Long time, no see--Are you guys and gals still financial whizzes?
invite response
2020 Apr 14, 1:29pm 1,464 views 15 comments
by CL ➕follow (1) 💰tip ignore
Comments 1 - 15 of 15 Search these comments
1
Shaman
2020 Apr 14, 1:45pm
Shaman
2020 Apr 14, 1:45pm
Invest in America.
We’ll be back.
Can you imagine how great you’d have done if you put everything into Amazon stock when stocks were at their nadir? That stock is now at record highs.
We’ll be back.
Can you imagine how great you’d have done if you put everything into Amazon stock when stocks were at their nadir? That stock is now at record highs.
2
CL
2020 Apr 14, 2:00pm
CL
2020 Apr 14, 2:00pm
Shaman says
Of course, I'm just trying to maximize opportunities, like tax advantages!
Invest in America.
We’ll be back.
Can you imagine how great you’d have done if you put everything into Amazon stock when stocks were at their nadir? That stock is now at record highs.
Of course, I'm just trying to maximize opportunities, like tax advantages!
3
EBGuy
2020 Apr 14, 2:10pm
CL says
Probably a better question for the recently returned @ellliemae, but here's my hot take. For your parents to become eligible for medicaid, they'll have to spend down most of their assets (including that Roth money you gifted them). Don't do it.
BTW, just did a spit take as a certain house in the Oakland hills just sold for a million bucks. Sorry to bring back bad memories. Yikes, that place may be cursed.
1) Questions: Is that a crazy-ass idea? Would it harm future medicaid eligibility, if needed?
Probably a better question for the recently returned @ellliemae, but here's my hot take. For your parents to become eligible for medicaid, they'll have to spend down most of their assets (including that Roth money you gifted them). Don't do it.
BTW, just did a spit take as a certain house in the Oakland hills just sold for a million bucks. Sorry to bring back bad memories. Yikes, that place may be cursed.
4
FortWayneAsNancyPelosiHaircut
2020 Apr 14, 2:38pm
FortWayneAsNancyPelosiHaircut
2020 Apr 14, 2:38pm
I dont know if Roth is better than traditional IRA depending on the age. However, whenever stocks are down, its not complicated to buy and wait a few month to get 20-30% gains, after that reinvest into long term. That's what I'm doing now. I'm just straight up buying stocks, its not Roth account, simple stock trader account online.
Been buying stocks for my kids too, so far those stocks have grown over years, its the best savings account you can have for them.
Hope all this helps in some way, I know its pretty simple
Been buying stocks for my kids too, so far those stocks have grown over years, its the best savings account you can have for them.
Hope all this helps in some way, I know its pretty simple
5
clambo
2020 Apr 14, 2:49pm
Roth IRA absolutely. It’s a great investment account to have.
It’s annoying to pay taxes while you are working; it’s maddening when you are retired and living from your investments.
I’m going to convert some of my investments to Roth but with caution, because the conversion is considered income, and is taxed.
If your parents are under 65, have them get a Fidelity Health savings account, those are awesome.
Invest in stock mutual funds in the HSA and let it ride.
I don’t understand the medicaid part of the question , this assumes that someone is very low income.
It’s annoying to pay taxes while you are working; it’s maddening when you are retired and living from your investments.
I’m going to convert some of my investments to Roth but with caution, because the conversion is considered income, and is taxed.
If your parents are under 65, have them get a Fidelity Health savings account, those are awesome.
Invest in stock mutual funds in the HSA and let it ride.
I don’t understand the medicaid part of the question , this assumes that someone is very low income.
6
Patrick
2020 Apr 14, 8:24pm
Patrick
2020 Apr 14, 8:24pm
Shaman says
Amazon may be up, but it seems like the majority of what they ship to Americans is made in China, putting Americans out of work.
Buying Amazon stock isn't really investing in America. It's more like investing in China.
Invest in America.
We’ll be back.
Can you imagine how great you’d have done if you put everything into Amazon stock when stocks were at their nadir? That stock is now at record highs.
Amazon may be up, but it seems like the majority of what they ship to Americans is made in China, putting Americans out of work.
