estate planning. You need to fully understand this! Of course anything can happen between now and 30+ years from now, but based on current tax law, this is an important thing to understand. By the way, kudos to you for your fantastic accumulation and management of your wealth. Understanding "the step up in basis" is your next step.
Thank you kindly!. We do have a Family trust we setup however. Will look into this 'step up" topic this year.
smitcat
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by smitcat »

smitcat wrote: Mon Feb 03, 2025 8:43 am
PN5048PC wrote: Mon Feb 03, 2025 8:30 am i would be obliged if you can elaborate on "stepped up basis rule would come into play" as i am not familiar with this term...thank you
Stepped up basis applies to the taxable account only upon the demise of current account holders (you and your spouse if any).
Stepped up basis does not help with the tax defferred accounts or with any tax drag on the taxable accounts between now and your demise.
Stepped up basis 'resets' the taxable LTCG to zero at the time of death.
Another thought....
I do not see a location posted for you so another thing to look into is potential State estate taxes.
I hope that you can see from these posts that estate planning is important for many things including but not limited to: income taxes, estate taxes, tax drag, current holders potential liabilities, heirs assett protection from potential liabilities, etc.
At some point a consultation with a respected profesional is very worthwhile.
Topic Author
PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

smitcat wrote: Mon Feb 03, 2025 9:14 am
smitcat wrote: Mon Feb 03, 2025 8:43 am

Stepped up basis applies to the taxable account only upon the demise of current account holders (you and your spouse if any).
Stepped up basis does not help with the tax defferred accounts or with any tax drag on the taxable accounts between now and your demise.
Stepped up basis 'resets' the taxable LTCG to zero at the time of death.
Another thought....
I do not see a location posted for you so another thing to look into is potential State estate taxes.
I hope that you can see from these posts that estate planning is important for many things including but not limited to: income taxes, estate taxes, tax drag, current holders potential liabilities, heirs assett protection from potential liabilities, etc.
At some point a consultation with a respected profesional is very worthwhile.
Thank you for the advise and noted. Live in the South (red/purple state) where taxes are not considered to be high relative to rest of the US.
bogling
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by bogling »

Leesbro63 wrote: Sun Feb 02, 2025 9:37 am I agree with the general thinking here that a somewhat balanced portfolio, over a long period of time, should get the original poster to his goal. That being said, I'm guy who always chimes in about the risk of a 1966-1981 period where real wealth of that portfolio lost half it's value, even with zero withdrawals. Of course if you look at the 15 after 1981, the entire 1966-1996 thirty year period looks better. But it could be a rocky road if similarities between 1966 and today play out in a similar way.
https://purefinancial.com/learning-cent ... st-decade/
smitcat
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by smitcat »

PN5048PC wrote: Mon Feb 03, 2025 9:19 am
smitcat wrote: Mon Feb 03, 2025 9:14 am

Another thought....
I do not see a location posted for you so another thing to look into is potential State estate taxes.
I hope that you can see from these posts that estate planning is important for many things including but not limited to: income taxes, estate taxes, tax drag, current holders potential liabilities, heirs assett protection from potential liabilities, etc.
At some point a consultation with a respected profesional is very worthwhile.
Thank you for the advise and noted. Live in the South (red/purple state) where taxes are not considered to be high relative to rest of the US.
One issue is income taxes another issue is estate taxes - not nearly the same.
Some states have additional estate taxes and some do not. Knowing which type of state you will be domiciled in if/when a transfer of wealth is likely to take place makes a difference.
Topic Author
PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

smitcat wrote: Mon Feb 03, 2025 9:57 am
PN5048PC wrote: Mon Feb 03, 2025 9:19 am Thank you for the advise and noted. Live in the South (red/purple state) where taxes are not considered to be high relative to rest of the US.
One issue is income taxes another issue is estate taxes - not nearly the same.
Some states have additional estate taxes and some do not. Knowing which type of state you will be domiciled in if/when a transfer of wealth is likely to take place makes a difference.
Noted. There are no State estate taxes in the one i live in.
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

