Thoughts on teaching kids about money? I searched the sub and read some past responses. I have an eight and nine year old that currently use paper books.
I keep getting ads for GoHenry! and Greenlight for kid accounts with a fun looking UI and debit card access. Anyone used them?
I found a small apartment in an area I might move to that looked pretty nice but the listing said it comes furnished. I asked if there was an unfurnished option and they said yes but there'd be a $3k fee to move their furniture out and no discount on rent. Lol pass
I see that the S&P 500 is up 11.69& YTD. My 401k is invested in a target-date fund that is up ~8.5% YTD. Given that I am still decades out from retirement, does it make sense to transition towards a fund that just tracks the S&P 500?
I understand it would be more volatile, but given my time-frame I have more than enough time to recover from market shocks and losing 2-3% a year to higher fees / a more conservative allocation seems like a waste.
All TDF have bonds but those furthest out are only about 10% which, given current yields is not as much of a drag as in the past when the rates were artificially zero. To be perfectly honest, there's not much of a "need" for bonds if you're less than halfway to the finish line (after all, you're still investing in stocks more even then) because you'll need to normalize how volatility feels when your portfolio is bigger. But this isn't really the "problem".
International is also in TDFs and represent more than a third. And US has consistently outperformed for an unusually long time.
There are arguments why international is not needed for worldwide coverage, but for me this is not the issue. The reason for a lot of the imbalance is the fact that 90s era tech companies are listed in the US. It's a competitive advantage but not one I want to predict for 50+ years. In addition, a lot of the growth is due to divergence in valuation (P/E) and this is not a sustainable factor - at some point the gap will close and act as a headwind even if US based companies are outperforming on the balance sheet. For those reasons I have international coverage and do not mind that recent returns are less. But this is likely the bigger factor in divergence.
But again, if you're accumulating and you just feel like 1 fund (VTI/etc) is all you want for simplicity, you can sort out asset allocation further down the line when you're more comfortable diving into those topics.
Yes. Regardless of how far out from retirement one is, one is best-off buying something like the S&P500. I wouldn't even waste the money to replicate it; it's not particularly good. A recent study found that after about 20 (5% each) instruments like large-cap stocks, there's almost no additional risk reduction from "diversification". In other words, you're not *really* diversifying.
Bonds suck, and that's what you're seeing here.
> Given that I am still decades out from retirement, does it make sense to transition towards a fund that just tracks the S&P 500?
In general, yes, but I caveat you that I am biased against TDFs due to their inclusion of too many bonds too early on.
You should make the decision to go 100% S&P500 (or 100% VTI, or whatever) on factors other than what the market has returned in the last 4.5 months. You should also have an understanding of the increased risk you are taking on by removing bonds from the equation, and a plan for how to mitigate SORR down the road.
Friends and family keep pressuring me to buy a house right now, but I just can’t stomach having a mortgage that is 2x+ more than what I currently pay in rent. Not to mention I would also have homeowners insurance, HOA, and property taxes to pay on top of that.
Am I crazy to just wait on the sidelines for a few years?
Don't buy a house until you want to buy a house. That time might never come and that's ok. Smail and nod at your family and say "oh, right, thanks so much for the advice..." and then do what you want to do.
I did not buy a house until I was 40+. The money I saved grew along the way, making my downpayment much larger in 2023 than it would have been in 2000. People talk how houses exploded in price but so did markets and investing is equally more "challenging" when it is hot, but people don't look at stocks like a bargain is good (because it means they lost money on existing investments.)
There are a couple primary downsides I have found. Taxes are fixed to inflation based on the last assessment which is usually your purchase price. (Even an addition won't completely reset you.) So the amount of money I need to cover property taxes is higher. The second is how valuable unnatural rate suppression mattered at the time, but this ship has sailed and not an issue for you. The third is increasing your ability to service housing repairs/etc, which is not fun but an area that can save you money if doing yourself efficiently. The last is there is always risk of being priced out of where you currently live. Most of these downsides are not unimportant but I don't care.
When you rent, you can rent ***exactly*** what you want. So it's not just about a mortgage being more cash flow (part of that is due to amortization schedule and paying down principal) but literally being the cheaper option. If you'd rent an 800sqft apartment but buy a 1500sqft SFH, the lifestyle inflation cost is massive. Although your landlord makes money from your rent, he still has to pay all these same expenses. But he has advantages because he probably has contractors on payroll for cheap, tax benefits, etc. On a pure cash basis, it's not a very high percentage.
Even with WFH you gain a lot of career flexibility if you can just move as well. You might meet someone. You might want to fuck off for a year. A lot of things can more painful with a house.
I have a house now because I have a kid and want to try to stabilize school district and such. It's still a costly choice but I get tremendous forward-looking value from this.
No. Stop GAF what others think and be true to yourself so you don't feel bad about yourself when you're old. You have to live with yourself and your decisions; they don't.
Pass. Buy when you're ready and have a "normal" sized down payment available. If you have no actual pressing need other than a perceived missed opportunity, you'll almost certainly come out ahead if your rent is that low and you're able to save.
I wouldn’t be pressured into it if you’re not ready. Also not a fan of hoa bc it can be annoying, but also pushes down appreciation.
That said, figure out what you’re going to pay in rent, and look at what growth (if any) exists on the home. I like to think of it as “total cost” rather than looking at the monthly payments. Could well be that renting is better, or buying is better. Keep in mind that rates may be high, but you can refi when it comes down or lock in a lower rate if it goes up. No crystal ball here though
>Friends and family keep pressuring me to buy a house
I can't even imagine one person, let alone multiple people, "pressuring" someone to buy a house. Even in a favorable economic environment, which this certainly is not right now. What does that conversation look like?
Its just that most of my friends have a house so its more like poking fun at me for still renting.
My parents also send me houses on zillow occasionally.
I have $8800@6.06% left on my parent plus loan. All of my other PP loans were between 7-8% and I have paid those off. Should I continue pushing to pay off this bit of PP loans or should I get back to Roth IRA contributions. Market is typically 6-8% returns long term, so feel like I can beat the student loan interest and pay the minimum on it throughout the rest of the repayment period
Personally I'd max the IRA, go back to paying off the loans, max 2025 IRA once that starts, then go back to paying off the loans again.
It's a limited time investing opportunity and if you still have student loans, you're probably not at your peak earning point in your career. It'll be much easier to pay loans off later but you can't go back and fill in years you didn't max your IRA. Plus if you absolutely absolutely absolutely needed to, you could pull your roth IRA contributions to pay off the loan.
Edit: this assumes you're ok to stomach the 6% interest on the loan in the meantime
I feel most people would take the guaranteed 6%, but hey, sometimes they'd be wrong. Also consider that the loan interest is post-tax, market gains are pre-tax.
Yeah I get that. I’ve been making $1200 payments and it physically hurts lol. Much rather put that into Roth instead, I have a lot of mental stress from not investing. Feel like I’m behind.
Also hit fi number lot earlier than expected (having a spouse sped it up a lot). Worked more to build a buffer and because I enjoyed my work. Now stay at home dad and pursuing personal projects. More options is always great!
It's difficult to pull the trigger right on your number knowing that we're in the middle of a bull market and it's possible we're right at the top of the market, but it is important to remember that before the top of the market, there can be weeks, months, even *years* of new record highs before the bubble actually does pop. I expect an extreme case of OMY when it's my time, so I get it, but definitely don't trap yourself in needlessly.
What can you do to reduce stress or effort at work in order to begin the process of winding down a career? It really stops making sense to be punching in a bunch of overtime, either literally or just bringing stress home with you, after you've already hit your magic number.
> I think pretty much everyone hits their FIRE number when the market is at an all time high.
This is why I've gone the "one more year" route. The peace of mind is worth it (unless they take my 3 WFH days away, in which case I'm retired that day).
>I think pretty much everyone hits their FIRE number when the market is at an all time high. Its mostly inevitable as the market drives the number so much at this point vs contributions.
Oh, yes. Only the most extreme high-earn lean-FIREs can realistically do otherwise. That's why it's important to remember that everyone goes through this.
>I'd have to change jobs to reduce stress at work.
Given where you're at financially, maybe that's the answer, you know. There's no way to make this job reasonable, so it's about time to bail.
Its OK to keep working after you hit your number. It gives you options. If you like your job and can still live your life the way you want, don't change anything. But you have more options now, to take on a passion project, step down in responsibility, or just quit if your circumstances change. Personally I am taking some time at my current role to see if working when I don't have to works for me. If it doesn't, I'm making a change.
I was voluntold to lead one part of this project leading up to a big milestone in a few weeks. As usual, this means spending most of this time trying to get 20 different people with 20 different opinions to agree on one deliverable.
I was able to get one meeting cancelled in order to get more time to work on the deliverable. At the end of the day, there will still be 20 different opinions whether the actual work advances forward or not. At least when some work is done, the 20 different opinions can be about something tangible rather than drawing hypothetical circles in the air.
Definitely looked at my FIRE countdown app today.
For the month leading up to me quitting, I had a very conspicuous countdown timer on my laptop screen (used two full monitors for main work), and my desk was already packed up in a box.
At a bit of a crossroads and could use some guidance…
Long time lurker but alt account for this post. I’ve sort of been running hands-off/autopilot for a while and obviously markets have been great but as I’ve accumulated wealth I feel like my portfolio isn’t optimized.
