Enduro/AM - The Weight Game

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Enduro/AM - The Weight Game
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flag badbadleroybrown
Posted: Jan 7, 2022 at 13:09 Quote
Circe wrote:
Does your employer offer a match? I would set my contribution to whatever the match is, otherwise you’re turning away free money.

If you’re not going to do a employee 401K, so a Roth. It’s tax free when you “retire.”
I second all of this... and even without an employer match, assuming you make enough to have any tax liability, it's kind of free money just in being able to reduce your tax liability too.
flag PHeller
O+
Posted: Jan 7, 2022 at 13:58 Quote
What about pulling money from ROTH or other investments?

My coworker has mentioned he keeps very little cash on hand. Pretty much all of his paycheck goes into his 401k, his mortgage or his bills.

If needs to pay for a big bill, he dips into his 401k (or Roth, I'm not sure). He's done this for home improvements projects, car repairs, even paying for a vacation this way.

We're the opposite. At least 1/4 of our savings is liquid. We could access it right now.

Despite the fact he probably pays all kinds of penalties on withdrawls, I think my coworker might actually have the better plan. I think we're losing out on significant gains.
flag Circe
Posted: Jan 7, 2022 at 14:09 Quote
PHeller wrote:
What about pulling money from ROTH or other investments?

My coworker has mentioned he keeps very little cash on hand. Pretty much all of his paycheck goes into his 401k, his mortgage or his bills.

If needs to pay for a big bill, he dips into his 401k (or Roth, I'm not sure). He's done this for home improvements projects, car repairs, even paying for a vacation this way.

We're the opposite. At least 1/4 of our savings is liquid. We could access it right now.

Despite the fact he probably pays all kinds of penalties on withdrawls, I think my coworker might actually have the better plan. I think we're losing out on significant gains.

With a Roth, you can pull out what you contributed without issue. You already paid taxes on it. Note - what you contributed. Not what you gained.

There’s a bunch of rules and exceptions. Good article below. With a regular 401K, there’s a lot more rules.

https://www.nerdwallet.com/article/investing/roth-ira-withdrawal-rules
flag badbadleroybrown
Posted: Jan 7, 2022 at 14:09 Quote
401k and other tax deferred accounts, don't touch em... typical investment account, there's noting wrong with that. On deferred retirement accounts, you just take too much of a hit in penalties and taxes for it to make sense.

As a rule, I keep 10% of my brokerage account as cash available for buy opportunities and six months of my typical burn rate liquid in the bank, one month burn in cash on hand in the safe along with precious metals.
flag Circe
Posted: Jan 7, 2022 at 14:11 Quote
seraph wrote:
Circe wrote:
seraph wrote:


I recently set my 401k to 0% deductions. I don't make enough money to have any taken away each paycheck. Plus I figure I'll never retire.

Does your employer offer a match? I would set my contribution to whatever the match is, otherwise you’re turning away free money.

If you’re not going to do a employee 401K, so a Roth. It’s tax free when you “retire.”

Yes Trek matches, I forget the percentage. But they were taking out $75 from me every paycheck, and I don't make enough money where that's ok right now. Maybe in another year or so.

When my parents kick the bucket, maybe in another 15 or 20 years, I'll get some cash from the sale of their house, likely around $800k to $1m so my wife and I can invest that in a high-yield CD and use it for when we stop working.

I’m sorry to hear that $75 right now is the make or break point for you guys . That’s a tough situation to be in. Buying a house is hard. Congratulations on making it happen and I hope your financial situation improves. Also, post puppy photos.
flag Tsoxbhk
Posted: Jan 7, 2022 at 14:19 Quote
Given his most recent bike build something seems off. Even with a deal on AXS it is crazy expensive to not be saving for retirement and riding GX! 12 months at 75 a month is right around what an AXS dropper is retail!

Not sure I get it.
flag dirtnapped
O+
Posted: Jan 7, 2022 at 14:20 Quote
seraph wrote:
Circe wrote:
seraph wrote:


I recently set my 401k to 0% deductions. I don't make enough money to have any taken away each paycheck. Plus I figure I'll never retire.

Does your employer offer a match? I would set my contribution to whatever the match is, otherwise you’re turning away free money.

If you’re not going to do a employee 401K, so a Roth. It’s tax free when you “retire.”

Yes Trek matches, I forget the percentage. But they were taking out $75 from me every paycheck, and I don't make enough money where that's ok right now. Maybe in another year or so.

When my parents kick the bucket, maybe in another 15 or 20 years, I'll get some cash from the sale of their house, likely around $800k to $1m so my wife and I can invest that in a high-yield CD and use it for when we stop working.

What route are you taking to avoid/minimize taxes on the sale of the home?
flag PHeller
O+
Posted: Jan 7, 2022 at 14:21 Quote
badbadleroybrown wrote:

As a rule, I keep 10% of my brokerage account as cash available for buy opportunities and six months of my typical burn rate liquid in the bank, one month burn in cash on hand in the safe along with precious metals.

