patrick.net

MA,

100K price reduction hasn't sparked ANY interest? But Bend is so HOT! It's "white hot"!

The Sunday Oregonian just ran a huge feature on how 2nd. homes in general and Bend in particular were going to do nothing but continue to benefit from the aging boomers. (Nothing like on site intel.)

Michael,
I'm going to place my bets on the fact that people are easily persuaded by the media. The papers, networks and sites ( especially sites like these) have probably done most of the erosion in the buying public's confidence. For years it was the "unstoppable RE boom". Just in the last year they've changed their tune to the drama filled unfolding events that are the foundations of a new, hot, soap opera drama that'll be sure to grab attention: The RE implosion and all the woeful stories about homeowners and so others in serious problems.
Basically, the public has been shifted into a new mode of though concerning RE. It's no longer the miraculous machine it was for the last few years. They knew the risks and heard the warnings. The kind of people that risked everything to invest in bubblicious housing are also the types of people who will want to ditch the fastest. They have to because they only had one plan for the homes they bought which was to sell and pocket the profit, and only the profit in the form of additional appreciation. Otherwise they're simply sitting on something they can't pay for or expect to even break even with. If you had the option of buying a car that would only be more expensive due to increasing car payments, would you do it? No, of course not, and neither are the approximatly 40% of the buyers in the last 2 years who made up the entire spectrum who bought only as investments.
That's why the fall will more than likely be hard and fast. These people do not have the option to simply hold. They will have to sell, and sell it fast. The public perception is now that housing prices will fall. If there is a massive amount of homes being sold at reduced prices, then buyers will hold off even longer because the perception will be that prices will tumble quite a bit.

I probably shy away from ETFs in my Vanguard acct because they don't have enough history to produce valid statistical Monte Carlo simulations. Like I said, I'm very old skool when it comes to my SEPIRA. Just old fashioned, boring MVO and Monte Carlo. When the ETFs I have available to me hit a high enough RSQ and F-Test I'll include them too.

Call it waiting to see if anyone dies from the newly approved drugs first, if you will. It's more a hyper conservative reaction I have to seeing all my Midwestern elder relatives retire with nothing but the gov't to support them. I'm not going out that way.

DinOR,

Not only do you get the tax advantages with S-elected corps, but you get a huge potential to make SEPIRA contributions. My last corp was a C and we still managed to hit the IRS max on SEP 5 of 7 years. That adds up pretty fast.

Randy H,

I hear what you're saying and have been a little leery of some of the "offerings of the week" from I/Power Shares. A lot of their "track record" leans rather heavily on things that didn't even exist during their data sample period. But there are plenty of well established ETF's and when it comes down to it I only track a few.

Randy H,

Exactly, and they're not near as arduous to set up as most imagine. The atty. does most of the work and it's very competitive so the fees are reasonable. Maxing out your SEP is the best feeling in the world.

MA,

Bend is going to be a nightmare anyway we slice it! They're talking about adding 10,400 new jobs over the next 3 years! Really? Based on their esteemed opinion how many of those new jobs would have been in construction?

Don't get me wrong, I think Bend is purdy too but when it boils down to basic economics people will dump Bend like an ugly girl at a dance!

For some reasons I still do not believe in retirement accounts.

I probably shy away from ETFs in my Vanguard acct because they don’t have enough history to produce valid statistical Monte Carlo simulations.

There's that, plus Vanguard's current offerings are still fairly limited. For RE, there's only a (commercial) REIT ETF. No homebuilder stocks, GSE or residential REIT ETFs --yet.

http://flagship4.vanguard.com/VGApp/hnw/FundsVIPERByType

Well we started a 401k, but I feel like that it's a bad idea - we have no control over when our contributions are invested, the funds don't correlate exactly with the funds on the xchange - I feel like the retirement firm can take us for a ride and charge us for it! What's to stop them form "buying" the funds (with our money), wait a few days and then "sell" us the funds for a profit? As well as charging fees etc

To me ETFs are just more liquid and transparent mutual funds with minimal fees.

They are also shortable, and in some case optionable mutual funds.

Taxable accounts are not all bad...