bogling wrote: Mon Feb 03, 2025 9:22 am
Leesbro63 wrote: Sun Feb 02, 2025 9:37 am I agree with the general thinking here that a somewhat balanced portfolio, over a long period of time, should get the original poster to his goal. That being said, I'm guy who always chimes in about the risk of a 1966-1981 period where real wealth of that portfolio lost half it's value, even with zero withdrawals. Of course if you look at the 15 after 1981, the entire 1966-1996 thirty year period looks better. But it could be a rocky road if similarities between 1966 and today play out in a similar way.
https://purefinancial.com/learning-cent ... st-decade/
I agree that diversification helps when markets are bad. the lost decade that you referenced was not an inflationary lost decade. What happened during 1966-81 was still terrible for investors, despite any diversification.
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

PN5048PC wrote: Mon Feb 03, 2025 9:13 am
Leesbro63 wrote: Mon Feb 03, 2025 9:04 am

Smitcat gave a great reply, just above. I strongly suggest that you spend time reading up on "step up in basis at death". This is a VERY important concept for someone with large wealth in a taxable account (versus IRA wealth which is taxed differently). The "step up" is part of the "secret sauce" in estate planning. You need to fully understand this! Of course anything can happen between now and 30+ years from now, but based on current tax law, this is an important thing to understand. By the way, kudos to you for your fantastic accumulation and management of your wealth. Understanding "the step up in basis" is your next step.
Thank you kindly!. We do have a Family trust we setup however. Will look into this 'step up" topic this year.
I am guessing, but I don't really know, that you have a Revocable Living Trust. In that case, you'll still get the "step up" upon death. But if you have an irrevocable trust, then it's more likely that you will NOT get a stepped up basis. As you said, you need to truly learn what you have and about the step up and how that should work for you.
dbr
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by dbr »

PN5048PC wrote: Mon Feb 03, 2025 8:11 am
dbr wrote: Mon Feb 03, 2025 7:31 am

Tax certainly has to be considered, that's for sure.

The OP has still not told us if a stock index fund qualifies or not based on a criterion of "moderate/mild" risk. We are still missing a table that correlates investment selections with degrees on that risk chart. In my mind all stocks is certainly not moderate or mild risk. On the other hand investment risk of TIPS in the usual sense is very low, zero even, on such a chart except that TIPS today do not meet the wealth target, indicating 100% risk of failure on that criterion.

My advice is to put it all into US stocks and the OP needs to decide if that risk of missing the target is acceptable. Also it isn't very hard to rethink what the target should be.
"The OP has still not told us if a stock index fund qualifies or not based on a criterion of "moderate/mild" risk" -- .I beleive i have answered this atleast 2 times in my earlier replies. I am willing to tolerate what would be considered "moderate" or "moderately aggressive" Asset allocations. This would typically include some combination of stocks, bonds, MM, cash et al. Also note the $ 20 MM in 20 yrs in todays dollars. Hope this helps.
Then you should put the $7MM 70% in VTI and 30% in BND and expect that in real dollars purchasing power your investment has roughly a 70% chance of growing to $20MM after 25 years. If you were to choose 90% VTI there would be perhaps a 75% chance of hitting that goal. At 50% stocks there would be around a 50% chance of reaching the goal. There is no option in that model that increases the odds past 75% chance of success.

Those numbers come from https://engaging-data.com/visualizing-4-rule/ with spending set to zero, starting portfolio set to $7MM, retirement years set to 25, investment costs set to 0.3%, and stocks and bonds selected as you choose. There are lots of other tools out there that estimate the statistical range of future wealth for different inputs using either historical data or arbitrary inputs to a Monte Carlo model.
protagonist
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by protagonist »

Leesbro63 wrote: Mon Feb 03, 2025 6:12 am
protagonist wrote: Sun Feb 02, 2025 11:29 pm I know this doesn't answer your question, but just out of curiosity I checked to see how much you would have in 20 years in real terms if you just put $10M into a 20 year TIPS, trading now at a yield of 2.411% real (maturity Feb. 2045)- in other words , as close to a zero risk investment that exists.
The answer (just using an online interest calculator) is between $16.1M-16.2M.
Of course, you would have to pay taxes along the way.

