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The Lounge>Personal finance and investing megathread extravaganza
DaFace 11:23 AM 06-27-2016
I know lewdog (and maybe others) have mentioned the desire to have a place to chat about personal finance stuff. We'll see if there's enough interest to keep this going in the long-term, but at least for now, here's a place to chat about whatever personal finance topics come up.



If you're just getting started thinking about saving and don't know where to begin,
this flow chart can help. Ask for advice in the thread for more help!
[Reply]
Amnorix 07:17 AM 06-28-2016
Originally Posted by lewdog:
Investment tip I have recently learned. Please correct me if I have anything wrong. I can't wait to see some tips from some of you. I love talking about investing and savings/life goals.


Roth IRA tip. A Roth IRA is only for those not making Dane money. A Roth IRA investment account can actually be fairly liquid. Much advice that I have currently been reading is talking about funneling as much money (max hopefully $5,500/year) to your Roth IRA account over dumping extra money into a savings account and earning nothing. This is of course after you have built an emergency fund of 3-6 months. The caveat of doing this is that as long as the Roth IRA has been open for 5+ years, you can withdrawn your contributions at any time, tax free and with no penalties. Meaning that if I have contributed $20k to my Roth over 7 years, and it's currently worth $25k, I am allowed to withdraw up to $20k without penalty. Is this ideal, no. But in a sense, it acts as a second emergency fund as well. And an emergency fund with actual chance to grow unlike a savings account. The money would take at most a few weeks to get to you from my understanding. Easily in the window to pay for a major emergency. Withdrawing money from a 401k should be a last resort for most as the penalties caused by this are not worth it unless it's your last option.

EDIT: Sorry, yes, looks like you have it right. Perhaps more reader-friendly version below:

Originally Posted by :
Quick Summary:

If you are over 59, you may withdraw as much as you want so long as your Roth IRA has been open for at least 5 years.

If you are under 59, you may withdraw the exact amount of your Roth IRA contributions with no penalties.

There are special exemptions for first-time home purchase and college expenses.
http://www.rothira.com/roth-ira-withdrawal-rules
[Reply]
Amnorix 07:18 AM 06-28-2016
Note that, generally, a Roth IRA is using after-tax money, and traditional IRAs are using PRE-tax money, which can be a significant advantage.

But you should know/understand the differences and consider which makes sense for you. Alot of this decision-making is tax driven.
[Reply]
Jewish Rabbi 07:24 AM 06-28-2016
Originally Posted by Amnorix:
errr...not quite. I think you're mixing up some of the concepts. Or I may just be misreading it. Anyway, this should clear things up:



http://www.rothira.com/roth-ira-withdrawal-rules
You are misreading. You can withdraw your contributions from the Roth without penalty, because as you said, they are post tax funds. Only pay penalties on the early withdraw of earnings.
[Reply]
ChiTown 07:31 AM 06-28-2016
Originally Posted by lewdog:
Investment tip I have recently learned. Please correct me if I have anything wrong. I can't wait to see some tips from some of you. I love talking about investing and savings/life goals.


Roth IRA tip. A Roth IRA is only for those not making Dane money. A Roth IRA investment account can actually be fairly liquid. Much advice that I have currently been reading is talking about funneling as much money (max hopefully $5,500/year) to your Roth IRA account over dumping extra money into a savings account and earning nothing. This is of course after you have built an emergency fund of 3-6 months. The caveat of doing this is that as long as the Roth IRA has been open for 5+ years, you can withdrawn your contributions at any time, tax free and with no penalties. Meaning that if I have contributed $20k to my Roth over 7 years, and it's currently worth $25k, I am allowed to withdraw up to $20k without penalty. Is this ideal, no. But in a sense, it acts as a second emergency fund as well. And an emergency fund with actual chance to grow unlike a savings account. The money would take at most a few weeks to get to you from my understanding. Easily in the window to pay for a major emergency. Withdrawing money from a 401k should be a last resort for most as the penalties caused by this are not worth it unless it's your last option.
I contribute and max out contributions to my SEP IRA annually.

https://en.wikipedia.org/wiki/SEP-IRA
[Reply]
Amnorix 07:31 AM 06-28-2016
Originally Posted by R8RFAN:
I gross about 2k per week and have a online side business I have owned since 1999 that earns about 25-30k per year profit

And I have to pay a shit load of taxes too:-)

You may already know all this, but perhaps not, or perhaps someone else doesn't:

Can I ask if you have a 401(k) option? Especially one that has matching? You don't even have to answer -- just let me say that any kind of matching is FREE money, and you should take it.

Even if there is no match, you should invest in the 401(k). Here's why.

Example A (no 401(K) being used):

Gross pay of $2,000 (other than non-tax deductions like health insurance etc). State and federal taxes reduce that by, say, 20%. Take home $1,600.


