Author Topic: New To Investing Thread  (Read 327227 times)

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Offline Purple Derpathy

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Re: New To Investing Thread
« Reply #2975 on: December 14, 2020, 11:28:15 AM »
Hey goEMAW, teach me about standard brokerage accounts, like taxes/best usage/withdrawing etc.

I've never really had one as I've been dumping all my money into my 401k/rIRA/HSA which are maxed and my savings are where I want them to be. This account would not be strictly for retirement but more for big purchase items in the future like expensive vacations/new roof/car/etc.

I know I could google all of this but I'd rather gE answer some questions/give me guidance as it would be easier then I could google more info when the time arises.

I plan to just throw it all in a SP500 index fund but my questions are

1. What kind of tax am I going to pay on dividends each year? (15%?) Should I reinvest them or use them to pay taxes on how much my stonks go up?

2. Teach me about long term capital gains?  Like say I sell 10k in stocks in 5 years to buy a new roof, is it FIFO or LIFO?

3. How much of a PIA is it during tax season?

Please offer any other advice you have regarding standard brokerage accounts.

TIA- ben ji

1. Depends on if they are ordinary or qualified dividends but 15% is the capital gains tax rate so you could use that is a point of reference. Reinvest them. You pay taxes on them regardless of your stock going up or not. You'll obviously only pay taxes on that stock when you sell it (assuming it appreciates).

2. 15% capital gains tax unless you are making over ~$400K/yr or somewhere around there. You can elect FIFO or LIFO.

3. Not much unless you trade a lot. If you're throwing in an index fund and forgetting about it, you won't have much work. Even if you make a few trades or reallocations a year, it's minimal work. You'll get a statement at the end of the year from whatever brokerage you use and it has all the information you need to input into your taxes.

Offline Kat Kid

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Re: New To Investing Thread
« Reply #2976 on: December 14, 2020, 11:33:13 AM »
Not everyone has that. In fact, in several states teacher pension system kicks people off of social security. Not Kansas, but still pretty garbage tbh.

You think it's shitty for someone to not be allowed to benefit from Social Security when they didn't contribute to it?  The states don't kick people off Social Security.  The federal government does.

The states set up agreements with the federal government so that people in their pension systems don't have to pay the Social Security portion of FICA taxes.  The money that would have gone to Social Security then goes to fund the pension system.  My wife's mom had this when she taught in Nevada.  The return on what she put in for NVPERS is a lot greater than what she would have got from Social Security.
The teachers in a state that did not opt in to social security are at the whim of their state government not fulfilling their obligations and that is a much more likely scenario than Uncle Sam.

Illinois is a state that opted out and it worked out fantastically for my father in law, but I would be at least a little nervous if I were a mid career teacher. But even Illinois isn’t the state that I am thinking of as being a worst case scenario, that would be Kentucky where the state has perpetually underfunded the pension, teachers have much lower average salaries and a much less generous pension than most illinois teachers and on top of that the state seems even more hell bent on not funding it than Illinois.

Also since you brought up Nevada my sister in law worked there for a few years, the Clark County education funding was a nightmare although I honestly don’t know how specific that was to LV vs the rest of the state. I will ask her about what the LV pension looks like for someone that leaves before fully vested, which is another huge issue.

In Kansas I have a decent pension, social security, and have saved money for retirement with a Roth. Teachers don’t get a great salary, but the financial security of knowing that I have 3 different retirement savings is good piece of mind that is worth more than the actual cash benefit and I also love the job.

So again, while it doesn’t impact me I think it is a pretty bad deal for a lot of teachers (though some have no doubt done better).

My wife's mom worked in CCSD and her pension check clears every month.  I haven't read anything about NVPERS being underfunded.

If states are paying less to a pension than they would pay for the employer's contribution to Social Security, then I agree that is shitty.

However, I have a pretty low level of sympathy for public employees when it comes to the financial viability of their pensions.  In most cases, they have been promised benefits which are actuarially unsound often times through what I consider to be corrupt bargains between elected officials and public employee unions.  It's not my fault you believed fantastical promises.  However, I would be ok with public employees that have pensions in place of Social Security being guaranteed the Social Security equivalent in any court cases that are going to come in terms of public pensions and state bankruptcies.

I made the conscious choice to work at places that have defined contribution rather than defined benefit primary retirement plans.  If you sign on to a defined benefit plan, you knew that going in.  You also knew the risks and thus should suffer the consequences if those risks come home to roost.

I think you have a pretty warped view about how normal people make decisions about their lives.

The idea that you sought out your career path for defined contribution plans is hilarious. If you are private sector then it is a really funny statement. If you are public sector I would love to hear how this was a deciding factor.

I know how people make decisions and the way they do is generally pretty suboptimal.  But, in my opinion, you don't get to cry victim because of the way you make decisions.  This is especially true now that it is pretty widely known the shape a lot of these public pensions are in.  Don't believe promises that are nearly impossible to be held up.