But if you have other sources of income, $20M is probably a pretty easy target for 20 years.

But remember, if you want $20M worth of today's purchasing power you need to factor inflation, and that is a big unknown, unless you are looking at inflation-protected assets. So there are no guarantees that you will hit your target.

IMHO, having a numerical goal AND a time limit for reaching it, with no guarantees, is a recipe for potential disappointment and can lead to making bad choices along the way. It's not unrealistic to say, for example, "I will retire when I have X dollars", or "I will retire 20 years from now", since both of those goals are independently achievable (even if the first one keeps you working your whole life), but to say "I will retire in 20 years with X dollars" is unrealistic unless you have eliminated the unknowns.

The main question is why do you need to leave your heirs that much money?

I also agree with PN5048PC, that you would help your kids a whole lot more if you use your money to help them now, while they are young and you are alive, than if you leave a windfall when they are already pretty old. With $10M, you can do a lot for your kids while you are still alive.
“Of course you would have to pay taxes along the way” is sort of “Other than that, Mrs. Lincoln, how was the play?” thing.

Taxes could become punitive if we see 2022 type 9% inflation. Remember, taxes are not only on the 2.5% coupon, but also on the big principal adjustment. TIPS for a $10M taxable account is not a good idea, in my humble opinion.
I was not advocating that OP invest $10M in TIPS...just trying to illustrate a point, not dissimilar to yours, that without inflation protection there are no guarantees of your assets doubling in real terms in 20 years, which is what I believe OP saw as his goal. There are no TIPS that, even before paying tax, would currently meet that goal.

Regarding TIPS in taxable accounts. what safe, fixed income alternative do you propose that would not be ultimately taxable on the same gains? With TIPS, it is just an issue of paying as you go, rather than when you cash out.

You mentioned 2022. If we had "2022-type 9% inflation" today, the 20 year TIPS would be earning 11.411% annually, and the gains would be taxed. When inflation was around 9% in 2022, people holding money in nominals, CDs or bank accounts were earning 0-3% in pre-tax dollars. I was buying TIPS in taxable then, and was happy paying taxes on my "phantom" gains rather than losing large amounts of money in real terms in other investments. If 9% increased or was sustained for much longer, a lot of bond investors and long-term CD investors would have really suffered.

Sure, holding them in a tax-deferred account is probably better (that is true for most investments), but even in that case, you or your heirs have to pay the tax when you withdraw the money (which you or your heirs ultimately have to do anyway). Withdrawing a large bulk sum vs. lower amounts periodically could result in paying more taxes in the long run, due to pushing you into a higher marginal bracket, IRMAA, etc. And tax rates are at historic lows these days, which could be a plus if you are paying incrementally every year vs. in bulk years down the road, if they rise in the future.

I agree that it is probably favorable to hold TIPS in tax-deferred accounts if possible. But I don't understand why people are afraid to hold them in taxable, assuming they have enough money to pay the taxes annually. Plus, unlike most investments, TIPS are state tax exempt.

I also agree with posters that taking some stock risk is a good idea with money you intend to leave to heirs because of the step-up provision. I am doing that with my own assets. The question is how much stock risk, and that is ultimately an individual decision, since it's impossible to know the future.
"The truth cannot force its way in, when something else is occupying its place." | -Ludwig Wittgenstein
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

protagonist wrote: Mon Feb 03, 2025 1:53 pm
Leesbro63 wrote: Mon Feb 03, 2025 6:12 am

“Of course you would have to pay taxes along the way” is sort of “Other than that, Mrs. Lincoln, how was the play?” thing.