Buying Amazon stock isn't really investing in America. It's more like investing in China.
7
ignoreme
2020 Apr 15, 12:51pm
Eh, the time to invest was march 23. Market is only 10% down from the start of the year at this point. We might see another drop, might not.
Roth vs traditional is very complicated and involves making a lot of assumptions about the future.
Your parents sound like they don’t have much saved. The best advice I could give is stop worrying about market timing and taxes. They need to start saving NOW, regularly, and for a long period. Everything else is details that won’t make more then a few percent difference in the end.
Roth vs traditional is very complicated and involves making a lot of assumptions about the future.
Your parents sound like they don’t have much saved. The best advice I could give is stop worrying about market timing and taxes. They need to start saving NOW, regularly, and for a long period. Everything else is details that won’t make more then a few percent difference in the end.
8
SunnyvaleCA
2020 Apr 15, 1:22pm
clambo says
It’s annoying to pay taxes while you are working; it’s maddening when you are retired and living from your investments.I'm no tax expert, but it seems more annoying to pay 9.3% California income tax for the money going into your ROTH than it does to pay 0% Florida income tax on the money coming out of a conventional IRA after you have fled the state after retirement. Conversely, if you plan on moving INTO California for retirement then the ROTH would be a good idea (and, please get your head examined, too!).
9
clambo
2020 Apr 15, 2:15pm
Sunnyvale has a point, but I assumed that they had been considering buying a RothIRA with income which was taxed anyway before they received it.
By coincidence I was just in Florida for several years, and I may go back if I hate California taxes too much someday.
By coincidence I was just in Florida for several years, and I may go back if I hate California taxes too much someday.
10
FortWayneAsNancyPelosiHaircut
2020 Apr 15, 2:31pm
FortWayneAsNancyPelosiHaircut
2020 Apr 15, 2:31pm
ignoreme says
Quoting this because this is really good advice. Just save what you can, everything else is almost trivial and won't be important enough.
Eh, the time to invest was march 23. Market is only 10% down from the start of the year at this point. We might see another drop, might not.
Roth vs traditional is very complicated and involves making a lot of assumptions about the future.
Your parents sound like they don’t have much saved. The best advice I could give is stop worrying about market timing and taxes. They need to start saving NOW, regularly, and for a long period. Everything else is details that won’t make more then a few percent difference in the end.
Quoting this because this is really good advice. Just save what you can, everything else is almost trivial and won't be important enough.
11
SunnyvaleCA
2020 Apr 15, 4:17pm
One advantage of a ROTH, as I understand it, is that there is no minimum required distribution. Plus, if you take out money unevenly, you won't (hopefully) be affected by the non-flat tax rates. You could probably also play games with income-tested government handouts... alternate years of taking out nothing and taking out 2x as much; in the off years claim you are poor and get government subsidies (i.e.: get at least a tiny amount of your hard-earned taxes back).
But the best advice is to get advice (and an overall strategy) from someone who really does know what they are talking about!
But the best advice is to get advice (and an overall strategy) from someone who really does know what they are talking about!
12
Tenpoundbass
2020 Apr 15, 4:30pm
Tenpoundbass
2020 Apr 15, 4:30pm
I'm smart enough to know when it's going to take a crap, though I haven't developed the skill to know exactly when.
And my investment skills aren't great enough to short markets. And after watching what that class of investors does to the global economy and people everywhere.
I think it should be outlawed.
I'm not in tune enough with the markets to know when stocks are going to go up, other than the obvious ones, that are going to gain a few points because they are being pumped up by the Feds.
And my investment skills aren't great enough to short markets. And after watching what that class of investors does to the global economy and people everywhere.
I think it should be outlawed.
I'm not in tune enough with the markets to know when stocks are going to go up, other than the obvious ones, that are going to gain a few points because they are being pumped up by the Feds.
13
CL
2020 Apr 16, 5:37pm
CL
2020 Apr 16, 5:37pm
Thanks all! For the record, my folks are retired but working (I myself am looking at retirement, and could, but my wife says I don't sit still anyway, so I'm better off keeping employed).
