I'm not doing a backdoor Roth, but I'm planning to do some Roth conversions, and I discovered something weird.
I'm 60, and working part-time now. My wife has also been doing some part-time stuff. When you add in dividends and some other income, our marginal tax rate is not low enough to warrant doing conversions this year.
In another year or so, my income and tax bracket will tank as my wife and I completely stop working. It'll stay that way until I'm 69. At that point, my wife will be getting Social Security and our Required Minimum Distributions will kick in. Then my Social Security will kick in the following year. So our marginal tax rate will jump up to about the same level that it is now.
I've always had the impression that my tax bracket would decline in retirement, but it'll only decline for about 8 years. So I have to do a lot of tax maneuvering during those eight years because it's my best shot. [Reply]
Originally Posted by Shag:
Thanks! I'm mid/late 40s, so kind of in a weird spot for risk. I've got a fairly large investment portfolio after years of 401k, ESPP, and RSUs, so I've got a nice nest egg going. Ideally, looking to retire as soon as reasonable, but realistically, that's likely at least 10yrs away.
CDs feel a little too conservative on that timeline, but maybe I'm not thinking about it properly. The market tear also makes me worried about a pullback, but I'd think a 10yr horizon should negate that long term. I was thinking maybe an index fund for the native diversification, but so many options on that front.
Then there's the AAPL, AMZN, MSFT, and NVDAs of the world - those always feel like good long term holds, but who knows, I'm not a great stock mind.
Yeah, I would agree that you're a bit too young for the CD strategy. Stocks are your friend.
I've become pretty diversified, and for the most part the "Magnificent Seven" has driven a lot of my returns. I'm doing okay on other stocks, but if I hadn't been invested in the Magnificent Seven I'd be far to the lesser in my balances. At some point they have to slow down and the non-tech stocks should have a run, but it seems like mixing the two is a good tradeoff.
I've got probably 20 to 25 percent of my money in the Magnificent Seven, which I think is underweighted compared to the major indices. They've done great, but it's kind of scary to me to have too much in a few stocks so I'm slightly whittling them down now. [Reply]
Originally Posted by Shag:
This is awesome, thanks! I'm single, so just trying to get myself to retirement, find a sugar mama, or both. Or buy a place in Tahoe, whichever comes first. :-)
I max out my 401k every year, but that does bring up another option I've been considering - mega backdoor roth IRA. This is an option through my employer, and seems like an awesome loophole for tax-free growth to retirement. I think the max is like 66k/yr (including traditional 401k), and trying to figure out if it makes sense when I'm at my highest tax burden. Anyone doing this?
The VOO/VUG thing is kind of what I had in mind. I threw some money into VTI a couple years ago, which was supposed to be a nice growth ETF, but it's been entirely flat. I'll look into those two a bit.
There are quite a few good Vanguard ETF options. VTI is the one I'm invested in. Remember if you've only been in it a couple of years your results will consist of one good investing year and one bad one. The market for just about every leading ETF will look flat for that short window. Both VTI and VOO have returned 14-15% average the past five years. Can't really go too far wrong with either. [Reply]
Originally Posted by Buehler445:
Congrats on maxing out your 401K. That's fucking awesome. Seriously.
If your company is offering a backdoor Roth, I'd probably do it. I haven't done one, but if a qualified plan is offering it, I'd be down. My comment about making sure you like your investments in your plan still stands. Seems like companies have gotten more progressive recently, but I don't know, I'm kind of out in the cold these days. If you're comfortable with the funds, I'd probably do it.
That being said, I'm like 1,000% more cash conscious than I was a couple years ago. Now that you can get 5+ for holding cash and borrowing money (probably) won't outperform the market, I'm holding a lot more cash than I have in years past. When I could get 2% money I didn't have a problem financing a car for instance. Now, if it's going to cost 8%, I'm not feeling it. So I'm keeping cash back for those kinds of purchases, where I did less before. 1. I'm incentivized to do so. (Cash is unlikely to outperform inflation, but 5% is much closer than 0%, especially when historic return of the S&P is 8% cash is much more attractive), 2. The cost of a little liquidity is substantially more expensive.
Accordingly, if you don't have a good bit of cash that's liquid, I'd leave some out, just for in case shit money. Once it goes into the tax shelter, it doesn't come back out.
