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Post by Deleted on Jun 14, 2022 21:55:38 GMT
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Post by FD1000 on Jun 14, 2022 22:04:18 GMT
And most of these don't have a big portfolio. Most of the big ones are professional with access. I don't know one professional with no access.
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Post by Deleted on Jun 14, 2022 22:09:53 GMT
FD - Talking about the public at large...You have to have earned income to have an IRA and 1/3 to 1/2 of workers don't have access to a 401K. What is the point you are making? I mean seriously - are you arguing most investors have no tax consequences? ?? No capital gains, losses, distributions? That's what you keep saying - that most people have tax deferred and no taxable - just the very rich. No wonder you advocate as you do if there are no tax considerations in your opinion? In my world, there are and also for every poster who talks about tax loss harvesting on these boards.
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Post by steadyeddy on Jun 15, 2022 0:00:16 GMT
40% of my portfolio (not including real estate) is in taxable accounts. Thus 60% of my tradeable PV is in tax deferred or Roth. I agree with @slooow . I also understand FD1000 's argumentative style of postings although I am not sure he is aware he comes across as inconsiderate to others' feelings and opinions.
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Post by Deleted on Jun 15, 2022 0:33:23 GMT
I'm okay with FD's postings - but want to see data to back up wide ranging claims that have consequences. Maybe I am wrong. With my portfolio, the thought of liquidating is ill making - mostly due to tax consequences. I also agree with another poster, that now is a time to be supportive of one another. Pointing out potential mis-steps is always welcome. If one feels they have the million dollar solution for investing - put it out there and put it proud. I don't have it. If one knows what the rest of the year will bring, then bring it. Don't tell me in November.
I do agree with the original OP by FD that it might be best to stand pat right now on a well thought out allocation plan.
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Post by Deleted on Jun 15, 2022 0:42:00 GMT
And most of these don't have a big portfolio. Most of the big ones are professional with access. I don't know one professional with no access. Sorry - What is the point you are making? That these persons only have deferred and no taxable investments? I don't believe that. Maybe we should take a poll. I know you and R48 are basically all deferred. I am not - by some 65%. Steady is 40% not.
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Post by win1177 on Jun 15, 2022 1:07:38 GMT
And most of these don't have a big portfolio. Most of the big ones are professional with access. I don't know one professional with no access. Sorry - What is the point you are making? That these persons only have deferred and no taxable investments? I don't believe that. Maybe we should take a poll. I know you and R48 are basically all deferred. I am not - by some 65%. Steady is 40% not. I’m at about 85% taxable, 15% in tax deferred/ tax free (Roth). When I started working full time at our medical school, I had the opportunity of using my IRA to purchase additional time in the state pension plan, based on my prior work at medical schools in Texas and Georgia, as well as part time work for a county Govt. In SC (before I joined the faculty). Was able to purchase an additional 12 years of time, so there went the IRA. In the long run, getting the additional time in the pension plan was a GREAT move, as it was at a lower cost, and allowed me to retire a earlier. So I entered my last ten years of work with much lower tax deferred/ tax free money, but I saved a LOT since we still lived a relatively low cost lifestyle, used cars, kids went to public schools, etc. During the last ten years of my work, I was in private practice, so I opened a small business 401k, and put a lot in there each year. So I wound up with less in tax deferred/ tax free retirement accounts, but I saved a lot in taxable accounts. My wife also inherited a little from her mother and father, again in taxable accounts. So that’s why we have so much in taxable. Most of our retirement accounts (80%) is in Roth, as that is what I funded heavily those last ten years. Win
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Post by mozart522 on Jun 15, 2022 1:54:58 GMT
I'm 99.5 tax-advantaged, some deferred, some tax-free. Only taxable is a small muni MM I use for monthly withdrawals and a chunky checking account.
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Post by Norbert on Jun 15, 2022 5:29:21 GMT
I'm okay with FD's postings - but want to see data to back up wide ranging claims that have consequences. Maybe I am wrong. With my portfolio, the thought of liquidating is ill making - mostly due to tax consequences. I also agree with another poster, that now is a time to be supportive of one another. Pointing out potential mis-steps is always welcome. If one feels they have the million dollar solution for investing - put it out there and put it proud. I don't have it. If one knows what the rest of the year will bring, then bring it. Don't tell me in November. I do agree with the original OP by FD that it might be best to stand pat right now on a well thought out allocation plan. I think you would have been wise to go to cash with the non-taxable accounts some time ago. But, that's water under the bridge. With the S&P 500 down over 20% prices are getting more attractive, so probably not the time to sell. Yes, we could see another 25% down, but who knows? I don't.