Example B (with 401(K):

Gross pay of $2,000 (other than non-tax deductions like health insurance etc.). Put $200 per week into 401(k). Gross pay now $1,800. Pay 20% ($360), so take home is $1,440.

$1,440 plus the $200 in the 401(k) is $1,640. You're $40 ahead.

But here's the real kicker-- the $40 grows tax free in whatever investment you put it in.

You basically can't beat tax-free deductions plus tax-free growth compounding over time. It along with home ownership are the two easiest paths to building wealth in the U.S. due, largely, to our existing tax laws.
[Reply]
Amnorix 07:32 AM 06-28-2016
Originally Posted by Jewish Rabbi:
You are misreading. You can withdraw your contributions from the Roth without penalty, because as you said, they are post tax funds. Only pay penalties on the early withdraw of earnings.

Yes, I saw before I saw your post, and edited my post. Thanks for correcting me however. He had it right.
[Reply]
Buehler445 07:47 AM 06-28-2016
Originally Posted by Amnorix:
So the concept I'm using it for is to (1) keep track of everything, and (2) see progress over time. I don't bother with including vehicles or other illiquid items that in theory add to net worth (other than the house), but you certainly could if you wanted (offset by any vehicle loan).

Anyone who has credit card or student loan debt should have it on the spreadsheet. You can also input what the interest rates are for the various debt, to help you visualize what debt you should prioritize getting rid of first.

In theory, if you had a baseball card collection or some other kind of collectible, you could include that, but it's pretty much YMMV there. Most types of collectibles aren't exactly a great way to plan for retirement unless it's your actual business, and even then it's risky for your heirs. Usually they need to be sold at firesale prices to convert to cash if anything goes wrong.
I'd really recommend doing a balance sheet at FMV.

Assets = Liabilities + Equity.


Organizing it any other way can lead to material misstatement.

Originally Posted by Amnorix:
I was a kid and remember interest rates that high.

Now imagine the flip side -- mortgages at like 18+ percent, because that was real too.

I could go on and on about how Fed Chairman Volcker had to do it to break "stagflation", but it also broke the Carter presidency (not that he was good, anyway, but alot of people blame Carter for stuff that he had no control over that came out of the oil embargo crisis etc.), but trust me when I say you don't want to get me started. :-)
Yeah my dad was on the other side of that. I'm not sure if he had any land loans, but I know he had an operating note.

I asked him a couple years ago how the hell he managed to survive that. His answer was legitimately, "I don't know."
[Reply]
aturnis 08:18 AM 06-28-2016
Originally Posted by Amnorix:
Your path might be great for YOU, but it is high risk, high reward, high maintenance, and not the right path, in my opinion, for the vast majority of investors.
Not sure what's high maintenance about making a decision and sticking with it.

Also not sure what's high risk about it.
[Reply]
scho63 09:33 AM 06-28-2016
Originally Posted by R8RFAN:
I have 150k cash
I have about 250k in my 401k
My house and cars are paid for

I am 100% debt free

That's my portfolio , Not glamorous but I am happy
What age are you? That's probably better than 97% of all other Americans
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Pasta Giant Meatball 09:39 AM 06-28-2016
Freighters had more but loaned it to the Faid to sign Sean S.
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scho63 09:42 AM 06-28-2016
Just calculated my net worth.....:-)
Attached: IMG_20160628_113109.jpg (38.6 KB) 
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LoneWolf 09:56 AM 06-28-2016
Originally Posted by R8RFAN:
Thats me... I am 50 now.. I don't have time to deal with stupid shit anymore
Originally Posted by scho63:
What age are you? That's probably better than 97% of all other Americans
R8RFAN is doing well at age 50. Don't believe me? Just ask him, he'll tell you himself.
[Reply]
CanadianChiefs 10:45 AM 06-28-2016
Main stocks I'm in: NVAX (well run company, looking for a run up soon) and AMDA ( FDA approval shortly, much riskier, sell on any major pop). Also swing trade bombardier usually once a week from low 1.90's to high 1.90's and make my 5% and repeat process. I'm a student so I'm not playing with a ton of cash (under 10k) but I am making money.
[Reply]
Halfcan 11:10 AM 06-28-2016
Lots of Hillbilly millionaires on the Planet.

I think I am going to liquidate my portfolio and buy a field full of junk cars and let them sit until some sucker buys them-that will be a great investment when my property tax bill hits in December. 30 cars at $200 a year property tax=$6,000 loss per year on a depreciating assets.
[Reply]
Halfcan 11:12 AM 06-28-2016
Originally Posted by CanadianChiefs:
Main stocks I'm in: NVAX (well run company, looking for a run up soon) and AMDA ( FDA approval shortly, much riskier, sell on any major pop). Also swing trade bombardier usually once a week from low 1.90's to high 1.90's and make my 5% and repeat process. I'm a student so I'm not playing with a ton of cash (under 10k) but I am making money.
That is a good way to keep your money earning for you. Sounds like you are building up some wealth. :-)
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