The benefits of Roth IRA, If eligible, this is the first important step in savings


#21

I bet the opposite way. I prefer traditional over Roth. My bet is that I can afford better accountant in the future than I do now. Also, income tends to go down after retirement. In any case source of income will change. Income tends to be more passive, coming from investments, than active, from working a job, after people retire. There are more accounting tricks to play with passive income, and thus plan the taxes better.


#22

What about diversification of taxes? I am taking advantage of before-tax 401K for both of us (36K/yr), then converting to Traditional IRA when we leave the employers, and I did about backdoor ROTH conversion at one point. I am hoping to draw from both accounts when I retire, so I can still stay in lower income brackets, and still getting advantages of compounding using before-tax money today.


#23

How about setting up a company that does nothing. Set up a Solo 401k plan there, and roll over all your 401k into it when you change job? With Solo K plans you have a much wider choice of investment, including real estate or buying businesses. The cool thing with investing in real estate is that you can leverage up with a mortgage. You can’t do that in stocks.


#24

Definitely, moving from 401k to IRA is good as you have wider options to invest it.

Luckily, my company account (fidelity) allows to invest in SDA (self directed account) stocks. IMO, this is the best option allowing me to earn higher returns than Traditional Mutual funds.

It is too late for me to switch to Roth 401k. I may try Roth conversion, but it depends on what I have during retirement.


#25

Well… in 2013 I too set up a solo 401k… maxxed it out in 2013 - 2015.

Feels like putting money on black AND on red. Hopefully 0 won’t come.


#26

Instead of doing that, you can set up a self-directed 401k by transferring your rollover 401k. You can use your self directed 401k to invest in RE.

http://www.irafinancialgroup.com/llcpurchaserealestate.php


#27

OK. I thought 401k plan has to be tied to an employer. If not that’s even cooler. I have one set up for my business anyway.

BTW if my business income grows beyond a certain threshold I will set up a pension plan. Now that would drastically lower my tax bill.

I am a Buffett liberal. I like to raise everybody’s taxes while taking every advantage of the tax code to lower mine. Hahaha :smile:


#28

I did that through another company. You can invest in almost anything.


#29

Anyone does angel investing with self directed 401k?


#30

I owned a small business with my self-directed Roth IRA. I didn’t have much in it, because I was only eligible to contribute for a few years. I made sure to keep the profits very small and re-invest in equipment. Then I sold the business and all those profits were tax free back into the Roth IRA. Now I’m not sure what to do with the money. I may just go with a brokerage account for now. It’s not enough to buy a home for cash as a rental property.


#31

I think that there’s some kind of ignorance going around and many people, including me before I learned of the subject, are guilty of it.

Having said that, there have been talks, hearsay, about, check this out, the republicans, yes, the republicans only, trying to finish off with 401K and anything life insurance. They have attempted to do that but they are slapped on the face when they are told they touch that, they are dead in the water. Basically, when it comes to law, perhaps any law, there’s this thing called “grandfathering”. They can’t go retroactively and change contracts, and contracts are the essence of law. You mess with contract law, you better start a revolution.

So, I read people here, and even though I see they are noble on their assumptions, they are ignorant of their own reality. Their tax bracket at retirement age won’t be “0”. Nor it will be 14, or 25, maybe up in that category. Don’t they have bunches of rentals? Will they we earning more than $44K household combined? Their SS check will be taxed up to 85%, etc, etc. etc.

Taxes? Come on people! Who is going to pay for the debt? The corporations? No! They are getting subsidies and whatnot! Even you as a landlord are getting subsidies! Not the people down there. So, expect the tax brackets to go up sooner or later to pay for the debt. Otherwise, you have found the cure for cancer.

Speaking of 401Ks and all deferred programs out there. I talk to many people about it. I will put this nurse as an example:

She told me that she was putting $1200 a month. Equals to $14,400 a year. When asked how much she had in her 401K she said $100K. OK, we are doing good, right? When asked for how long, she said “8 years”. Her contributions and her returns so far didn’t match. She had spent $115,200 to keep $100K. Ain’t that nice? Don’t forget because of her tax bracket she owed about $30-$40K in taxes.

That’s the common problem with Americans. They don’t read the fine print, they don’t know how much they are making or losing. Or, the fact that they are smiling today, and crying later because they were not told, or better yet, they knew it but ignored the fact that at the end, there are taxes and fees to be paid to keep their 401Ks working for them, not the hard working class, but the managers of those accounts that in some cases have up to 2% charges that will deplete 50% of the account.

Anything you do, look for the following:

1- No market risk. Nice to have WS doing good. But what happens when it crashes? 2008?
2- Tax free money on your principal and returns.
3- Liquidity. If you can’t use a % of your money, but if you can and with it comes worries about paying it back, and face penalties, why bother? It’s your money.

For those old enough to not be able to risk of get a life insurance, there are annuities that can pay you up to 8%. Guaranteed. But that’s for money to be captured for 10-20 years. There are SPIAs, simple premium immediate annuities where you can withdraw money from first month buy you don’t get that much, probably 4% and their cash surrender is poor, but what the heck, better than risking it in the stock market.


#32

You can get a mortgage from NASB. They even wrote a book about that topic.

It just occurred to me bitcoin is another offbeat thing one can invest with solo 401k. Its rise is unbelievable. If you think nvidia is incredible take a look at bitcoin.


#33

Today morning I bought bitcoin ETF ( OTCMKTS:GBTC ), but did not post here as many are (I thought) not so much interested in such !

It is scary, but I just put small amount from the NVDA profit. Bitcoin is not at all value investing but a pure speculative.

June 2009 1 BTC = 0.0001 USD
June 2010 1 BTC = 0.07 USD
June 2011 1 BTC = 15 USD
June 2012 1 BTC = 7 USD
June 2013 1 BTC = 100 USD
June 2014 1 BTC = 600 USD
June 2015 1 BTC = 220 USD

Today, it has reached 2303.39 US Dollar

Looks like today it is up 22% (I think so).


#34

I just don’t understand bitcoin. I don’t know why it has gone up so much and I don’t know what drove it down before. So I chose to stay away.

On the other hand I now understand tesla a bit more. And I am bearish.


#35

I do not understand bitcoin either, neither know why it is going. I am trying to research further, but I do not have any pages except this one

http://midwaymonitor.com/looking-at-the-technicals-for-bitcoin-investment-trust-gbtc/99647/

Many reddit members telling long time bitcoin skyrocket, but today someone posted there is a bitcoin ETF is allowed to trade in fidelity. I checked the GBTC, it was available to trade.

Just sold some NVDA and bought few GBTC around 10 am, by the end of the day it is up $400 ! This is not my investment, just trying to take a chance of speculative buy.

I have put the money so little, even if I lose entire stake, it is fine.However, I may sell any time when I have $1000 gain, let me see.


#36

bitcoin is gambling. see who has balls.


Market still hot
#37

No doubt, this is about to bubble or crash. As usual we do not know when and how much !

Here you go the update:

I bought 44 GBTC shares at $275/share yesterday morning around 10 am.
Believe it or not, this went up to $337/share, sold 40 shares today with gain of $62/share,
left 4 shares from the gain as I just want to monitor the growth or loss.

It is crazy and gambling !

The last 3-5 days jump is 57%


#38

I think bitcoin is mostly driven by the online black markets: it provides completely digital payment for them, totally untraceable. The ransomwares today demand bitcoin. The old Silk Road also used bitcoin.


#39

Yes, it is safe for black money ! This has skyrocketed 125% in last 6 months !


#40

You a bought a bitcoin EFT in June…
Still have any?