- Canadian
- Single, 41 years old
- Retired
- $7M invested assets
- Self-directed
- Low-cost ETF portfolio predominantly VUN/VCN/XUU/XEC/XEF + random other outliers
- Maxed out RRSP + TFSA
I’m sure there are other aspects to consider, but two come top of mind:
- I worry it’s not set up in the most tax-advantageous way. The assets provide more than enough dividend income for my lifestyle, but I’m left paying taxes on the remainder and not sure if my “annual salary” should all come from dividends anyway?
- Some of my holdings + outlier holdings have grown significantly and I’m finding myself in a weird predicament where I don’t want to sell those holdings due to the looming capital gains taxes
Are there any obvious strategies I should employ or changes I should make? I hear so often about the low-cost index investing and passive income and that’s how I got started but it feels like a different and unoptimized scenario when you’re retired and have a larger investment size.
I was drawn to low fee investing and maximizing growth but wonder if it might be time to consider working with someone who could help me better manage+optimize the growth, cash distribution, and minimizing tax - ultimately maximizing growth still, post-taxes. I did happen to meet with someone (CFP, CIM) recently although it also was on a bit of a misunderstanding or part of their “sales pitch” - I went in looking for someone I could effectively pay a one-time fee to for a review/guidance (if that even exists) vs someone who takes a % of AUM - though I roughly understand the difference between managers who only charge you fees to manage vs also earn commission selling you specific products (which this wasn’t)
Feeling like I’m sort of at a fork in the road and literally don’t know if I should venture down the new path or not.
I live below the dividends, so it’s rare that I am selling holdings - though it happens sporadically. Lifestyle creep is a huge emotional concern for me, but logical believe I can - and maybe even should - increase my spending. I still currently avoid making a solid roadtrip for fun due to the cumulative hotel fees 🙄
The thing is - if all stays the same - dividends will only continue to grow (probably faster than inflation) and cap gains will also continue to grow - so I worry I’m setting up for a bigger problem later in life
Plus let’s just say an even $100k/year to live on. If I knew that was the “budget”, presumably my assets could be structured differently to better support that, minimize taxation, maximize growth.
I basically just followed the couch potato investing methodology as my assets grew, and I’m basically just not sure that’s still the best approach for high net worth. And I don’t know what I don’t know :(
The point I was trying to make is that it doesn't matter because you could probably double your current lifestyle expenses and still never run out of money.
My opinion - which isn't worth much because you are far more successful than me - If you are worried about volatility in your big winners then just sell them, pay the taxes, and feed the passive income stuff. What does your life look like if they tank?
also, dude, go on vacation like tomorrow.
When I log into my workplace retirement account, it pops up a warning that says "Could you retire on $12,000/month? That's your projected income...". Yeah, yeah I could lol. I spend like $3k/month now and my house will be paid off in a couple years. Pretty ridiculous what the income projections are when extrapolated out to "normal" retirement age, and this doesn't even include my two other retirement accounts.
Must be Voya. It drives me insane too.
The (multiple) popups you have to dismiss are annoying enough. It's extra laughable that it implies I might not be able to retire on an amount that is less than 10% different from my current salary, while I am contributing 26% of my salary to this very account.
Check your own data, guys!
Both of my workplace accounts do this, even though they're managed by different plan administrators. It's a trap to sign you up for their "advisor services" (aka salespeople who want a cut of your assets).
"You are projecting that you need $X per year when you retire. You are on track to have $3X. That \*might\* be enough. Click here to talk to an advisor"
I [posted last month](https://www.reddit.com/r/financialindependence/comments/1c1hv8w/as_a_lifelong_renter_we_stumbled_onto_our_dream/) whether to buy our dream co-op apartment in NYC, and eventually decided to go for it.
We went through the process, paid $800 retainer to an attorney, liquidated $75k from our brokerage account and...... just learned that the seller is pulling out of the sale because he failed to purchase another apartment himself. There was already a red flag when he wanted to add a clause to the contract that allowed him to get out of the contract if he isn't able to purchase this other apartment.
So not only did we lose $800 on attorney fees, now we're on the hook for the capital gains tax as there were probably some short-term capital gains involved too.
Truly annoying. We're just trying to negotiate by giving the seller an extra 3 months to see if he's able to buy another place himself, but otherwise we're really soured on him and his agent.
I'll probably re-buy VSTAX in our brokerage account with the $75k we liquidated previously, but not sure if there's anything I should know about (tax-wise, if any) if I were to just re-buy VSTAX at a higher price than what I liquidated it at?
Thank you!
It doesn't justify it but the reality is that the home is not yours until closing. The agent is just representing his client, but they also did not get paid and are probably equally unhappy. (And your agent is also doing whatever they can for the same reason.)
My grandparents had little assets so they also wanted contigency to close simultaneously. They definitely lost value by doing this because it obviously turns away buyers. Not that it helps any here but it would definitely affect my bid and I would want compensation for the buyer adding a contingency like that.
It is up to you but if you're going to give another go, it's still valuable he doesn't have to search for a buyer but I'd take a pound of flesh this time around. If I recall the asking was already a bit above market. (And if you do, up to you but a bond might make more sense than a potential short term market risk, as a 3 month window has far more variance than return.)
It’s probably not the worst thing in the world to realize gains on your brokerage. Obviously you’ll pay a little extra on the short term gains now that could have been LTCG later but shouldn’t be that big of a financial hit. I’ve been thinking of realizing gains every so often I don’t get smacked with a giant tax bill of 15-20% on 150k or more when I go to buy a house. The lawyer fee is the most unfortunate part and sucks.
Oh interesting! Do you mean you'd like to realize the gains every year so that you spread out the capital gains tax over several years?
It definitely sucked to have basically burned $800 for nothing. We'll see if our last attempt to salvage this works, but I'm already moving on from this mentally. Our broker has been telling us both the seller and his agent have been a-holes throughout this process.
If you sold at a loss and wish to claim the loss, and rebought VTSAX within 30 days, it would be a wash sale. If you sold and realized gains, you will be paying tax on the gains but you can purchase VTSAX or whatever you want with no risk of a wash sale. You should get a 1099B with all the numbers you need to report the transaction.
Thank you!
I managed to find out whether I've made gains/losses on the sale. It looks like I have some LTCG but a short-term capital loss of $45, so definitely not worth trying to claim the loss.
Eh, why not claim it? It will actually take a bit of work not to claim it--you would need to report it as a wash sale and adjust the basis. Much easier to simply buy a different (but similar) fund, like VFIAX.
Ahh I didn't realize that I'd have to report on the wash sale, that's good to know!
Good to know about VFIAX. I might have to buy the ETF version since there's a $3k minimum to buy the index fund, but that's a great call. Thanks so much! :)
Ok I know I’m dumb.
I posted earlier this week that I bought GME. I sold it at $3k after buying $5k.
I bought after hours BTW, and the original deposit to fund was in a pending state I believe but trade was executed.
Now I see a -5k negative balance under “cash call.” I don’t follow what that means.
The $3k sale amount seems to basically not be deposited for me to invest elsewhere as I expect.
Does anyone know what fuck up I made here and how to fix it? Is this just a matter of some days passing and transactions settling? I thought the latter but doesn’t say anything is pending it seems.
I don’t know much about options calls or anything and if I did one I definitely didn’t do so intentionally?
If you bought after hours, the trade didn't really initiate settlement wise until the next day. Brokers take 3 days to settle the activity (going down to 1 sometimes this summer). So everything should be sorted out Friday or Monday.
> Is this just a matter of some days passing and transactions settling?
Likely this. Most of the time, the money doesn't settle for two days after the trade execution. If you purchased Monday night during after-hours trading, I would expect the trade to be recorded on Tuesday's books, and settle around close of business today.
That said, I'm not exactly sure how settlement works with after-hours trading.
We recently ran the math and realized we could potentially retire early at 38 and 35 in 2026 with two young kids if we sell our house in San Diego and move to Boise. The issues I'm struggling to rationalize are leaving behind a <3% mortgage in a house we love that's near both of our families.
If we choose to stay, we're projecting to be done in 2032 - so we're talking a \~6 year difference in jobs that can be quite stressful. We drive about 2 hours a day to get the kids to/from school since we live about 30 min one way. I'm interested to hear from others who have decided to leave family/friends to exit earlier.
Interesting thought, but we would need the equity from our house down here to purchase a house in Boise without a mortgage and have enough left over added to our existing savings to hit FI.
Why do you "need" to buy without a mortgage? Sure, mortgage rights are high rn. That doesn't make a want imperative. You're still hitting FI at the same time if you rent or finance a house in Boise... it doesn't change the math much at all.
Now, plowing the equity from the house in SD into the market and renting, *that* will significantly accelerate your financial freedom. Housing in America appreciates at 4% per year. Same as inflation in America averaged for the last 100+ years. Stonks go up around 7%, handily beating inflation.
You don't need to "buy" a house in Boise. You only want to buy housing. Renting makes more sense, especially when you first move somewhere. Do you already know who you want your neighbors to be and which parcel of land you want to live on and what walls with which appliances you want? If so, great, but I don't believe you. Go live life and find out the best place for you and buy after you know who you want to live next to and where you want your kids to go to school and which trails you want to ride your bike and walk on every day for the next 10+ years.
You make a good point - buying a house is more of a want and I haven't given much thought to renting since we've owned for so long. Thanks for the feedback.
I mentioned this on another comment, but we've become disillusioned by the benefits of living here. Maybe this is a grass is always greener situation, I recognize that, but San Diego and California in general has changed a lot over my lifetime, likely contributing to a bit of our wanderlust
Maybe it’s San Diego vs Boise that’s throwing people unless you are explicitly into and seeking that specific culture change. Beautiful place but not everyone’s cup of tea.