Taxes could become punitive if we see 2022 type 9% inflation. Remember, taxes are not only on the 2.5% coupon, but also on the big principal adjustment. TIPS for a $10M taxable account is not a good idea, in my humble opinion.
I was not advocating that OP invest $10M in TIPS...just trying to illustrate a point, not dissimilar to yours, that without inflation protection there are no guarantees of your assets doubling in real terms in 20 years, which is what I believe OP saw as his goal. There are no TIPS that, even before paying tax, would currently meet that goal.

Regarding TIPS in taxable accounts. what safe, fixed income alternative do you propose that would not be ultimately taxable on the same gains? With TIPS, it is just an issue of paying as you go, rather than when you cash out.

You mentioned 2022. If we had "2022-type 9% inflation" today, the 20 year TIPS would be earning 11.411% annually, and the gains would be taxed. When inflation was around 9% in 2022, people holding money in nominals, CDs or bank accounts were earning 0-3% in pre-tax dollars. I was buying TIPS in taxable then, and was happy paying taxes on my "phantom" gains rather than losing large amounts of money in real terms in other investments. If 9% increased or was sustained for much longer, a lot of bond investors and long-term CD investors would have really suffered.

Sure, holding them in a tax-deferred account is probably better (that is true for most investments), but even in that case, you or your heirs have to pay the tax when you withdraw the money (which you or your heirs ultimately have to do anyway). Withdrawing a large bulk sum vs. lower amounts periodically could result in paying more taxes in the long run, due to pushing you into a higher marginal bracket, IRMAA, etc. And tax rates are at historic lows these days, which could be a plus if you are paying incrementally every year vs. in bulk years down the road, if they rise in the future.

I agree that it is probably favorable to hold TIPS in tax-deferred accounts if possible. But I don't understand why people are afraid to hold them in taxable, assuming they have enough money to pay the taxes annually. Plus, unlike most investments, TIPS are state tax exempt.

I also agree with posters that taking some stock risk is a good idea with money you intend to leave to heirs because of the step-up provision. I am doing that with my own assets. The question is how much stock risk, and that is ultimately an individual decision, since it's impossible to know the future.
In theory you are right. If we knew for sure that we'd have big inflation for a long time, paying the tax on TIPS is still the least worst option. In reality if you had $10M of TIPS in a taxable account, for 2022 you'd be paying tax on $900,000 of phantom income.
Topic Author
PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

Leesbro63 wrote: Mon Feb 03, 2025 11:39 am
PN5048PC wrote: Mon Feb 03, 2025 9:13 am Thank you kindly!. We do have a Family trust we setup however. Will look into this 'step up" topic this year.
I am guessing, but I don't really know, that you have a Revocable Living Trust. In that case, you'll still get the "step up" upon death. But if you have an irrevocable trust, then it's more likely that you will NOT get a stepped up basis. As you said, you need to truly learn what you have and about the step up and how that should work for you.
Yes Revocable Trust.
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

PN5048PC wrote: Mon Feb 03, 2025 2:51 pm
Leesbro63 wrote: Mon Feb 03, 2025 11:39 am

I am guessing, but I don't really know, that you have a Revocable Living Trust. In that case, you'll still get the "step up" upon death. But if you have an irrevocable trust, then it's more likely that you will NOT get a stepped up basis. As you said, you need to truly learn what you have and about the step up and how that should work for you.
Yes Revocable Trust.
I am not a lawyer or a tax professional. But my layman's guess is that for a Revocable trust, the step up basis issue will probably be important for you to learn about and maybe beneficial to your situation.
Topic Author
PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

