wilked
Footballguy
SPIAs are not overpriced. They are very efficient and priced competitively
To answer, they use 7%
-73,000 in 2019
+6,744 (562/month) beginning 2028 and ending 2048 (death)
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Personal Finance Advice and Education! (4 Viewers)
- Thread starter No. 16
- Start date
To answer, they use 7%
-73,000 in 2019
+6,744 (562/month) beginning 2028 and ending 2048 (death)
ghostguy123
Footballguy
They use 7% starting 12 years from now? Doesnt seem efficient.
By the time he can draw money he should conservatively doubled his money, in which case that much bigger lump sum grows.
Oh yeah, plus he could potentially die before drawing anything, or the company folds......
Seems like a no brainer to take it and roll it over.
wilked
Footballguy
I think you are confusing IRR and interest rate, for what it's worth. Two very different things
The IRR for the SPIA I noted above is 7%. What you are talking about doing is taking the $51K, rolling it into an IRA and investing it - yes? That is equivalent is about a 4% interest rate vs 20 years of $6744 beginning at age 62.
I am guessing that you think his IRA will outperform 4% (I also assume you'd have him invest it 100% in stocks, but I could have it wrong here). The product you are comparing it to (pensions or SPIA) is guaranteed income though, which is why the 4% interest rate is appropriate.
All of this is simplified a bit... Presumably he might need the money once he retires so he'd start withdrawing it at 62 or so. The $51K might have grown to $70K by then, and as you pull money out there is obviously less to grow, and so on. And taxes would matter a good bit in all of this.
Still, I feel pretty certain that the lump sum is discounted ~ 30% from fair market value
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-OZ-
Footballguy
stlrams said:
ghostguy123 said:
Back of the envelope math, he has 12 years, I'll use 6% mostly because that seems reasonable and easily fits the rule of 72 - so let's say the lump sum will be worth $102k.
4% rule; means that's $4,000 / year, divide by 12 = $333 / month. Do you get COLA with the $561? I'm still taking the lump sum, but it's not a lock.
GoBirds
Footballguy
Can you guys remind me the differences of titling and investment account "tenants by the entirety with right of survivorship" as opposed to "joint tenants with right of survivorship"? It appears switching my Vangaurd account to the 1st is significantly more of a headache than the 2nd.
-OZ-
Footballguy
Best explanation I found:
There are different forms of real estate ownership. Each gives the property owner specific rights as well as restricting certain rights, which might include the right of conveyance, such as in community property ownership. Joint tenancy is one form of real estate ownership. The rights and restrictions under joint tenancy can vary according to state law.
Right of Inheritance
Joint tenancy is for two or more owners. One of the common characteristics of joint tenancy is the right of survivorship. This means that if one of the owners dies, his share of the property goes to the surviving owners, as opposed to his heirs. When a married couple owns a home as community property, either party can will his share to someone else, without the other spouse’s consent, which can be rather shocking news for the widower who discovers his wife left her half of their home to her boyfriend. Had the couple owned the home in joint tenancy instead of community property, the husband would normally inherit his wife’s share of the home after her death.
State Laws
Most states recognize joint tenancy, yet some of these have abolished the “right of survivorship” as an automatic characteristic of joint tenancy. In these states, the deed must specifically reference the right of survivorship.
Selling Interest
While the joint tenant with right of survivorship can’t will his share in the property to his heir, he can sell his interest in the property before his death. Once a joint tenant sells his share, this ends the joint tenancy ownership involving the share. The new owner is not a joint tenant, yet the rights of the other owners remain. For example, if John, Bill and Susan own property as joint tenancy with right of survivorship, and Susan sells her share to Ann, Ann is not included in the joint tenancy and can will her share to her heir. Yet, if John dies, his share goes to Bill.
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-OZ-
Footballguy
2019 has been awesome for the market. Just did my quarterly review, including home equity we're up for Jan-Oct more than I'll make all year. Around 18%
Looks like the S&P 500 is up 19%
If the Democrats don't impeach Trump, he's got a pretty decent chance of getting another term unless the market tanks the next 13 months.