In terms of me deciding where to work, it's pretty straightforward to see if a university offers defined benefit vs defined contribution and use that as a factor in making a decision.  Obviously, there could be factors that outweigh a university offering defined benefit, but everything else equal, I definitely choose the university with defined contribution.  For example, I interviewed at Western Illinois University and they have defined benefit in a pension system in pretty bad shape.  There was almost no way I was taking that job unless there were no other options or something else was just fantastic about the position.  I know who took the position and it was a married couple where both of them were offered positions there.  That would be something that would outweigh the defined benefit aspect.  They also are no longer there.

A lot of my goals involve not needing to work if I don't want to by the time I am 45, so the nature of the retirement plan is pretty important.

yeah that's all fairly reasonable for you, and I certainly don't begrudge you that choice at all. 

I still think it is pretty crazy to judge people for being upset when their benefits system that they had nothing to do with setting up or choosing goes bad. The fact that I was born and raised in Kansas determined that I was probably going to get a job in Kansas.  For nearly everyone this is the case, so acting like people have all these choices and that they are using this as rational, when in reality that isn't what is going on.  I shouldn't get credit for lucking in to a good system.

Offline Justwin

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Re: New To Investing Thread
« Reply #2977 on: December 14, 2020, 01:42:03 PM »

yeah that's all fairly reasonable for you, and I certainly don't begrudge you that choice at all. 

I still think it is pretty crazy to judge people for being upset when their benefits system that they had nothing to do with setting up or choosing goes bad. The fact that I was born and raised in Kansas determined that I was probably going to get a job in Kansas.  For nearly everyone this is the case, so acting like people have all these choices and that they are using this as rational, when in reality that isn't what is going on.  I shouldn't get credit for lucking in to a good system.

I don't judge people for being upset.  I'd be pissed too if I was in that situation.  However, I in no way support bailing out state pension systems with federal funds.  And if I was a taxpayer in those states with failing pension systems, I would in no way support higher taxes to support the pension systems.

Like I said earlier, I can see guaranteeing individuals in those pension systems benefits that are comparable to what they would have received through Social Security if they are in a system that opted out of Social Security.  I think that is fair.  However, anything above and beyond that, I wouldn't be in favor of.  My position is that if you believe promises that are too good to be true, don't get too upset when they turn out to not be true.  If you are currently a part of a pension system that is in bad shape, you should be planning and saving based on that information.  The information is widely available and you can't claim ignorance at this point.  If you don't like the situation, have some agency and make a change.  I'm forced to be a part of a retirement system I wish I could opt out of (Social Security).  Rather than dwell on how terrible of a return I get from it, and how much I'd like it to go away, I take it as a given and make plans accordingly.  If I could opt out of Social Security when I am 40, and let Social Security keep all of the taxes I have paid over my lifetime (it would be 27 years of taxes at that point), I would do it in a heartbeat.  Even if it meant I had to save the 12.4% that goes into it on my behalf in some sort of retirement account, that would be fine.  In terms of opting out, I mean Social Security would never owe me anything and I never pay in again.

In terms of you lucking into KPERS, I guess I don't attribute as much of the results of life to luck or things beyond my control.  I also wonder how many people around the country would agree that you are lucky that you were born and now work in Kansas.  Don't get me wrong, it is where I want to live and work and don't ever plan to move away, but I don't think a lot of people share that sentiment.

Online catastrophe

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Re: New To Investing Thread
« Reply #2978 on: December 17, 2020, 10:46:13 AM »
Interesting! I was mainly asking because of the strategy of moving money to cash then back to stocks. My performance is all over the place. Below is all Dec. 2019-20.

Vanguard regular investments +24%

Wife’s Vanguard target retirement fund IRA: +17.9%

529 (last stock purchase in Aug. 2018): +52.5%  :sdeek:

I’m super curious how my 401k did since I made most of my contributions RIGHT before the market tanked (so basically the worst possible time), but this weekend is website maintenance weekend I guess. :(
Update: 401k up 18% over the last 12 months when I timed my contributions about as bad as possible.

So not apples to apples, but we’ll call it for 2020:

Bad timing vs. dollar cost averaging approximation: +6% DCA

DCA vs. KK gambit: +6% KK

Online chum1

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Re: New To Investing Thread
« Reply #2979 on: December 29, 2020, 08:54:31 AM »
I am getting absolutely hammered this week. First time I've had anything remotely like this before!

DJIA +1.1%
S&P +1.3%
chum1 -25%

Online chum1

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Re: New To Investing Thread
« Reply #2980 on: December 29, 2020, 08:59:41 AM »
At the end of the day yesterday, down 15%, I was like, "That SUCKED. Thank God it's over." Now, I'm down another 10%. Whoops!

Offline wetwillie

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Re: New To Investing Thread
« Reply #2981 on: December 29, 2020, 09:01:17 AM »
What’s driving the blood bath in chum1 fund?
When the bullets are flying, that's when I'm at my best

Offline Kat Kid

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Re: New To Investing Thread
« Reply #2982 on: December 29, 2020, 09:10:24 AM »
not -10% bad, but the Chinese Communist Party interfering with my investments in Alibaba and other Chinese internet companies has me pretty chaffed.  Doubled down on Baba and its up today so hope we get back to $300.

