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48 minutes ago, Grahamburn said:

Is anyone using ACORNS or other "loose change" investment apps?  It seems like a really simple hands off way to save outside of the traditional avenues.  I'm intrigued. 

Acorns Review 2019

I am.  I primarily signed up to get $15 free through a Verizon promotion (figuring it would cover the $1 a month fee for a while and I could scrap it if I don't like it).  My daughter is post college graduation interning (so no benefits) and wants to start retirement investing.  I referred her and we each got $5.  My son is taking his first college ECON class this semester and we talked about investing too.  He is in now and we each got the $5 referral thingy too.  For me, its a fun way to save for those "I want but don't really need type purchases".   I want to put a bluetooth sound system on the jet ski.  I've budgeted for it between monthly deposits and round ups.   

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Well, today we paid off the last 22 years of our mortgage.  We sold/closed our investment property last week that we bought in 2013.  We did well on it and rolled that money up with some savings and p

Can't really talk about it with RL friends and most of it is pre-tax, but sat down with the wife and figured out that the household is officially in the two comma club. Ten years ago I was unemployed

My big win was in getting educated on personal finance, getting organized, and making a plan. Details: 1. Learned the value of an HSA and contributed for 2019 and 2020. 2. Got my wife’s

23 minutes ago, wilked said:

https://www.capitalone.com/bank/savings-accounts/online-money-market-account/

 

I could have worded better

 

the 'fee' is -1.15% on your interest.  I consider that a fee, call it a rate-lowering, or whatever is a better term.  

Okay, so that applies to that ONE MM account but there are plenty of great options that offer 2% or greater with either no minimums or low minimums....

https://www.nerdwallet.com/blog/banking/best-money-market-accounts/

Quote

 

Marcus by Goldman Sachs Online Savings Account

4.0NerdWallet rating

2.25% APY with no minimum balance

 

Barclays Online Savings

4.0NerdWallet rating

2.20% APY with no minimum balance

 

CIT Bank Money Market Account

1.85% APY with $100 minimum deposit

Note the new Savings Builder account has an APY of 2.45% APY

 

Sallie Mae Money Market Account

4.0NerdWallet rating

2.20% APY with no minimum balance

 

 

 

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12 minutes ago, dgreen said:

We've had a coin jar over the years. The most recent one has been about 90% full for about six months now. We just don't have coins to put in there. It will likely be our last coin jar. I always liked having a coin jar as a way to fund a fun family activity. I've heard of Acorn and how some banks round up transactions and save the extra for you and thought about looking into it. But, now I'm thinking of viewing credit card points as our new coin jar.

It's not as satisfying as a physical jar, but when you can get up to 5, sometimes 6% without spending anything extra, plus "special" offers to sign up, the points or cash back can add up. 

For example, I bought myself an indoor bike with my credit card reward from our last vacation.  ($500 sign up offer). 

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52 minutes ago, -OZ- said:

Nope. 

I use credit cards and budget. I get the allure but it's a gimmick. 

Do you know how they work?  You attach your credit cards to the app, and then on each purchase it rounds up the amount and deposits it into an ETF investment account.  They've also partnered with several vendors that deposit additional amounts when you make purchases with them.  I thought it was a cool way to continue saving, even at minimal amounts, once 401k and ROTH options are maxed out.  

I have a Way2Save account that's basically worthless.  It takes $1 any time I use my debit card, which I never do, and deposits it into a savings account that generates no interest.  I only keep it at this point to have a savings and don't want to pay a fee. 

With this you're getting credit card points and saving the "loose change" at the same time. 

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37 minutes ago, 2Young2BBald said:

I am.  I primarily signed up to get $15 free through a Verizon promotion (figuring it would cover the $1 a month fee for a while and I could scrap it if I don't like it).  My daughter is post college graduation interning (so no benefits) and wants to start retirement investing.  I referred her and we each got $5.  My son is taking his first college ECON class this semester and we talked about investing too.  He is in now and we each got the $5 referral thingy too.  For me, its a fun way to save for those "I want but don't really need type purchases".   I want to put a bluetooth sound system on the jet ski.  I've budgeted for it between monthly deposits and round ups.   

Seems like a really great option for those just starting out in investing as well.