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Post by bf22 on Jun 15, 2022 6:02:06 GMT
80% in taxable accounts. I did save the maximum allowed in 401Ks for over 25 years. I worked for several high tech companies. With the stock options that most people I know received, there is no way that most of their investments is in non-taxable.
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Post by Deleted on Jun 15, 2022 9:45:07 GMT
I'm okay with FD's postings - but want to see data to back up wide ranging claims that have consequences. Maybe I am wrong. With my portfolio, the thought of liquidating is ill making - mostly due to tax consequences. I also agree with another poster, that now is a time to be supportive of one another. Pointing out potential mis-steps is always welcome. If one feels they have the million dollar solution for investing - put it out there and put it proud. I don't have it. If one knows what the rest of the year will bring, then bring it. Don't tell me in November. I do agree with the original OP by FD that it might be best to stand pat right now on a well thought out allocation plan. I think you would have been wise to go to cash with the non-taxable accounts some time ago. But, that's water under the bridge. With the S&P 500 down over 20% prices are getting more attractive, so probably not the time to sell. Yes, we could see another 25% down, but who knows? I don't. Norbert - I have 3 deferred accounts - 401K, IRA and ROTH. The bulk of my 401K is basically in cash as protected principal earning the 5 year Treasury rate. A small amount in the S&P and EAFE. The IRA has stocks I have accumulated for a decade - O, CSCO, PFE, CLX, etc...No plans to sell and will continue to reinvest for the next 3 to 7 years I am working. The ROTH has JNJ, CTRA, MCD, SHEL, OXY, GOOG, AMZN, etc....No plans to sell these either. International etfs there. Also have COIN and UBER there..... I spent a lot to time taking gains and buying what I thought were better values. All accounts generate consistent income. We have a reasonably priced market right now - not overvalued. 25% down? Why not 50%? No one knows. I do know cash is a permanent loser. Which will win the race in 5 years - cash or stay the course? If you need it now - cash would be a better choice no matter what is going on. But I don't. So that is my rationale.
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Post by Capital on Jun 15, 2022 9:51:35 GMT
And most of these don't have a big portfolio. Most of the big ones are professional with access. I don't know one professional with no access. Sorry - What is the point you are making? That these persons only have deferred and no taxable investments? I don't believe that. Maybe we should take a poll. I know you and R48 are basically all deferred. I am not - by some 65%. Steady is 40% not. I'm about 80% deferred, 13% Roth and HSA and 7% Taxable. Currently holding all core and sector weighting positions - no trading except for some covered calls of short duration. Except for 401k, cash from new contributions and dividends/distributions are remaining in cash. All 401k contributions going to FXAIX. Cash reserve is held in cash or invested in 3-month Treasury Bills or in 3-month CDs. That's about all I'm doing right now. Cash I am building up will probably go to buying individual bonds when I'm ready.
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Post by FD1000 on Jun 15, 2022 16:47:44 GMT
FD - my guess is many of those upper middle class deferred account holders also have taxable investments. Many have no access to deferred accounts and only have taxable accounts. IRAs you can't put much in. Some have none. Tax consequences need to always be considered when providing investment options/opinions. UH - I now have a small stake in UTG. There are millions with small portfolios, the median portfolio age 65-69 is about $200K. I'm talking about the upper portion. People who don't make much, usually don't have access. Gov/State, big companies such as Walmart, Home deport, even McDonald has one. Then you look at all the STEM, finance, health care, Teachers, universities and most have it. I also know people that made their money in RE, and why most of the money is in RE. Basically, most of the upper half have a nice % in deferred. They can play timing as a starting point with 20-30% and if they like it move to 40-50%. Millions have very small portfolio, they are not in this discussion. The ones who have over 4-5 millions, who cares. How many have this amount? They usually have a special situation, such as, making a lot more, sold a business, got inheritance. You can contribute to 401K is $20.5K then another $6.5K catch up + $6-7K for Roth. How many can do the max? So why would any of these people have a lot in taxable. Others save in taxable and then buy their first house. BTW, smart investors have done Roth conversion for years as part of taxes and now can use it for timing. Steady: Feelings have no place in investing. It's all data driven for me. Using single stocks is another problem because one of them can have a huge tax in taxable account. Then you have a problem selling 10-20 stocks and buying back. It all makes sense why I love concentrated portfolio with up to 5 funds. Another reason why funds are better, especially when we know the SP500 beat a huge number of investors/funds when you look at 2-3-4 decades of investing. Bottom line: it's doable without major tax consequences. The easiest thing, is to look for excuses, just like most other stuff (I must have high % in cash for years in retirement or using income to cover up total performance).
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Post by Deleted on Jun 15, 2022 17:26:13 GMT
In today's news, another reference to "it."
