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2017-08-04 at 12:20 AM UTCI'm a personal finance nerd. It's not what I do for a living, but studying it and talking about it is a hobby of mine.
Is anyone here interested in talking about personal finance topics, or do you all just snort anything you can get your hands on? -
2017-08-04 at 12:49 AM UTCWhat kind of question is that?
K do you go to college or skip it?
This is life. Choosee your career. -
2017-08-04 at 12:52 AM UTCIf you don't understand the question, then the topic is probably not for you. Though there can be some good discussions around what you brought up.
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2017-08-04 at 12:56 AM UTCI'm sorry for sitting on your thread.
Do you play the stock market?
Valuable investestments? -
2017-08-04 at 1:04 AM UTCI don't play the stock market in terms of options trading or even individual stocks (at least not anymore), but my asset allocation is heavily in stocks. I have some bonds funds, but mostly in equities. I like index funds, especially when they low expense ratios. Buy and hold.
What do you consider to be valuable investments? -
2017-08-04 at 1:43 AM UTCThat's a good question, give me some time to think..
On a personal note: mono atomic gold. -
2017-08-04 at 1:45 AM UTCI know a guy who makes dentures, and reaps a fortune.
Use your mind, use your mind. -
2017-08-04 at 3:27 AM UTChow to get rich quick
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2017-08-04 at 7:44 AM UTCWhat are your thoughts on a roth IRA in addition to a matched 401k?
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2017-08-04 at 7:45 AM UTC
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2017-08-04 at 8:27 AM UTCI mean in terms of tax efficiency vs. the penalties of early withdrawal. Like personal investment vs. a roth ira.
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2017-08-04 at 12:01 PM UTCDupe. Please delete.
Post last edited by Ajax at 2017-08-04T13:23:51.352113+00:00 -
2017-08-04 at 1:21 PM UTC
Originally posted by Lanny What are your thoughts on a roth IRA in addition to a matched 401k?
Originally posted by Lanny I mean in terms of tax efficiency vs. the penalties of early withdrawal. Like personal investment vs. a roth ira.
I think they are both great to have.
This is the order in which I would contribute: 401(k) up to the match, then Roth IRA up to the max, then back to the 401(k) up to the max, then taxable accounts if you can do even more. If you Can max out the first two accounts, you would be contributing $23,500 per tax year, which is awesome. You would easily be a millionaire by the time you retire. Here's why I would use that order.
A 401(k) match is free money. If you get a 100% match, there is no investment vehicle that will get you that rate of return right off the bat. To describe the Roth IRA, we can approach your other questions about it.
With a 401(k), your contributions are tax-deferred. This means that you can deduct the amount of your contributions from your taxable income. So if you are in, say, a 25% tax bracket and you contribute $10,000 to your 401(k), then that's $2,500 you don't have to pay to the tax man. At least not until you withdraw the money. The idea is that you can use the $2,500 you saved in taxes to invest more throughout the year than you would have otherwise. So, your money grows tax-deferred, but when you take it out, everything is taxed... including all the growth in your account (compounding rate of returns). Over a working career, more of your account balance will be growth on the principal, so keep that in mind.
With a Roth IRA, you pay taxes up front on your contributions, but then that's it. All of your growth is tax-free. So when you withdraw your money, of which the majority is growth on the principal, you won't have to pay any taxes. You already paid taxes when you contributed and the rest is not taxed. Let that sink in.
Now let's mention max contribution levels, early withdrawal penalties, and required minimum distributions (RMD). For 2017, you can contribute up to $18,000 per year to your 401(k) if you are under age 50 and up to $5,500 to your IRA (Roth or traditional) if you are under age 50. If you are 50 or older, you can make catch-up contributions of up to $24,000 for your 401(k) and up to $6,500 in your IRA. These limits will likely increase in 2018.
Early withdrawal penalties. If you make a withdrawal from your 401(k) before age 59 1/2, you get hit with a 10% federal tax penalty plus whatever tax bracket you're in (it gets treated as income). There are some hardship withdrawal exceptions such as becoming totally disabled or having medical debt up to your eyeballs, but employers don't have to honor those exceptions. I forgot to mention, a 401(k) is an employer sponsored retirement plan. For a Roth IRA, you can withdraw your contributions anytime because you've already paid taxes on it. However, you would be hit with the 10% penalty if you withdraw any earnings before age 59 1/2. There are some exceptions, but it's best to not do it. It becomes a hassle if you're audited by the IRS.
Lastly, 401(k) accounts have required minimum distributions at age 70 1/2 (along with traditional IRAs) and Roth IRAs do not. This is because the tax man wants his cut, so they force you to take distributions on tax-deferred money so they can get it. Remember, Roth IRAs are not taxable, so they don't care about that.
To maximize tax efficiency, I would make withdrawals first from taxable accounts because contributions have been taxed, then from tax-deferred accounts like 401(k)s because your tax burden will be greater than that from a taxable account (think contributions), then from a Roth IRA. Let that Roth grow as long as you can before touching it. Tax-free growth truly is a gem.