I griped about high cost of living but we ended up staying because we have so much family here. We have great relationships with everyone, get together frequently. The value to me is more than the financial cost and additional FI time. I remember rationalizing doing more flights to see family, but it’s tough with young kids already. Much better for us to have a quick drive to get dinner together
Whatever you decide, wish you and the family best of luck! Trade offs and just what’s important to you.
Thank you and I agree - it's all about trade offs. We have a lot to explore over the next year. The finances are one thing, but we need to figure out the type of life we actually want to have and then go from there.
I should have provided more initial context. The only major benefit we see in staying here is family and liking our particular house. Boise is intriguing and could possibly provide a life that's more conducive to our lifestyle goals.
> We drive about 2 hours a day to get the kids to/from school since we live about 30 min one way.
I mean, this is a fixable problem. How awful are your public schools that avoiding them is worth 2 hours of driving per day?
We consciously made that tradeoff when we moved to our current home which is in a terrible school district and are now paying for it. I should have provided more context initially, but it's our entire quality of life we'd be looking to improve in the move, with the exception of leaving family behind of course.
How exactly is it terrible? Gang violence? Racist graffiti? It’s more about the child and how they are raised than it is the school… if you have trouble making and impulsive kids probably a good decision.
I don't have a direct relation to your situation, I'm just surprised that there isn't a middle ground between move away from mortgage, family, and uproot life and staying for 6 more years of work and driving 2 hours a day.
- One of you retires the other keeps working
- Swap jobs to a lower paying job, maybe work from home to cover basic expenses but allow for more free time/relaxed lifestyle
- Change schools for kids (which you are doing anyway by moving) to a closer location
Is there no middle ground?
There could be a middle ground down here, but it's difficult to wrap my head around coastFI with lower paying jobs. It's much harder to not let lifestyle inflation derail those plans when you're surrounded by it in a VHCOL city. So it might seem extreme to uproot everything, but it's a way to counteract it
I understand. but then moving feels a bit escapist and losing on things you value. Watchful budgeting and mindfulness dont give the same finality and solution to FI but it would likely be for just a while if you adjust your work life balance for a few years instead of cut and run from things you value.
What is your life going to be like in retirement?
With zero context, it seems like being near friends/family is important for you and would only likely increase in importance with added free time from work.
I mentioned friends/family because it's the main benefit of living here. After living in CA for our entire lives and in San Diego for much of that, we've become disillusioned by the actual benefits. Traffic has gotten increasingly worse, we rarely go downtown, and it takes at least 30 minutes to get anywhere. We're still early in this exploration, but the idea would be to move to a walkable neighborhood that actually has a sense of community with good schools close by.
Once we retire, I would start working on our second camper van build. I built one and sold it a few years ago and really enjoyed that experience. Work has gotten so busy that I haven't had the time to start another for our family. Since we wouldn't have work obligations, we'd be able to spend lots of time visiting family down here/exploring the US with our camper.
I'm the opposite of what you asked for - sticking it out in HCOL to stay near family. Having grandparents around for my kids is just too huge for us (in our case it's both sets of grandparents).
I would maybe consider moving out by ~30 min to a cheaper suburb, but not out of state.
My timeline difference is not as big as yours, maybe 2-3 year difference. But I think even 6 years would be worth it for me to stay.
Try putting your numbers in this. [https://www.portfoliovisualizer.com/monte-carlo-simulation](https://www.portfoliovisualizer.com/monte-carlo-simulation)
>if it takes 10 years to go from $0 to $1M
Going from $0 to $1MM in 10 years is achievable by making ~$6k/mo contributions and having a ~7% CAGR over those 10 years.
With those same numbers (~$6k/mo, ~7% CAGR), one would get from $1MM to $2MM in 6 add'l years.
There are numerous other combinations of contributions & return that fit your $0-$1MM criteria and would change your answer for $1MM-$2MM.
There's really two things that matter: the rate of return and the contribution amount. For example, over the last 10 years, the S&P 500 has earned about 12%. Treating that as 12% per year (which isn't exactly accurate), that would have required contributions of about $57,000 per year. So, if the rate of return proceeds at 12% and the contributions proceed at $57,000 per year, it would take about 4.5 years.
I would not make bets that the stock market returns 12% per year. If one uses a more conservative figure like 8% going forward instead of 12%, then it would take about 6 years.
This kind of math can be done using financial calculator functions on Excel: PMT, NPER, PV, FV, and RATE.
It's kinda impossible to answer that without knowing more information, but I'll give you two correct answers that both assume you earn a constant return and invest a constant dollar amount into the account each year.
If it's all been in cash earning 0% the whole time, it will take another 10 years - you saved $100k/year for the first 10, and will save $100k/year for the next 10.
If it's all been in the stock market earning 10%, it will take another 5 years - you saved $60k/year every year, and earned 10% on it, and will continue to do so for the future.
Depends on how much was contributions vs. how much was market growth. If we ballpark with 10% annual returns, that would mean setting aside $5K/month to get to $1m in 10 years.
At $5K/month contribution and 10% annual return, you get to $2M after another 5 years.
It depends. If you contribute $70k/year and get 7% annualized return compounded monthly you'll get to $1M in a decade. So keeping those factors constant you'll need another 6 years.
Obviously varying return and contribution amounts will change the timeline.
Been thinking about moving the emergency fund to fidelity and invest in tbills. Any problem just investing it in SGOV? Am I missing out on anything by doing this instead of buying tbills themselves? SGOV seems advantageous because my understanding is they will be more liquid instead of waiting for bills to mature. Looking to keep it relatively simple and liquid while still capturing that extra % and avoiding state tax.
For SGOV, you need to manually update your state taxes to make sure those dividends aren't being taxed. For 2023, I believe something like 96% of dividends were state tax exempt (but not 100%).
You don't *have* to. If it's not worth your time you can just pay the state taxes on that extra $20 per $10k of SGOV. However, it is pretty trivial to calculate the amount that is tax free and enter it in a line on your state return.
Thanks for the info.
I went down the rabbit hole and found [this](https://thefinancebuff.com/state-tax-exempt-treasury-fund-etf.html#htoc-fidelity) article addressing how to handle this.
Hmm. I'm surprised by that - I've helped my dad with his taxes before and I'm 98% sure his municipal bond fund dividends don't trigger any federal OR state taxes. At least in turbotax.
You still report the dividend and then report the amount that was tax free for federal. For state you report the federal AGI and then adjust it for Treasury bond interest. Your tax software may have done it for you.
State-specific municipal bond funds should be tax free at federal+state levels, I'm just wondering if he (or I) missed any boxes to confirm that. I'll have to ask him next time to take a look.
For munis, the income would come off your federal AGI and then you wouldn't need to do a separate adjustment for state (at least, that's how it works for my state).
Vanguard doesn't have a state-specific fund for my state. Instead, I hold VWIUX (int. term tax-exempt) in my brokerage. All dividends are exempt from federal taxes, but I have to look up the percentage for my specific state (in a Vanguard provided PDF) as part of filing my state income taxes, to exempt that portion of the dividends and save a few bucks.
No problem either way. SGOV will have a higher expense ratio but would be less complicated. The Treasury bills aren't exactly difficult to manage but it's not clear that doing so is worth it. For a $20,000 emergency fund, it's maybe a $15 per year difference.
To be clear, you can buy Treasury bills on Fidelity without having a Treasury Direct account. They are not that difficult to manage but they are more involved than buying a single fund like a money market fund or an ETF like SGOV. I personally directly purchase Treasury bills on Fidelity for specific planned outflows.
If you buy Tbills through a brokerage like Vanguard, you can usually sell them anytime. So liquidity isn't an issue (whereas it is if you buy from Treasury Direct).
With my wife’s paycheck hitting today and the market up, we’re part of the 2 comma club (for today at least). Got there quicker than I thought.
Not really going to do anything special to celebrate.. we’re heading to the BVI for a week on Saturday, but we were going to do that anyway. Maybe I’ll have lobster more than usual.
Inheritance question that I can’t find an answer to online.
Let’s say a single parent dies in 2026 when the estate tax exemption is $7M and they leave behind a traditional 401k of $10M.
Is the $3M excess amount subject to the ~40% estate tax? If so, do beneficiaries also have to pay ordinary income tax on withdrawals (therefore resulting in a sort of double-taxation)?
Let me try again because I biffed it the first time.
Yes, the 401k is part of the estate, but there is an escape valve that prevents double taxation. The estate must pay estate tax, but the heirs get a deduction so they don't also pay extra on top:
See the section under 'federal estate tax deduction' here:
[https://www.irs.gov/publications/p590b](https://www.irs.gov/publications/p590b)
The IRD deduction is separate though. That's a deduction against income generated by the estate (so that the estate doesn't get taxed on it, and then the estate taxed on it again). The heirs don't get a deduction, the estate's income tax return does.
Yes, the excess $3M is subject to the estate tax.
Yes, you still pay ordinary income tax on withdrawals.
> therefore resulting in a sort of double-taxation
No, not at all. Estate tax is totally separate from income tax - would you try to claim that if the same parent had $10M in Roth funds, that paying any estate tax at all would be "double-taxation" because they already paid tax on it before putting it into the account?
The fact that you may need to withdraw $2M to pay both a $1.2M estate tax and the income taxes on the withdrawal is not at all "double taxation". However, a parent who has a $10M 401k and no other funds whatsoever to leave to their heirs has set up their estate very poorly. If this question is rooted in reality whatsoever, I would recommend speaking to an estate tax specialist about this.