"Police said the driver fled the scene, but officers eventually located it, and the positive ID of the alleged shooter was made."
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Post by Mustang on Jun 15, 2022 17:31:54 GMT
Our investments fall above the median but below the "who cares." I was hoping to make the "who cares" category in the next 10 years but 2022 has been a bit of a setback. Our investments are 84% deferred, 15% taxable with 1% in cash which is also taxable. 7.5% is in Roth's but I'm not doing Roth conversions. We have no earned income. I live in a state that doesn't tax most of my income so I pay very little in state taxes.
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Post by Deleted on Jun 15, 2022 17:47:22 GMT
Well- there we have it - no need to worry about tax consequences........
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Post by junkster on Jun 15, 2022 17:50:36 GMT
I am just a tad below the “who cares” category in no small part because of a financially debilitating divorce years ago. I am 90% in tax deferred. My biggest financial mistake was not the divorce but not converting to a Roth when they became available in the late 90s. Huge, huge mistake. The divorce on the other hand while cutting my nest egg almost in half at the time was one of my better life decisions,
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Post by retiredat48 on Jun 15, 2022 22:39:25 GMT
@slooow ,…and others…I had taxable accounts also. But being retired 29 years, I drew down/lived on taxable. Now taking REQUIRED Minimum Distributions.
BTWMuch in taxable can be mitigated re taxes. Use ETFs which have a special tax advantage of almost zero cap gains. So, if you buy a small cap ETF, in taxable, it is like a mini IRA. You have minimal income and no cap gain worries. Keep income earning stuff in tax advantaged.
R48
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Post by mozart522 on Jun 15, 2022 22:59:43 GMT
Most buy and holders who are in TIRAs might benefit from Roth conversions right now while the market is down. Pay the tax with your taxable cash that is losing badly to inflation right now.
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Post by FD1000 on Jun 16, 2022 0:20:10 GMT
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Post by johntaylor on Jun 16, 2022 15:58:39 GMT
The "who cares?" point might be a bit higher than 4-5 million, which isn't all that much these days
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Post by Mustang on Jun 16, 2022 16:59:36 GMT
Well- there we have it - no need to worry about tax consequences........ I don't worry about them. There are two reasons to worry about taxes. The first is if you expect to be in a lower tax bracket later so over all you will pay less taxes. The second is to defer taxes and let your estate worry about it.
We will never be in a lower tax bracket. Even in retirement I make more than I did working... and I worked two jobs: CFO of a manufacturing company and adjunct professor teaching accounting. (But, my wife and I were both putting 25% of our wages in 401Ks.) When I die the insurance will be invested and my wife will make as much by herself as we do jointly. At least that is the plan which hasn't changed. Her tax bracket will go up not down.
My RMDs are reinvested. My wife's social security is invested. All distributions are re-invested. This increases the cost basis of our investments so when it comes time to sell there will be less capital gain profit and less taxes. After having been in some funds for over 30 years there will be considerable capital gains when we sell.
While there may be some small difference, paying taxes today means we will pay less later. Perhaps when we need it the most. So no, I don't worry about income taxes.
I know this goes against conventional wisdom but so does taking social security early. My wife and I took social security at 62. All of the money is invested. While social security increased around 2-3% per year we were making 10-20% depending on the year. But here is the best reason to take it early and invest it. Mutual Funds can be inherited by the kids. Social security can't. Those that spend every penny they get shouldn't do that but it is working out well for us.
P.S. Maybe when I get into the "who cares" category I'll look at taxes a little closer.
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Post by anitya on Jun 16, 2022 17:59:02 GMT
I am not following this thread closely but I saw folks mentioning that $4-5M as the who cares point. A few things to consider in coming up with that who cares number.
Composition of your tax deferred and tax accounts matters. As an extreme example, only to illustrate - If all of it is in a tax deferred account, your government owns part of the account. (1) Figure out how much of it you own and if that is at a who care point.
Desire to bequeath matters. Figure out how much you wish to bequeath and consider that as not yours. (2) Figure out how much is left for you.
Married or single matters. Depending on ones mental inclinations, money has somewhat conflicting definitions. For example, Money is something that buys conveniences, Money provides psychological security, etc. Your mental inclinations may not be the same as your spouse's. So, (2) above you come up with may not be the same as what your spouse might think. You have to take the lower of what you come up with and your spouse comes up with.
Finally, most couple do not have open conversations about money. Partly because one or both of them do not necessarily want to think about what their definition of money is.
I do not worry about any of the above.
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Post by Deleted on Jun 16, 2022 18:01:39 GMT
Mustang - "Even in retirement I make more than I did working... and I worked two jobs: CFO of a manufacturing company and adjunct professor teaching accounting. (But, my wife and I were both putting 25% of our wages in 401Ks.)"
to put 25% of your wages in 401k, wages would be less that 100K per annum. what decade was it?