dbr wrote: Mon Feb 03, 2025 12:45 pm
PN5048PC wrote: Mon Feb 03, 2025 8:11 am "The OP has still not told us if a stock index fund qualifies or not based on a criterion of "moderate/mild" risk" -- .I beleive i have answered this atleast 2 times in my earlier replies. I am willing to tolerate what would be considered "moderate" or "moderately aggressive" Asset allocations. This would typically include some combination of stocks, bonds, MM, cash et al. Also note the $ 20 MM in 20 yrs in todays dollars. Hope this helps.
Then you should put the $7MM 70% in VTI and 30% in BND and expect that in real dollars purchasing power your investment has roughly a 70% chance of growing to $20MM after 25 years. If you were to choose 90% VTI there would be perhaps a 75% chance of hitting that goal. At 50% stocks there would be around a 50% chance of reaching the goal. There is no option in that model that increases the odds past 75% chance of success.

Those numbers come from https://engaging-data.com/visualizing-4-rule/ with spending set to zero, starting portfolio set to $7MM, retirement years set to 25, investment costs set to 0.3%, and stocks and bonds selected as you choose. There are lots of other tools out there that estimate the statistical range of future wealth for different inputs using either historical data or arbitrary inputs to a Monte Carlo model.
Thank you for sharing...this is a cool and a useful tool!
dbr
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by dbr »

PN5048PC wrote: Mon Feb 03, 2025 3:13 pm
dbr wrote: Mon Feb 03, 2025 12:45 pm

Then you should put the $7MM 70% in VTI and 30% in BND and expect that in real dollars purchasing power your investment has roughly a 70% chance of growing to $20MM after 25 years. If you were to choose 90% VTI there would be perhaps a 75% chance of hitting that goal. At 50% stocks there would be around a 50% chance of reaching the goal. There is no option in that model that increases the odds past 75% chance of success.

Those numbers come from https://engaging-data.com/visualizing-4-rule/ with spending set to zero, starting portfolio set to $7MM, retirement years set to 25, investment costs set to 0.3%, and stocks and bonds selected as you choose. There are lots of other tools out there that estimate the statistical range of future wealth for different inputs using either historical data or arbitrary inputs to a Monte Carlo model.
Thank you for sharing...this is a cool and a useful tool!
PS I retract the advice about BND. Taxes have to be considered which usually means a state specific muni fund if you have state taxes or a national fund if you don't.
protagonist
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by protagonist »

Leesbro63 wrote: Mon Feb 03, 2025 2:46 pm
protagonist wrote: Mon Feb 03, 2025 1:53 pm

I was not advocating that OP invest $10M in TIPS...just trying to illustrate a point, not dissimilar to yours, that without inflation protection there are no guarantees of your assets doubling in real terms in 20 years, which is what I believe OP saw as his goal. There are no TIPS that, even before paying tax, would currently meet that goal.

Regarding TIPS in taxable accounts. what safe, fixed income alternative do you propose that would not be ultimately taxable on the same gains? With TIPS, it is just an issue of paying as you go, rather than when you cash out.

You mentioned 2022. If we had "2022-type 9% inflation" today, the 20 year TIPS would be earning 11.411% annually, and the gains would be taxed. When inflation was around 9% in 2022, people holding money in nominals, CDs or bank accounts were earning 0-3% in pre-tax dollars. I was buying TIPS in taxable then, and was happy paying taxes on my "phantom" gains rather than losing large amounts of money in real terms in other investments. If 9% increased or was sustained for much longer, a lot of bond investors and long-term CD investors would have really suffered.

Sure, holding them in a tax-deferred account is probably better (that is true for most investments), but even in that case, you or your heirs have to pay the tax when you withdraw the money (which you or your heirs ultimately have to do anyway). Withdrawing a large bulk sum vs. lower amounts periodically could result in paying more taxes in the long run, due to pushing you into a higher marginal bracket, IRMAA, etc. And tax rates are at historic lows these days, which could be a plus if you are paying incrementally every year vs. in bulk years down the road, if they rise in the future.

