Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Stewie]

Originally Posted by lewdog

Link some?

Only ones I’ve seen you have to do all these transactions and such a month. And those were for 3.75%.

Popular Direct and Bask Bank come to mind. No weird transactions etc. from what I remember.

[Stewie]

Originally Posted by Rain Man

Today I just put a bit of money into a 1-year CD for 5.0 percent and also a 5-year CD for 5.0 percent.

Did I do good or did I do bad?

My goal these days is to just match or beat inflation overall. So I don't need to get rich. I just need to avoid getting wiped out. It seems to me that inflation over the next five years will be less than 5 percent, so I'm liking the long-term CD.

This is all money that's just sitting in cash right now.

I did something similar a couple of weeks ago. I bank through Capital One and they offer an 11 month 5% CD.

[lewdog]

Originally Posted by Hog's Gone Fishin

QYLD pays a 13.05% Dividend and pays monthly

It's a covered call ETF

Down 23% from it's high this year. Dividends are not free money and are not risk free when the stock price tanks along with your capital.

Don't confuse people into thinking these are the same.

[displacedinMN]

What the hell is happening yesterday and today?

Sent from my SM-G991U using Tapatalk

[ThaVirus]

Regarding traditional vs Roth IRAs:

How do you determine whether or not you are likely to be in a higher tax bracket at the time you start to withdraw?

[Buehler445]

Originally Posted by ThaVirus

Regarding traditional vs Roth IRAs:

How do you determine whether or not you are likely to be in a higher tax bracket at the time you start to withdraw?

Just a wild ass guess.

Typically if you are not earning income you'll be in a lower bracket, but who knows.

The big thing with ROTH is you put the principal investment in after tax. Any gain/growth/appreciation is tax free. So if you put 300K in after tax over the life the account, and the value of the account is 500K when you retire, you got 200K tax free. You paid tax on the 300K before it went in and nothing on the back end is taxable.

That's the big draw of a Roth.

EDIT: Should include the comparison.

For a traditional, If you put in 300K over the life of the account and it's worth 500K at retirement, sure you get to deduct the contributions going in, but the whole 500K is taxable on the back end.

[Hog's Gone Fishin]

For Rainman, this is a nice video breakdown of investing in dividend stocks, and I'll wait patiently for the obligatory Lewdog to say it isn't free money. LOL. Love you Lew!

[Jenson71]

Originally Posted by ThaVirus

Regarding traditional vs Roth IRAs:

How do you determine whether or not you are likely to be in a higher tax bracket at the time you start to withdraw?

I think the financial industry starts with an assumption that tax rates across all income levels will be generally higher in the coming decades.

I've had a financial advisor explain his belief that half Roth and half Trad is the way to go in order to take advantage of both a current and future benefit, but it's grounded in concerns that Congress will take away the Roth benefit, which I've never heard anyone else share a concern of, and the thought that a buck today is better than X bucks tomorrow.

[BIG_DADDY]

Originally Posted by Jenson71

I think the financial industry starts with an assumption that tax rates across all income levels will be generally higher in the coming decades.

I've had a financial advisor explain his belief that half Roth and half Trad is the way to go in order to take advantage of both a current and future benefit, but it's grounded in concerns that Congress will take away the Roth benefit, which I've never heard anyone else share a concern of, and the thought that a buck today is better than X bucks tomorrow.

Was Hellen your financial advisor?

[Stewie]

It looks like the Fed is going to have to raise rates through at least June.

Inflation just won't behave like the Feds want.

5.25% from the Fed by July is the consensus.

[scho63]

Originally Posted by Stewie

It looks like the Fed is going to have to raise rates through at least June.

Inflation just won't behave like the Feds want.

5.25% from the Fed by July is the consensus.

The Fed has ****ed this all up.

[Buehler445]

Originally Posted by Jenson71

I think the financial industry starts with an assumption that tax rates across all income levels will be generally higher in the coming decades.

I've had a financial advisor explain his belief that half Roth and half Trad is the way to go in order to take advantage of both a current and future benefit, but it's grounded in concerns that Congress will take away the Roth benefit, which I've never heard anyone else share a concern of, and the thought that a buck today is better than X bucks tomorrow.

That’s assenine for anyone under like 45 or 50.

Tax rates are almost exclusively higher when you’re earning income (while you’re working) than when you’re not (retired, drawing from your retirement instrument)

The difference is GAINS in the Roth are not taxed ever. The basis is taxed when it is put in (basically - there is no tax shelter, but there are ways you could contribute non-taxed earnings - like gains from the sale of a home or restitution or some shit but for all practical purposes, let’s say ROTH dollars are taxed when you put them in), but if it goes up 100% between when you’re 40 making the contribution and 70 when you’re pulling it out, that means half of it wasn’t taxed. Or put another way, your tax rate would have to be half of what you’re paying now, and let’s be real here, if your tax rate is half of what you’re paying now you’re going to have a miserable retirement.

And especially for young people, early basis can yield waaaay more than 100%
Gain.

Do the ROTH.

[Jenson71]

Yeah, I agree.

[Rain Man]

I was thinking about something the other day involving tax rates, and I think the government is running a little IRA grift on us. It's still better to put money into an IRA than to not do it, but this is something I'd never thought about.

If you put money into a stock in an IRA and the price grows, then yay, you make money. When you eventually take it out, you pay regular income tax on the gains, which is going to vary, but it's almost certain to be 22% to 35% for most people.

If you bought that same stock in a regular investment account, you're going to pay capital gains tax when you sell it, which is probably going to be 15% for most people.

So by holding it in an IRA, you end up paying a higher tax on the gains.

Now, it's still better to put it in an IRA because it's pre-tax money going in, which gives you a bigger investment, and the taxes are deferred for many years, but I'd never thought about the fact that you take a bigger bite coming out.

Am I thinking about this right? Do I have any wrong assumptions?

[Buehler445]

Originally Posted by Rain Man

I was thinking about something the other day involving tax rates, and I think the government is running a little IRA grift on us. It's still better to put money into an IRA than to not do it, but this is something I'd never thought about.

If you put money into a stock in an IRA and the price grows, then yay, you make money. When you eventually take it out, you pay regular income tax on the gains, which is going to vary, but it's almost certain to be 22% to 35% for most people.

If you bought that same stock in a regular investment account, you're going to pay capital gains tax when you sell it, which is probably going to be 15% for most people.

So by holding it in an IRA, you end up paying a higher tax on the gains.

Now, it's still better to put it in an IRA because it's pre-tax money going in, which gives you a bigger investment, and the taxes are deferred for many years, but I'd never thought about the fact that you take a bigger bite coming out.

Am I thinking about this right? Do I have any wrong assumptions?

Depends on what you have coming in for income in Retirement. If you're at 35% at age 40, and 22% in retirement, that is almost a wash. But if all you have is SSA (not all of which is taxable) and a RMD and (more, some of those are ROTH), it's pretty easy for a taxpayer and spouse to get under 83K, putting them in the 12% bracket, so the gains would actually be CHEAPER than at any time in history.

Plus the time value of the tax dollars you didn't have to pay, presuming you're getting a return on that.