patrick.net

3+2 in Stockton.

HuggyBumbers McLovkins says

+2 in Stockton.

Are you serial? And what do those run? And did they repeal Prop 13 or something? :)

Definitely don't waste the scrill on attending some politician fundraiser dinner....

dublin hillz says

Definitely don't waste the scrill on attending some politician fundraiser dinner....

I usually just contribute and miss the "free" dinner. :)

CL says

Managed portfolio

Screw that. Just buy a Vanguard Index of some kind, but then, you said you didn't want equities. Managed is rubbish. I just found out some money manager put my 70-year old parents in Japanese Small Caps and Timber Trusts and other weird crap inappropriate to their age and investment goals.

if it's money you can afford to lose, try loaning the money out:
https://www.prosper.com/invest

...and let us know what happened.

Vanguard Dividend Growth fund
Dodge&Cox Stock Fund
Fidelity Contrafund
T.Rowe Price Capital Appreciation.

OR: Vanguard Index Total Stock Market.

Oh, I forgot:

For sleeping soundly at night: Vanguard Wellington Fund (balanced)

If you hate a 1099 Div. from the dough: Vanguard Tax managed balanced.

CL says

I have a few hundred extra thousand dollars laying around. What should I do with it?

Good news, you're a speculator now.

SPY, until the duck tells you to duck.

thunderlips11 says

Screw that. Just buy a Vanguard Index of some kind, but then, you said you didn't want equities. Managed is rubbish.

Agree that managed is complete rubbish.

What are your goals with this money and what percentage of your overall retirement and non-retirement portfolio does it consume? It really depends on income, age, assets, tax-advantaged vs. taxable, etc. There's no reason to consider this money differently from other money -- it's part of one and the same portfolio.

If you need capital preservation, it's a different answer from if you're 30 and making a high income, and that would have a different answer from if you're middle income and 55.

Hard to say without knowing more.

Check out Bogleheads too.

thunderlips11 says

if it's money you can afford to lose, try loaning the money out:

https://www.prosper.com/invest

...and let us know what happened.

Interesting. Do you know anyone who has done it?clambo says

If you hate a 1099 Div. from the dough: Vanguard Tax managed balanced.

I pay a guy to do my return, so isn't that HIS problem? :) (Thanks)

Heraclitusstudent says

Good news, you're a speculator now

Not necessarily. You could have advised me to "Go, sell all I have and give to the poor".

Heraclitusstudent says

SPY, until the duck tells you to duck.

You think the S&P has room to run?

corntrollio says

Agree that managed is complete rubbish.

Seems to be the theme. Good to know.

corntrollio says

What are your goals with this money and what percentage of your overall retirement and non-retirement portfolio does it consume?

Same old goals, really. Make the pie higher! I've maxed out for a couple decades on my 401k contribution. I have plenty for me and the wife, (no kids). I'm not a big consumer of things and have most of what I want--never bought into consumerism.

High income, no debt. 20 Years or so until I retire, but retiring sounds nice. I'm not opposed to retiring early! ;)

Hi CL,

I was in the same spot you are a couple of months ago. I had CDs maturing (5-year term at near 4% interest rates, nice for these times), and I was considering rolling those funds into annuities as I had found one paying 3.65% fixed for 10 years. Then, however, I had the fortune to find something conservative that was far better in my opinion.

I found out about a guy (former commodities trader in the pits in Chicago) who moved back to his hometown (Lexington, KY) to put together farmland investment deals. Basically, he uses his background in ag commodities to find profitable farms, and he purchases them using his own money/equity and also that from investors. A legal partnership is formed, with each investor having a share/interest/percentage in the farm along with him (he personally invests in each of his properties, and the professional farmer who rents the land from the partnership also invests in some of the properties - everybody has skin in the game). The farm is deeded/titled in the name of the partnership, giving each investor shared but direct ownership of the farmland, no funny business like all these electronic funds where you don't actually own the underlying commodity - SCAM CRAP!

