Personal Finance Advice and Education! (4 Viewers)

[culdeus]

But is it a wash sale if I buy even more first and then sell some a few days later?

The wash sale rules are vague.  The IRS has been known to enforce them quite specifically.  I would steer clear except in case of ETF type tax loss harvesting which was ####### epic in December.  

 

[huthut]

How legit is Wealthfront? They have the new 2.24% APR cash savings accounts and my wife is thinking we should be putting all of our money into it. I am somewhat risk adverse and don't really like all of our money in some company that does not seem as established as the "to big to fail" banks, but getting extra money for nothing is also good. 

 

[Chadstroma]

General mortgage loan rate alert. Rates have dropped since November at are at one year lows. Expectation is that rate will increase again gradually moving ahead. If you were thinking of buying a home, now is a great time to do it. If you bought last year, look into refinancing. 

 

[skycriesmary]

General mortgage loan rate alert. Rates have dropped since November at are at one year lows. Expectation is that rate will increase again gradually moving ahead. If you were thinking of buying a home, now is a great time to do it. If you bought last year, look into refinancing. 

Yep. I actually had the short-term midas touch and locked in last month on the 27th, rates have increased over 1/4 pt since then. Refi for a 30 at 3.875 with all closing/third party costs under $2,500. Sign me up...

 

[-OZ-]

Wash sale applies to 30 days before OR after. Your loss is disallowed if you make another trade within that time 

https://www.law.cornell.edu/cfr/text/26/1.1091-1

Otherwise people would do exactly what you brought up all the time when tax loss harvesting 

Does this work across different accounts? 

Example - the tax loss harvesting I did on December 31, put into Roth IRAs a few days later. I'm pretty sure I'm okay to take those losses. But what if I put it in a different non tax benefited account?

 

[RUSF18]

How legit is Wealthfront? They have the new 2.24% APR cash savings accounts and my wife is thinking we should be putting all of our money into it. I am somewhat risk adverse and don't really like all of our money in some company that does not seem as established as the "to big to fail" banks, but getting extra money for nothing is also good. 

You can get 2% or more at legit banks. Capital One I know is 2% with a not very high minimum deposit. 

If you have to ask, I'm not sure why you would risk it for 25 bps max.

 

[-OZ-]

I think wash sale rules apply across all accounts, and within all in the household. So selling for a loss in your taxable account and buying the same within 30 days in the wife's Roth is still a no-go. 

Good to know, so it seems selling at a loss in a taxable account, then buying in a Roth is an especially bad deal. Thankfully I didn't buy substantially similar shares.

 

[matuski]

You can get 2% or more at legit banks. Capital One I know is 2% with a not very high minimum deposit. 

If you have to ask, I'm not sure why you would risk it for 25 bps max.

etrade 2+% right now.. i assume many options like this.

 

[huthut]

You can get 2% or more at legit banks. Capital One I know is 2% with a not very high minimum deposit. 

If you have to ask, I'm not sure why you would risk it for 25 bps max.

Maybe I am misunderstanding bps, but it seems like it would be closer to 250 bps? Capitol One seemed pretty fee heavy, but Etrade and some others seem reasonable. Figure switching from our low interest savings account could be like one more pay check per year or whatever.  

 

[RUSF18]

Maybe I am misunderstanding bps, but it seems like it would be closer to 250 bps? Capitol One seemed pretty fee heavy, but Etrade and some others seem reasonable. Figure switching from our low interest savings account could be like one more pay check per year or whatever.  

25 extra basis points in your example of 2.24% vs 2.00% at Capital One. 

I've never paid a fee with my Capital One account, think the minimums are pretty low to avoid that. 

Bankrate.com is good for comparisons if you haven't seen it yet. 

 

[pollardsvision]

25 extra basis points in your example of 2.24% vs 2.00% at Capital One. 

I've never paid a fee with my Capital One account, think the minimums are pretty low to avoid that. 

Bankrate.com is good for comparisons if you haven't seen it yet. 

Yeah, it seems there are dozens of ways to 2.1%+ at a bank folks are quite familiar with nowadays. I'd guess for a lot of people, it's probably simplest to just go through an investment site or credit card company you use or are familiar with. Seems like they've almost all got them now.

 

[Juxtatarot]

I don’t see a real problem with Wealthfront.  The account is federally insured so there really isn’t risk.  From a quick search it looks like the account is new?  One concern is if they’ll keep such a competive rate.  There are many other options that have a longer history of doing that.

I’m using Vanguard Prime Money Market Fund which is at 2.48% now.  It’s reasonably convenient since I have other monies at Vanguard.

 

[Slapdash]

I don’t see a real problem with Wealthfront.  The account is federally insured so there really isn’t risk. 