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11 minutes ago, Grahamburn said:

Do you know how they work?  You attach your credit cards to the app, and then on each purchase it rounds up the amount and deposits it into an ETF investment account.  They've also partnered with several vendors that deposit additional amounts when you make purchases with them.  I thought it was a cool way to continue saving, even at minimal amounts, once 401k and ROTH options are maxed out.  

I have a Way2Save account that's basically worthless.  It takes $1 any time I use my debit card, which I never do, and deposits it into a savings account that generates no interest.  I only keep it at this point to have a savings and don't want to pay a fee. 

With this you're getting credit card points and saving the "loose change" at the same time. 

I get it, it's a gimmick to pay yourself some change every time you make a purchase. If vendors or the company is giving you additional cash, that I did not know and could make it worthwhile.

I get the allure of some money you don't really pay attention to growing over time.  Maybe this helps some people, maybe it's a good intro into investing.

For many of us we can just take a certain amount each month up front into our retirement accounts, take some more at the end of each period (I use monthly others might not) into Robinhood or other accounts. It accomplishes the same thing.  

But if the gimmick helps, go for it.

I did not know they pay extra.

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1 hour ago, dgreen said:

We've had a coin jar over the years. The most recent one has been about 90% full for about six months now. We just don't have coins to put in there. It will likely be our last coin jar. I always liked having a coin jar as a way to fund a fun family activity. I've heard of Acorn and how some banks round up transactions and save the extra for you and thought about looking into it. But, now I'm thinking of viewing credit card points as our new coin jar.

Just throw paper money into the jar along with coins

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3 hours ago, -OZ- said:

It's not as satisfying as a physical jar, but when you can get up to 5, sometimes 6% without spending anything extra, plus "special" offers to sign up, the points or cash back can add up. 

For example, I bought myself an indoor bike with my credit card reward from our last vacation.  ($500 sign up offer). 

That's pretty much what I've been doing with my cashback card, saving up the money for a vacation.  Although the two times I wasn't able to pay my full statement amount (I'm largely commission-based so can have a lean month here and there) I took the money out of there to cover the interest amount. 

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We keep our e-fund in Barclays, and have been keeping equity payouts in there for now while we decide whether to move that extra cash to laddered CDs or just leave it at Barclays to pay for wife's b-school beginning this fall. Laddered CD's appear to offer more, but only after a certain length. SO we might put year 2 of tuition into CDs and keep the rest in high-yield savings.

Open to advice if anyone has done something similar for school/house/anything.

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15 minutes ago, Shula-holic said:

Anyone here do any investing in triple net leases?  I'm considering these and wanted to see if anyone had any experience in them.

I have held a bunch of shares in Realty Income for years.  Does that count?

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20 minutes ago, Shula-holic said:

Anyone here do any investing in triple net leases?  I'm considering these and wanted to see if anyone had any experience in them.

We have a number of properties that are a modified net where we dont pass through insurance/taxes. What type properties are you looking at? Hard to find good values right now. 

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1 hour ago, Shula-holic said:

Anyone here do any investing in triple net leases?  I'm considering these and wanted to see if anyone had any experience in them.

If it's me I look achieve similar exposure in an REIT.  Too much risk IMO on the NNN

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1 hour ago, GoBirds said:

We have a number of properties that are a modified net where we dont pass through insurance/taxes. What type properties are you looking at? Hard to find good values right now. 

Yeah that's what I'm seeing.  The stuff I wouldn't mind owning, the cap rates are a little tight on.  Obviously the attractive cap rates are properties that have some question marks as to the tenant, location, or lease term.  I've been looking in conjunction with a buddy of mine who does real estate development for a living.  He is looking to get into this area as well as the residential he owns.  We've discussed doing a partnership if we find the right property.  As someone else just mentioned, the risk of having your investment tied up in one property is pretty significant.  

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1 hour ago, Sand said:

I have held a bunch of shares in Realty Income for years.  Does that count?

Yeah I own some REITS as well.  I've tried to establish some future cash flows with residential real estate properties I've picked up over the past few years.  As you know, around here there's not the cash flows at today's market prices to make these attractive right now.  I'm trying to look at other alternatives to perhaps add more passive income without overpaying.  I may be in a situation where it's best to just sit tight for now and try and accumulate some cash.

