Sanrith Descartes
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Investing General Discussion
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Sanrith Descartes
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ABBV with the beat top and bottom this morning up 6.5% (which sounds trivial in a week like TSLA had). We like to always talk about our wins, but this one is one I sold out of too early. Good news is I still hold it in my Mom's account. Mom is happy.
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Question about RothIRAs:
I understand you must have made at least as much income in the year you make a RothIRA contribution. For example last year if you made 7000 in income you can contribute 7000 into the Roth. But what if ALL 7000 of that income went straight into your 401k? Can you still stuff away 7000 more into the Roth? (lets pretend I had a extra 7000 hidden in my mattress).
Roth and non-working spouse. If you are married and filing joinitly , the non-working spouse can ALSO take full advantage of the Roth max contribution so long as the working spouse made enough money in that year to equal the cap for both Roths right? (husband made 15k last year, both he and his housewife can put 7k into each of their Roths, correct? Even if husband diverted all 15k into his 401k???)
I understand you must have made at least as much income in the year you make a RothIRA contribution. For example last year if you made 7000 in income you can contribute 7000 into the Roth. But what if ALL 7000 of that income went straight into your 401k? Can you still stuff away 7000 more into the Roth? (lets pretend I had a extra 7000 hidden in my mattress).
Roth and non-working spouse. If you are married and filing joinitly , the non-working spouse can ALSO take full advantage of the Roth max contribution so long as the working spouse made enough money in that year to equal the cap for both Roths right? (husband made 15k last year, both he and his housewife can put 7k into each of their Roths, correct? Even if husband diverted all 15k into his 401k???)
401k contributions are pre-tax, meaning that they reduce your total taxable income and lower the amount remaining to qualify for other purposes such as Roths.
Yes, generally.
No, because in this scenario you have zero taxable income after your 401k contributions and no one gets to use the Roth. You don't ever get to apply more money to tax-advantaged purposes in a given year than you had income (barring exotic cases).
Keep in mind that on the other end of the scale, if you have too much income your ability to contribute to Roths is reduced.
Retirement Plans FAQs regarding IRAs Contributions | Internal Revenue Service
Find answers to commonly asked questions about IRA contributions. Learn about contribution limits, tax deductions, IRAs and work retirement plans and more.
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Hmm ok but what about income that was put towards a CSPP (company stock purchase plan). Its after tax income but goes to buy company stocks at a discount. Can that dollar amount be used towards meeting the income requirements for Roth contribution? Same can be said for money earned but used to pay for after tax programs like short term disability, etc
Any taxable income counts towards your min/max Roth limits. In your scenario, think of it as putting your income into the Roth and spending down savings for whatever else.
Most standard commercial tax software will calculate the answers to all this.
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yes , ME. I'm debt free now and last year only worked barley enough to max my 401k and HSA and rothIRA. This year there will be even less household income coming in, basically just my wages which I only make up to that 401k/HSA limit. I'm trying to figure out what misc. post- tax compensation I get can also be applied to a Roth contribution. ESPP (we call it CSPP), post tax payments to short term disability insurance, etc.
Probably, but I'm trying to plan out THIS work year. I'd rather kick up my heels than make one penny more that can't go into some sort of tax advantaged account.
I'm mostly trying to figure out if I should bother with the company stock purchase plan or not. If that 10 percent (the max) I can deduct from my paycheck that goes post tax for that can ALSO be used towards fulfilling the income requirements for Roth contribution, then its more worth it to me to enroll in it (and work a bit more).
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You do you, but that's a pretty odd approach unless you couldn't actually use any more money.
I'm self-employed with a very lumpy income pattern and have occasionally had years where I barely meet the minimums for my i401k.
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You are right. But its more that I hate work more than I hate taxes. I'm looking at those tax advantaged plans to help motivate me to not take months x,y,z off (my job is super flexible).
eXarc
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Anyone here actively trade Options? Looking for some anecdotes and experiences, advice on what to be cautious about even when things seem incredibly solid and so on. I’ve read up on a lot, but I want to hear some real stories from real people and not just textbook jargon on news sites. I’ve gone to Reddit and been on their subs for a long time but they are either hilarious trolls like WSB (which I fucking love) or lofty bullshit on the more serious subs.
eXarc
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Where I’m at with it currently is basically going short term calls on (lower risk) stocks, MSFT and steady risers. Going long term (6+ months) still makes me a little uneasy but the way I understand it, I can sell the contracts before they expire anyway so if I find a comfortable place to get out and find a buyer of the contracts I’m good? I’m not trying to dip into extremely volatile things yet as I don’t have the ability or risk tolerance to eat heavy handed losses at the moment, but in the future I think my risk tolerance will be much higher and would love to utilize options probably more than anything to generate short term bursts of cash and use my stock portfolio to invest long term and diversify as much as possible over time.