Looks like the S&P 500 is up 19%
If the Democrats don't impeach Trump, he's got a pretty decent chance of getting another term unless the market tanks the next 13 months.
GoBirds
Footballguy
Thanks for this info? Do you guys think this is worth the trouble for an investment account with a spouse or just set it up with both names on it and don't worry about it? You guys in the business see many set up accounts this way or overkill? Wouldn't expect any issues but I guess it would protect from creditors after one spouse?
ghostguy123
Footballguy
Random question that hopefully someone can asnwer.
Can you explain to me briefly how REITs work? Are they mostly structured the same? Do they pay you dividends monthly, quarterly, yearly?
Do you get paid dividends in a structured way, and how does that compare to the stock price?
Can someone who invests in these give me a quick rundown on how it works? Thanks a bunch
Can you explain to me briefly how REITs work? Are they mostly structured the same? Do they pay you dividends monthly, quarterly, yearly?
Do you get paid dividends in a structured way, and how does that compare to the stock price?
Can someone who invests in these give me a quick rundown on how it works? Thanks a bunch
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ghostguy123
Footballguy
If I were to invest 10 grand in VGSLX, would I basically just get paid the "rent" and then the stock price just does whatever it does until I decide to sell?
culdeus
Footballguy
This is pretty cherry picking since snp took a dump December 2018.
Keep politics to correct forum.
culdeus
Footballguy
-OZ-
Footballguy
YTD is cherry picking? 
Gawain
Footballguy
skycriesmary
Climbing up the Walls
skycriesmary
Climbing up the Walls
Good reminder. Also need to research what happens to RE in a recessionary environment (looking 6-12 months out).
Gawain
Footballguy
NutterButter
Footballguy
You should really check out the thread predicting that the stock market had reached its peak a few years back. Lots of good laughs in there.skycriesmary said:
skycriesmary
Climbing up the Walls
-OZ-
Footballguy
Sand
Footballguy
These are legal pass through structures that generally hold real estate, though some do cell towers and mortgage bonds, etc. They are legally required to pass through 80% of their profits every year. The dividend policies are all over the map. Some are quarterly, some are monthly (like O - "the monthly dividend company"). Most are managed payouts like typical companies, but some are variable - NLY is a good example of that.
Also note that these are not qualified dividends, so the taxes are a bit more in a taxable account. The new tax law does blunt this a bit with (I think) a 20% decrease in taxation. So not quite the tax rate of a qualified dividend, but closer.
It's also important to note that P/E really isn't a good metric for REITs. They are analyzed according to price/AFFO (adjusted funds from operations).
skycriesmary
Climbing up the Walls
Sand
Footballguy
Well first I'd say that there is such a thing as private REITs bought through advisors and one should avoid those like the plague. Anything worth buying is in an exchange.
I have an amount set aside I dedicate to these securities (all listed on exchanges). They include O, VTR, BIP, NLY, KIM, DLR, and CHCT. All are a bit different in their focus except for CHCT - that was a spin off from VTR that had done well and I never bothered to sell it.
If you wanted an ETF VNQ has performed well and is one of the most established of these.
-OZ-
Footballguy
I have a healthy portion in VNQ, and a fair bit in OHI. they've been nice over the past year.
NutterButter
Footballguy
Freak Show
Footballguy
If I own commercial property, and want to pass it on to my children, should I use an estate planner?
Redwes25
Footballguy
Yes, everyone should have a will. Given you have commercial properties I would think you would need a trust and estates lawyer but even if someone just has kids they need one. Cheaper online forms can be done but would think it would be worth hiring an actual lawyer in your case.
Freak Show
Footballguy
Thank you for the reply. I live in the Denver area, and will try to find one.
-OZ-
Footballguy
Chalk this one under conversations you didn't expect to have:
I've recently transferred most of our accounts from E-Trade to M1. The interface is better, I like the pie concept with free trades (which almost everyone has now), how the portfolio automatically buys your underperforming assets unless you change the targets.
Our E-Trade rep has been great, no complaints about him whatsoever. He called to ask why we were leaving, I told him, and he just talked about how great M1 is and how he really likes their services. I was expecting him to try to get us to stay, but nope. He is just on orders to call people as they leave. He did ask that I consider referring others to them. Ok...