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57 minutes ago, wilked said:

If it's me I look achieve similar exposure in an REIT.  Too much risk IMO on the NNN

The new tax law may make a REIT investment more attractive for some investors.  Qualified REIT dividends are eligible for the 20% QBI deduction, but the IRS recently announced that income derived from a triple net lease does not rise to the level of trade or business and is not considered QBI eligible for the 20% deduction.

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1 hour ago, Shula-holic said:

Yeah that's what I'm seeing.  The stuff I wouldn't mind owning, the cap rates are a little tight on.  Obviously the attractive cap rates are properties that have some question marks as to the tenant, location, or lease term.  I've been looking in conjunction with a buddy of mine who does real estate development for a living.  He is looking to get into this area as well as the residential he owns.  We've discussed doing a partnership if we find the right property.  As someone else just mentioned, the risk of having your investment tied up in one property is pretty significant.  

It’s worked out pretty well for us but when you have a large tenant leave get ready for a significant buildout expense. I had a property sent to me recently in a bad area looking for a low cap rate which makes me think our market is out of touch. I would definitely start looking at deals then when the economy slows the next couple years maybe we can find a deal. 

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1 hour ago, Tom Hagen said:

The new tax law may make a REIT investment more attractive for some investors.  Qualified REIT dividends are eligible for the 20% QBI deduction, but the IRS recently announced that income derived from a triple net lease does not rise to the level of trade or business and is not considered QBI eligible for the 20% deduction.

Ouch do you have a link on that not qualifying? 

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14 minutes ago, GoBirds said:

Ouch do you have a link on that not qualifying? 

I hindsight I may have overstated it.  Triple net leases do not qualify for the safe harbor the IRS recently announced to determine if rental activities qualify as trade or business for purposes of Section 199A.  It is possible to argue facts and circumstances without relying on the safe harbor but the IRS seems to be looking for a baseline of 250 hours annually of active participation to be eligible and IMO it would be tough to meet that threshold on a regular basis if all the lessor does is receive a rent payment.

Here is a Forbes article that spells it out.  The relevant section is quoted below. 

Quote

 

More importantly, however, a taxpayer can't use the safe harbor for any property rented on a triple net basis.

What is a triple net lease? It's any lease where the landlord passes on the responsibility for paying real estate taxes, insurance, and maintenance to the tenant. And over the past century, while the courts have showed leniency in allowing even relatively hands-off rentals to be treated as a Section 162 trade or business, the judicial precedent is not on the side of property owners who rent via triple net leases. In those situations, because the building owner bears little of the responsibility of operating the building, the IRS has viewed the ownership of real estate rented on a triple-net basis as akin to holding stock, and it has treated the property as an investment rather than a Section 162 trade or business (See Neill and Rev. Rul. 73-522). Now, with those triple net landlords also shut out of the new safe harbor, the final regulations create a conundrum.

 

The original IRS notice is 2019-07

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10 minutes ago, Tom Hagen said:

I hindsight I may have overstated it.  Triple net leases do not qualify for the safe harbor the IRS recently announced to determine if rental activities qualify as trade or business for purposes of Section 199A.  It is possible to argue facts and circumstances without relying on the safe harbor but the IRS seems to be looking for a baseline of 250 hours annually of active participation to be eligible and IMO it would be tough to meet that threshold on a regular basis if all the lessor does is receive a rent payment.

Here is a Forbes article that spells it out.  The relevant section is quoted below. 

The original IRS notice is 2019-07

That’s really interesting thanks for posting it. Surprised they go into detail calling out triple net leases....we don’t see many true triple net leases in our business although you hear many reference them as such. After seeing this I’m glad we deal in more “modified net” leases where we have tenants handle their own utilities and janitorial but we handle maintenance, taxes, insurance etc. On these type properties we invest in our CPA advised the new law will benefit us but thanks for posting this as after recent property assessment hikes we debated going NNN but not a chance if what you posted is the case. Good info thanks for sharing. 

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59 minutes ago, GoBirds said:

It’s worked out pretty well for us but when you have a large tenant leave get ready for a significant buildout expense. I had a property sent to me recently in a bad area looking for a low cap rate which makes me think our market is out of touch. I would definitely start looking at deals then when the economy slows the next couple years maybe we can find a deal. 