The farmland is rented to a large 15-member extended-family farming operation (Peterson Family Farms) whose ancestors have farmed since the year 1640! They farm 15,000 acres, and yes, they do insure the vast majority of the acreage that they lease/rent.

The income from the farm comes exclusively from the rent charged to the professional farmer, using a multiplier equation taking into account commodity (grain) prices. In the years since this has been going, the rent income was always above what I would've made with the annuity, so I was excited, PLUS farmland has the potential to appreciate in "the background" of the investment.

The farm manager issues a dividend check ever December, and you get schedule K-1'd for tax purposes. His fees are small and very reasonable (small operation with very low overhead/waste).

My farm is near Raywick, KY, a town of 117 people a couple of miles away from the distillery where they make Maker's Mark whisky, which is where some of the grains grown on my farm go to! I got a free bottle of whisky when I sent in my membership paperwork and check, plus other goodies. I did such a thorough due diligence on my farm manager and the opportunity in general, I was so impressed with the people behind this opp that I sent gifts for their children along.

Send me a private e-mail message, and I'll give you my phone number if you want to talk.

Interesting idea, Schmitz_Kris. I have family out that way. I'll let it marinate and do some research.

Thank you for the time.

CL says

Heraclitusstudent says

SPY, until the duck tells you to duck.

You think the S&P has room to run?

There will be corrections, but yes.
Of course the key is to jump out of the car before it goes over the cliff.

Which is why it is speculation.

Most money managers can't beat the S&P 500. I would rather let by dog make investment decisions.

http://wallstcheatsheet.com/personal-finance/investing-101-should-you-hire-fund-managers.html/?a=viewall

Zzyzzx and new renter will love this.

http://www.vetstreet.com/our-pet-experts/pet-scoop-cat-beats-pros-at-picking-stocks-sloth-bears-born-in-idaho

CL, be sure to ask your family in Kentucky about the price per acre over there. Here in MN, it's asinine, up to $15,000 an acre due to speculative fund and institutional buying. Ditto for much of the Midwest, I've even heard of 20,000 per acre in Iowa - talk about money printing gone haywire.

In Kentucky? Good farmland in much of the state is still like 2700-3000 an acre because it's off the radar of the big boys.

As for equities, has anybody ever found anything cheaper to own than admiral shares ( of index funds) at Vanguard? God, their fees are nothing!

Strategist says

Zzyzzx and new renter will love this.

http://www.vetstreet.com/our-pet-experts/pet-scoop-cat-beats-pros-at-picking-stocks-sloth-bears-born-in-idaho

I just give my kitty my banking info and let her do her thing.

CL says

I have a few hundred extra thousand dollars laying around. What should I do with it?

I have people at USAA who want me to put some into a Managed portfolio, but I feel like with my individual stocks and the 401k I'm fairly heavy into equities already, and who knows where the next correction lies?

Any idears? I could obviously at least choose their most conservative Managed account and probably beat inflation.

How hard do you want to work at it? Sounds like you are awful heavy in one basket, US equities. I would be thinking of getting a next egg going overseas to hedge against things really going sour in the US. Don't think that things can't go sour and quickly even in the good old USA, they can. But to do it safely and with a reasonable return takes a lot of effort.

If you want to get more diversified beyond equities with your IRA's you can roll them into self directed. That gives you the freedom to invest in any valid financial instrument. Real estate, private loans, tax liens, whatever. I've done this for years, it's a great option.

New Renter says

Strategist says

Zzyzzx and new renter will love this.

http://www.vetstreet.com/our-pet-experts/pet-scoop-cat-beats-pros-at-picking-stocks-sloth-bears-born-in-idaho

I just give my kitty my banking info and let her do her thing.

Ask your kitty when I should get out of Apple. If she gets it right I'll get her a duck for desert. Cough cough....make that a goose.

Call Mush and buy some gold. You'll also get William DeVane's autograph pumped out by a signing machine.