So now we'll have both Roth accounts and our shorter term brokerage with m1. Most of our retirement is still with the TSP which I don't see leaving. The 3 oldest kids college accounts are still with E-Trade, but that's a total of just under $100k. Those are set, haven't traded in those accounts in years, no plan to.
I've recently transferred most of our accounts from E-Trade to M1. The interface is better, I like the pie concept with free trades (which almost everyone has now), how the portfolio automatically buys your underperforming assets unless you change the targets.
Our E-Trade rep has been great, no complaints about him whatsoever. He called to ask why we were leaving, I told him, and he just talked about how great M1 is and how he really likes their services. I was expecting him to try to get us to stay, but nope. He is just on orders to call people as they leave. He did ask that I consider referring others to them. Ok...
So now we'll have both Roth accounts and our shorter term brokerage with m1. Most of our retirement is still with the TSP which I don't see leaving. The 3 oldest kids college accounts are still with E-Trade, but that's a total of just under $100k. Those are set, haven't traded in those accounts in years, no plan to.
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KCitons
Footballguy
Can you expand on why?
I signed up about 2 months ago. So, I don't have previous frame of reference.
culdeus
Footballguy
Seems like more frequent downtimes with providers. I mean getting a consistent amex and Chase update lately had been impossible just to name a few.
Instinctive
Footballguy
I refuse to use Mint because it is Intuit-owned.
Redwes25
Footballguy
Given data breaches, etc. I think financial institutions will be less likely to allow aggregators in the future (or that is the excuse they will use). Though I think the real reason they hate them is competitive reasons as they want to push you to use them for all your financial needs and aggregators let you spread stuff around more easily.
Have used Mint in passed and still have an account but rarely check it other than to figure out total retirement savings in one place given my wifes 401k is in a different place then mine.
-OZ-
Footballguy
I feel like I cheated, and have become one of "those people".
Wife wanted bedroom furniture, and to be frank we could use it. Go from a queen size mattress to King, get good new stuff, while we've had her parents hand me downs which they had since she was a kid.
Found what we like at a "reasonable" price for new quality stuff. Asked for a deal if we paid cash, they wouldn't bite but offer 0% for 60 months. The only loan we have is the mortgage, we paid cash for my car back in May. But 0%, when we have the money, seems like a no brainer. The monthly payment is pretty close to what we get in interest monthly in our emergency / sinking funds. I'm not sure if I'm justifying the cost, but we were ready to pay the cash now.
So now I have a loan, haven't had one of those other than the mortgage in 9 years.
Could pay it off tomorrow, but probably won't.
Wife wanted bedroom furniture, and to be frank we could use it. Go from a queen size mattress to King, get good new stuff, while we've had her parents hand me downs which they had since she was a kid.
Found what we like at a "reasonable" price for new quality stuff. Asked for a deal if we paid cash, they wouldn't bite but offer 0% for 60 months. The only loan we have is the mortgage, we paid cash for my car back in May. But 0%, when we have the money, seems like a no brainer. The monthly payment is pretty close to what we get in interest monthly in our emergency / sinking funds. I'm not sure if I'm justifying the cost, but we were ready to pay the cash now.
So now I have a loan, haven't had one of those other than the mortgage in 9 years.
Could pay it off tomorrow, but probably won't.
ConstruxBoy
Kate's Daddy
KCitons
Footballguy
Doesn't seem like there is a downside for you. Unless you blow the saved money. Buy a cd for the 60 months and count that as your "cash deal".I feel like I cheated, and have become one of "those people".
Wife wanted bedroom furniture, and to be frank we could use it. Go from a queen size mattress to King, get good new stuff, while we've had her parents hand me downs which they had since she was a kid.
Found what we like at a "reasonable" price for new quality stuff. Asked for a deal if we paid cash, they wouldn't bite but offer 0% for 60 months. The only loan we have is the mortgage, we paid cash for my car back in May. But 0%, when we have the money, seems like a no brainer. The monthly payment is pretty close to what we get in interest monthly in our emergency / sinking funds. I'm not sure if I'm justifying the cost, but we were ready to pay the cash now.