Online chum1

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Re: New To Investing Thread
« Reply #2983 on: December 29, 2020, 09:12:42 AM »
What’s driving the blood bath in chum1 fund?

Shitty stocks across the board, apparently. I'm still +1.3% over the past month, so it's not nearly as bad as it could be.

Offline Kat Kid

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Re: New To Investing Thread
« Reply #2984 on: December 29, 2020, 09:15:21 AM »
do you pick em?

Online chum1

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Re: New To Investing Thread
« Reply #2985 on: December 29, 2020, 09:20:52 AM »
do you pick em?

Sort of. I use an algorithm. So, I don't know anything about them, really.

Offline steve dave

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Re: New To Investing Thread
« Reply #2986 on: December 29, 2020, 09:22:04 AM »
the chum1 algo has my attention

Offline ben ji

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Re: New To Investing Thread
« Reply #2987 on: December 29, 2020, 09:44:13 AM »
Yes, please tell me more about your algo and what it looks for.

Or maybe you just tell us some of the stocks that are in the chum1 fund and we try to guess what the algo looks for?

Offline wetwillie

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Re: New To Investing Thread
« Reply #2988 on: December 29, 2020, 09:45:05 AM »
Sounds like we should be fading the algo
When the bullets are flying, that's when I'm at my best

Offline Rage Against the McKee

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Re: New To Investing Thread
« Reply #2989 on: December 29, 2020, 10:05:22 AM »
What do you investing pros do with kansas farmland you acquire via inheritance that you have no desire to have?

I would only sell that land if I absolutely needed the money. Put it into CRP, lease it, whatever, but the land itself is going to be a solid investment and there is always a chance that some gas/wind/solar guy comes along and gives you a ton of money.

Online chum1

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Re: New To Investing Thread
« Reply #2990 on: December 29, 2020, 10:25:15 AM »
tell us some of the stocks that are in the chum1 fund and we try to guess what the algo looks for?

Here are the six worst right now.

AAU
ARCT
BMYRT
FRANQ
QTT
UXIN

Online chum1

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Re: New To Investing Thread
« Reply #2991 on: December 29, 2020, 10:32:08 AM »
I am getting absolutely hammered this week. First time I've had anything remotely like this before!

DJIA +1.1%
S&P +1.3%
chum1 -25%

Seem to have bottomed out at -35% (including Monday) about an hour ago. Free fall in the first hour of trading. I was starting to ask myself if I should consider throwing in the towel and selling off everything.

Offline steve dave

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Re: New To Investing Thread
« Reply #2992 on: December 29, 2020, 10:47:23 AM »
well, ARCT was definitely some shitty timing.

and lmao at BMY.RT. straight up gamblin' man.

Offline kim carnes

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Re: New To Investing Thread
« Reply #2993 on: December 29, 2020, 10:52:44 AM »
It could be a good time to buy ARCT.  I owned it up until last week.  I don’t see the news as definitively bad.

Offline steve dave

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Re: New To Investing Thread
« Reply #2994 on: December 29, 2020, 10:54:38 AM »
It could be a good time to buy ARCT.  I owned it up until last week.  I don’t see the news as definitively bad.

agree here.

Offline Kat Kid

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Re: New To Investing Thread
« Reply #2995 on: December 29, 2020, 11:55:56 AM »
lesson I'm learning:  if the healthcare guy eats crap on the health care stocks, probably not a great idea to try and pick em.

Offline treysolid

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Re: New To Investing Thread
« Reply #2996 on: January 02, 2021, 03:12:30 PM »
In 2021, I am welcoming 4 new ETFs into my portfolio: BOTZ, ARKG, IDNA and SMH.

Offline Kat Kid

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Re: New To Investing Thread
« Reply #2997 on: January 02, 2021, 03:36:44 PM »
In 2021, I am welcoming 4 new ETFs into my portfolio: BOTZ, ARKG, IDNA and SMH.

I had ARKG for like 4 days until I looked and saw that ARKK basically had most of the names and I already owned IBB and XBI.  I like SMH though.  If you are looking for exposure to those types of things I would consider just owning ARKK instead of all 3.

Offline kim carnes

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Re: New To Investing Thread
« Reply #2998 on: January 02, 2021, 04:15:11 PM »
ARKK is ripe for a beating IMO, a lot of the holdings have taken a bath in the last week but man what a year it’s had.

Offline Kat Kid

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New To Investing Thread
« Reply #2999 on: January 02, 2021, 04:35:44 PM »
ARKK is ripe for a beating IMO, a lot of the holdings have taken a bath in the last week but man what a year it’s had.
I don’t disagree, I was late to the party but still was up like 50% on it. So I have a stop in on it.

But the amount of overlap in all of those names is pretty big.
« Last Edit: January 02, 2021, 04:40:26 PM by Kat Kid »