Wealthfront isn't insured by the FDIC or NCUA, so there is certainly risk that doesn't exist for the vast majority of deposit accounts at banks/credit unions.

Previous comment looks outdated, I know it was true at one point.  They claim to offer an FDIC cash sweep option, does that yield the same amount?

 

[Juxtatarot]

Wealthfront isn't insured by the FDIC or NCUA, so there is certainly risk that doesn't exist for the vast majority of deposit accounts at banks/credit unions.

Previous comment looks outdated, I know it was true at one point.  They claim to offer an FDIC cash sweep option, does that yield the same amount?

I'm sure this is the account mentioned: https://www.wealthfront.com/cash

 

[Tiger Fan]

Stumbled across the "Mega Backdoor Roth IRA" concept yesterday.  Surprised it hasn't been mentioned in here yet.  I need to wait until next week to talk to Fidelity to determine if my 401k plan is eligible for in-service distributions (couldn't find anywhere online)......but I typically have pretty good benefits, so somewhat stoked about this.

https://www.employeefiduciary.com/blog/whats-old-is-new-again-mega-back-door-roth-ira-contributions-spark-new-interest-in-old-school-after-tax-contributions

From Boggle heads:

Advantages

• Subject to much higher contribution limits than traditional 401(k)s (up to $55,000 in 2018, $56,000 in 2019)
  
• If funds are rolled into a Roth IRA soon after contribution, gains (and tax on them) will be minimal. Further growth in the Roth IRA is tax free (subject to the usual Roth IRA restrictions).
  
• Some 401(k)s allow for in-service distributions, allowing employees to roll over funds during employment without a triggering event.[note 1]
  
• Protection from creditors under ERISA.
  

Disadvantages

• Death, for monies waiting for rollover, the inheritor is left with a non-deductible IRA with very complicated paperwork.
  
• Gains before rollover are taxed as ordinary income.
  
• Losses before rollover, "basis" could be lost if you don't leave a few pennies in the account.
  
• Management Risk: the rules can be changed without warning.
  
• Management Fee/Check writing fees may be high enough to eat into savings.
  
• Trustee Risk: You may receive two 1099-R's every year, one for the rollover and one for the gains. This increases the chance for error.
  
• Legislative Risk: hopefully you could complete the rollover before the benefits were ended.
  
• Additional paperwork: many accountants aren't aware of the documentation requirements.
  
• Company fails nondiscrimination tests, resulting in a return of contributions.[1] See Highly compensated employee.
  

Update.  I had to educate my CPA on these...after looking into it, he talked to a few other folks who said it was great...but very few plans allow it.  Pulling the trigger this week.

 

[Sand]

So the S&P finally hit a new high - last one was 9/21/18.  

Over those last 7 months the markets have gone sideways - my investable assets have increased 4.5% in that time frame.  Just goes to show, keep piling in the contributions.  A little bit of dividends and dividend growth doesn't hurt, either.  

 

[Terminalxylem]

A couple questions:

1. Short of researching every individual stock, is there an easy way to invest ethically? I wasn’t too pleased when I found out my 401k included investments in tobacco companies, for example.

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

And although this is a thread about money, I think it’s important not to forget that time is our most valuable resource. I see too many people working their asses off, ignoring their health and chasing a dream of a comfortable retirement, only to have medical expenses and debility ruin their golden years.

 

[wilked]

A couple questions:

1. Short of researching every individual stock, is there an easy way to invest ethically? I wasn’t too pleased when I found out my 401k included investments in tobacco companies, for example.

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

And although this is a thread about money, I think it’s important not to forget that time is our most valuable resource. I see too many people working their asses off, ignoring their health and chasing a dream of a comfortable retirement, only to have medical expenses and debility ruin their golden years.

what do you define as medium risk?  ie, how much of the $50K would you be willing to lose over that period?

 

[guru_007]

A couple questions:

1. Short of researching every individual stock, is there an easy way to invest ethically? I wasn’t too pleased when I found out my 401k included investments in tobacco companies, for example.

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

And although this is a thread about money, I think it’s important not to forget that time is our most valuable resource. I see too many people working their asses off, ignoring their health and chasing a dream of a comfortable retirement, only to have medical expenses and debility ruin their golden years.

There are plenty of mutual funds out there for social/ethical investing.  I've held tobacco stocks in the past, but no longer do so directly.  If the index funds or other funds I hold own them so be it.  Not happy about it, but they do throw off a nice return/dividend and I'm not forcing anyone to smoke, it's legal and it's their choice.

As a hedge, I own tons of healthcare stocks (taking a beating on those of late).

