Talking Finances

[espanol]

Spinoff from the great Talking Stocks 2.0 thread, thought it would be interesting to start a financial planning thread. Would enjoy hearing strategies anyone is utilizing in this trying time for the financial markets. Here's a few I've found helpful in the US:

1) Consider Roth conversions of pre-tax funds. Due to lower stock/fund prices, investors are able to capture the same number of units or shares at lower prices now than in 2021. Note, these are taxable, so this strategy is typically best suited for times when the market is down (like now), or when you are in a lower-than-normal tax year. Always consult CPA or planner before doing this.

2) Revisit unrealized gains in non-retirement accounts. Prior gains may be wiped out, which could present a good opportunity for reallocating to a more long-term portfolio

3) Tax-loss harvest. Don't forget the wash-sale rule

4) Don't forget bank yield for excess cash. Yields have been ~0 for years, but we're finally starting to see high-yield money markets break 3%. Also, consider CDs for funds you wont immediately need. I've found a few 12-month CDs at 4.25%

5) Owners/Sole-proprietors- consider overhauling your 401(k). Few know that you're permitted to put well-beyond the basic 401(k) quoted amounts of $20.5 or $27k (50+ y/o). There is a strategy where owners can put up to $61,000 into a Roth IRA each year using their 401(k), regardless of income limits. It's called a Mega Backdoor Roth Conversion. It's really simple. One needs to have a plan that allows after-tax contributions, and in-service rollovers. Simple to set-up, and the ability to sock away $61k into a Roth each year is a game changer for most

Employees- check to see if your 401(k) has any unique benefits like after-tax contributions or in-service rollovers

6) Don't forget to rebalance your portfolio in accordance to your long-term goals

7) Controversial, but consider holding that low fixed-rate mortgage you have, and not making accelerated payments. Why pay down sub-3% debt when you could get more in a high-yield money market (at a minimum)?

[superdog]

Great idea. Very excited to see what comes of this thread.

[Chiboy]

FWIW, I have been buying Treasuries with excess cash rather than keeping the $$ in money market accounts. They are much easier and cheaper (because they are so liquid) to break (sell) vs. CDs and rates are generally higher. You can buy Treasuries that mature in six months and yield 4.4%.

[espanol]

Originally Posted by superdog

Great idea. Very excited to see what comes of this thread.

Thanks Seth

Originally Posted by Chiboy

FWIW, I have been buying Treasuries with excess cash rather than keeping the $$ in money market accounts. They are much easier and cheaper (because they are so liquid) to break (sell) vs. CDs and rates are generally higher. You can buy Treasuries that mature in six months and yield 4.4%.

Good idea. Makes even the 2YR at ~4.6 seem relatively unattractive then.

[Calatrava r]

I agree with #7. It makes no sense to me to accelerate a three percent or less fixed mortgage at the moment.

[SDGT3]

- With the market down, we're shifting from 401K to ROTH401k contributions in hopes of bigger tax free upside.

- Bought some iBonds which are currently paying 9.62%.

- Did some tax loss harvesting on brokerage holdings as well as some munis. Hoping to buy back the holdings after the required 30 days.

- Picked up some AA munis that are relatively short term and triple tax free.

- Bought a car this month and financed 4 years at a super low rate of 2.49%. Typically like to pay cash but with treasuries paying 4.5% it was a no brainer arbitrage.

[ryangambrill]

Originally Posted by Chiboy

FWIW, I have been buying Treasuries with excess cash rather than keeping the $$ in money market accounts. They are much easier and cheaper (because they are so liquid) to break (sell) vs. CDs and rates are generally higher. You can buy Treasuries that mature in six months and yield 4.4%.

Interesting, how is this accomplished?


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[Chiboy]

Originally Posted by ryangambrill

Interesting, how is this accomplished?

Buy through brokerage account.

[TheVTCGuy]

I am an absolute Dorklehead with anything concerning finances… I understood everything you said right up until: “…Here’s a few I found helpful in the US.”

[rmagoo57]

Originally Posted by TheVTCGuy

I am an absolute Dorklehead with anything concerning finances… I understood everything you said right up until: “…Here’s a few I found helpful in the US.”

You don't understand "Tax law harvest"?? Get your shit together!!!

I have been converting IRA funds to my Roth these past few years since I have zero earned income. Feed the Roth is what I preach to my daughters for the tax free growth.