To avoid large long-term capital gains, one can always donate the shares, help the world, and get a nice write off.

To avoid short-term capital gains, one can offet them against short-term capital losses.

Claire,

The actions you describe would be MAJOR infractions in the eyes of ERISA, DOL, IRS, EBSA and the PBGC. Other than that, no problem. One issue you might see is that firms like ADP and Paychex become like banks b/c they sit on America's pay check for two weeks and actually do lend to the commercial arena.

Are 401K firms complacent? Oh HELL YES! Do they care if you ever see a dime in appreciation? HELL NO! Unlike Peter though, I will advocate if nothing else at the very least contribute up to the company match and dump the balance into a roth or reg. IRA. We've got to stop inventing excuses for not saving. In the end that's what these are, "savings plans".

Peter P,

There's nothing wrong with "pay as you go". You can also amortize a long term cap gain over time. There are also a number of "turn-key" trusts that you can set up at no expense to you and actively direct those proceeds to the bona fide charity of your choosing. Used to be trusts were expensive (and a pain) to set up.

The 401k is not even matched, but at least it's before tax, I thought you could only have a regular IRA if you don't have a 401K?

There are also a number of “turn-key” trusts that you can set up at no expense to you and actively direct those proceeds to the bona fide charity of your choosing.

I think Fidelity has a charitable fund. It may be a tax-efficient way to improve karma. :)

For some reasons I still do not believe in retirement accounts.

Have to second DinOR here --if you can't trust your own retirement accounts (401k/IRAs), what can you trust?

However, I completely understand not "trusting" federal entitlement programs (Social Security, Medicare, etc.) or defined-benefit pension plans. I fully expect those either to be bankrupt or severely scaled back and/or means-tested to the point most people will have little chance of seeing any payoff. SS/FICA to me is basically "Boomer retirement payroll tax" for future generations.

Have to second DinOR here –if you can’t trust your own retirement accounts (401k/IRAs), what can you trust?

I trust something that can be readily cashed out.

The 401k is not even matched, but at least it’s before tax, I thought you could only have a regular IRA if you don’t have a 401K?

Nope, I have both. As I don't yet have children or a CA personal ATM (house) and I don't itemize, these are about the only tax shelters I have at the moment.

You can cash a ROTH IRA out, just not the gains or you'll get taxed on them.

I trust something that can be readily cashed out.

Point taken, though technically you can (for a big hefty penalty, of course :-( ). IRAs/401k/403b rules also allow one-time penalty-free withdrawals for certain events --like buying a first home, paying for kid's college tuition, and such.

HARM -

So you have a tax-deductible IRA not ROTH?

AFAIK, if you contributed to a 401K plan, your contributions to a regular IRA (if they are allowed based on income etc) are NOT pre-tax. In that case, it makes sense to contribute to a Roth IRA, again if income levels allow it.

* NOT A TAX ADIVCE

IRAs/401k/403b rules also allow one-time penalty-free withdrawals for certain events –like buying a first home, paying for kid’s college tuition, and such.

Withdrawal or loan?

So you have a tax-deductible IRA not ROTH?

Yes, though I would like to convert it to a Roth at the next opportunity (2007 I believe?).

I thought it was 2010? For conversion of IRA's that is.

Peter P,

Some of the "charitable trust remainders" are set up so that you can,

Make the contribution

Get an immediate tax break

Keep the income (dividends)

Will it to an heir (also rec. the income)

And upon their passing the $'s finally go to the charity

Pretty good deal.

Pretty good deal.

Yes indeed. Do your clients have any donor-advised fund (e.g. Fidelity Charitable Gift Fund)?

HARM,

I'm kind of in your position except that one of us is self employed. Through my SEP I can "fairly" well adjust my tax position by making a final contribution just prior to the cut off.

Just as Peter questions the "value" of retirement accts. I seriously challenge the sagely wisdom of "fluffing up" your sched. A through the use of Mort. int. ded! If in the process of "fluffing" you are ignoring virtually all of your other savings options "it just doesn't make sense". (Particularly since many fluffers NEED that big fat tax return check to get caught up on bills)!

Withdrawal or loan?