I guess I don't understand this. How do you keep 10% of the account as cash?

Does that mean if the market drops, the amount of cash in the brokerage drops as well?
flag badbadleroybrown
Posted: Jan 7, 2022 at 14:27 Quote
PHeller wrote:
badbadleroybrown wrote:

As a rule, I keep 10% of my brokerage account as cash available for buy opportunities and six months of my typical burn rate liquid in the bank, one month burn in cash on hand in the safe along with precious metals.

I guess I don't understand this. How do you keep 10% of the account as cash?

Does that mean if the market drops, the amount of cash in the brokerage drops as well?
You fund a brokerage account with cash, and then invest from that account into equities.. So, say you have $100k to invest... you put that $100k in the brokerage account and you have $100k in your account. I would then invest $90k in equities and reserve $10k left alone as cash for buy opportunities that come up. So, like I mentioned a week long investment in Rivian earlier... I made that play from the 10% cash reserve as opposed to selling another equity to free up cash. Made a quick 40% and then sold out Rivian back to cash without ever having to touch any of my longer term investments. It's basically like a "savings" account... it just sits in the 'bank' of your brokerage. So it doesn't move with the market, aside from a tiny bit of interest you earn.
flag PHeller
O+
Posted: Jan 7, 2022 at 14:32 Quote
So the 10% cash in the brokerage is like the "play money" that you can use to act on market news?

I would assume however, that unless you do something with it, that cash isn't earning anything, right?

I guess as long as you make a few plays each year, you'll far out performan any savings account interest, though.
flag badbadleroybrown
Posted: Jan 7, 2022 at 14:42 Quote
PHeller wrote:
So the 10% cash in the brokerage is like the "play money" that you can use to act on market news?

I would assume however, that unless you do something with it, that cash isn't earning anything, right?

I guess as long as you make a few plays each year, you'll far out performan any savings account interest, though.
Exactly... It just saves you from having to screw with long term investments for short term plays. Some weird crypto popping all of sudden, random IPO, breaking news, etc...

It earns like 1.0% or 0.8% or something negligible and a bit below a typical savings account just sitting there, but it keeps me from having to rob Peter to pay Paul when an opportunity arises. So, for rolling the dice on Rivian I didn't need to sell out of something I'm long on. It also protects my long investments since, if I sell something I like to buy something that's hype for the moment, there's way more risk of it losing money. You don't wanna sell a bunch of something solid and stable like AMZN to roll the dice on some Shiba coin and then lose half of it... so it's sort of a high risk reserve for short term plays.
flag Axxe
Posted: Jan 7, 2022 at 14:54 Quote
Two ways managed brokerage accounts and ETFs are rigged against you.
First, idea to keep anything in cash long term is a myth. If you are worried about hedging your bets - damn properly hedge your bets. Cash is a bad hedge. They only promote it so they can free ride on your assets.
Second, unlike assembling your own portfolio of stocks, buying ETFs locks you out of opportunity to tax harvest losses and use it to rebase your gains tax free. It costs you one to two percent a year in the long run. It adds up.
You basically let fund managers make use of your losses, and tack on management fees.

But. It is sure damn convenient.
flag badbadleroybrown
Posted: Jan 7, 2022 at 14:55 Quote
Axxe wrote:
Two ways managed brokerage accounts and ETFs are rigged against you.
First, idea to keep anything in cash long term is a myth. If you are worried about hedging your bets - damn properly hedge your bets. Cash is a bad hedge. They only promote it so they can free ride on your assets.
Second, unlike assembling your own portfolio of stocks, buying ETFs locks you out of opportunity to tax harvest losses and use it to rebase your gains tax free. It costs you one to two percent a year in the long run. It adds up.
You basically let fund managers make use of your losses, and tack on management fees.

But. It is sure damn convenient.
I disagree with the bit about keeping a cash reserve for short term trades, obviously... but the rest of that is spot on.
flag Axxe
Posted: Jan 7, 2022 at 15:05 Quote
Managed brokerage account does not let you day trade with cash. They just sit on it. Of course of you trade frequently cash is needed. And watching out for free ride rules and such.

I don’t, so everything I don’t know what to do with is just parked in dividend stock ETF.
flag seraph
Posted: Jan 7, 2022 at 15:21 Quote
Tsoxbhk wrote:
Given his most recent bike build something seems off. Even with a deal on AXS it is crazy expensive to not be saving for retirement and riding GX! 12 months at 75 a month is right around what an AXS dropper is retail!

Not sure I get it.

We all make financial decisions that affect us in the long run. Mine was to build a high end mountain bike and pay for it on a credit card. I'll pay it off eventually.

 


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