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Post by win1177 on Jun 16, 2022 19:22:04 GMT
I am not following this thread closely but I saw folks mentioning that $4-5M as the who cares point. A few things to consider in coming up with that who cares number. Composition of your tax deferred and tax accounts matters. As an extreme example, only to illustrate - If all of it is in a tax deferred account, your government owns part of the account. (1) Figure out how much of it you own and if that is at a who care point. Desire to bequeath matters. Figure out how much you wish to bequeath and consider that as not yours. (2) Figure out how much is left for you. Married or single matters. Depending on ones mental inclinations, money has somewhat conflicting definitions. For example, Money is something that buys conveniences, Money provides psychological security, etc. Your mental inclinations may not be the same as your spouse's. So, (2) above you come up with may not be the same as what your spouse might think. You have to take the lower of what you come up with and your spouse comes up with. Finally, most couple do not have open conversations about money. Partly because one or both of them do not necessarily want to think about what their definition of money is. I do not worry about any of the above. What do you mean by “4-5 M as The Who cares point”? Is this in regards to portfolio size? I agree with Anitya in that there are several additional factors that would influence that amount, such as amount taxable vs. tax deferred, single vs. married, etc. Win
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Post by junkster on Jun 16, 2022 19:55:03 GMT
I would think the biggest factor re the “who cares”” amount would be age. Nest single or married. At some point/age a single person with a large nest egg could care less about continuing to accumulate and spend their remaining precious years enjoying life to the fullest. Unfortunately far too many wake up and realize because of age related health issues it is too late to enjoy what they spent a lifetime accumulating.
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Post by FD1000 on Jun 16, 2022 20:07:30 GMT
The who cares is just a number. If you think it's 6-10 or 20 millions, again, who cares. What % of investors have over 5 millions? small The idea is to discuss big numbers, the majority of investors who are above the median portfolio size, and they are between $200K to 2 millions. Most can do some trading at 20-30% or more because they have access to deferred accounts or made sure to do conversion or something else.
Back to OP. IMO, it's still make sense. One thing is different. In the OP I said: "I already bought my flights to the west for a 2-week vacation in May. That's a great way to forget the markets and enjoy life. Flying abroad will have to wait a bit longer." Yesterday, I bought our ticket to UK for almost 3 weeks, next October. If I was losing money YTD, I would think twice before spending that much. This is the power of not losing.
Another point of this thread is "not losing as much as...what ever" doesn't satisfy me, I don't want to lose and why selling is so critical.
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Post by Mustang on Jun 16, 2022 20:48:32 GMT
Mustang - "Even in retirement I make more than I did working... and I worked two jobs: CFO of a manufacturing company and adjunct professor teaching accounting. (But, my wife and I were both putting 25% of our wages in 401Ks.)" to put 25% of your wages in 401k, wages would be less that 100K per annum. what decade was it? It was 1996 to 2010. And, I simplified that statement. Some of that 25% may have gone into a traditional IRAs. We were contributing to both. I'm going off memory and its been a couple of years. And, yes. Wages were just under $100K.
P.S. I've not yet made it to the "who cares" category.
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Post by Deleted on Jun 16, 2022 22:19:56 GMT
"two jobs: CFO of a manufacturing company and adjunct professor teaching accounting. " - Mustang
The reason for asking is that in CA, fresh graduates software engineer are now starting with salary higher than 100k. But they will be paying a lot more for housing and other things.
How times have changed.
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Post by retiredat48 on Jun 17, 2022 16:09:50 GMT
To Sara and others…
Sara, you are projecting “market timing” as some sort of all in—all out, or partial buy/ sell…action.
However there are other ways…one is going to neutral. For example, I am currently using (with cash) a hedge, PSTIX, a Pimco short type fund, that moves opposite the market. So when the market declines, and most of my stock funds decline, the move is neutralized by the rise in PSTIX. Like, in last five down stock trading days, PSTIX is up about 10%. I’ve owned some PSTIX since early January. Not short term trading this.
Thus one can take a protection posture of neutral. So if you sell a stock or fund of 1% of your portfolio, buying PSTIX with the proceeds removes another 1%of equity exposure. Sell 5% and one can neutralize an additional 5%.
This is still market timing. But the results not so severe. You give up some on the upside, but protect against severe loss on the downside.
there are other techniques some call timing, but imo make great sense in investing…more, perhaps later.
R48
Edit to add. For example, if I buy PSTIX for 2%of my portfolio, and stocks immediately double in price, I will still rejoice the PSTIX loss, for now my portfolio is hugely larger.
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