Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[lewdog]

Originally Posted by Hog's Gone Fishin

When they announce that plan you're gonna get in on the way up. It may move quick. It's closed at 13.12 today. I'm sitting on X cash waiting for a good play.

High five on X. We nailed that sucka! It's at 34 now.

Yea could be a good short term play on that. I’m just not sure what’s a good buy price. Many thought $20 was it.

And yes, that was great. Doubled my money on it! Thanks for investment conversations we’ve had.

[scho63]

Originally Posted by lewdog

Sometimes stocks are “cheap” for a reason. Ask people on here who bought GE near $20.

Until they put together a strategic turn around plan, I’ve got better places to put money.

I got very very lucky with GE. I sold the stock at $17 for a nearly a $3,000 loss but thanks to having PUT options that went up nicely, I sold the puts shortly after selling the stock and lost only about $280 dollars.

If I held onto the puts after I sold the stock, I would have MADE money a few days later.

GE has worse problems than they claimed to disclose at the big write down. I don't trust their accounting and that all the bad news is still out. I could see more dividend cuts.

Looks cheap but it could get under $10 IMHO.

I certainly didn't think so at $19+ when I bought shares.

[Pushead2]

I'm a n00b to this thread, but my spouse just lost her job and I'm taking care of all the bills. Things are snug, but we're not worrying about our lights being shut off.

My question to everyone is should I lower my 401K contribution until she finds something new? Sure in the short term I'll get a little extra in my check, but is it worth it to do so in the long term? Currently, I put in 8% with my company matching up to 5%.

[eDave]

Originally Posted by Pushead2

I'm a n00b to this thread, but my spouse just lost her job and I'm taking care of all the bills. Things are snug, but we're not worrying about our lights being shut off.

My question to everyone is should I lower my 401K contribution until she finds something new? Sure in the short term I'll get a little extra in my check, but is it worth it to do so in the long term? Currently, I put in 8% with my company matching up to 5%.

I'd reduce to 5% because it's foolish not to take the match. Until she finds new work. But a 3% differential probably isn't that much. And with this crazy market it might not be a bad idea anyway. Really depends on how long you think she will be out of work and how snug you really are.

Perhaps invest the 3% into an IRA so you can access if needed.

[Hog's Gone Fishin]

Originally Posted by Pushead2

I'm a n00b to this thread, but my spouse just lost her job and I'm taking care of all the bills. Things are snug, but we're not worrying about our lights being shut off.

My question to everyone is should I lower my 401K contribution until she finds something new? Sure in the short term I'll get a little extra in my check, but is it worth it to do so in the long term? Currently, I put in 8% with my company matching up to 5%.

I wouldn't change my contribution. I'd tell the wife to not go to walmart to buy a damn thing until she's got a job. Or you could sell your laptop.

[Buehler445]

Originally Posted by eDave

I'd reduce to 5% because it's foolish not to take the match. Until she finds new work. But a 3% differential probably isn't that much. And with this crazy market it might not be a bad idea anyway. Really depends on how long you think she will be out of work and how snug you really are.

Perhaps invest the 3% into an IRA so you can access if needed.

Sound advice. If you do the IRA thing make sure it is a Roth. The rules are less stringent.

[Amnorix]

Originally Posted by Pushead2

I'm a n00b to this thread, but my spouse just lost her job and I'm taking care of all the bills. Things are snug, but we're not worrying about our lights being shut off.

My question to everyone is should I lower my 401K contribution until she finds something new? Sure in the short term I'll get a little extra in my check, but is it worth it to do so in the long term? Currently, I put in 8% with my company matching up to 5%.

Agree with eDave. Go to 5% to take the match. NEVER say no to free money! The three percent probably doesn't matter much either way, but in case your spouse's reemployment takes longer than expected, you might prefer it in your pocket.

[DaFace]

Not that we need more agreement with eDave, but here's one more. Don't touch the 5% unless things are getting REALLY sketchy.

[Fat Elvis]

Think of it this way: That 5% match is a 100% return on your investment....

[Amnorix]

Originally Posted by Fat Elvis

Think of it this way: That 5% match is a 100% return on your investment....

Yeah, but just to emphasize - a 100% TAX DEFERRED return on your investment, with both the investment and the match growing in a TAX DEFERRED manner as well.

Honestly, if you aren't searching the couch for quarters, you shouldn't be cutting into that 5%.

[ChiliConCarnage]

Originally Posted by Buehler445

Sound advice. If you do the IRA thing make sure it is a Roth. The rules are less stringent.

Also, having a mix of traditional and Roth money in retirement gives you more flexibility in terms of tax avoidance in retirement. At least, for average joe's, I think this normally makes sense.

[eDave]

Originally Posted by ChiliConCarnage

Also, having a mix of traditional and Roth money in retirement gives you more flexibility in terms of tax avoidance in retirement. At least, for average joe's, I think this normally makes sense.

When you have a moment, would you please expand on this?

Thank you.

[lewdog]

Originally Posted by eDave

When you have a moment, would you please expand on this?

Thank you.

You don’t want all your income in retirement to come from taxable investments such as 401k or IRAs.

That’s why it’s important for many to contribute to a ROTH. It’s not counted as income in retirement, thus lowering your tax bracket for many.

[Buehler445]

Originally Posted by lewdog

You don’t want all your income in retirement to come from taxable investments such as 401k or IRAs.

That’s why it’s important for many to contribute to a ROTH. It’s not counted as income in retirement, thus lowering your tax bracket for many.

Eh. That’s a little wonky.

401s and traditional IRAs have some theoretical advantages.

You’ve paid tax on contributions to ROTH where as 401s and traditional IRAs are not taxed at contribution. In theory your tax rate will be lower in retirement so there may benefits there. Where the ROTH shines is the gains aren’t taxed.

So the gamble you’re taking is the tax on the basis at the time of contribution is less than the tax on the basis and gain at the time of distribution.

Typically it is but is still a gamble.

[ChiliConCarnage]

Originally Posted by eDave

When you have a moment, would you please expand on this?

Thank you.

Sure, to really simplify it, if you have 400k in pre-tax/traditional retirement savings. The Fed has a 15% tax rate up to 32k and 23.5% from 32 to 62k.

If you need 45k to live this year, you'll need to pay 13k at the 23.5% rate.

If you have 300k pre-tax and 100k roth, you can use 32k pre-tax and pay 15% then withdraw 13k from your post tax roth money and avoid the higher tax rate.

This can all get into some talk about whether your taxes will be higher now or in retirement in general. I think for regular people this is incredibly hard to answer and that almost everyone should have some both pre and post tax funds for flexibility.

edit: also, these numbers don't make sense lol. It's just the idea that you can avoid higher tax brackets lol