[ryangambrill]

Hello All - each of us are in situations as unique as ourselves. Here are a few things we have been and are planning to continue.

- “Backdoor ROTH IRA”
- ROTH 401k Contributions
- HSA - Contribute Max & Invest Proceeds - huge benefits
- ROTH Conversion from Traditional IRA/401k
- We have a fiduciary that manages our diversified portfolio and acts as our person CFO. :-)
- We establish our contribution plan in Dec of each year for the following year. Auto pilot regardless of ups or downs in market.
- own some rental realestate. Focus on cash flow and return on cash. Not concerned about speculation and the appreciation in value. Would love to add more. Just needs to make financial sense. Feel some great buys will occur in somewhat near future.

Interested to hear what you all are doing.


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[JParm]

Series I bond savings bond rates are at 9.62%, for those interested in parking $10k somewhere.

[ryangambrill]

Originally Posted by JParm

Series I bond savings bond rates are at 9.62%, for those interested in parking $10k somewhere.

Is there a catch? Why would an individual purchase a CD? I know very little about savings bonds. Other than I used to receive them as gifts when I was a kid.


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[pjaffe]

Originally Posted by ryangambrill

Is there a catch? Why would an individual purchase a CD? I know very little about savings bonds. Other than I used to receive them as gifts when I was a kid.


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The I bond interest rate changes every 6 months. No catch, it's all government backed. You can't sell it for a year and if you sell before 5 years you forfeit 3 months of interest, but otherwise you can let it mature for the full 30 years. If you buy before October 28th-ish you'll lock in that 9.6% rate for 6 months. You can buy 10k per year per SSN in your household.

[espanol]

Originally Posted by pjaffe

The I bond interest rate changes every 6 months. No catch, it's all government backed. You can't sell it for a year and if you sell before 5 years you forfeit 3 months of interest, but otherwise you can let it mature for the full 30 years. If you buy before October 28th-ish you'll lock in that 9.6% rate for 6 months. You can buy 10k per year per SSN in your household.

This. Plus with the new rate announcement for Nov-beyond, you’re essentially locking in a blended 8%. Intention is to keep up with inflation.

Also, if the funds are used to pay for educational expenses, then interest is tax-free.

Finally, spouses can put $10k each, brining total to $20k in I bonds. You can also allocate $5k of your federal return next year to go into I bonds.

[7sins]

Originally Posted by espanol

Spinoff from the great Talking Stocks 2.0 thread, thought it would be interesting to start a financial planning thread. Would enjoy hearing strategies anyone is utilizing in this trying time for the financial markets. Here's a few I've found helpful in the US:

1) Consider Roth conversions of pre-tax funds. Due to lower stock/fund prices, investors are able to capture the same number of units or shares at lower prices now than in 2021. Note, these are taxable, so this strategy is typically best suited for times when the market is down (like now), or when you are in a lower-than-normal tax year. Always consult CPA or planner before doing this.

2) Revisit unrealized gains in non-retirement accounts. Prior gains may be wiped out, which could present a good opportunity for reallocating to a more long-term portfolio

3) Tax-loss harvest. Don't forget the wash-sale rule

4) Don't forget bank yield for excess cash. Yields have been ~0 for years, but we're finally starting to see high-yield money markets break 3%. Also, consider CDs for funds you wont immediately need. I've found a few 12-month CDs at 4.25%

5) Owners/Sole-proprietors- consider overhauling your 401(k). Few know that you're permitted to put well-beyond the basic 401(k) quoted amounts of $20.5 or $27k (50+ y/o). There is a strategy where owners can put up to $61,000 into a Roth IRA each year using their 401(k), regardless of income limits. It's called a Mega Backdoor Roth Conversion. It's really simple. One needs to have a plan that allows after-tax contributions, and in-service rollovers. Simple to set-up, and the ability to sock away $61k into a Roth each year is a game changer for most

Employees- check to see if your 401(k) has any unique benefits like after-tax contributions or in-service rollovers

6) Don't forget to rebalance your portfolio in accordance to your long-term goals

7) Controversial, but consider holding that low fixed-rate mortgage you have, and not making accelerated payments. Why pay down sub-3% debt when you could get more in a high-yield money market (at a minimum)?

My .02 with change to spare, for non-qual money, you have to pay federal taxes on treasuries. The after tax yield on say a 1 year treasury, for those in the highest tax bracket, are much lower than a AAA/AA 1 year tax free muni. Arbitrage opportunity there is meaningful.