I'm not going to throw out any specific suggestions for 10-15 year investments, as there are too many dynamics in play and quite frankly, no one knows what the future may hold.  Diversification is obviously the safer play.   Bulk of my money is in funds cause I'm probably not going to beat the market, but I am an investor with ~ 20 individual stocks I own at any individual time.  My favorites are GOOGL and PFE so they will probably be good shorts.

Totally agree about time being most valuable resource.  Holds true for investing too.

 

[eoMMan]

A couple questions:

1. Short of researching every individual stock, is there an easy way to invest ethically? I wasn’t too pleased when I found out my 401k included investments in tobacco companies, for example.

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

And although this is a thread about money, I think it’s important not to forget that time is our most valuable resource. I see too many people working their asses off, ignoring their health and chasing a dream of a comfortable retirement, only to have medical expenses and debility ruin their golden years.

Your take on "ethical" companies is probably going to be different from other people.

For example, would you consider a drug company ethical?  What about an energy company (oil & gas)?

 

[wilked]

Bulk of my money is in funds cause I'm probably not going to beat the market, but I am an investor with ~ 20 individual stocks I own at any individual time.  My favorites are GOOGL

could use some more info on this sneaky play...  is that a new company?  Close to going public?

 

[Sand]

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

I'd consider IVV to be "medium" risk.

 

[Terminalxylem]

what do you define as medium risk?  ie, how much of the $50K would you be willing to lose over that period?

All of it.

 

[Terminalxylem]

Your take on "ethical" companies is probably going to be different from other people.

For example, would you consider a drug company ethical?  What about an energy company (oil & gas)?

Depends. That’s why I find investing in stocks much trickier than something like real estate, for example.

 

[Terminalxylem]

I'd consider IVV to be "medium" risk.

Maybe it’s already explained somewhere, but what is IVV?

 

[Redwes25]

Maybe it’s already explained somewhere, but what is IVV?

s&p etf

 

[Sand]

Maybe it’s already explained somewhere, but what is IVV?

Sorry, yes basically just a stock market index.

I'd consider items like the Nasdaq, emerging markets, and gold to be high risk. VIX would be on the ludicrous scale.

 

[wilked]

All of it.

Easy call then

https://cdn-images-1.medium.com/max/1600/1*0alNPOFdW_Ze3abR0zTM6w.jpeg

 

[culdeus]

Sorry, yes basically just a stock market index.

I'd consider items like the Nasdaq, emerging markets, and gold to be high risk. VIX would be on the ludicrous scale.

What are you defining as NASDAQ?  I mean thats a pretty broad equity segment 

 

[Sand]

What are you defining as NASDAQ?  I mean thats a pretty broad equity segment 

I guess the tech sector.  It tends to be more volatile then the market as a whole.  As of late it has been very profitable, for sure, but has opportunities for larger corrections.

 

[GoBirds]

Posted similar in stock thread but curious across all investments where do you think you are finding decent value with stocks and real estate currently at strong valuations? Any investments at good value out there or better just staying on the sidelines? Interested to hear what moves you are making. 

 

[tjnc09]

Does anyone have good links about receiving a lump sum from a previous employer's pension plan?  Do you get hit with additional taxes on top of normal income taxes if it is selected before retirement?

 

[Rattle and Hum]

A couple questions:

1. Short of researching every individual stock, is there an easy way to invest ethically? I wasn’t too pleased when I found out my 401k included investments in tobacco companies, for example.

2.  Any suggestions for a medium risk, 10-15 year investment for ~$50k? I have no debt, an emergency fund and am on track to retire in that period.

And although this is a thread about money, I think it’s important not to forget that time is our most valuable resource. I see too many people working their asses off, ignoring their health and chasing a dream of a comfortable retirement, only to have medical expenses and debility ruin their golden years.

40% SPY s&p 500 stock etf

15% IBUY online retail etf

15% SKYY cloud computing etf

15% PFJ dynamic software etf

15% XKCP clean power etf

 

[Doctor Detroit]

Americans owe $1.14 trillion in auto loans

 

 

[pollardsvision]

Americans owe $1.14 trillion in auto loans

 

A new Ramsey Rant probably coming soon.

 

[wilked]

A new Ramsey Rant probably coming soon.

Great rant

hes right. Want to be a loser? Have a car payment. 

 

[NutterButter]

Are we going to forgive the auto loans as well?   I mean think of all the stuff people can't buy b/c they have those punishing auto loans.

 

[proteus126]

Are we going to forgive the auto loans as well?   I mean think of all the stuff people can't buy b/c they have those punishing auto loans.

Tim bat signal?

 

[Bob Sacamano]

Great rant

hes right. Want to be a loser? Have a car payment. 

General murmur of agreement.

But there's also still cheap enough financing out there that it can be worth it.