I park my non-retirement money in Vanguard Inflation Protected Securities. Stocks go up, they go down and vice versa, but tend to do in the 6 to 7.5 percent range in appreciation and payouts over the long run with very low risk.

I echo the last sentence of what Bob said above. I have been doing private lending and making 1% interest per month effortless. I don't like the business model of prosper and lending club. Lending money to strangers unsecured for those kinds of returns? No thanks.

You can invest with Bruce Norris on short-term Trust Deed and make around 8%-10% annually. These trust deeds are typically at 65% LTV. No CDs for me.

Tax liens are more work, but they can be lucrative if you know what you're doing. Real estate has been the most lucrative investment for me. However, you have to know how to buy at a discount and how to force-appreciate the properties. Once you have mastered this trade, it's like running a legal Ponzi scheme. You're set for life. Roberto A. Ribas would be a good example. The guy can retire with his cash-flow in AZ. Of course, the typical folks are too busy building someone else's dreams and collecting that W-2 checks.

Why live less now so you can live less later? You only live once. Build and live your dreams NOW instead of building other people's dreams. Of course, it's not easy to leave that perceived secured JOB until you get axed and it dawned on you.

Good luck.

CL says

If you hate a 1099 Div. from the dough: Vanguard Tax managed balanced.

I pay a guy to do my return, so isn't that HIS problem? :) (Thanks)

No (as I'm sure you know) the return is ALWAYS your problem because it's YOUR name on it. I've found companies that will pay the penalty if the IRS doesn't like something. But I haven't found one that will pay the extra tax money and interest. Too many people get in trouble because they they pay to have the return done, see it long enough to sign it and think everything is okay from that point on ... and I don't really get the impression that you're one of those people.

mmmarvel says

CL says

If you hate a 1099 Div. from the dough: Vanguard Tax managed balanced.

I pay a guy to do my return, so isn't that HIS problem? :) (Thanks)

No (as I'm sure you know) the return is ALWAYS your problem because it's YOUR name on it. I've found companies that will pay the penalty if the IRS doesn't like something. But I haven't found one that will pay the extra tax money and interest. Too many people get in trouble because they they pay to have the return done, see it long enough to sign it and think everything is okay from that point on ... and I don't really get the impression that you're one of those people.

No, I'm not. But I figure the biggest issue I've ever had with 1099-DIV is that there are lots of entries and it complicates things for my lizard brain. CPAs don't seem to mind doing them. But I hear ya, and I know they're my responsibility.

They seem pretty straightforward for accountants though. Am I missing something?bob2356 says

If you want to get more diversified beyond equities with your IRA's you can roll them into self directed. That gives you the freedom to invest in any valid financial instrument. Real estate, private loans, tax liens, whatever. I've done this for years, it's a great option.

I don't really have any IRAs. Should I get one or some? What kind? I remember being ineligible for a Roth due to income limits then I just kind of quit looking at IRAs in general.

Thanks all.

CL says

I don't really have any IRAs. Should I get one or some

Depends on what you want to do. If you're happy invested in 401k ( I meant 401 not IRA) then why bother. If you want to diversify out of securities with a self directed then bother. Your goals and risk management are up to you. Just thought you might like to know some of the options.

CL says

I don't really have any IRAs. Should I get one or some? What kind? I remember being ineligible for a Roth due to income limits then I just kind of quit looking at IRAs in general.

open a non-deductible IRA and then do a ROTH conversion. Voila, you have a ROTH IRA, income limits be damned. (this tells me Congress are idiots as it seems like rules are written by completely different people. IRA rule #1 and IRA rule 2, then put it together and it is moronic)

Once it rolls into the ROTH the backdoor way, you have a tax free account where gains/dividends are tax free. You want to make sure this is the winner account.