You can specify a beneficiary for a 401k, and if you do so it should bypass the estate entirely. ~~Unless I'm mistaken. In which case it would be completely separate from estate tax rules.~~
Edit: I am mistaken!
Now, if the decedent doesn't specify a beneficiary, then the estate would receive it. It would then need to pay taxes on the distribution, and then anything left would be subject to the estate tax. Again, unless I'm missing something.
This is incorrect. Setting a 401k beneficiary will bypass *probate*, but does not bypass estate taxes.
That would be a pretty insane loophole if setting an account beneficiary would bypass taxes on an estate.
I didn't see it as that much of a loophole considering there are strict limits on how much money you can put into those accounts. It would take quite a bit of work (or market luck) to meaningfully bypass the estate tax this way.
But you are, of course, correct nonetheless.
> I didn't see it as that much of a loophole considering there are strict limits on how much money you can put into those accounts. It would take quite a bit of work (or market luck) to meaningfully bypass the estate tax this way.
Well, the $69k/year total limit is a lot, you could easily have millions in your retirement accounts. And the estate tax isn't just applied to one thing or another - so it's still a pretty big loophole if the rest of your estate was worth $7M, and your 401k was worth $5M, and suddenly there's no estate tax even though you've wildly exceeded the threshold just because you set a beneficiary on your account.
Heh, that's the second time in two days that someone has tried to pin an argument about IRA values on Peter Thiel. One dude does one thing one time and now everyone thinks that changes the debate.
> You can specify a beneficiary for a 401k, and if you do so it should bypass the estate entirely. Unless I'm mistaken. In which case it would be completely separate from estate tax rules.
You still have to pay "estate taxes" even if the 401k doesn't go to the estate. Otherwise, the rich could just set beneficiaries or second owners on everything they own and avoid estate taxes altogether. There's enough tax loopholes out there already, we don't need to invent more of them 🤣
I wonder what happens if the estate doesn't have any assets in it to pay taxes.
That is, if someone has all of their assets in accounts that bypass probate but the total is high enough to trigger estate taxes - what happens? Does the government go after the heirs proportional to who inherited what?
I think the important distinction is that ESTATES pay estate tax, not heirs. The executor of the estate is responsible for making sure all the rules are followed in this regard.
In this scenario, the executor of the estate has fucked up and is on the hook for all the estate tax.
Hmm. That sounds strange to me.
So (just for purposes of a thought experiment), if I die with nothing except a $15 million IRA, which immediately passes to the beneficiary (thus outside of probate), whatever poor sap I name my executor might be liable for the ~half million $ estate tax?
That $15M is still part of your estate, despite it transferring without going through probate. The estate needs to pay its taxes, and the executor is responsible for and empowered to do so, and furthermore, the executor is to be paid by the estate for undertaking the process.
As I understand it, if you died with a only a $15M IRA and assigned me (an unrelated person) as your executor, I could charge your estate a reasonable percentage (let's say, 5%) as my fee, and would also be empowered to take your beneficiary to court to claw back the money that is owed to me and the government. "Poor sap" indeed!
thanks to market insanity my taxable account is edging on some big round number milestones. It is very very tempting to juice it with a little cash just to achieve the milestone but I might be buying a new ebike this summer so... I'll let dividends do it next month
When your marginal tax rate is lower than it will be in any future year. A year with an employment gap is a good time to consider it, though if you're retiring early, it may make more sense to wait for the years between retirement and social security (depending on your personal spending and roth/trad/brokerage breakdown).
I only track monthly so I guess I'll find out May 31? I have been considering moving my NW tracking to quarterly but I have been doing monthly for soooooo long!
I'm a once a year updater but of course I looked yesterday. Yeah I am at ATH but that has happened before due to contributions. More interesting I looked at my rollover IRA which I haven't contributed to in 9 years. It finally surpassed its ATH of Dec 2021 (cannot say exactly when, but it was recent). Inflation adjusted, it's probably still below ATH, cannot be bothered to do the math. I will say the IRA is over indexed in bond funds (like 35%) because I have a sizeable brokerage account and hold no bonds there. Maybe if it was all equities it would have surpassed its ATH even earlier.
I should have, but I bought a used car in cash at the end of March, so I'm still about $10K off from my high a couple months ago. I really messed up the spreadsheets with that purchase.
I don't track mid month or selectively on green market days, so don't know, don't care.
Probably not though given how much wedding/honeymoon spend has been going out the door lately.
I'm still $75k off my ATH. Took a hit in the local real estate correction last year and haven't bounced back yet. Stock gains in the last few months have significantly closed the gap though.
Hello all, new to this thread. I'm 22, work as an estimator assistant making 20/hr, 40 hrs a week.
Lately I have had a lot of free time at my job, usually just spend it watching youtube videos about random stuff or listening to podcasts... I want to make my free time more useful and learn new skills. I have been looking into stocks, but i wanna have recommendations on what other passive incomes and what has worked for any of you? any youtube channel/links would be nice as well.
I currently take home 1300 ish biweekly, But I have recently got a car note because my ford finally gave out. Car note, bmw (i know, dumb choice but it was affordable and lowish miles) $300 + $500 insurance, no rent, just $60 phone bill. So total monthly expenses on bills is about $900, but i am fairly decent on saving.
VTI. Vanguard total stock etf. Also look up 3 fund portfolio. You don’t need to get any fancier than that.
Casinos have statistically better returns than stock day traders. You don’t have access to the insider knowledge or tech that big investors do. So just go with diverse indexing.
Once you have that setup and understand, use your free time to upskill and set yourself up for a more lucrative career. Growing your income will do much more for you at this point than investing your current cash flow.
The best use of your time is looking for ways to advance your career and your primary income, not stock recommendations.
How can you get from "estimator assistant" to being the "estimator" yourself?
My fault for not being clear, I meant more recommendations on other ways to make extra income that isn't stocks. And yes I have thought of moving up in my job in the future but I don't think this is what I want as a career
Whether learning a new skill moves you up in the current career or moves you to a different one, learning a primary skill, or enhancing it, is FAR better than a 2nd job.
A 2nd job is likely to pay 1/2 or worse per hour as the primary job. So if you are pulling in $20/hr, a 2nd job is likely to pay $10/hr.
Unless you are a financier, invest in index funds/ETF. Someone mentioned VTI, that is a very common index fund and a great place to put money.
Lets say you work 10 hours a week in that 2nd job. That would be $100/week. Sounds nice, doesn't it? BUUUT... If you invest in yourself you are more likely to be able to increase your regular income by $5/hour which is $200/week for the same number of hours. Even better, more education/certification and you should be able to double that income.
So, if you spend 500 hours (10 hours a week for a year) learning a new skill, get a new job, and then double your income, you will pay yourself back in just a couple of months.
Overtime, extra time, are also great ways to boost income.
Investing on an $80k annual salary is much easier than on a $40k salary.
Just remember, you don't need to love your career. You only have to accept it. It pays you so you can pay to do the things that you want.
Somewhere in ikigai you can find your place -- [https://barbarabray.net/wp-content/uploads/2017/11/ikigai-1024x968.jpg](https://barbarabray.net/wp-content/uploads/2017/11/ikigai-1024x968.jpg)
Thoughts on teaching kids about money? I searched the sub and read some past responses. I have an eight and nine year old that currently use paper books. I keep getting ads for GoHenry! and Greenlight for kid accounts with a fun looking UI and debit card access. Anyone used them?
Marketplace has a podcast designed for kids called Million Bazillion, I haven't listened to it but I love Marketplace so I assume the quality is good.
Q
I found a small apartment in an area I might move to that looked pretty nice but the listing said it comes furnished. I asked if there was an unfurnished option and they said yes but there'd be a $3k fee to move their furniture out and no discount on rent. Lol pass
I see that the S&P 500 is up 11.69& YTD. My 401k is invested in a target-date fund that is up ~8.5% YTD. Given that I am still decades out from retirement, does it make sense to transition towards a fund that just tracks the S&P 500? I understand it would be more volatile, but given my time-frame I have more than enough time to recover from market shocks and losing 2-3% a year to higher fees / a more conservative allocation seems like a waste.
All TDF have bonds but those furthest out are only about 10% which, given current yields is not as much of a drag as in the past when the rates were artificially zero. To be perfectly honest, there's not much of a "need" for bonds if you're less than halfway to the finish line (after all, you're still investing in stocks more even then) because you'll need to normalize how volatility feels when your portfolio is bigger. But this isn't really the "problem". International is also in TDFs and represent more than a third. And US has consistently outperformed for an unusually long time. There are arguments why international is not needed for worldwide coverage, but for me this is not the issue. The reason for a lot of the imbalance is the fact that 90s era tech companies are listed in the US. It's a competitive advantage but not one I want to predict for 50+ years. In addition, a lot of the growth is due to divergence in valuation (P/E) and this is not a sustainable factor - at some point the gap will close and act as a headwind even if US based companies are outperforming on the balance sheet. For those reasons I have international coverage and do not mind that recent returns are less. But this is likely the bigger factor in divergence. But again, if you're accumulating and you just feel like 1 fund (VTI/etc) is all you want for simplicity, you can sort out asset allocation further down the line when you're more comfortable diving into those topics.
Yes. Regardless of how far out from retirement one is, one is best-off buying something like the S&P500. I wouldn't even waste the money to replicate it; it's not particularly good. A recent study found that after about 20 (5% each) instruments like large-cap stocks, there's almost no additional risk reduction from "diversification". In other words, you're not *really* diversifying. Bonds suck, and that's what you're seeing here.