So now I have a loan, haven't had one of those other than the mortgage in 9 years.
I get what you mean about not wanting to have loans. We just signed paper work for a $175k HELOC. We had to take $5k out up front, even though we don't need the money. It's going to cost us a little each month to keep a balance. And now I'm not sure we are going to use it at all with my dad's health issues. We spent so much time becoming debt free, it seems like you can undue that 10x quicker.
-OZ-
Footballguy
What rate?
I've thought about opening one just for EF purposes, but we're really unlikely to use it. Our limit would be around $15k, assuming they want there to be a 20% buffer between our mortgage and home value (also assuming the value, based on recent sales here).
KCitons
Footballguy
6%
The purpose is to have cash readily available while we shop for a smaller house. I'd like to move first, then list our current home which has no first mortgage. The HELOC would only be used for 6 months, then everything would be paid off again.
NutterButter
Footballguy
How social security benefits the wealthy
There's another idea I don't know if I've ever heard mentioned for addressing solvency; taxing benefits at 100% for those above certain income. I guess its just another flavor of reducing benefits based on means.
There's another idea I don't know if I've ever heard mentioned for addressing solvency; taxing benefits at 100% for those above certain income. I guess its just another flavor of reducing benefits based on means.
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Buddy Ball 2K3
Footballguy
Not know your personal life, position nor your kids ages, your relationship with them etc. One option is form a small real estate holding company and make them minority owners. This can protect you and your kids in several ways.
Buddy Ball 2K3
Footballguy
Merchants (Best Buy, Amazon, Raymour & Flanigan etc) are so willing to sell you items that many offer 0% for "X" time frame. IMO its the only way to make purchases over $1k.I feel like I cheated, and have become one of "those people".
Wife wanted bedroom furniture, and to be frank we could use it. Go from a queen size mattress to King, get good new stuff, while we've had her parents hand me downs which they had since she was a kid.
Found what we like at a "reasonable" price for new quality stuff. Asked for a deal if we paid cash, they wouldn't bite but offer 0% for 60 months. The only loan we have is the mortgage, we paid cash for my car back in May. But 0%, when we have the money, seems like a no brainer. The monthly payment is pretty close to what we get in interest monthly in our emergency / sinking funds. I'm not sure if I'm justifying the cost, but we were ready to pay the cash now.
So now I have a loan, haven't had one of those other than the mortgage in 9 years.
Random
Footballguy
I would argue that purchasing these items with Credit Cards (and paying them off each month) would return greater value than any interest you might earn in a savings account.
-OZ-
Footballguy
I'll make payments through the credit card.
Or get another card to churn and use that. But we should be able to use the card to pay monthly.
Even if we don't do that, I have a set amount I want to keep in savings. The extra funds go into investments. I hope to make more invested than the card would have returned in points.
Buddy Ball 2K3
Footballguy
If the money is in a savings account my guess is the person is not worried about 2% interest but more interested in having the $ readily available.
Sand
Footballguy
SS benefits are 85% taxed at the top end, so not far from the 100% you note.
What these researchers are ignoring is that high earners contribute past the second bend point, which is accretive to SS; i.e. they pay in much more to support that first 90% slope. Their contribution to SS happens before retirement.
Also, it's important to point out that the SS actuarial tables are based on overall mortality rates. They don't discriminate by economic status, race, gender, etc. This is one area that treats all US citizens as equals - a laudable status.
wilked
Footballguy
There’s an inherent bias in there though
https://news.harvard.edu/wp-content/uploads/2016/04/graphic-jama1.jpg
Not suggesting there is any action needed, but the rich get more out of SS (proportionately) than the poor
Sand
Footballguy
Lots of interplay there. The wealthier live longer, yes. The less wealthy get a much greater percentage of their contributions returned due to the progressive nature of how SS is structured (see my post above about the bend points). The wealthy also get taxed on 85% of their payments and the less wealthy generally don't get taxed on it (SS taxation is horribly complicated, as well, which makes it hard to model). Not sure that it all evens out, but there were definitely factors left out of that article.