How difficult have you found it to attract a new tenant when a large one leaves?  I'm not sure if that's something I can handle on my own, even though I have a real estate license I'm not active and this was never my area of expertise.

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23 minutes ago, Shula-holic said:

How difficult have you found it to attract a new tenant when a large one leaves?  I'm not sure if that's something I can handle on my own, even though I have a real estate license I'm not active and this was never my area of expertise.

It really depends on your location and property but if you get a good agent and are realistic about price it shouldn't take too long. Some spaces are a good layout and we've had minimal renovation needed (paint/carpet if that) then other we go in and move walls etc but if you get into that require a long term to make it worth it. We just got a 10 year lease which is rare, most in the 3-5 range. Also if you don't want to get into managing the buildouts you should be able to find contractors that GC small jobs like this. 

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1 hour ago, GoBirds said:

It really depends on your location and property but if you get a good agent and are realistic about price it shouldn't take too long. Some spaces are a good layout and we've had minimal renovation needed (paint/carpet if that) then other we go in and move walls etc but if you get into that require a long term to make it worth it. We just got a 10 year lease which is rare, most in the 3-5 range. Also if you don't want to get into managing the buildouts you should be able to find contractors that GC small jobs like this. 

Thanks for the info.  I'm looking at a restaurant that is in a pretty good area that was initially a bank.  That bank failed back in 2011 and the building was renovated for this locally owned restaurant.  It's pretty successful from appearances, of course that can be said about anything.  I feel that the area and the layout of the building would be pretty safe if I had to find a new tenant.  The cap rate is 7.25%.  The initial info says it has a long term lease but working on getting the specifics.

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The brokerage my wife has had her Roth with for the last decade sold out to E-Trade, all accounts were transferred. I assumed they also transferred the records properly. 

Earlier this month I went to make our 2019 contributions from money I had taken from normal account (tax loss), to Max it out early. Looked at 2018, the account showed no contributions. I couldn't remember if we had contributed, as we were putting everything into the TSP and saving outside the Roths last year for money we want accessible (in hindsight probably should just take contributions from the Roth if the time comes, or at least put into the Roths first). Nonetheless, saw no contributions so put $5500 in. 

Now the old brokerage sends us her tax statement for 18, we contributed $1500 last winter. So now we over funded for 18. 

Can the brokerage just reclassify part of the last contribution to 2019? We've made some profit from the recent money already (just a few hundred). But that could have just as easily been 2019 money.  Could we reclassify the whole contribution to 2019, then make another $4,000 contribution to 18 before April?

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12 hours ago, Shula-holic said:

Thanks for the info.  I'm looking at a restaurant that is in a pretty good area that was initially a bank.  That bank failed back in 2011 and the building was renovated for this locally owned restaurant.  It's pretty successful from appearances, of course that can be said about anything.  I feel that the area and the layout of the building would be pretty safe if I had to find a new tenant.  The cap rate is 7.25%.  The initial info says it has a long term lease but working on getting the specifics.

I would try to negotiate to a higher cap if possible, with rates going up I worry caps will too making it tough to get in new properties at the right price. 

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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.
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3 hours ago, Tiger Fan said:

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.

Don't be disappointed when they aren't.  Few plans are.

There is something to be said for post tax monies.  If I go early I'll need enough cash to pay off the house and get me to 65.  Having that post tax money makes managing income much easier (ACA cliff avoidance for example).

Edited by Sand
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1 hour ago, Sand said:

Don't be disappointed when they aren't.  Few plans are.

There is something to be said for post tax monies.  If I go early I'll need enough cash to pay off the house and get me to 65.  Having that post tax money makes managing income much easier (ACA cliff avoidance for example).

yeah, i'm not expecting it; but i guess you never know

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On 1/26/2019 at 10:10 AM, Sand said:

Don't be disappointed when they aren't.  Few plans are.

There is something to be said for post tax monies.  If I go early I'll need enough cash to pay off the house and get me to 65.  Having that post tax money makes managing income much easier (ACA cliff avoidance for example).

Good news, my plan does allow in-service distributions!  This.  Changes.  Everything.!

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21 hours ago, GoBirds said:

Was curious what’s the best tax calculator you all have found to predict taxes with the new laws? 