I agree that it is probably favorable to hold TIPS in tax-deferred accounts if possible. But I don't understand why people are afraid to hold them in taxable, assuming they have enough money to pay the taxes annually. Plus, unlike most investments, TIPS are state tax exempt.

I also agree with posters that taking some stock risk is a good idea with money you intend to leave to heirs because of the step-up provision. I am doing that with my own assets. The question is how much stock risk, and that is ultimately an individual decision, since it's impossible to know the future.
In theory you are right. If we knew for sure that we'd have big inflation for a long time, paying the tax on TIPS is still the least worst option. In reality if you had $10M of TIPS in a taxable account, for 2022 you'd be paying tax on $900,000 of phantom income.
True. But you would have absorbed a more significant real loss in wealth, rather than a real gain, if you were invested in non-inflation protected fixed income securities. A hypothetical 7% real loss in 2022 on $10M would be a $700,000 real loss , as opposed to a real gain with TIPS. That real loss far exceeds the sum of the real gain with TIPS minus the federal tax paid on $900K.
If you consider sequence of returns to be significant, and also consider the possibility of a slower recovery, the long-term impact on your net worth could be very negative.
Do you think taxes will decline or remain at historic low levels between now and 2045?
Last edited by protagonist on Tue Feb 04, 2025 11:58 am, edited 3 times in total.
"The truth cannot force its way in, when something else is occupying its place." | -Ludwig Wittgenstein
protagonist
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by protagonist »

If I were OP, I would (mind you, there are many roads to Rome, or used to be, though not all that many to Dublin):

1. Abandon the dual goal of doubling the value AND a fixed date by which it needs to happen. Too many unpredictable variables which could lead to bad choices.

2. Given today's TIPS yields, create a portfolio consisting of stock index funds and TIPS, the balance depending on how much risk OP is willing to take. I'm assuming the $10M is all discretionary funds that OP does not need, since OP stated the desire to leave it to heirs.
If that is correct, and if OP is willing to gamble for high potential returns, that could be as high as 100% stocks, knowing that could make heirs fantastically rich if luck persists.
Because even if the market declines 90% in real terms between now and 2045, that still leaves $1M for heirs in 2025 $, tax-free. Not bad, considering they didn't have to work for it. I'd take it. :D

3. TIPS, if used, should go into tax-deferred first, and if more TIPS are desired, then into taxable.

(Unfortunately, I do not have the OP's dilemma.)
"The truth cannot force its way in, when something else is occupying its place." | -Ludwig Wittgenstein
oragne lovre
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by oragne lovre »

White Coat Investor wrote: Sat Feb 01, 2025 3:59 pm
And growing $10 million to $20 million in 20-25 years is child's play. You only need a return of 2.81%

=RATE(25,0,-10000000,20000000) = 2.81%.
Could you please elaborate further as to come up with this rate, White Coat Investor?

Thanks in advance
The finest, albeit the most difficult, of all human achievements is being reasonable.
Leesbro63
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by Leesbro63 »

protagonist wrote: Tue Feb 04, 2025 11:47 am Do you think taxes will decline or remain at historic low levels between now and 2045?
Speculation about that is against the rules here. But I think it's OK to note that tax law changes frequently and trying to guess taxation in 20 years from now would be just a guess. So I'd stick with doing tax planning based on the current set of tax laws.
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by White Coat Investor »

oragne lovre wrote: Tue Feb 04, 2025 3:40 pm
White Coat Investor wrote: Sat Feb 01, 2025 3:59 pm
And growing $10 million to $20 million in 20-25 years is child's play. You only need a return of 2.81%

=RATE(25,0,-10000000,20000000) = 2.81%.
Could you please elaborate further as to come up with this rate, White Coat Investor?