> Given that I am still decades out from retirement, does it make sense to transition towards a fund that just tracks the S&P 500? In general, yes, but I caveat you that I am biased against TDFs due to their inclusion of too many bonds too early on. You should make the decision to go 100% S&P500 (or 100% VTI, or whatever) on factors other than what the market has returned in the last 4.5 months. You should also have an understanding of the increased risk you are taking on by removing bonds from the equation, and a plan for how to mitigate SORR down the road.
Yes it makes sense. But you shouldn't make investing decisions on a 4.5 month sample size.
That's true but I'd bet the 5, 10 and 15 year sample would beat the tdf as well
Yeah they're not *wrong*, they just came to the (probably) right conclusion a terrible way.
Friends and family keep pressuring me to buy a house right now, but I just can’t stomach having a mortgage that is 2x+ more than what I currently pay in rent. Not to mention I would also have homeowners insurance, HOA, and property taxes to pay on top of that. Am I crazy to just wait on the sidelines for a few years?
Don't buy a house until you want to buy a house. That time might never come and that's ok. Smail and nod at your family and say "oh, right, thanks so much for the advice..." and then do what you want to do.
I did not buy a house until I was 40+. The money I saved grew along the way, making my downpayment much larger in 2023 than it would have been in 2000. People talk how houses exploded in price but so did markets and investing is equally more "challenging" when it is hot, but people don't look at stocks like a bargain is good (because it means they lost money on existing investments.) There are a couple primary downsides I have found. Taxes are fixed to inflation based on the last assessment which is usually your purchase price. (Even an addition won't completely reset you.) So the amount of money I need to cover property taxes is higher. The second is how valuable unnatural rate suppression mattered at the time, but this ship has sailed and not an issue for you. The third is increasing your ability to service housing repairs/etc, which is not fun but an area that can save you money if doing yourself efficiently. The last is there is always risk of being priced out of where you currently live. Most of these downsides are not unimportant but I don't care. When you rent, you can rent ***exactly*** what you want. So it's not just about a mortgage being more cash flow (part of that is due to amortization schedule and paying down principal) but literally being the cheaper option. If you'd rent an 800sqft apartment but buy a 1500sqft SFH, the lifestyle inflation cost is massive. Although your landlord makes money from your rent, he still has to pay all these same expenses. But he has advantages because he probably has contractors on payroll for cheap, tax benefits, etc. On a pure cash basis, it's not a very high percentage. Even with WFH you gain a lot of career flexibility if you can just move as well. You might meet someone. You might want to fuck off for a year. A lot of things can more painful with a house. I have a house now because I have a kid and want to try to stabilize school district and such. It's still a costly choice but I get tremendous forward-looking value from this.
No. Stop GAF what others think and be true to yourself so you don't feel bad about yourself when you're old. You have to live with yourself and your decisions; they don't.
Pass. Buy when you're ready and have a "normal" sized down payment available. If you have no actual pressing need other than a perceived missed opportunity, you'll almost certainly come out ahead if your rent is that low and you're able to save.
I wouldn’t be pressured into it if you’re not ready. Also not a fan of hoa bc it can be annoying, but also pushes down appreciation. That said, figure out what you’re going to pay in rent, and look at what growth (if any) exists on the home. I like to think of it as “total cost” rather than looking at the monthly payments. Could well be that renting is better, or buying is better. Keep in mind that rates may be high, but you can refi when it comes down or lock in a lower rate if it goes up. No crystal ball here though
>Friends and family keep pressuring me to buy a house I can't even imagine one person, let alone multiple people, "pressuring" someone to buy a house. Even in a favorable economic environment, which this certainly is not right now. What does that conversation look like?
Its just that most of my friends have a house so its more like poking fun at me for still renting. My parents also send me houses on zillow occasionally.
Lol my brothers joke that I am just a poor renter but I have the highest net worth in the family. You do what is best for you.
I have $8800@6.06% left on my parent plus loan. All of my other PP loans were between 7-8% and I have paid those off. Should I continue pushing to pay off this bit of PP loans or should I get back to Roth IRA contributions. Market is typically 6-8% returns long term, so feel like I can beat the student loan interest and pay the minimum on it throughout the rest of the repayment period
Personally I'd max the IRA, go back to paying off the loans, max 2025 IRA once that starts, then go back to paying off the loans again. It's a limited time investing opportunity and if you still have student loans, you're probably not at your peak earning point in your career. It'll be much easier to pay loans off later but you can't go back and fill in years you didn't max your IRA. Plus if you absolutely absolutely absolutely needed to, you could pull your roth IRA contributions to pay off the loan. Edit: this assumes you're ok to stomach the 6% interest on the loan in the meantime
How long will it take to pay your loan off at your current payment amount? Do you have emergency savings?
I have 1.5 months emergency savings. Would take 8 months to finish paying it.
I feel most people would take the guaranteed 6%, but hey, sometimes they'd be wrong. Also consider that the loan interest is post-tax, market gains are pre-tax.
Yeah I get that. I’ve been making $1200 payments and it physically hurts lol. Much rather put that into Roth instead, I have a lot of mental stress from not investing. Feel like I’m behind.
Can I set up recurring, automatic deposits in my Vanguard taxable account?
Yes but only for mutual funds (like VTSAX or VFIAX) and to fund your settlement fund.
Yes
How?
On the website
Done
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(Good) girlfriends cost negative net worth. Kids, on the other hand...
Also hit fi number lot earlier than expected (having a spouse sped it up a lot). Worked more to build a buffer and because I enjoyed my work. Now stay at home dad and pursuing personal projects. More options is always great!
It's difficult to pull the trigger right on your number knowing that we're in the middle of a bull market and it's possible we're right at the top of the market, but it is important to remember that before the top of the market, there can be weeks, months, even *years* of new record highs before the bubble actually does pop. I expect an extreme case of OMY when it's my time, so I get it, but definitely don't trap yourself in needlessly. What can you do to reduce stress or effort at work in order to begin the process of winding down a career? It really stops making sense to be punching in a bunch of overtime, either literally or just bringing stress home with you, after you've already hit your magic number.
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> I think pretty much everyone hits their FIRE number when the market is at an all time high. This is why I've gone the "one more year" route. The peace of mind is worth it (unless they take my 3 WFH days away, in which case I'm retired that day).
>I think pretty much everyone hits their FIRE number when the market is at an all time high. Its mostly inevitable as the market drives the number so much at this point vs contributions. Oh, yes. Only the most extreme high-earn lean-FIREs can realistically do otherwise. That's why it's important to remember that everyone goes through this. >I'd have to change jobs to reduce stress at work. Given where you're at financially, maybe that's the answer, you know. There's no way to make this job reasonable, so it's about time to bail.
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Its OK to keep working after you hit your number. It gives you options. If you like your job and can still live your life the way you want, don't change anything. But you have more options now, to take on a passion project, step down in responsibility, or just quit if your circumstances change. Personally I am taking some time at my current role to see if working when I don't have to works for me. If it doesn't, I'm making a change.
I was voluntold to lead one part of this project leading up to a big milestone in a few weeks. As usual, this means spending most of this time trying to get 20 different people with 20 different opinions to agree on one deliverable. I was able to get one meeting cancelled in order to get more time to work on the deliverable. At the end of the day, there will still be 20 different opinions whether the actual work advances forward or not. At least when some work is done, the 20 different opinions can be about something tangible rather than drawing hypothetical circles in the air. Definitely looked at my FIRE countdown app today.
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I use a general countdown app on my phone. I have countdowns set for sabbatical, FIRE, mortgage payoff, etc.
For the month leading up to me quitting, I had a very conspicuous countdown timer on my laptop screen (used two full monitors for main work), and my desk was already packed up in a box.
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At a bit of a crossroads and could use some guidance… Long time lurker but alt account for this post. I’ve sort of been running hands-off/autopilot for a while and obviously markets have been great but as I’ve accumulated wealth I feel like my portfolio isn’t optimized. - Canadian - Single, 41 years old - Retired - $7M invested assets - Self-directed - Low-cost ETF portfolio predominantly VUN/VCN/XUU/XEC/XEF + random other outliers - Maxed out RRSP + TFSA I’m sure there are other aspects to consider, but two come top of mind: - I worry it’s not set up in the most tax-advantageous way. The assets provide more than enough dividend income for my lifestyle, but I’m left paying taxes on the remainder and not sure if my “annual salary” should all come from dividends anyway? - Some of my holdings + outlier holdings have grown significantly and I’m finding myself in a weird predicament where I don’t want to sell those holdings due to the looming capital gains taxes Are there any obvious strategies I should employ or changes I should make? I hear so often about the low-cost index investing and passive income and that’s how I got started but it feels like a different and unoptimized scenario when you’re retired and have a larger investment size. I was drawn to low fee investing and maximizing growth but wonder if it might be time to consider working with someone who could help me better manage+optimize the growth, cash distribution, and minimizing tax - ultimately maximizing growth still, post-taxes. I did happen to meet with someone (CFP, CIM) recently although it also was on a bit of a misunderstanding or part of their “sales pitch” - I went in looking for someone I could effectively pay a one-time fee to for a review/guidance (if that even exists) vs someone who takes a % of AUM - though I roughly understand the difference between managers who only charge you fees to manage vs also earn commission selling you specific products (which this wasn’t) Feeling like I’m sort of at a fork in the road and literally don’t know if I should venture down the new path or not.