[LSU-MOOSE]

With gold down I bought (20) 10 oz. Gold bullion bars and put them in my safe.

[ryangambrill]

Originally Posted by LSU-MOOSE

With gold down I bought (20) 10 oz. Gold bullion bars and put them in my safe.

I have been thinking about this. A few points/questions/comments:

- My gold holdings are paper. GLDM. Risk here as the custodian is HSBC. No way to get access to the gold, and HSBC might not even have the gold in possession to backup the paper.
- Been thinking about picking up physical gold. Never done this before. Appears as though there is a significant premium over spot prices. Then also have to add in sales tax. Thinking USA gold eagles 1oz. Also thinking of adding silver 1oz. Heard the saying, gold to save, silver to spend. Liquidity is always the question.
- George Gammon had a great video about physical vs paper. Was very informative. Price vs Value. The price of gold may go down (manipulated) but it will always have value.

Anyone else have thoughts?


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[pjaffe]

Originally Posted by ryangambrill

I have been thinking about this. A few points/questions/comments:

- My gold holdings are paper. GLDM. Risk here as the custodian is HSBC. No way to get access to the gold, and HSBC might not even have the gold in possession to backup the paper.
- Been thinking about picking up physical gold. Never done this before. Appears as though there is a significant premium over spot prices. Then also have to add in sales tax. Thinking USA gold eagles 1oz. Also thinking of adding silver 1oz. Heard the saying, gold to save, silver to spend. Liquidity is always the question.
- George Gammon had a great video about physical vs paper. Was very informative. Price vs Value. The price of gold may go down (manipulated) but it will always have value.

Anyone else have thoughts?


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If you’re buying gold strictly as bullion you can find some stuff pretty close to spot. Check out APMEX or JMBullion. You’ll pay a premium for the stuff like gold eagles vs. a generic 1 oz. coin or bar.

[ryangambrill]

Originally Posted by pjaffe

If you’re buying gold strictly as bullion you can find some stuff pretty close to spot. Check out APMEX or JMBullion. You’ll pay a premium for the stuff like gold eagles vs. a generic 1 oz. coin or bar.

Are there benefits to paying the premium for gold eagles? Liquidity better?


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[pjaffe]

Originally Posted by ryangambrill

Are there benefits to paying the premium for gold eagles? Liquidity better?


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Really no benefit, just the design is prettier than a generic piece and it has "brand name" recognition. To a dealer gold is gold, as long as it weighs whatever it is supposed to they don't care what it is.

[huncho]

Originally Posted by ryangambrill

I have been thinking about this. A few points/questions/comments:

- My gold holdings are paper. GLDM. Risk here as the custodian is HSBC. No way to get access to the gold, and HSBC might not even have the gold in possession to backup the paper.
- Been thinking about picking up physical gold. Never done this before. Appears as though there is a significant premium over spot prices. Then also have to add in sales tax. Thinking USA gold eagles 1oz. Also thinking of adding silver 1oz. Heard the saying, gold to save, silver to spend. Liquidity is always the question.
- George Gammon had a great video about physical vs paper. Was very informative. Price vs Value. The price of gold may go down (manipulated) but it will always have value.

Anyone else have thoughts?


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honest question, what's the point of buying gold anymore? worst performing asset of the past decade and when it mattered most and was supposed to protect people's money with high inflation/equities collapsing it still didn't do what it was meant to. obviously there's no safe haven and everything is getting hit hard right now but it's performing like the s&p on this downturn while underperforming vs everything else on the up trend

for reference - gold hit highs in march when the s&p was down 3-4%. since then gold is down 21% and the s&p is down 19%. since jan 2010 s&p is up roughly 300% while gold is up 75%. both are nearing 2019/early 2020 pre covid levels so i just don't see the argument for gold anymore

[LSU-MOOSE]

Originally Posted by huncho

honest question, what's the point of buying gold anymore? worst performing asset of the past decade and when it mattered most and was supposed to protect people's money with high inflation/equities collapsing it still didn't do what it was meant to. obviously there's no safe haven and everything is getting hit hard right now but it's performing like the s&p on this downturn while underperforming vs everything else on the up trend

for reference - gold hit highs in march when the s&p was down 3-4%. since then gold is down 21% and the s&p is down 19%. since jan 2010 s&p is up roughly 300% while gold is up 75%. both are nearing 2019/early 2020 pre covid levels so i just don't see the argument for gold anymore

My reason for buying gold:

My net worth is between 35-40 Million. I was advised a few years ago that high net worth individuals should have 1-2 % in real gold(bullion in your safe) as an ultimate fall back.