Withdrawal. Though it looks like I was mistaken about first homes & college tuition being exempt from the 10% early withdrawal fee. These would be considered "hardship withdrawals" and are subject to tax + 10% beffore age 59 1/2.

Getting a penalty-free withdrawal is a bit more restrictive:

--You become totally disabled.
--You are in debt for medical expenses that exceed 7.5 percent of your adjusted gross income.
--You are required by court order to give the money to your divorced spouse, a child, or a dependent.
--You are separated from service (through permanent layoff, termination, quitting or taking early retirement) in the year you turn 55, or later.
--You are separated from service and you have set up a payment schedule to withdraw money in substantially equal amounts over the course of your life expectancy.

http://www.401khelpcenter.com/mpower/feature_121902.html

Peter P,

Just as a matter of convenience I typically use Eaton Vance in Boston. They're pretty comfortable with the process and have an in house stable of tax experts that keep things current. It really helps people that have a low cost basis in a stock and can even help folks that have sold off RE holdings. I hate to say it but it really is a "last ditch effort" when all other "relief" has been exhausted.

*Not a plug for EV

Thanks, DinOR.

I thought it was 2010? For conversion of IRA’s that is.

Yes, got the year wrong --sorry:
http://www.toolkit.cch.com/columns/taxes/06-231roth.asp

I seriously challenge the sagely wisdom of “fluffing up” your sched. A through the use of Mort. int. ded! If in the process of “fluffing” you are ignoring virtually all of your other savings options “it just doesn’t make sense”.

Yes. Plus, your home represents an incredibly UN-diversified and illiquid tax shelter/savings vehicle.

HARM,

Unless you plan to retire near the poverty level, always load up on your Roth IRA first.

DinOR,

Huh? You just won't let me go on that, will you? I was just advocating a flat tax system with fewer loopholes. Since that's just not gonna happen, I don't think my advocacy would really cut into the amount of business you may wish to conduct.

Well, this Jeff guy could just file for financial death, AKA bankruptcy...unless he lied getting those loans.

astrid,

I was ONLY kidding! Btw, you're right, take full advantage of your roth. I'd really love to see the IRS consolidate the two so people don't have the redundant fees (and account statements).

DinOR,

I have heard similar dislike for COVERED CALLS from my friends who trade in options. I think I am alone in this. I write covered calls, ALL the time. Sometimes in IRA accounts, if possible.

I have many long positions. I write call options on it. I consider it as "extra dividend".

I am mot suggesting buying stocks to write call options. But if you already have a stock or ETF, then writing call options is as close to "easy money" as it can get.

Theoritically there is a chance of getting called and missing the upside. In a raging bull market that is very likely. But in current market, like for last 5 years, I have been called less than 5% of the time. And in all cases, I could get back in the position cheaper than the strike price.

Each contract writing yields in very small amounts. But if done on many long positions over and over again, the returns are nothing to sneeze at. Esp. in IRA. And it's so freaking easy ! I am not trying to optimize anything. I just write long very out of the money calls. The nickels and dimes add up over years.

Sometimes, it is a life saver. Without the calls I wrote on DELL over last 5 years, I would have been in red, deep red. But I managed to get out early this year, with a small combined profit due to all the calls that I wrote and simply expired.

To BA or Not to BA,

I have absolutely no problem w/that strategy at all. It's what "old money" does when the market turns flat as a means to generate extra income. But you must admit, it's done as often as not as defensive measure and you have to have a pretty big position for it have an impact.

I have heard similar dislike for COVERED CALLS from my friends who trade in options. I think I am alone in this. I write covered calls, ALL the time. Sometimes in IRA accounts, if possible.

I prefer writing uncovered OTM puts, especially if a possible slight downside is foreseeable.

Each contract writing yields in very small amounts. But if done on many long positions over and over again, the returns are nothing to sneeze at.

Make sure you do not pay more than $1 per contract in commission.

NOT INVESTMENT ADVICE

Scott,

The VIPERS are great. But the case between ETF and its underlying fund is clear. For automatic investment plans, the fund is better, because ETF trading fees will be a drag on the performance for most people. For trading, ETFs win hand down, as there is no "early redemption fee".