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Thread: Financial Independence

  1. #301
    Darth Small Macheath's Avatar
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    Time to think about HSAs again! I think the smartest approach to investment vehicles, based on best return and most tax advantage, is something like:

    1. up to company match in 401k
    2. max out HSA
    3. max out Roth IRA
    4. max out 401k
    5. brokerage account

    The drawbacks to an HSA, however, are numerous. First of all, you need a high deductible health plan. Which means you need to be young, healthy, and willing to take risks. Second... the annual contribution limit is even lower than an IRA. And third, shit, I like a simple setup. I do a lazy portfolio because I'm lazy, not because it's better than perfect diversification; my approach to accounts is similar. I realize things could be more efficient if I were splitting my money based on a flow chart, but I'd rather just put everything in Account #1 until I can't anymore, then everything in Account #2, and then I'm done because I ran out of money.

    Need to run the math on how much money I'm costing myself by continuing to ignore HSAs, and then contrast that (hopefully small) amount against the pain in the ass a HDHP might be.

  2. #302
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    Here's a wrench that would completely change your savings priority. Trump wants to lower corporate taxes and make up the difference by taxing the employees. I'm not even going to try to explain the fucking insanity of this plan, instead I'm going to contact my representatives and build protest signs. Cheeto Hitler can blow me.

  3. #303
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    Quote Originally Posted by nynnja View Post
    Here's a wrench that would completely change your savings priority. Trump wants to lower corporate taxes and make up the difference by taxing the employees.
    I love these kinds of things:

    Quote Originally Posted by The Article
    According to the latest report from the Joint Committee on Taxation, [tax-deferred 401k] plans cost the federal government more than $90 billion in potential tax revenue in 2016.
    Meanwhile, initial estimates for 2016 suggest the government hauled $3.5 trillion in revenue for its overall budget in 2016, including:

    • $1.5 trillion from individual income tax,
    • $1.1 trillion from social security tax, and
    • a whopping $0.3 trillion from corporate income tax.

    Fucking over every American worker with a 401k for an extra $0.09 trillion is like cutting the NEA's $148 million budget to save money. The numbers sound impressive and wasteful until you hear them in context ($148M = 0.02% of total budget).

  4. #304
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    Quote Originally Posted by Macheath View Post
    I'm down around $5000 from my recent auto purchase (loan amount minus car value). The mini-crash in August hurt my portfolio, and it hasn't quite recovered. ... I've got a shitload of work to do in the next 8 months if I want this year to keep pace with the last few.
    Looking back, by 8/1/2016 (i.e. the end of Macheath Fiscal Year 2015) my net worth had ultimately gone up 18 percent. Didn't quite keep pace, and in terms of raw numbers it was my worst year since the Great Financial Awakening of 2012. Still, a good year. Not going to shit on 18 percent.

    MFY16 is on track to be (with a little luck) the best post-Awakening year, in spite of the thousands upon thousands of dollars marrying an immigrant is costing me.

    So rather than sweat mini-crashes and new debts, now I'm worrying about the whole market! It's getting pretty nuts out there, the stock market and real estate are both inflating like nutballs. Think we're due for another 2009?

    TIME TO SELL IT ALL

  5. #305
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    My current company was acquired and as a result all ESPP share were forcefully liquidated. I'm sure that will result in an unpleasant tax bill next year, but for the time being I have a significant amount of cash to deal with.

    I currently placed the money in a savings account paying 0.95%. And I'm already maxed out on all 401K contributions, have 0 debt, all that good stuff. I already have most of my retirement accounts invested in the market and I'm already getting restless there (see your "TIME TO SELL IT ALL" comment above). So I really don't want to wade more into the stock market.

    I am looking at joining LendingClub with a small investment. Has anyone tried it or has any comments or prior experience- good or bad?

    Any other ideas or recommendations for good cash parking options or "safer" investment choices? I'd rather not lock the money in anything more than a year if possible.

  6. #306
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    Quote Originally Posted by zlordsahan View Post
    I am looking at joining LendingClub with a small investment. Has anyone tried it or has any comments or prior experience- good or bad?
    MMM has written a comprehensive diary of his LendingClub experiment. Although, two weeks ago he Tweeted that he's pulling out money.

  7. #307
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    Quote Originally Posted by zlordsahan View Post
    My current company was acquired and as a result all ESPP share were forcefully liquidated. I'm sure that will result in an unpleasant tax bill next year, but for the time being I have a significant amount of cash to deal with.
    ...
    Any other ideas or recommendations for good cash parking options or "safer" investment choices? I'd rather not lock the money in anything more than a year if possible.
    The one year investment horizon limits your "safe" options. You're probably stuck with a savings account or CD, which will give a pretty pathetic return.

    If you can commit some portion of the money for 5-10 or more years, and would still like something safe... I've been thinking about I-Bonds.

  8. #308
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    Thanks. That was very helpful. Reading the comments also led me to another 'social lending' company called Prosper. So I will look into that one as well. They seem to be good places to invest, but it does seem like I have to be involved in the management of the funds. Hopefully, they offer some 'Do it for me' button on their web site.

    Quote Originally Posted by Macheath View Post
    The one year investment horizon limits your "safe" options.
    Well, by safe I really mean "unlikely to lose 30% of your principal overnight" not the "guaranteed not to lose a penny" safe.

  9. #309
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    Quote Originally Posted by zlordsahan View Post
    "unlikely to lose 30% of your principal overnight"
    Well, sure, but that describes the stock market: unlikely to drop 30% overnight, or even in a year...... but not impossible, or even unprecedented.

    This is just the question of your risk tolerance. Bank accounts are safe and low return, stocks are less safe, bonds are somewhere in the middle. I don't know of anything (in the market) that you can invest in for 1 year and get some sort of decent return without assuming a bit of risk. Maybe you could try flipping a house.

    EDIT: To be clear, when we talk about stocks, we're talking about index funds, right? I wouldn't suggest putting your money in TSLA for a year, but VTSAX? Sure.
    Last edited by Macheath; 04-27-2017 at 05:43 PM.

  10. #310
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    Quote Originally Posted by Macheath View Post
    I don't know of anything (in the market) that you can invest in for 1 year and get some sort of decent return without assuming a bit of risk.
    Don't you consider something like LendingClub as an investment option? It seems that it offers a decent return with a relatively safer prospect than stocks. Trump could bomb Kim Jong Un and stocks (including index funds) may lose 20% in one hour, but people still have to make their monthly loan payments.

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