Here’s one I found that factors in business income, if anyone found a better one let me know. Otherwise hopefully this helps. 

 

https://www.calcxml.com/calculators/trump-tax-reform-calculator

I wouldn't trust anything that had "trump" in it.  Seems like possible clickbait.  Use official sources only.  

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  • 2 weeks later...

I'm not sure how much it has been discussed in here but with the new Tax law the incentive for charitable contributions has gone down because of the limiting of itemized deductions and higher standard deduction.  If you are over 70 1/2, have an IRA, and are currently giving money to charities it would behoove you to make the donations directly out of your IRA.  By doing this, the donations count towards your RMD but are not taxable to you.  

I have told all of my clients over 70 1/2 about this and many are taking advantage of it.

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1 hour ago, Walking Boot said:

 

For other people, it might be useful to put all your contributions into a single year and stack them up, so you can itemize in, say, odd numbered years and take the standard deduction in even numbered years. Plan ahead so all your itemizable items are in the same year.

So if you normally donate $1000 a year to your charity, donate $2000 in December of 2019, nothing in 2020 and take the standard, and $2000 again in 2021 and itemze, etc. Then make any deductible home improvements those same year, or anything else you can itemize.

You can also maintain a "donor advised fund" and make contributions to that every other year.  The contribution is deductible in the year you make it regardless of when you make distributions from the fund to various charities.  That way the flow of funds to charities is more evenly distributed which, for smaller charities, makes it easy for them to budget.  So the charities that you're supporting don't go two years between your contributions.

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Looking for some very basic advice, as I'm just getting started on retirement savings.

Got a Roth and an individual account set-up, with auto monthly transfers to the Roth (with plans to dump in any extra I can). The individual account mainly as a place to park cash in investments instead of sitting in checking, but that I can get out of if need be. 

I'm 39 with very little saved (nearly nothing by FBG standards). Just equity in the business and the house as assets.

So, taking a 20+ year approach with everything (probably more like 30. I'm a working hump). Right now, I'm just mainly focused on ETF's and mutual funds, and basically all of those focused on small cap growth funds. Once I feel more comfortable with those and have more invested, I was planning on focusing towards REIT's.

Does that sound like a reasonable approach? Any other basic things I should be looking at? 

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1 hour ago, pollardsvision said:

Looking for some very basic advice, as I'm just getting started on retirement savings.

Got a Roth and an individual account set-up, with auto monthly transfers to the Roth (with plans to dump in any extra I can). The individual account mainly as a place to park cash in investments instead of sitting in checking, but that I can get out of if need be. 

I'm 39 with very little saved (nearly nothing by FBG standards). Just equity in the business and the house as assets.

So, taking a 20+ year approach with everything (probably more like 30. I'm a working hump). Right now, I'm just mainly focused on ETF's and mutual funds, and basically all of those focused on small cap growth funds. Once I feel more comfortable with those and have more invested, I was planning on focusing towards REIT's.

Does that sound like a reasonable approach? Any other basic things I should be looking at? 

Sounds like you are on the right track, instead of focusing just on small caps and REITS I would diversify best your can. I just switched to Vanguard funds and love the low expense....they even have target retirement date funds which make it easy. 

I don’t think your situation is unusual for business owners, when times are ok make sure to take some out and set it aside like you are doing. 

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Great talk in here on real estate. We’re currently trying to find some commercial NNN building to buy and it’s hard getting the right cap rate in this market. Looking at one on Friday that is around a 7.5 and that’s about as high as we’ve reasonably seen. Most places get bid up higher than we’re willing to pay, esp if they’re opportunity zone. It’s been fun learning how the market works but frustrating trying to find a place to park the money. 

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15 hours ago, pollardsvision said:

Looking for some very basic advice, as I'm just getting started on retirement savings.

Got a Roth and an individual account set-up, with auto monthly transfers to the Roth (with plans to dump in any extra I can). The individual account mainly as a place to park cash in investments instead of sitting in checking, but that I can get out of if need be. 

I'm 39 with very little saved (nearly nothing by FBG standards). Just equity in the business and the house as assets.

So, taking a 20+ year approach with everything (probably more like 30. I'm a working hump). Right now, I'm just mainly focused on ETF's and mutual funds, and basically all of those focused on small cap growth funds. Once I feel more comfortable with those and have more invested, I was planning on focusing towards REIT's.