VTI is a total market fund, so it has every stock on the market. I've considered it because it is as diversified as you get, but it has all the losers too. VOO (S&P) just has the biggest 500 companies, so there are less likely to be big losers (but it's not impossible, see GE, Philip Morris, etc).
Again, JMO. I'm certainly open to being a dumbass.
I was raised pretty conservative financially, so stocking away for retirement has always been on my mind, been contributing to 401k since I was 21. Now that I'm getting closer, trying to figure out how to speed this thing up, lol. I'm pretty cash flush right now, so trying to fix that, but will definitely keep some liquid cash in a HYSA. Appreciate all the input!
Originally Posted by lewdog:
If you are within 10 years of retirement, I don't think the backdoor Roth will make a lot of sense with the tax burden it creates. If you are younger and a ways from retirement, absolutely convert it now.
What am I missing on the tax burden of a MBDR? My understanding is that the money goes in post-tax, but the growth is untaxed at cashout. So, instead of putting money into the market today and being taxed on growth, that same money could go into a MBDR and come out tax-free. Am I wrong there? [Reply]
Originally Posted by Rain Man:
Yeah, I would agree that you're a bit too young for the CD strategy. Stocks are your friend.
I've become pretty diversified, and for the most part the "Magnificent Seven" has driven a lot of my returns. I'm doing okay on other stocks, but if I hadn't been invested in the Magnificent Seven I'd be far to the lesser in my balanced. At some point they have to slow down and the non-tech stocks should have a run, but it seems like mixing the two is a good tradeoff.
I've got probably 20 to 25 percent of my money in the Magnificent Seven, which I think is underweighted compared to the major indices. They've done great, but it's kind of scary to me to have too much in a few stocks so I'm slightly whittling them down now.
I should probably be more heavily invested in the M7, will probably throw some money that way, and mix in some ETFs. I've done pretty terribly in my brokerage "play" account, so individual stocks have become scarier, lol.
Originally Posted by EPodolak:
There are quite a few good Vanguard ETF options. VTI is the one I'm invested in. Remember if you've only been in it a couple of years your results will consist of one good investing year and one bad one. The market for just about every leading ETF will look flat for that short window. Both VTI and VOO have returned 14-15% average the past five years. Can't really go too far wrong with either.
Good call out on that, with the market doing so well lately, I sometimes forget about the downturn recently. [Reply]
Hog's Gone Fishin 12-25-2023, 09:33 AM
This message has been deleted by Hog's Gone Fishin.
Reason: The Butthurt is real
I know a little about investing…just a little though. The market changed my life 18 years ago and it continues to pay me dividends today (no pun intended). [Reply]
Time for my annual investing review, and it’s good news this year. If every year was like this, I would eventually buy my own island.
Total net worth up by 22.3 percent.
Total return on liquid investments up by 30.0 percent.
The difference between the two is that my house value decreased notably in 2023, according to Zillow estimates. Interest rates being high was not good for prices. But hey, it’s not like I’m planning to sell any time soon.
In terms of liquid investments, I’m not adjusting for purchases or sales. I’m just looking at totals that include those. I don’t make big moves at all, though. I’m pretty much a buy and hold with tiny adjustments.
The returns of my top ten holdings at the beginning of the year:
GOOG 57.1%
MSFT 57.8%
AMZN 77.0%
AAPL 54.4%
NVDA 246.0%
CVX -10.2%
IHI 3.1%
BX 74.5%
AMD 130.3%
FTANX 9.3%
At the beginning of the year, these ten holdings were 23.5 percent of my investment holdings. My returns were spectacular with 7 of the 10 going up more than 50 percent. Pretty freaking amazing.
I had some other big winners over the year, so my top ten at the end of the year changed a bit as some other stocks grew. I’m a little more concentrated now as my top ten are now 24.9 percent of my holdings. You’ll see a lot of “Magnificent Seven” on this list.
In short, my three year-starting holdings that weren’t up 50 percent dropped off my top ten list, replaced by other holdings that had great years. CVX, IHI, and FTANX fell off the top ten, replaced by PSX, QCOM, and NVO. NVDA is a big story, shooting up to become my largest holding, while AMD moved up from #9 to #6.
However, I’ve been buying CDs like crazy, and collectively they now represent 19.2 percent of my holdings, up from about 5.6 percent last year. With an average annual return of 5.2 percent, they’re going to be my anti-anxiety strategy for the next few years. Even if they underperform the market the next few years, they’re above my needed rate of return, and if there’s a down market they’re going to prop it up quite well.