Where I’m at right now, Puts terrify me and it appears to be a completely batshit way of trying to acquire wealth and instead seems like more intelligent to use at a protection barrier and hedge calls or other plays to limit potential losses from sinking heavily. Unless I am misunderstanding something. I saw someone lose a shit ton of money in a box spread recently because they didn’t think it through and literally though it was risk free, and tried to explain along with others on the forum that it was absolutely not risk free and it got out of control, I think the buyer exercised some of their shares he didn’t actually have or something, and he was out like 18-20k literally overnight.
How do you decide you are confident enough to make a call? Is there basically a barrier you cross after enough research and due diligence then pull the trigger and pray you’ve done your homework and are correct?
Is it feasible to become highly proficient at making good Calls and using that as a method of consistently making small, but meaningful amounts of money over and over? What kind of risks are hiding beneath the surface that a beginner might be completely blindsided by?
Where I’m at right now, Puts terrify me and it appears to be a completely batshit way of trying to acquire wealth and instead seems like more intelligent to use at a protection barrier and hedge calls or other plays to limit potential losses from sinking heavily. Unless I am misunderstanding something. I saw someone lose a shit ton of money in a box spread recently because they didn’t think it through and literally though it was risk free, and tried to explain along with others on the forum that it was absolutely not risk free and it got out of control, I think the buyer exercised some of their shares he didn’t actually have or something, and he was out like 18-20k literally overnight.
How do you decide you are confident enough to make a call? Is there basically a barrier you cross after enough research and due diligence then pull the trigger and pray you’ve done your homework and are correct?
Is it feasible to become highly proficient at making good Calls and using that as a method of consistently making small, but meaningful amounts of money over and over? What kind of risks are hiding beneath the surface that a beginner might be completely blindsided by?
Blazin
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To simplify and give you a better answer explain what you want to do without using options terms. So taking MSFT for example, "I want to capture some potential upside while limiting my risk" "I think it's overbought but bullish long term and would like to get long at the correct price. etc." Once you give me an example of the type of position you want to take, I'll tell you how options can help frame that trade and often in a risk defined way.
Blazin
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To answer some questions in the meantime. For most options on large companies or indexes there is sufficient liquidity to exit your position. Positions with less liquidity or open interest you could pay for it when trying to exit the trade prior to exp. via a large bid and ask spread. The computers won't take your trade without you giving up part of the move. It's usually prudent to look at the bid/ask spreads on the options you are interested in prior to entering. It could be a penny or two all the way up to $1+. On individual equities, like MSFT, the majority of the action is in the monthly options and the spreads will normally be manageable. For popular indexes (SPY, QQQ, EEM, IWM etc.) the spread condition is usually excellent.
Undefined risk is what probably terrifies you, puts used in particular ways can be very low risk trades. We need to get into selling puts/calls vs buying them. Need to discuss being naked vs covered. But would rather ease into that to make sure you get the info in a way that will be useful to you.
Never enter an option trade until you fully understand all possible outcomes and their effect on your position. Software has helped a lot with this as many trading programs show charts outlining the risk but for me this is no substitute to actually understanding the trades you are making. Options trades can be boring for 90% of the time lulling people into a false sense of security and completely unprepared when that 10% comes rolling along, and the more you play the more it's a matter of when not if. I lost 20k once 17 or so years ago on an options trade and I will never forget the fool I was, but it was a great teaching moment for me.
To your last few questions see my first reply, working through some examples is probably the best way to answer them.
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ShakyJake
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Many years ago I bought shares in a Vanguard energy index fund (VDE) when the energy market was at a high. As many might know, it crashed hard a few years ago and I've been waiting forever for it to climb back up. I'm currently underwater by $1200 bucks off an investment of ~$5800. I'm starting to wonder if I'd be better off taking the loss and putting the money somewhere else. The only other index fund I've invested in is their VTI Total Stock Market which has, obviously, done quite nice.
Any thoughts are appreciated.
Any thoughts are appreciated.
Sanrith Descartes
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ShakyJake
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Not sure. I'm just looking at the "Total Gain/Loss" under the "Unrealized gains & losses" area.
Frenzied Wombat
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I don't see energy going up anytime soon, but that being said if you wanted to sell, you should have done it before EOY for some tax loss harvesting. I would personally sell it and dump the money in a military or internet ETF.
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