So my preference for ROTH (backdoor) is investing in REITS's. Normally with REITS, there is no tax for the "entity" and the dividends are treated as ordinary income. In a ROTH, there is no tax for the 'Corporation" and no tax at the ROTH account. That is investing with a brain. The government gets nothing no matter how much cash the REITS generate (from the corporation or from the shareholder, zero taxation)

Buy an RV, tour the USA, it is very beautiful. Enjoy the money and spend it on what you enjoy doing most in life. If its fishing travel then travel where to can go fishing or buy your own boat. Since it sounds like extra money, laying around, enjoy it over time; i don't think you will regret doing that as long as its what you really like doing !

CL says

That seems interesting to me. Just getting started with the IRA might start me on the path to understanding everything else you said!!! Or at least familiar enough to trust what I'd be doing.

Go to wells Fargo, tell him/her my income is too high for a ROTH so I want to do a backdoor Roth. That's all you need to do. In fact, open one for your spouse too so you can double up.

CL says

Same old goals, really. Make the pie higher! I've maxed out for a couple decades on my 401k contribution. I have plenty for me and the wife, (no kids). I'm not a big consumer of things and have most of what I want--never bought into consumerism.

High income, no debt. 20 Years or so until I retire, but retiring sounds nice. I'm not opposed to retiring early! ;)

I would look into options for putting more money into tax-protected space. For example, at some employers, you can stuff up to $52K/year tax-protected savings into your 401(k).

SFace already mentioned the Backdoor Roth -- even if you don't qualify through the normal method for a Roth because you make too much money, you can put $5500 into a non-deductible IRA (i.e. traditional IRA, but after you pay taxes on the money), then immediately convert that into a Roth. You can do this at any brokerage or IRA provider (Schwab, Fidelity, Etrade, whatever). Because you already paid taxes on the principal, and there are no gains yet, you pay zero in tax to get a Roth. You can do this for you + wife, so $11,000 this year (the amount changes yearly based on inflation.

If you or your wife have any consulting income, you can open retirement accounts based on that too.

Also, if you have an HSA option with a high-deductible health plan, that can be used as a stealth IRA.

Some of these get rich quick ideas posted by people are likely to have you lose your ass when the market turns. Some of them might also be somewhat illiquid.

Someone also mentioned annuities. Most annuities suck, but there are a few exceptions. One of the best types is a Single Payment Immediate Annuity. This has one of the lowest fees and has some of the best returns as a result. A lot of the various variable annuities suck.

Financial planners will also try to get people to buy life insurance products, promising tax benefits, but without saying what those tax benefits are. People with high income are so afraid of taxes that they buy these POS products that have high fees and high commissions and low returns. What these products often do that further kills you is that they often turn income that would get capital gains rates into ordinary income, which is a double-whammy. If you can't understand the product, and if the financial advisor can't explain the fees/commissions and return in a succinct fashion, don't buy this crap. There are very few people for whom these products (e.g. whole life, universal life, variable universal life, etc.) are good ideas.

CL says

corntrollio says

For example, at some employers, you can stuff up to $52K/year tax-protected savings into your 401(k).

Is that through catch-up contributions or what? How does that work

52K limit is the SEP IRA. or self employed which has nothing to do with a 401K. You need to make 208K in your business to contribute 52K. Since you already max out your 401k, you'll need a backdoor ROTH IRA. this way, you have taxable distribution mixed with non-taxable distribution (to play around with) during your retirement years to minimize your tax rate.

How wonderful if you can withdraw 50K from IRA/SS, 30K from ROTH and get taxed like 50K, or next to nothing (like 10%-15% bracket for seniors)

I will also be in this situation later this year when a 3.5% 5 year CD expires, and will invest it into dividend paying stocks. No way am I going to let that thing roll over into a new CD paying so little now (I think 1.95% APY is the current rate on a 5 year CD at Discover).

CL says

if it's money you can afford to lose, try loaning the money out:


https://www.prosper.com/invest

...and let us know what happened.

Interesting. Do you know anyone who has done it

I have dipped my big toe into Lending Club, which is a competitor to Prosper (same basic idea).