Thanks in advance
You mean you want me to teach you how to use the RATE function on a spreadsheet or financial calculator? Basically copy and paste what I wrote into a box on Excel and you'll get the rate.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
smitcat
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by smitcat »

Leesbro63 wrote: Tue Feb 04, 2025 3:48 pm
protagonist wrote: Tue Feb 04, 2025 11:47 am Do you think taxes will decline or remain at historic low levels between now and 2045?
Speculation about that is against the rules here. But I think it's OK to note that tax law changes frequently and trying to guess taxation in 20 years from now would be just a guess. So I'd stick with doing tax planning based on the current set of tax laws.

History is something you can look at - here is a chart on historical tax rates over the years.....
https://fred.stlouisfed.org/graph/?g=jm6o
bogling
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by bogling »

White Coat Investor wrote: Tue Feb 04, 2025 5:55 pm
oragne lovre wrote: Tue Feb 04, 2025 3:40 pm

Could you please elaborate further as to come up with this rate, White Coat Investor?

Thanks in advance
You mean you want me to teach you how to use the RATE function on a spreadsheet or financial calculator? Basically copy and paste what I wrote into a box on Excel and you'll get the rate.
This calculates in a spreadhseet the rate needed on the amount over the time specified, but it would be a real rate needed not a nominal rate calculated with that formula, as mentioned before. In other words, assuming inflation the rate would need to add an inflation rate to the 2.81% so the $ at the goal date could be worth what $20M is worth today.
Last edited by bogling on Wed Feb 05, 2025 3:23 am, edited 2 times in total.
bogling
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by bogling »

Leesbro63 wrote: Mon Feb 03, 2025 11:38 am
I agree that diversification helps when markets are bad. the lost decade that you referenced was not an inflationary lost decade. What happened during 1966-81 was still terrible for investors, despite any diversification.
Good point...and both examples for OP to understand it's all a venture, not certain, and strategies are just that with many things to consider, like also maybe high valuations being correlated based on past data with lower gains in a subsequent decade ... though 25 years presents a notable opportunity.
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PN5048PC
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by PN5048PC »

bogling wrote: Wed Feb 05, 2025 3:21 am
Leesbro63 wrote: Mon Feb 03, 2025 11:38 am

I agree that diversification helps when markets are bad. the lost decade that you referenced was not an inflationary lost decade. What happened during 1966-81 was still terrible for investors, despite any diversification.
Good point...and both examples for OP to understand it's all a venture, not certain, and strategies are just that with many things to consider, like also maybe high valuations being correlated based on past data with lower gains in a subsequent decade ... though 25 years presents a notable opportunity.
Thanks you and agree. Been running various scenarios using some of the online models shared here and appears (barring any catastrophes) i have a better than fair chance of reaching my goal while minimizing risk.
protagonist
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by protagonist »

Leesbro63 wrote: Tue Feb 04, 2025 3:48 pm
protagonist wrote: Tue Feb 04, 2025 11:47 am Do you think taxes will decline or remain at historic low levels between now and 2045?
Speculation about that is against the rules here. But I think it's OK to note that tax law changes frequently and trying to guess taxation in 20 years from now would be just a guess. So I'd stick with doing tax planning based on the current set of tax laws.
That was the point I was trying to make...I was not seriously asking if taxes would decline, but trying to suggest that guessing is futile.
"The truth cannot force its way in, when something else is occupying its place." | -Ludwig Wittgenstein
protagonist
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Re: $10 MM Net worth..need advise on growing to $20 MM

Post by protagonist »

protagonist wrote: Wed Feb 05, 2025 11:56 am
Leesbro63 wrote: Tue Feb 04, 2025 3:48 pm

Speculation about that is against the rules here. But I think it's OK to note that tax law changes frequently and trying to guess taxation in 20 years from now would be just a guess. So I'd stick with doing tax planning based on the current set of tax laws.
That was the point I was trying to make...I was not seriously asking if taxes would decline, but trying to suggest that guessing is futile....though if history is of any use (???), we are currently at historic lows.
"The truth cannot force its way in, when something else is occupying its place." | -Ludwig Wittgenstein
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