My top ten stocks in terms of returns totaled 11.2 percent of my holdings at the end of the year, and all were up more than 100 percent. At the beginning of the year, they were 6.5 percent. I let the winners ride, and it was awesome. ANF (Abercrombie & Fitch) has had an astounding run. I've owned it for a long time and I read a few years ago when the stock was down that they were making great long-term decisions that would have an impact eventually. They were right.
You’ll see two cruise lines on the list. I rode them all the way down in 2020, so I’m still down on CUK, but believe it or not, I’m back to my 2020 level on RCL.
TSLA has been a wild ride. I’m massively up on it from my purchase price, though I’m down from my peak a couple of years ago. I’m still up roughly 600 percent overall on TSLA.
I have to call out HCI, too – it’s a home insurance company that’s done well for me for years.
Most of these are above my dollar limit for buying more, so I’m just holding. A few still have room for buying more, and I’ve been adding tiny amounts to them.
My bottom ten stocks in terms of returns totaled 1.8 percent of my holdings at the end of the year. At the beginning of the year, they were 4.4 percent. One thing I was pretty good at this year was not chasing losers.
I’ve given up on SILC and RMCF and am selling them off. FF is on thin ice, but I’m waiting since they had a huge one-time dividend last year that would get them to breakeven. It would be nice if something similiar will happen soon, but I'm losing hope.
I stayed too late at the MRNA & PFE party, so I’m just holding them. ALB is a past big winner that had a drawback due to some international stuff. If I was a gambler I might buy more MPW, but I’m not a gambler. It’s my biggest dollar disaster the past couple of years. It was a great low-risk stock until suddenly it became a high-risk stock.
Huh. I had no idea Abercrombie boarded a rocket ship.
WTF did they do so right? Go to an all-internet setup or something? I looked on their website, and it sure looks like a bunch of generic overpriced young people stuff. That's fucking incredible.
Well done on that one. That wasn't even in the neighborhood of my radar. [Reply]
Originally Posted by lewdog:
Great analysis, Rainman! You beat the index which is hard to do in an up year. Great fucking job, you hit some big winners.
My total investment accounts were up 25% for the year, which sits right about at the index.
I was apparently a bit overweighted in Nasdaq stocks.
I was trying to find my summary last year, and was pretty sure I'd done it, but I don't see it. Maybe I was too depressed.
I figured I was mostly just getting back last year's losses, but it looks like last year I was only down 11 percent by year end. That's way better than I thought. So 2023 really put me ahead of the game. [Reply]
Originally Posted by Buehler445:
Huh. I had no idea Abercrombie boarded a rocket ship.
WTF did they do so right? Go to an all-internet setup or something? I looked on their website, and it sure looks like a bunch of generic overpriced young people stuff. That's fucking incredible.
Well done on that one. That wasn't even in the neighborhood of my radar.
It's been probably three or four years since I read the article. I don't remember exactly, and I have no expertise in retail to even understand, but it seemed like stuff that a retailer should always do. I think it was stuff like reorganizing their floors, shutting some underperforming stores, and backroom stuff like inventory systems. I just remember the article saying that they were going to take some hits in the short term, but they were going to pay off in the long term. I'd taken a hit on it, but I decided to hold it and got rewarded handsomely this year. In the short term, I guess their sales and profits and forecasts have been great, so the changes have had tangible results.
I don't remember how long ago he left, but it helped that they got rid of a moronic CEO. The guy flat-out said that they sized their clothes so that overweight people couldn't buy them, because they wanted to be the brand that only cool people wore. Now, maybe that's a viable strategy and maybe it isn't, but you sure as heck don't tell the public about it. It caused a big kerfluffle and the brand started going down the tubes. A new CEO came in who is apparently very knowledgeable and well regarded, and she reversed it and made the changes that are now well regarded.
Heh. Wikipedia has the quote that got the old CEO fired.
That's why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don't market to anyone other than that. ... In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don't belong [in our clothes], and they can't belong. Are we exclusionary? Absolutely.
So I have a $200,000 error in my favor right now, or kind of.
I bought a $2,000 CD a while back, which was 2 shares at $1,000 each. My portfolio total is correct, but when I drill into individual investments, my fixed income total is really high even though the overall total adds up. After some investigation, it's showing that I own 200 shares at $1,000 each. I like that interest accrual.
I assume it'll get fixed soon, but it's kind of tempting to sell it all off. [Reply]