So, other than the facts here, this is all my opinion and not financial advise. Let me know if you disagree or have other thoughts.The following users say it would be alright if the author of this post didn't die in a fire! -
2017-08-15 at 1:17 AM UTCCan I arbitrarily report bitcoin trades as Last In First Out (or say any random groupings as long as the buys/sells and dates match up) because it's a fungible asset or will the IRS rape my ass?
Should I be more agressive than a savings account for house down payment saving? -
2017-08-15 at 2:55 AM UTC
Originally posted by Ajax I think they are both great to have.
This is the order in which I would contribute: 401(k) up to the match, then Roth IRA up to the max, then back to the 401(k) up to the max, then taxable accounts if you can do even more. If you Can max out the first two accounts, you would be contributing $23,500 per tax year, which is awesome. You would easily be a millionaire by the time you retire. Here's why I would use that order.
A 401(k) match is free money. If you get a 100% match, there is no investment vehicle that will get you that rate of return right off the bat. To describe the Roth IRA, we can approach your other questions about it.
With a 401(k), your contributions are tax-deferred. This means that you can deduct the amount of your contributions from your taxable income. So if you are in, say, a 25% tax bracket and you contribute $10,000 to your 401(k), then that's $2,500 you don't have to pay to the tax man. At least not until you withdraw the money. The idea is that you can use the $2,500 you saved in taxes to invest more throughout the year than you would have otherwise. So, your money grows tax-deferred, but when you take it out, everything is taxed… including all the growth in your account (compounding rate of returns). Over a working career, more of your account balance will be growth on the principal, so keep that in mind.
With a Roth IRA, you pay taxes up front on your contributions, but then that's it. All of your growth is tax-free. So when you withdraw your money, of which the majority is growth on the principal, you won't have to pay any taxes. You already paid taxes when you contributed and the rest is not taxed. Let that sink in.
Now let's mention max contribution levels, early withdrawal penalties, and required minimum distributions (RMD). For 2017, you can contribute up to $18,000 per year to your 401(k) if you are under age 50 and up to $5,500 to your IRA (Roth or traditional) if you are under age 50. If you are 50 or older, you can make catch-up contributions of up to $24,000 for your 401(k) and up to $6,500 in your IRA. These limits will likely increase in 2018.
Early withdrawal penalties. If you make a withdrawal from your 401(k) before age 59 1/2, you get hit with a 10% federal tax penalty plus whatever tax bracket you're in (it gets treated as income). There are some hardship withdrawal exceptions such as becoming totally disabled or having medical debt up to your eyeballs, but employers don't have to honor those exceptions. I forgot to mention, a 401(k) is an employer sponsored retirement plan. For a Roth IRA, you can withdraw your contributions anytime because you've already paid taxes on it. However, you would be hit with the 10% penalty if you withdraw any earnings before age 59 1/2. There are some exceptions, but it's best to not do it. It becomes a hassle if you're audited by the IRS.
Lastly, 401(k) accounts have required minimum distributions at age 70 1/2 (along with traditional IRAs) and Roth IRAs do not. This is because the tax man wants his cut, so they force you to take distributions on tax-deferred money so they can get it. Remember, Roth IRAs are not taxable, so they don't care about that.
To maximize tax efficiency, I would make withdrawals first from taxable accounts because contributions have been taxed, then from tax-deferred accounts like 401(k)s because your tax burden will be greater than that from a taxable account (think contributions), then from a Roth IRA. Let that Roth grow as long as you can before touching it. Tax-free growth truly is a gem.
So, other than the facts here, this is all my opinion and not financial advise. Let me know if you disagree or have other thoughts.
how about something realistic. no one in here makes enough to have $20k available to dump into investments. you need something more along the lines of 'how to invest on your $6/hr mcdonalds salary' -
2017-08-15 at 2:57 AM UTC
Originally posted by infinityshock how about something realistic. no one in here makes enough to have $20k available to dump into investments. you need something more along the lines of 'how to invest on your $6/hr mcdonalds salary'
How do taxes work with your line of work? You're probably supposed to report your income just like anyone else, but does aggressive male prostitution work like that? -
2017-08-15 at 3 AM UTCThe following users say it would be alright if the author of this post didn't die in a fire!
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2017-08-15 at 3:01 AM UTC
Originally posted by mmQ How do taxes work with your line of work? You're probably supposed to report your income just like anyone else, but does aggressive male prostitution work like that?
prostitution is income-tax free, considering its an illegal trade therefore reporting it for income tax purposes is sufficient evidence for indictment.
and.
im not a whore. i do it for free. -
2017-08-15 at 4:16 AM UTCDo you have any investments in stock?
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2017-08-16 at 5:07 PM UTC
Originally posted by infinityshock prostitution is income-tax free, considering its an illegal trade therefore reporting it for income tax purposes is sufficient evidence for indictment.
In many countries you can report illegal income, your tax records are not shared with law enforcement and aren't admissible in court except in tax cases. It actually kinda makes sense, the state gets to collect tax and criminals don't have to hide assets, I guess the downside is you can't build a case on people having money they're not supposed to have but I mean that probably shouldn't be enough for criminal prosecution anyway.