On my low(er) risk portfolio I'm earning 9.5% returns (net of fees and charge offs), and my high(er) risk portfolio is around 12% net. You can invest IRA funds in LC if you use a 3rd party firm to set up a self directed IRA. Lending Club helps coordinate this to make it easy to set up, and they pay the annual self directed IRA fee ($200 annually) if you invest $10k or more.

There is an option (for a fee - 1%?) to automatically invest for you based on a range of criteria (not just credit risk/interest rate, but a lot of parameters)...I have managed it myself so far, and I probably eke out a bit better returns by being more selective...You know, when someone says they are borrowing $20k for credit card refinancing, but their credit report only shows $4k in revolving debt, I take note that their "story" doesn't add up and I'm less likely to lend...I don't know how much of an edge that actually gives me, though, and it is time consuming. Probably worth it if I had $100k in there and was making bigger "bets" on each loan, not so sure it is worth it with $25 bets and $10k invested. At some point it's just a numbers game.

It is also harder to unwind an investment in LC than in IBM...secondary market is there, but it's not a liquid investment...

I'm happy to have it as part of my portfolio, but I don't think I will be going crazy with it.

CL says

corntrollio says

For example, at some employers, you can stuff up to $52K/year tax-protected savings into your 401(k).

Is that through catch-up contributions or what? How does that work?

If your workplace allows you to a) make after-tax contributions and b) either do an in-service withdrawal or an in-service Roth conversion of those after-tax contributions, you can exceed the $17,500/23,000 limits. The in-service Roth conversion change is recent, but many plans allowed in-service withdrawals of after-tax contributions before that.

SFace says

52K limit is the SEP IRA. or self employed which has nothing to do with a 401

Your 401(k) can still have 52K/year if your plan allows it. The 52K limit is for all defined contribution plans, SEP, Individual 401(k), and employer 401(k), but your employer's plan has to allow it. In some cases, you might need an extra step of withdrawing the after-tax amounts, rolling over to an IRA, and then doing the Roth conversion.

Passive index fund or bust.

Hi CL,

I was in the EXACT same predicament a few months ago. I had CDs maturing (5-year ones at almost 4%, nice for these times), and I was considering rolling those funds into annuities as one of my financial planners had found me one paying 3.65%. I was just about to buy that annuity when I found something better in my opinion.

I found a guy (ex-commodities trader in the Chicago pits) who moved back to his hometown (Lexington, KY) to put together a farmland investment program whereby profitable farms for sale are found and researched (by him), a legal partnership is formed (the investors are the partners obviously, receiving a schedule K-1 for tax purposes), the farm is purchased and deeded/titled in the partnership name (giving the investors direct title/ownership of the farmland (shared as a percentage/interest based on your investment amount) of the land. The farmland is managed by the manager (he does all the paperwork, tax crap, etc.), and the farmland is leased to professional farmers who have been farming quite literally almost forever. Investors do nothing but collect the rental income (and the land has the obvious potential to appreciate too). The rental income from the farmland was better than the rate on the annuity, so, after doing many weeks of extreme due diligence ("creeping it" more accurately) on the farm manager and the opportunity in general, I put a big chunk of money with him. The rent on farmland varies with commodity prices, obviously, but with the fundamentals the way they are (people will continue to eat and have sex and produce more people plus the weather these days is all screwed up), I feel it's a conservative investment plus it is considered by many to be an inflation hedge.

The farmland is rented to a 15-member extended-family farming operation with roots to farming going back all the way to the year 1640! They farm 15,000 acres (13,500 of that is insured per annum). The grains grown on my farm go into Maker's Mark whisky, and I got a free bottle when I joined (plus other goodies). :-)

Not only that, but after researching my farm manager for weeks and finding literally everything about him that I could, I liked him so much I even included some gifts for his kids when I sent in my membership materials.

Contact me privately at my e-mail if you want my phone number, and we can talk about it.