RE: Medicaid, my understanding is that eventually many people, regardless of means, wind up utilizing medicaid for nursing homes. I believe none other than Elliemae told me that years ago. The reason that's important would be that if they had to spend down assets to be eligible, it'd be my dough they're spending down or that's getting liquidated.
OTOH, if I inherit my own money in a Roth, I'd be able to keep that money growing for another decade tax free (my only brother died recently, leaving me the only heir).
They could also take some of their IRA (now that it's taken a hit) and convert it to Roth. As it recovers, it'd be recovering into a tax-free account rather than back in a tax-deferred account. Of course, Dad might stop working sooner than he realizes, given the dangers at homeless shelters.
EBGuy says
RE: Medicaid, my understanding is that eventually many people, regardless of means, wind up utilizing medicaid for nursing homes. I believe none other than Elliemae told me that years ago. The reason that's important would be that if they had to spend down assets to be eligible, it'd be my dough they're spending down or that's getting liquidated.
OTOH, if I inherit my own money in a Roth, I'd be able to keep that money growing for another decade tax free (my only brother died recently, leaving me the only heir).
They could also take some of their IRA (now that it's taken a hit) and convert it to Roth. As it recovers, it'd be recovering into a tax-free account rather than back in a tax-deferred account. Of course, Dad might stop working sooner than he realizes, given the dangers at homeless shelters.
EBGuy says
CL saysjust did a spit take as a certain house in the Oakland hills just sold for a million bucks. Sorry to bring back bad memories. Yikes, that place may be cursed.Cursed? How? I think I managed to do fine without it (it only went up 200K). Good to see you!
14
Booger
2020 Apr 16, 5:46pm
Booger
2020 Apr 16, 5:46pm
At this point you really should be selling your yams, ammo, and toilet paper, and buying S&P500 futures.
15
CL
2020 Apr 21, 3:08pm
CL
2020 Apr 21, 3:08pm
ThreeBays says
I guess what I wondered there was, conceivably one could say "help" a working adult with a traditional IRA contribution. Depending on who took the dough out, it could be funded with post-tax earnings, but taxed on the withdrawal or conversion?
ThreeBays says
I was under the impression that most people eventually dump whatever assets they have ~ 5 years out so they can go on the Medicaids. They have no intention of that, but I reckon most don't.
You can gift each of your parents up $15,000 each per year without affecting your estate tax exclusion. You won't get double taxed unless you inherit more than $11.5 million in 2020. Inherited IRAs have an RMD.
I guess what I wondered there was, conceivably one could say "help" a working adult with a traditional IRA contribution. Depending on who took the dough out, it could be funded with post-tax earnings, but taxed on the withdrawal or conversion?
ThreeBays says
Look into the Medicaid "asset limit". The limit is not very high, so if your parents already have some savings it may already disqualify them from Medicaid
I was under the impression that most people eventually dump whatever assets they have ~ 5 years out so they can go on the Medicaids. They have no intention of that, but I reckon most don't.
1) My parents were working last year (at a homeless shelter), and my mom, who was a Professor prior to this, found it too physically taxing and has since "retired" (although may return to teaching). Dad is still working there, and plans to until death, although the Covid-risk is high among that population, so ya never now.
1) Idea: take their stimulus check(s) plus some canceled "vacation to the west coast" cash and put it in a Roth. Given their employment situation, I can figure they could drop 7K each in for 2019, and 7K for my dad in 2020 for a total of 21k. I could gift them the difference.
1) Questions: Is that a crazy-ass idea? Would it harm future medicaid eligibility, if needed? Would I introduce taxes to myself if the money comes back to me, either as we withdrew, or through inherited IRA fine print? Would I get "double taxed" somehow?
2) Given the mods in the CARES act, can one get access to their 401k/IRAs penalty-free and put that money to use, only to repay it later (like in the 3+ years they allow). Especially pertinent to question 1, because there might be an opportunity for the folks to use their own IRA, fund the Roth, pay it back through the growth.
3) Given the drop in the market, is it a good time for some/all to do Roth conversion? I already do the backdoor Roths for me, but my wife has a former employer 401k I wouldn't mind improving upon. It would seem so with the drop in value and historically low taxes that are bound to go up.
Any other smart idears?