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Nzoner's Game Room>Investing megathread extravaganza
DaFace 11:23 AM 06-27-2016
A place to talk about investing stuff.
[Reply]
kepp 09:05 AM 02-28-2017
I'll start by saying I know this topic has probably been covered multiple times, but I don't feel like picking through 50 pages.

Recently the wife and I started considering the possibility of early retirement. I think we could have the funds in place to do it at say 55 years of age. The problem (at least I see it as a problem) is that all of what we've saved so far is in 401k accounts which aren't accessible without penalties until we are of retirement age (correct?).

So my first question is, what do I do about that? Do I start to shrink my 401k contributions and open a personal trading account and invest in similar mutual funds that our 401ks are in, or are there better things to do?

Also, I want to dabble (a couple thousand $) in trading. What is the best DIY online service? From what I've read so far, TD Ameritrade and Charles Schwab are highly rated.
[Reply]
Amnorix 09:12 AM 02-28-2017
Originally Posted by kepp:
I'll start by saying I know this topic has probably been covered multiple times, but I don't feel like picking through 50 pages.

Recently the wife and I started considering the possibility of early retirement. I think we could have the funds in place to do it at say 55 years of age. The problem (at least I see it as a problem) is that all of what we've saved so far is in 401k accounts which aren't accessible without penalties until we are of retirement age (correct?).
Right. 59 and 1/2 is the withdrawal age. Withdrawal before that can be done, but you will pay a 10% penalty on top of the ordinary income tax that you will pay for the money.

It depends on your financial situation, of course, but you can view this as a 4.5 year period for your 401(k) to continue to grow while you are relying on other savings. That money needs to last the rest of your life, so the later you tap it, the better, in some respects.

Originally Posted by :
So my first question is, what do I do about that? Do I start to shrink my 401k contributions and open a personal trading account and invest in similar mutual funds that our 401ks are in, or are there better things to do?
Right. You need to invest in non-retirement accounts. These will NOT grow tax deferred, of course, so sales will require payment of cap gains taxes as well as transaction fees.

Originally Posted by :
Also, I want to dabble (a couple thousand $) in trading. What is the best DIY online service? From what I've read so far, TD Ameritrade and Charles Schwab are highly rated.
For that I will defer to others.
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Weapon X 09:46 AM 02-28-2017
Bitcoin and Ethereum are where it's at
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Halfcan 10:33 AM 02-28-2017
Originally Posted by lewdog:
Marijuana Industry Projected To Create More Jobs Than Manufacturing By 2020

https://www.forbes.com/sites/debrabo.../#1cb704893fa9
UBQU

Best MJ stock I have found lately- they are actually making money. All of their products are legal in all 50 states.
[Reply]
Halfcan 10:38 AM 02-28-2017
Originally Posted by Demonpenz:
I met with edward jones yesterday. I got jack shit for money and I just figure I will spend money to get my ass handed to me so I can figure out what doesn't work for me.

Your best bet would be to have them set you up a Roth IRA. Put in what you can afford right now- and then start maxing it out when you can.
[Reply]
DaKCMan AP 11:07 AM 02-28-2017
Originally Posted by kepp:
I'll start by saying I know this topic has probably been covered multiple times, but I don't feel like picking through 50 pages.

Recently the wife and I started considering the possibility of early retirement. I think we could have the funds in place to do it at say 55 years of age. The problem (at least I see it as a problem) is that all of what we've saved so far is in 401k accounts which aren't accessible without penalties until we are of retirement age (correct?).

So my first question is, what do I do about that? Do I start to shrink my 401k contributions and open a personal trading account and invest in similar mutual funds that our 401ks are in, or are there better things to do?

Also, I want to dabble (a couple thousand $) in trading. What is the best DIY online service? From what I've read so far, TD Ameritrade and Charles Schwab are highly rated.
Originally Posted by Amnorix:
Right. 59 and 1/2 is the withdrawal age. Withdrawal before that can be done, but you will pay a 10% penalty on top of the ordinary income tax that you will pay for the money.

It depends on your financial situation, of course, but you can view this as a 4.5 year period for your 401(k) to continue to grow while you are relying on other savings. That money needs to last the rest of your life, so the later you tap it, the better, in some respects.



Right. You need to invest in non-retirement accounts. These will NOT grow tax deferred, of course, so sales will require payment of cap gains taxes as well as transaction fees.



For that I will defer to others.
Another option (if you're eligible) is to invest in a Roth IRA. It's still after-tax $$, but it grows tax free. You can always remove your contributions without penalty, tax free but to distribute earnings penalty free and tax free you will have to be older than 59.5 years and you have to have held the account for at least 5 years.