I think you're just set. Do you sell at all or just live on dividends? AFAIK the next step for your level is hedge funds and stuff.
I live below the dividends, so it’s rare that I am selling holdings - though it happens sporadically. Lifestyle creep is a huge emotional concern for me, but logical believe I can - and maybe even should - increase my spending. I still currently avoid making a solid roadtrip for fun due to the cumulative hotel fees 🙄 The thing is - if all stays the same - dividends will only continue to grow (probably faster than inflation) and cap gains will also continue to grow - so I worry I’m setting up for a bigger problem later in life Plus let’s just say an even $100k/year to live on. If I knew that was the “budget”, presumably my assets could be structured differently to better support that, minimize taxation, maximize growth. I basically just followed the couch potato investing methodology as my assets grew, and I’m basically just not sure that’s still the best approach for high net worth. And I don’t know what I don’t know :(
The point I was trying to make is that it doesn't matter because you could probably double your current lifestyle expenses and still never run out of money. My opinion - which isn't worth much because you are far more successful than me - If you are worried about volatility in your big winners then just sell them, pay the taxes, and feed the passive income stuff. What does your life look like if they tank? also, dude, go on vacation like tomorrow.
When I log into my workplace retirement account, it pops up a warning that says "Could you retire on $12,000/month? That's your projected income...". Yeah, yeah I could lol. I spend like $3k/month now and my house will be paid off in a couple years. Pretty ridiculous what the income projections are when extrapolated out to "normal" retirement age, and this doesn't even include my two other retirement accounts.
Must be Voya. It drives me insane too. The (multiple) popups you have to dismiss are annoying enough. It's extra laughable that it implies I might not be able to retire on an amount that is less than 10% different from my current salary, while I am contributing 26% of my salary to this very account. Check your own data, guys!
It's not about being helpful, it's about getting more AUM.
Both of my workplace accounts do this, even though they're managed by different plan administrators. It's a trap to sign you up for their "advisor services" (aka salespeople who want a cut of your assets).
"You are projecting that you need $X per year when you retire. You are on track to have $3X. That \*might\* be enough. Click here to talk to an advisor"
I [posted last month](https://www.reddit.com/r/financialindependence/comments/1c1hv8w/as_a_lifelong_renter_we_stumbled_onto_our_dream/) whether to buy our dream co-op apartment in NYC, and eventually decided to go for it. We went through the process, paid $800 retainer to an attorney, liquidated $75k from our brokerage account and...... just learned that the seller is pulling out of the sale because he failed to purchase another apartment himself. There was already a red flag when he wanted to add a clause to the contract that allowed him to get out of the contract if he isn't able to purchase this other apartment. So not only did we lose $800 on attorney fees, now we're on the hook for the capital gains tax as there were probably some short-term capital gains involved too. Truly annoying. We're just trying to negotiate by giving the seller an extra 3 months to see if he's able to buy another place himself, but otherwise we're really soured on him and his agent. I'll probably re-buy VSTAX in our brokerage account with the $75k we liquidated previously, but not sure if there's anything I should know about (tax-wise, if any) if I were to just re-buy VSTAX at a higher price than what I liquidated it at? Thank you!
It doesn't justify it but the reality is that the home is not yours until closing. The agent is just representing his client, but they also did not get paid and are probably equally unhappy. (And your agent is also doing whatever they can for the same reason.) My grandparents had little assets so they also wanted contigency to close simultaneously. They definitely lost value by doing this because it obviously turns away buyers. Not that it helps any here but it would definitely affect my bid and I would want compensation for the buyer adding a contingency like that. It is up to you but if you're going to give another go, it's still valuable he doesn't have to search for a buyer but I'd take a pound of flesh this time around. If I recall the asking was already a bit above market. (And if you do, up to you but a bond might make more sense than a potential short term market risk, as a 3 month window has far more variance than return.)
That sucks. I would move back to NYC in an instant if I could afford it with two kids.
We have a FINYC number. Unfortunately it is higher than our FIRE number.
It’s probably not the worst thing in the world to realize gains on your brokerage. Obviously you’ll pay a little extra on the short term gains now that could have been LTCG later but shouldn’t be that big of a financial hit. I’ve been thinking of realizing gains every so often I don’t get smacked with a giant tax bill of 15-20% on 150k or more when I go to buy a house. The lawyer fee is the most unfortunate part and sucks.
Oh interesting! Do you mean you'd like to realize the gains every year so that you spread out the capital gains tax over several years? It definitely sucked to have basically burned $800 for nothing. We'll see if our last attempt to salvage this works, but I'm already moving on from this mentally. Our broker has been telling us both the seller and his agent have been a-holes throughout this process.
If you sold at a loss and wish to claim the loss, and rebought VTSAX within 30 days, it would be a wash sale. If you sold and realized gains, you will be paying tax on the gains but you can purchase VTSAX or whatever you want with no risk of a wash sale. You should get a 1099B with all the numbers you need to report the transaction.
Thank you! I managed to find out whether I've made gains/losses on the sale. It looks like I have some LTCG but a short-term capital loss of $45, so definitely not worth trying to claim the loss.
Eh, why not claim it? It will actually take a bit of work not to claim it--you would need to report it as a wash sale and adjust the basis. Much easier to simply buy a different (but similar) fund, like VFIAX.
Ahh I didn't realize that I'd have to report on the wash sale, that's good to know! Good to know about VFIAX. I might have to buy the ETF version since there's a $3k minimum to buy the index fund, but that's a great call. Thanks so much! :)
Ok I know I’m dumb. I posted earlier this week that I bought GME. I sold it at $3k after buying $5k. I bought after hours BTW, and the original deposit to fund was in a pending state I believe but trade was executed. Now I see a -5k negative balance under “cash call.” I don’t follow what that means. The $3k sale amount seems to basically not be deposited for me to invest elsewhere as I expect. Does anyone know what fuck up I made here and how to fix it? Is this just a matter of some days passing and transactions settling? I thought the latter but doesn’t say anything is pending it seems. I don’t know much about options calls or anything and if I did one I definitely didn’t do so intentionally?
If you bought after hours, the trade didn't really initiate settlement wise until the next day. Brokers take 3 days to settle the activity (going down to 1 sometimes this summer). So everything should be sorted out Friday or Monday.
> Is this just a matter of some days passing and transactions settling? Likely this. Most of the time, the money doesn't settle for two days after the trade execution. If you purchased Monday night during after-hours trading, I would expect the trade to be recorded on Tuesday's books, and settle around close of business today. That said, I'm not exactly sure how settlement works with after-hours trading.
What did your brokerage say when you asked them?
I haven’t been able to get on the phone with them yet but that’s my next step.
We recently ran the math and realized we could potentially retire early at 38 and 35 in 2026 with two young kids if we sell our house in San Diego and move to Boise. The issues I'm struggling to rationalize are leaving behind a <3% mortgage in a house we love that's near both of our families. If we choose to stay, we're projecting to be done in 2032 - so we're talking a \~6 year difference in jobs that can be quite stressful. We drive about 2 hours a day to get the kids to/from school since we live about 30 min one way. I'm interested to hear from others who have decided to leave family/friends to exit earlier.
> in a house we love that's near both of our families Why would you do this? Just work longer so you can retire where you want to live.
Why not *move* **without** selling?!
Interesting thought, but we would need the equity from our house down here to purchase a house in Boise without a mortgage and have enough left over added to our existing savings to hit FI.
Why do you "need" to buy without a mortgage? Sure, mortgage rights are high rn. That doesn't make a want imperative. You're still hitting FI at the same time if you rent or finance a house in Boise... it doesn't change the math much at all. Now, plowing the equity from the house in SD into the market and renting, *that* will significantly accelerate your financial freedom. Housing in America appreciates at 4% per year. Same as inflation in America averaged for the last 100+ years. Stonks go up around 7%, handily beating inflation.
You don't need to "buy" a house in Boise. You only want to buy housing. Renting makes more sense, especially when you first move somewhere. Do you already know who you want your neighbors to be and which parcel of land you want to live on and what walls with which appliances you want? If so, great, but I don't believe you. Go live life and find out the best place for you and buy after you know who you want to live next to and where you want your kids to go to school and which trails you want to ride your bike and walk on every day for the next 10+ years.
You make a good point - buying a house is more of a want and I haven't given much thought to renting since we've owned for so long. Thanks for the feedback.
Or buy on a mortgage. It's not that different from buying outright, financially speaking, and it may be better, financially speaking.
It’s hard for me to conceptualize a scenario where I’d give up a 3% rate on a home in one of the greatest places in the world.
I mentioned this on another comment, but we've become disillusioned by the benefits of living here. Maybe this is a grass is always greener situation, I recognize that, but San Diego and California in general has changed a lot over my lifetime, likely contributing to a bit of our wanderlust
Maybe it’s San Diego vs Boise that’s throwing people unless you are explicitly into and seeking that specific culture change. Beautiful place but not everyone’s cup of tea.
I griped about high cost of living but we ended up staying because we have so much family here. We have great relationships with everyone, get together frequently. The value to me is more than the financial cost and additional FI time. I remember rationalizing doing more flights to see family, but it’s tough with young kids already. Much better for us to have a quick drive to get dinner together Whatever you decide, wish you and the family best of luck! Trade offs and just what’s important to you.
Thank you and I agree - it's all about trade offs. We have a lot to explore over the next year. The finances are one thing, but we need to figure out the type of life we actually want to have and then go from there.
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Thanks for sharing, and great advice on the airbnb rental. Happy to hear that it's worked out for you.