 

[wilked]

General murmur of agreement.

But there's also still cheap enough financing out there that it can be worth it.

The problem is that free money isn't free...

0% loans sound great, look great on paper, etc.  But they incent people to spend more than they would spend if they were writing a check.  If you ask people, they will tell you - no way, not me, maybe the other guy spends more but I don't.  But it's fairly well proven and simply a human condition to do so

https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/

One of the most often cited studies is one conducted by Dun & Bradstreet, where the company found that people spend 12-18% more when using credit cards instead of cash

0% loan is no different than a credit card, just a line of credit.

Pay for cars with cash, if you don't have the cash you can't afford the car.  Dave R is right.  

 

[Bob Sacamano]

The problem is that free money isn't free...

0% loans sound great, look great on paper, etc.  But they incent people to spend more than they would spend if they were writing a check.  If you ask people, they will tell you - no way, not me, maybe the other guy spends more but I don't.  But it's fairly well proven and simply a human condition to do so

https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/

0% loan is no different than a credit card, just a line of credit.

Pay for cars with cash, if you don't have the cash you can't afford the car.  Dave R is right.  

Want to be a loser?  Follow absolutes.

 

[ghostguy123]

Pay for cars with cash, if you don't have the cash you can't afford the car.  Dave R is right.  

I bought a rental property cash.  They were only accepting a cash offer.  It was too good to pass on, so I bought it.

I also needed a new car at the time with child #2 on the way.  We financed a new car because I had barely any money in savings after buying the rental property.

I guess I F'd up

I shoulda paid closing costs and a much higher interest rate on a different property that was a worse overall value 

 

[guru_007]

I bought a rental property cash.  They were only accepting a cash offer.  It was too good to pass on, so I bought it.

I also needed a new car at the time with child #2 on the way.  We financed a new car because I had barely any money in savings after buying the rental property.

I guess I F'd up

I shoulda paid closing costs and a much higher interest rate.

probably best just to put some know it all posters on ignore.  I just bought a new car and took out a nice fat loan too.  Guess we both f'd up 

So long as you live within your means and you have access to very cheap money.....

 

[Bob Sacamano]

probably best just to put some know it all posters on ignore.  I just bought a new car and took out a nice fat loan too.  Guess we both f'd up 

So long as you live within your means and you have access to very cheap money.....

He's not wrong.  Generally speaking.  You may have effed up buying a new car and taking out a nice fat loan.

But absolutes are as dumb as car payments.  Of course there are instances where people either should or have no choice but to go against that advice.  

 

[wilked]

It’s not an absolute, it’s a general rule, which sometimes has exceptions. It’s a rule that helps you succeed financially in life. You might not like Dave R but I think he is spot on in his rant 

 

[tonydead]

I bought a rental property cash.  They were only accepting a cash offer.  It was too good to pass on, so I bought it.

I also needed a new car at the time with child #2 on the way.  We financed a new car because I had barely any money in savings after buying the rental property.

I guess I F'd up

I shoulda paid closing costs and a much higher interest rate on a different property that was a worse overall value 

You did, by having more kids.  

Why didn't you get a car you could afford instead of a new one?

 

[tonydead]

probably best just to put some know it all posters on ignore.  I just bought a new car and took out a nice fat loan too.  Guess we both f'd up 

So long as you live within your means and you have access to very cheap money.....

Don't know your situation, but taking these few sentences at face value, is horrible financial advise.  Cheap loans are still loans.  You're in dept paying people instead of saving.  Why didn't you buy a car you could afford instead of a new car?

 

[ghostguy123]

You did, by having more kids.  

Why didn't you get a car you could afford instead of a new one?

I made the payments with the rent check.  

I COULD afford the car.  I just used my cash on something that made more sense.

 

[Bull Dozier]

Don't know your situation, but taking these few sentences at face value, is horrible financial advise.  Cheap loans are still loans.  You're in dept paying people instead of saving.  Why didn't you buy a car you could afford instead of a new car?

That's not necessarily true.  By that logic, buying anything doesn't make sense because every dollar spent could be saved instead.

A 0% loan is better than paying cash since the money paid in year 3, 4, 5 are worth less than they were when the car was purchased.

 

[Sand]

I bought a rental property cash.  They were only accepting a cash offer.  It was too good to pass on, so I bought it.

I also needed a new car at the time with child #2 on the way.  We financed a new car because I had barely any money in savings after buying the rental property.

I guess I F'd up

I shoulda paid closing costs and a much higher interest rate on a different property that was a worse overall value 

Is the rental cash flow minus the car payment interest positive?  Cap rate after this expense?  If you really got a good deal then this should still be accretive (and well beyond the Dave Ramsey "all debt is bad" pontifications)