Does that sound like a reasonable approach? Any other basic things I should be looking at? 

If you're at a 30 year horizon you should be able to be pretty aggressive.  Not sure if you rally want to be 100% small cap aggressive (most people's risk tolerance is less than they think it is).  I'd have a look at this site quick.  Have a look at the return profiles and see what you like - folks have done some good work constructing portfolios with parts that balance each other.  At your reported risk level I'd look at the Rick Ferri and the Swenson ones for ideas.  Both have a bit of RE in there to smooth out the returns.

Also, note with Roths that you can only take your principal back out penalty free.  So keep good records of contributions.  

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2 hours ago, ConstruxBoy said:

Great talk in here on real estate. We’re currently trying to find some commercial NNN building to buy and it’s hard getting the right cap rate in this market. Looking at one on Friday that is around a 7.5 and that’s about as high as we’ve reasonably seen. Most places get bid up higher than we’re willing to pay, esp if they’re opportunity zone. It’s been fun learning how the market works but frustrating trying to find a place to park the money. 

 Very hard to find good opportunities right now....I’m hesitant to get in a job at that low of a cap as it seems they can only go up.  Careful of the new tax law on NNN if what was mentioned is true that they don’t get the 20% of profit untaxed. It appeared you could go to a modified net structure though and avoid that. 

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Can someone give some quick advice on REITs for someone who has never even considered them?  I work with a lot of people that own rental property and hear over and over again how it is a good way to diversify from just counting on the stock market for retirement.  I am in a financial position to possibly start investing in property of my own but have several huge issues to work out. 

First of all, my wife got burned on a house that she bought that she couldn't sell when we moved in together so we decided to rent it out.  We ended up dealing with problem tenants, big time repair issues and even eventually took a loss on the property when she sold it just so she could stop worrying about the whole situation.  So although the main issue was a poor initial house purchase she is pretty strongly against getting back into the rental property game.

Secondly, I'm not exactly the handiest of guys.  I've done some small stuff around our house but it's not like I'm going to be able to go in and remodel a kitchen or tile floors in a house before we rent it out.  I also don't have a bunch of contractors I know that I could use and be sure I was getting a decent price so anything done to the property would be pretty much out of pocket at regular contractor prices.

Would investing in a REIT or several REITs be a reasonable way to capture some of the benefits of having a rental property without some of the huge headaches that come with it? Or should I just stick to my low cost index funds and keep plugging away there?

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1 hour ago, pokin said:

Can someone give some quick advice on REITs for someone who has never even considered them?  I work with a lot of people that own rental property and hear over and over again how it is a good way to diversify from just counting on the stock market for retirement.  I am in a financial position to possibly start investing in property of my own but have several huge issues to work out. 

First of all, my wife got burned on a house that she bought that she couldn't sell when we moved in together so we decided to rent it out.  We ended up dealing with problem tenants, big time repair issues and even eventually took a loss on the property when she sold it just so she could stop worrying about the whole situation.  So although the main issue was a poor initial house purchase she is pretty strongly against getting back into the rental property game.

Secondly, I'm not exactly the handiest of guys.  I've done some small stuff around our house but it's not like I'm going to be able to go in and remodel a kitchen or tile floors in a house before we rent it out.  I also don't have a bunch of contractors I know that I could use and be sure I was getting a decent price so anything done to the property would be pretty much out of pocket at regular contractor prices.

Would investing in a REIT or several REITs be a reasonable way to capture some of the benefits of having a rental property without some of the huge headaches that come with it? Or should I just stick to my low cost index funds and keep plugging away there?

Rentals are anything but passive investments, as you found out (always thought that you should have 0 rentals or a dozen.  1 is the suck.).  Anyway, financial studies have shown conclusively that a bit of RE in the form of REITs lowers risk in a portfolio.  It has generally pretty high returns (actually much better than the market in the last 20 years) and is also not very well correlated with the markets.  Most portfolio constructions I've seen will have 5-15% REITs.  Head over to portfoliocharts.com and see what some well regarded constructions look like with regard to RE there.

I have about 10% in REITs and feel that's a good number.