I don’t invest in gold as an investment but as an ultimate safe haven. Not for everyone. There are many “investment” strategies better than gold. As currencies falter gold has remained.

As I researched I found that the lower the weight of the item the more premium you pay. You can buy 1/100 oz. Gold bars. The premium is high versus the price of gold but are easy to carry and exchange and is probably worth about $25 right now. I buy 10oz. Bars and the going rate is just under $17,000.

[GB-man]

Originally Posted by LSU-MOOSE

My reason for buying gold:

My net worth is between 35-40 Million. I was advised a few years ago that high net worth individuals should have 1-2 % in real gold(bullion in your safe) as an ultimate fall back.

I don’t invest in gold as an investment but as an ultimate safe haven. Not for everyone. There are many “investment” strategies better than gold. As currencies falter gold has remained.

As I researched I found that the lower the weight of the item the more premium you pay. You can buy 1/100 oz. Gold bars. The premium is high versus the price of gold but are easy to carry and exchange and is probably worth about $25 right now. I buy 10oz. Bars and the going rate is just under $17,000.

[StackLexus17]

Originally Posted by LSU-MOOSE

My reason for buying gold:

My net worth is between 35-40 Million. I was advised a few years ago that high net worth individuals should have 1-2 % in real gold(bullion in your safe) as an ultimate fall back.

I don’t invest in gold as an investment but as an ultimate safe haven. Not for everyone. There are many “investment” strategies better than gold. As currencies falter gold has remained.

As I researched I found that the lower the weight of the item the more premium you pay. You can buy 1/100 oz. Gold bars. The premium is high versus the price of gold but are easy to carry and exchange and is probably worth about $25 right now. I buy 10oz. Bars and the going rate is just under $17,000.

Own any miners in the market right now?
Thinking it’s a good time to buy with gold slowing and the market taking a big it.

Fellow LSU Alum
Geaux Tigers


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[espanol]

Also, I failed to mention HSAs. If you have a high-deductible health plan, you should prioritize putting money into your HSA, as it’s triple-tax advantaged (deductible, grows tax free, and tax free at distribution if used for medical expenses).

Max for 2022 is $3,650 if single, $7,300 for family if all are covered under the HDHP. Also an additional $1k bump if over 55.

If you’re young, only use HSA funds if absolutely necessary. Ideally, you would pay for medical expenses from another source (likely cash), save the receipt, and years later, you could reimburse the expense from your HSA after it’s grown tax-free for decades.

[ryangambrill]

Originally Posted by espanol

Also, I failed to mention HSAs. If you have a high-deductible health plan, you should prioritize putting money into your HSA, as it’s triple-tax advantaged (deductible, grows tax free, and tax free at distribution if used for medical expenses).

Max for 2022 is $3,650 if single, $7,300 for family if all are covered under the HDHP. Also an additional $1k bump if over 55.

If you’re young, only use HSA funds if absolutely necessary. Ideally, you would pay for medical expenses from another source (likely cash), save the receipt, and years later, you could reimburse the expense from your HSA after it’s grown tax-free for decades.

Agreed 100000%. I would add if you are young and or healthy.

Most HSA allow you to invest your deposited amount. Ours requires a minimum cash balance of $1000 or so. All amounts over that automatically get invested in one of the available funds.

Think of this as a supplemental retirement fund.


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[espanol]

IRS announced new US tax brackets for 2023 just yesterday:
https://www.cnbc.com/amp/2022/10/20/...ess-money.html

[Letsgodiving]

Several people mentioned I bonds but one of the downsides to I bonds is the $10k a year limit with an additional $5k/year in a tax refund. There is legislation in the works to increase the limit to $30k/yr but I'm not up to date on its prospects. You can also front-load I bonds by gifting $10k/yr for several years if you like. They will be held in the giftbox and count for your future yearly allotment but they do accrue the interest during that time and it's way around the limits and a good way to quickly increase your holdings especially for a couple. Also, additional I bonds can be purchased in a trust.

I Bonds can be a decent place for fixed income and lately they have received a lot of attention due to current inflation but of course if that abates the bond rates will decline along with lower inflation.

[Chester01]

Thats all pretty complex. I think ill keep investing and just simply hold until the storm clears, which is always does.