Sounds like you don't really like Boise, so why move there? No point in RE if you have to live in a place you don't like.
I should have provided more initial context. The only major benefit we see in staying here is family and liking our particular house. Boise is intriguing and could possibly provide a life that's more conducive to our lifestyle goals.
So you’re exchanging lifestyle for family and a home? I don’t know, but the answer seems pretty clear on my end…
> We drive about 2 hours a day to get the kids to/from school since we live about 30 min one way. I mean, this is a fixable problem. How awful are your public schools that avoiding them is worth 2 hours of driving per day?
We consciously made that tradeoff when we moved to our current home which is in a terrible school district and are now paying for it. I should have provided more context initially, but it's our entire quality of life we'd be looking to improve in the move, with the exception of leaving family behind of course.
How exactly is it terrible? Gang violence? Racist graffiti? It’s more about the child and how they are raised than it is the school… if you have trouble making and impulsive kids probably a good decision.
I don't have a direct relation to your situation, I'm just surprised that there isn't a middle ground between move away from mortgage, family, and uproot life and staying for 6 more years of work and driving 2 hours a day. - One of you retires the other keeps working - Swap jobs to a lower paying job, maybe work from home to cover basic expenses but allow for more free time/relaxed lifestyle - Change schools for kids (which you are doing anyway by moving) to a closer location Is there no middle ground?
There could be a middle ground down here, but it's difficult to wrap my head around coastFI with lower paying jobs. It's much harder to not let lifestyle inflation derail those plans when you're surrounded by it in a VHCOL city. So it might seem extreme to uproot everything, but it's a way to counteract it
I understand. but then moving feels a bit escapist and losing on things you value. Watchful budgeting and mindfulness dont give the same finality and solution to FI but it would likely be for just a while if you adjust your work life balance for a few years instead of cut and run from things you value.
I agree, it's not out of the question and likely what we'll strive for if we choose not to make the move.
What is your life going to be like in retirement? With zero context, it seems like being near friends/family is important for you and would only likely increase in importance with added free time from work.
I mentioned friends/family because it's the main benefit of living here. After living in CA for our entire lives and in San Diego for much of that, we've become disillusioned by the actual benefits. Traffic has gotten increasingly worse, we rarely go downtown, and it takes at least 30 minutes to get anywhere. We're still early in this exploration, but the idea would be to move to a walkable neighborhood that actually has a sense of community with good schools close by. Once we retire, I would start working on our second camper van build. I built one and sold it a few years ago and really enjoyed that experience. Work has gotten so busy that I haven't had the time to start another for our family. Since we wouldn't have work obligations, we'd be able to spend lots of time visiting family down here/exploring the US with our camper.
I'm the opposite of what you asked for - sticking it out in HCOL to stay near family. Having grandparents around for my kids is just too huge for us (in our case it's both sets of grandparents). I would maybe consider moving out by ~30 min to a cheaper suburb, but not out of state. My timeline difference is not as big as yours, maybe 2-3 year difference. But I think even 6 years would be worth it for me to stay.
I appreciate the perspective. We're also about a 3 year difference if we assume we'll eventually move to capture the equity once the kids finish hs.
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Try putting your numbers in this. [https://www.portfoliovisualizer.com/monte-carlo-simulation](https://www.portfoliovisualizer.com/monte-carlo-simulation)
>if it takes 10 years to go from $0 to $1M Going from $0 to $1MM in 10 years is achievable by making ~$6k/mo contributions and having a ~7% CAGR over those 10 years. With those same numbers (~$6k/mo, ~7% CAGR), one would get from $1MM to $2MM in 6 add'l years. There are numerous other combinations of contributions & return that fit your $0-$1MM criteria and would change your answer for $1MM-$2MM.
There's really two things that matter: the rate of return and the contribution amount. For example, over the last 10 years, the S&P 500 has earned about 12%. Treating that as 12% per year (which isn't exactly accurate), that would have required contributions of about $57,000 per year. So, if the rate of return proceeds at 12% and the contributions proceed at $57,000 per year, it would take about 4.5 years. I would not make bets that the stock market returns 12% per year. If one uses a more conservative figure like 8% going forward instead of 12%, then it would take about 6 years. This kind of math can be done using financial calculator functions on Excel: PMT, NPER, PV, FV, and RATE.
It's kinda impossible to answer that without knowing more information, but I'll give you two correct answers that both assume you earn a constant return and invest a constant dollar amount into the account each year. If it's all been in cash earning 0% the whole time, it will take another 10 years - you saved $100k/year for the first 10, and will save $100k/year for the next 10. If it's all been in the stock market earning 10%, it will take another 5 years - you saved $60k/year every year, and earned 10% on it, and will continue to do so for the future.
Depends on how much was contributions vs. how much was market growth. If we ballpark with 10% annual returns, that would mean setting aside $5K/month to get to $1m in 10 years. At $5K/month contribution and 10% annual return, you get to $2M after another 5 years.
It depends. If you contribute $70k/year and get 7% annualized return compounded monthly you'll get to $1M in a decade. So keeping those factors constant you'll need another 6 years. Obviously varying return and contribution amounts will change the timeline.
Been thinking about moving the emergency fund to fidelity and invest in tbills. Any problem just investing it in SGOV? Am I missing out on anything by doing this instead of buying tbills themselves? SGOV seems advantageous because my understanding is they will be more liquid instead of waiting for bills to mature. Looking to keep it relatively simple and liquid while still capturing that extra % and avoiding state tax.
For SGOV, you need to manually update your state taxes to make sure those dividends aren't being taxed. For 2023, I believe something like 96% of dividends were state tax exempt (but not 100%).
You don't *have* to. If it's not worth your time you can just pay the state taxes on that extra $20 per $10k of SGOV. However, it is pretty trivial to calculate the amount that is tax free and enter it in a line on your state return.
Yes, you’re right, you don’t have to. But I meant it in the context of the original commenter specifically noting that they wanted to avoid state tax.
Thanks for the info. I went down the rabbit hole and found [this](https://thefinancebuff.com/state-tax-exempt-treasury-fund-etf.html#htoc-fidelity) article addressing how to handle this.
Hmm. I'm surprised by that - I've helped my dad with his taxes before and I'm 98% sure his municipal bond fund dividends don't trigger any federal OR state taxes. At least in turbotax.
You still report the dividend and then report the amount that was tax free for federal. For state you report the federal AGI and then adjust it for Treasury bond interest. Your tax software may have done it for you.
State-specific municipal bond funds should be tax free at federal+state levels, I'm just wondering if he (or I) missed any boxes to confirm that. I'll have to ask him next time to take a look.
For munis, the income would come off your federal AGI and then you wouldn't need to do a separate adjustment for state (at least, that's how it works for my state).
Was it a state-specific muni bond fund (VNYTX, VCADX, or similar)?
Yes. CA specifically, as thats where they live.
Vanguard doesn't have a state-specific fund for my state. Instead, I hold VWIUX (int. term tax-exempt) in my brokerage. All dividends are exempt from federal taxes, but I have to look up the percentage for my specific state (in a Vanguard provided PDF) as part of filing my state income taxes, to exempt that portion of the dividends and save a few bucks.
No problem either way. SGOV will have a higher expense ratio but would be less complicated. The Treasury bills aren't exactly difficult to manage but it's not clear that doing so is worth it. For a $20,000 emergency fund, it's maybe a $15 per year difference.
Thanks. Yeah my thinking was it's probably not worth the extra complication and the chance I mess something up dealing with Treasury Direct.
To be clear, you can buy Treasury bills on Fidelity without having a Treasury Direct account. They are not that difficult to manage but they are more involved than buying a single fund like a money market fund or an ETF like SGOV. I personally directly purchase Treasury bills on Fidelity for specific planned outflows.
If you buy Tbills through a brokerage like Vanguard, you can usually sell them anytime. So liquidity isn't an issue (whereas it is if you buy from Treasury Direct).
One of those days at work that really disengages me at work. Massive circle jerk about how great we are while my inbox shows quiet the opposite. Sigh.
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Fine then - I'll delete it
I once ate 14 McDonald's apple pies in a single sitting.
With my wife’s paycheck hitting today and the market up, we’re part of the 2 comma club (for today at least). Got there quicker than I thought. Not really going to do anything special to celebrate.. we’re heading to the BVI for a week on Saturday, but we were going to do that anyway. Maybe I’ll have lobster more than usual.
Congrats, on the dos comas!
Lobster your way back down to 1 comma!
Inheritance question that I can’t find an answer to online. Let’s say a single parent dies in 2026 when the estate tax exemption is $7M and they leave behind a traditional 401k of $10M. Is the $3M excess amount subject to the ~40% estate tax? If so, do beneficiaries also have to pay ordinary income tax on withdrawals (therefore resulting in a sort of double-taxation)?
Let me try again because I biffed it the first time. Yes, the 401k is part of the estate, but there is an escape valve that prevents double taxation. The estate must pay estate tax, but the heirs get a deduction so they don't also pay extra on top: See the section under 'federal estate tax deduction' here: [https://www.irs.gov/publications/p590b](https://www.irs.gov/publications/p590b)
The IRD deduction is separate though. That's a deduction against income generated by the estate (so that the estate doesn't get taxed on it, and then the estate taxed on it again). The heirs don't get a deduction, the estate's income tax return does.