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3 hours ago, pokin said:

Can someone give some quick advice on REITs for someone who has never even considered them?  I work with a lot of people that own rental property and hear over and over again how it is a good way to diversify from just counting on the stock market for retirement.  I am in a financial position to possibly start investing in property of my own but have several huge issues to work out. 

First of all, my wife got burned on a house that she bought that she couldn't sell when we moved in together so we decided to rent it out.  We ended up dealing with problem tenants, big time repair issues and even eventually took a loss on the property when she sold it just so she could stop worrying about the whole situation.  So although the main issue was a poor initial house purchase she is pretty strongly against getting back into the rental property game.

Secondly, I'm not exactly the handiest of guys.  I've done some small stuff around our house but it's not like I'm going to be able to go in and remodel a kitchen or tile floors in a house before we rent it out.  I also don't have a bunch of contractors I know that I could use and be sure I was getting a decent price so anything done to the property would be pretty much out of pocket at regular contractor prices.

Would investing in a REIT or several REITs be a reasonable way to capture some of the benefits of having a rental property without some of the huge headaches that come with it? Or should I just stick to my low cost index funds and keep plugging away there?

 

1 hour ago, Sand said:

Rentals are anything but passive investments, as you found out (always thought that you should have 0 rentals or a dozen.  1 is the suck.).  Anyway, financial studies have shown conclusively that a bit of RE in the form of REITs lowers risk in a portfolio.  It has generally pretty high returns (actually much better than the market in the last 20 years) and is also not very well correlated with the markets.  Most portfolio constructions I've seen will have 5-15% REITs.  Head over to portfoliocharts.com and see what some well regarded constructions look like with regard to RE there.

I have about 10% in REITs and feel that's a good number.

Yep, this. Between 10-15%

I only own two - VNQ and OHI. VNQ is the vanguard REIT ETF, OHI is long term health / assisted living facilities. Currently a 7% dividend, it was my best holding last year. 

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3 minutes ago, -OZ- said:

Yep, this. Between 10-15%

I only own two - VNQ and OHI. VNQ is the vanguard REIT ETF, OHI is long term health / assisted living facilities. Currently a 7% dividend, it was my best holding last year. 

Outside of sector funds I own SKT, KIM, O, CHCT, DLR, and VTR.  I have way more VTR than anything else.  Just ideas - those I own with mad money.  Most of the REIT money is in sector funds.

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Does anyone here use Avidia Bank for their HSA?  They are an option through my employer and they let you invest the funds fee free after $3,000.  The fund options look good.  I like that they have the Vanguard funds with low expense ratios.  Just looking for any thoughts before I open the account.

American Funds Invmt Co of Amer F1        AICFX        Large Blend        0.68
American Funds New Perspective F1        NPFFX        World Large Stock        0.82
BlackRock Equity Dividend Inv A        MDDVX        Large Value        0.98
Cohen & Steers Real Estate Securities A        CSEIX        Real Estate        1.15
Dreyfus Opportunistic Midcap Value A        DMCVX        Mid-Cap Blend        1.16
Franklin Growth A        FKGRX        Large Growth        0.88
Franklin High Income A1        FHAIX        High Yield Bond        0.76
Janus Henderson Venture A        JVTAX        Small Growth        1.03
Loomis Sayles Core Plus Bond A        NEFRX        Intermediate-Term Bond        0.73
MFS Conservative Allocation A        MACFX        Allocation--30% to 50% Equity        0.91
MFS Growth Allocation A        MAGWX        Allocation--70% to 85% Equity        1.02
MFS Moderate Allocation A        MAMAX        Allocation--50% to 70% Equity        0.96
PIMCO Government Money Market Instl        PGYXX        Money Market - Taxable        0.18
PIMCO StocksPLUS Small Institutional        PSCSX        Small Blend        0.79
PIMCO Total Return Instl        PTTRX        Intermediate-Term Bond        0.55
Vanguard 500 Index Admiral        VFIAX        Large Blend        0.04
Vanguard Mid Cap Index Admiral        VIMAX        Mid-Cap Blend        0.05
Vanguard Small Cap Index Adm        VSMAX        Small Blend        0.05
Vanguard Total Intl Stock Index Inv        VGTSX        Foreign Large Blend        0.17
 

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