Investing General Discussion

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Furry

Furry

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Mist said:
There's no knobs left to turn. They've been cutting rates and easing for a decade now.
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Yea, I've touched on this before. That's why the situation is even worse in europe where they went too far. Low interest rates in a boom economy has just lead to people borrowing lots of money and investing it in poor vehicles. Inflated real estate prices, people borrowing and using it to make leveraged stock market bets. It's setting up 2008 again.
 
Sanrith Descartes

Sanrith Descartes

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Furry said:
Yea, I've touched on this before. That's why the situation is even worse in europe where they went too far. Low interest rates in a boom economy has just lead to people borrowing lots of money and investing it in poor vehicles. Inflated real estate prices, people borrowing and using it to make leveraged stock market bets. It's setting up 2008 again.
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I wonder how much of our downside moves last week were attributed to margin calls on those over leverage folks.
 
sleevedraw

sleevedraw

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I just hope the low primes hang around for another year or two. The boy and I are saving for a down payment ATM, and I want to do a traditional 20% down to avoid PMI.
 
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Gravel

Gravel

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Furry said:
Im sure that highschool student is being fucking crushed by his tax burden. Infact, this is why I said you only get the traditional if you don't qualify for a Roth. If you make enough money to have a high tax burden a roth is not available to you. (Technically it still is, but that's a story for another time.)

The only exception where you can get a roth and not have it be the ideal situation compared to a traditional is if you are a few years from retirement and have saved practically nothing so you'll definitely be a few tax brackets down in retirement. At that point you're probably screwed anyways.
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I guess there's no one with an income between "high school student" and "Roth IRA phase out."

Seriously, you're a fucking moron. I hope no one takes any financial advice from you.
 
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moonarchia

moonarchia

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Sanrith Descartes said:
Assuming you havent, check the limits on deductability with an IRA if you already have a 401k if you decide to go traditional.
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While it would save me 1500 up front per year in taxes, I would get a lot more in the end if Roth continues to be untaxed when it pays out.
 
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Gravel

Gravel

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moonarchia said:
While it would save me 1500 up front per year in taxes, I would get a lot more in the end if Roth continues to be untaxed when it pays out.
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Don't be a Furry.

This is awful math. If it really is saving you $1500 in a single year, how could that possibly be beaten by a Roth? Doesn't matter if you're talking single or joint either, one is 25% savings and the other is 12.5%...immediately.

You're applying some weird fallacy about how you'd have tens or hundreds of thousands in tax savings 40 years from now while ignoring that you're giving up the opportunity cost of using the tax savings now. If you wouldn't use the Traditional tax savings right now, you're really just talking about upping your spend rate arbitrarily so the Roth wins in the end.

This is nonsense!
 
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Attog

Attog

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Gravel said:
Don't be a Furry.

This is awful math. If it really is saving you $1500 in a single year, how could that possibly be beaten by a Roth? Doesn't matter if you're talking single or joint either, one is 25% savings and the other is 12.5%...immediately.

You're applying some weird fallacy about how you'd have tens or hundreds of thousands in tax savings 40 years from now while ignoring that you're giving up the opportunity cost of using the tax savings now. If you wouldn't use the Traditional tax savings right now, you're really just talking about upping your spend rate arbitrarily so the Roth wins in the end.

This is nonsense!
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I realized the truth of this about 15 years ago and switched everything from ROTH to traditional. I do still have my old ROTH accounts and they will be nice to have in 15 years when I retire, but the simple fact is for normal people, having that extra money now is worth it. Gravel Gravel is right on this, at least for average people like me.
 
C

Captain Suave

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Gravel said:
If it really is saving you $1500 in a single year, how could that possibly be beaten by a Roth? Doesn't matter if you're talking single or joint either, one is 25% savings and the other is 12.5%...immediately.
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It's not absurd as long as you have a decent expectation of what tax bracket you'll be in at retirement. The difference isn't dramatic, though, and you're right that for most people a traditional is a better fit.
 
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LachiusTZ

LachiusTZ

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Roth, for me, is a much smaller fund that I am using for the sole purpose of maybe I have a time when I want to take out money tax free.

I won't need it all the time, but having that utility on the chance it will benefit me is a "why not" thing.

I think I have 7% or so in Roth

Could be a stupid thing to do.
 
Gravel

Gravel

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Captain Suave said:
It's not absurd as long as you have a decent expectation of what tax bracket you'll be in at retirement. The difference isn't dramatic, though, and you're right that for most people a traditional is a better fit.
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Unless you're expecting to be in a higher bracket, which is unlikely, a Traditional is a better fit. Since you're currently employed, and saving enough to actually have, y'know, savings, you're likely earning higher than you will be drawing in retirement.

The only caveat is the idea that we get a Bernie Sanders that raises tax rates exorbitantly on middle class incomes (which honestly, wasn't a concern previously but is becoming more likely now), in which you could expect higher tax brackets. But by this same token, that kind of overreaching government will also likely raid Roths and you're screwed in that scenario anyway.
 
Sanrith Descartes

Sanrith Descartes

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The idea is to hit your traditional when you have retired and your tax bracket should be significantly lower than when you are putting the money in. For low income workers then yeah I can see the Roth. For people in the mid to hi 20% tax bracket while working, how can that be lower than when they retire and have zero income except SS (maybe) and their retirement accounts?

Disclaimer - I also think paying hundreds of dollars a share for the cash burning machine known as Tesla is insane, so I may not be the savvy investor.
 
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C

Captain Suave

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Gravel said:
Unless you're expecting to be in a higher bracket, which is unlikely, a Traditional is a better fit. Since you're currently employed, and saving enough to actually have, y'know, savings, you're likely earning higher than you will be drawing in retirement.
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It depends. I'm self-employed and have a very lumpy income. In low years I'm making way less than my planned retirement withdrawal rate and I'll put money in the Roth because the immediate tax cost is small compared to the future gains.
 
Furry

Furry

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I think I've changed my mind.

I'm starting to think that you guys are absolutely right in assuming you're going to be in a lower tax bracket at retirement.
 
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Fogel

Fogel

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TJT

TJT

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Furry said:
I think I've changed my mind.

I'm starting to think that you guys are absolutely right in assuming you're going to be in a lower tax bracket at retirement.
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I live super cheap now lol. No reason to think I wont live even cheaper when I'm older and need even less shit.
 
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