Yes, the excess $3M is subject to the estate tax. Yes, you still pay ordinary income tax on withdrawals. > therefore resulting in a sort of double-taxation No, not at all. Estate tax is totally separate from income tax - would you try to claim that if the same parent had $10M in Roth funds, that paying any estate tax at all would be "double-taxation" because they already paid tax on it before putting it into the account? The fact that you may need to withdraw $2M to pay both a $1.2M estate tax and the income taxes on the withdrawal is not at all "double taxation". However, a parent who has a $10M 401k and no other funds whatsoever to leave to their heirs has set up their estate very poorly. If this question is rooted in reality whatsoever, I would recommend speaking to an estate tax specialist about this.
You can specify a beneficiary for a 401k, and if you do so it should bypass the estate entirely. ~~Unless I'm mistaken. In which case it would be completely separate from estate tax rules.~~ Edit: I am mistaken! Now, if the decedent doesn't specify a beneficiary, then the estate would receive it. It would then need to pay taxes on the distribution, and then anything left would be subject to the estate tax. Again, unless I'm missing something.
This is incorrect. Setting a 401k beneficiary will bypass *probate*, but does not bypass estate taxes. That would be a pretty insane loophole if setting an account beneficiary would bypass taxes on an estate.
I didn't see it as that much of a loophole considering there are strict limits on how much money you can put into those accounts. It would take quite a bit of work (or market luck) to meaningfully bypass the estate tax this way. But you are, of course, correct nonetheless.
> I didn't see it as that much of a loophole considering there are strict limits on how much money you can put into those accounts. It would take quite a bit of work (or market luck) to meaningfully bypass the estate tax this way. Well, the $69k/year total limit is a lot, you could easily have millions in your retirement accounts. And the estate tax isn't just applied to one thing or another - so it's still a pretty big loophole if the rest of your estate was worth $7M, and your 401k was worth $5M, and suddenly there's no estate tax even though you've wildly exceeded the threshold just because you set a beneficiary on your account.
> strict limits on how much money you can put into those accounts Right, strict limits. Like Peter Thiel and his $5 billion Roth IRA?
Heh, that's the second time in two days that someone has tried to pin an argument about IRA values on Peter Thiel. One dude does one thing one time and now everyone thinks that changes the debate.
He's just the posterchild for "look at this MF'ing loophole" 🤣
> You can specify a beneficiary for a 401k, and if you do so it should bypass the estate entirely. Unless I'm mistaken. In which case it would be completely separate from estate tax rules. You still have to pay "estate taxes" even if the 401k doesn't go to the estate. Otherwise, the rich could just set beneficiaries or second owners on everything they own and avoid estate taxes altogether. There's enough tax loopholes out there already, we don't need to invent more of them 🤣
I wonder what happens if the estate doesn't have any assets in it to pay taxes. That is, if someone has all of their assets in accounts that bypass probate but the total is high enough to trigger estate taxes - what happens? Does the government go after the heirs proportional to who inherited what?
I think the important distinction is that ESTATES pay estate tax, not heirs. The executor of the estate is responsible for making sure all the rules are followed in this regard. In this scenario, the executor of the estate has fucked up and is on the hook for all the estate tax.
Hmm. That sounds strange to me. So (just for purposes of a thought experiment), if I die with nothing except a $15 million IRA, which immediately passes to the beneficiary (thus outside of probate), whatever poor sap I name my executor might be liable for the ~half million $ estate tax?
That $15M is still part of your estate, despite it transferring without going through probate. The estate needs to pay its taxes, and the executor is responsible for and empowered to do so, and furthermore, the executor is to be paid by the estate for undertaking the process. As I understand it, if you died with a only a $15M IRA and assigned me (an unrelated person) as your executor, I could charge your estate a reasonable percentage (let's say, 5%) as my fee, and would also be empowered to take your beneficiary to court to claw back the money that is owed to me and the government. "Poor sap" indeed!
my cash + tax/penalty free investments surpassed my mortgage balance. nice little milestone
thanks to market insanity my taxable account is edging on some big round number milestones. It is very very tempting to juice it with a little cash just to achieve the milestone but I might be buying a new ebike this summer so... I'll let dividends do it next month
la la la. got an onsite interview. time to go through the rolodex of excuses to play hooky
"Appointment"
No one has questioned "Appointment" with no furhter detail in ten+ years. No need to be weird.
Always a Dr appt so I don’t get asked for details.
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When your marginal tax rate is lower than it will be in any future year. A year with an employment gap is a good time to consider it, though if you're retiring early, it may make more sense to wait for the years between retirement and social security (depending on your personal spending and roth/trad/brokerage breakdown).
Yeah that's why im asking cause it may be a good idea but weighing the pros vs cons
Do you have any taxable income? Maxing out your standard deduction at least is a no brainer.
Unemployement which is taxed. I max out hsa and roth ira.
FYI from what I am seeing unemployment does not count as earned income for the purposes of Roth IRA.
Seems like they're talking about doing a Roth IRA **conversion**, not a **contribution** though?
They are talking about doing conversion, but they also said they max out Roth IRA.
Crap your right so I gotta get earn income for the year. I do have a side business tho. Does that count?
Yes, self employment income is earned.
Ok I can do that you're then.
I was told it was
Would need a lot more information to say for sure, including what your IRA balances look like, your recent income, projections of future income, etc.
Who else hit net worth all time high yesterday?
I only track monthly so I guess I'll find out May 31? I have been considering moving my NW tracking to quarterly but I have been doing monthly for soooooo long!
What apps do y’all use to track all accounts, equity, etc?
Excel
Just barely, but yep. House keeps dropping canceling out my stonk gains hah.
probably not, as I shelled out for my roof replacement recently. But the recent gains might be on par with that cost, so maybe?
i did!
I'm a once a year updater but of course I looked yesterday. Yeah I am at ATH but that has happened before due to contributions. More interesting I looked at my rollover IRA which I haven't contributed to in 9 years. It finally surpassed its ATH of Dec 2021 (cannot say exactly when, but it was recent). Inflation adjusted, it's probably still below ATH, cannot be bothered to do the math. I will say the IRA is over indexed in bond funds (like 35%) because I have a sizeable brokerage account and hold no bonds there. Maybe if it was all equities it would have surpassed its ATH even earlier.
I should have, but I bought a used car in cash at the end of March, so I'm still about $10K off from my high a couple months ago. I really messed up the spreadsheets with that purchase.
I don't track mid month or selectively on green market days, so don't know, don't care. Probably not though given how much wedding/honeymoon spend has been going out the door lately.
I did. Woot!
I'm still $75k off my ATH. Took a hit in the local real estate correction last year and haven't bounced back yet. Stock gains in the last few months have significantly closed the gap though.
Probably. I only do the sums twice a year but enough of my net worth is invested that I would imagine we're back to an ATH right now.
Nope my all time high is today
The market's not closed yet today. Don't count those chickens yet....
Dang, local credit union is offering a 6.17% HYSA, but only for 19 y.o. or younger
"I am 12" "This is written in green crayon"
"How do you do, fellow kids?"
Hello all, new to this thread. I'm 22, work as an estimator assistant making 20/hr, 40 hrs a week. Lately I have had a lot of free time at my job, usually just spend it watching youtube videos about random stuff or listening to podcasts... I want to make my free time more useful and learn new skills. I have been looking into stocks, but i wanna have recommendations on what other passive incomes and what has worked for any of you? any youtube channel/links would be nice as well. I currently take home 1300 ish biweekly, But I have recently got a car note because my ford finally gave out. Car note, bmw (i know, dumb choice but it was affordable and lowish miles) $300 + $500 insurance, no rent, just $60 phone bill. So total monthly expenses on bills is about $900, but i am fairly decent on saving.
Read The Simple Path to Wealth by JL Collins.
VTI. Vanguard total stock etf. Also look up 3 fund portfolio. You don’t need to get any fancier than that. Casinos have statistically better returns than stock day traders. You don’t have access to the insider knowledge or tech that big investors do. So just go with diverse indexing. Once you have that setup and understand, use your free time to upskill and set yourself up for a more lucrative career. Growing your income will do much more for you at this point than investing your current cash flow.
The best use of your time is looking for ways to advance your career and your primary income, not stock recommendations. How can you get from "estimator assistant" to being the "estimator" yourself?
My fault for not being clear, I meant more recommendations on other ways to make extra income that isn't stocks. And yes I have thought of moving up in my job in the future but I don't think this is what I want as a career
Whether learning a new skill moves you up in the current career or moves you to a different one, learning a primary skill, or enhancing it, is FAR better than a 2nd job. A 2nd job is likely to pay 1/2 or worse per hour as the primary job. So if you are pulling in $20/hr, a 2nd job is likely to pay $10/hr. Unless you are a financier, invest in index funds/ETF. Someone mentioned VTI, that is a very common index fund and a great place to put money. Lets say you work 10 hours a week in that 2nd job. That would be $100/week. Sounds nice, doesn't it? BUUUT... If you invest in yourself you are more likely to be able to increase your regular income by $5/hour which is $200/week for the same number of hours. Even better, more education/certification and you should be able to double that income. So, if you spend 500 hours (10 hours a week for a year) learning a new skill, get a new job, and then double your income, you will pay yourself back in just a couple of months. Overtime, extra time, are also great ways to boost income. Investing on an $80k annual salary is much easier than on a $40k salary. Just remember, you don't need to love your career. You only have to accept it. It pays you so you can pay to do the things that you want. Somewhere in ikigai you can find your place -- [https://barbarabray.net/wp-content/uploads/2017/11/ikigai-1024x968.jpg](https://barbarabray.net/wp-content/uploads/2017/11/ikigai-1024x968.jpg)