[Reply]
kepp 03:59 PM 02-28-2017
Originally Posted by DaKCMan AP:
Another option (if you're eligible) is to invest in a Roth IRA. It's still after-tax $$, but it grows tax free. You can always remove your contributions without penalty, tax free but to distribute earnings penalty free and tax free you will have to be older than 59.5 years and you have to have held the account for at least 5 years.
So for a 401k, the contributions are pre-tax, but you get taxed when you take distributions...and for a Roth IRA, the contributions are post-tax but you are not taxed on the growth at all as long as you take qualified distributions?

What about an ordinary trading account? Obviously the contributions are post-tax. Do you get taxed on the growth every year?
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DaFace 04:03 PM 02-28-2017
Originally Posted by kepp:
So for a 401k, the contributions are pre-tax, but you get taxed when you take distributions...and for a Roth IRA, the contributions are post-tax but you are not taxed on the growth at all as long as you take qualified distributions?

What about an ordinary trading account? Obviously the contributions are post-tax. Do you get taxed on the growth every year?
You do get taxed on growth in a standard brokerage account, but the tax rate on that growth is less than your normal income tax rate.
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TigeRRUppeRRcut 04:23 PM 02-28-2017
Want to make a nice investment that will cash out well in the next few years?

Aclaris Therapeutics and Portola Pharmaceuticals.

You're welcome.
[Reply]
Halfcan 05:06 PM 02-28-2017
Originally Posted by Halfcan:
UBQU

Best MJ stock I have found lately- they are actually making money. All of their products are legal in all 50 states.
Anyone that would have bought after I posted this would have made a quick 20% profit.
[Reply]
ChiliConCarnage 06:20 PM 02-28-2017
Originally Posted by kepp:
What about an ordinary trading account? Obviously the contributions are post-tax. Do you get taxed on the growth every year?
Not necessarily. You gain the tax benefit or cost when you realize the gain or loss by selling. If you buy Amazon tomorrow, and it's up $150 at year end, you don't owe anything on that unless you sell.

You'd owe on any dividends possibly that get paid out through the year. Qualified dividends are typically at long term cap gains rates
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lewdog 06:33 PM 02-28-2017
Originally Posted by Halfcan:
UBQU

Best MJ stock I have found lately- they are actually making money. All of their products are legal in all 50 states.
Interesting. I want to lay down a small amount of money in some marijuana stock relatively soon. Nothing crazy and money I'm ok losing.

UBQU which is trading at $.02 a share?
[Reply]
Buehler445 07:58 PM 02-28-2017
Originally Posted by DaFace:
You do get taxed on growth in a standard brokerage account, but the tax rate on that growth is less than your normal income tax rate.
Not necessarily. If you've owned the stock less than a year, it is ordinary income. Looks like dividends are taxed the same.

Pretty good breakdown here.

https://www.fool.com/retirement/2016...-for-2017.aspx
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Amnorix 08:33 AM 03-01-2017
Originally Posted by kepp:
So for a 401k, the contributions are pre-tax, but you get taxed when you take distributions...and for a Roth IRA, the contributions are post-tax but you are not taxed on the growth at all as long as you take qualified distributions?
Yes, that is correct. To differentiate between the two, the first type is typically called a "traditional" IRA versus the Roth IRA.

Originally Posted by :
What about an ordinary trading account? Obviously the contributions are post-tax. Do you get taxed on the growth every year?

An ordinary brokerage account will generate (1) capital gains on sales of stock or mutual funds or whatever, if any are sold, and (2) dividend income.

Capital gains can either be long term or short term. Long term capital gains are gains on securities sold after you've held hte stock for at least one year. They are typically taxed at 15%, but very high earners can see a rate of 20% on cap gains I believe. Short term capital gains are gains on securities held for one year or less, and are taxed at ordinary income.

Your ordinary income tax rate will very typically be higher than the capital gain rate. Go here to see what the highest marginal rate looks like under various scenarios.

https://taxfoundation.org/2017-tax-brackets/

(note: 2017 income tax rates subject to change based on changes in law by the new Congress/Administration, so YMMV).


Dividends also come in two flavors, qualified and not qualified. Most dividends are qualified, and are taxed at capital gains rates. Non-qualified dividends are taxed at ordinary income rates.
[Reply]
Amnorix 08:34 AM 03-01-2017
Originally Posted by Buehler445:
Not necessarily. If you've owned the stock less than a year, it is ordinary income. Looks like dividends are taxed the same.

Pretty good breakdown here.

https://www.fool.com/retirement/2016...-for-2017.aspx


I really should've read through the thread before replying. :-)
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