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Looking for advice on short term investments. I've got a sizeable chunk of change from selling my house that I need to figure out what to do with. I'm going to be renting for the next couple years and then looking to buy again when the market has hopefully returned to sanity. Main concern is just not losing buying power to inflation but also want to make sure I'm not going to lose half of it in the next correction. Any advice?

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1 hour ago, KWings06j said:

Looking for advice on short term investments. I've got a sizeable chunk of change from selling my house that I need to figure out what to do with. I'm going to be renting for the next couple years and then looking to buy again when the market has hopefully returned to sanity. Main concern is just not losing buying power to inflation but also want to make sure I'm not going to lose half of it in the next correction. Any advice?

Depends on when you need the money...within next couple years?   Savings account (preferably "hi yield") would likely be your best bet.  If you don't really need it for 5-10 years or more, your options are more varied, and many on here and elsewhere would suggest dollar cost averaging (or not who cares) into a low-cost index fund.

Alternatively you could go put it on black.

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1 hour ago, KWings06j said:

Looking for advice on short term investments. I've got a sizeable chunk of change from selling my house that I need to figure out what to do with. I'm going to be renting for the next couple years and then looking to buy again when the market has hopefully returned to sanity. Main concern is just not losing buying power to inflation but also want to make sure I'm not going to lose half of it in the next correction. Any advice?

Crypto. Seriously. 

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9 minutes ago, VMFA187 said:

Crypto. Seriously. 

Bitcoin is back to $50,000.  As inflation continues and the clowns pushing more stimulus get closer to success Bitcoin is looking better and better.  I think $300,000 within two years.

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2 minutes ago, ClearedHot said:

Bitcoin is back to $50,000.  As inflation continues and the clowns pushing more stimulus get closer to success Bitcoin is looking better and better.  I think $300,000 within two years.

Concur. I think it gets to six figures in November / December, maybe even as high as $140k. 

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4 hours ago, KWings06j said:

Looking for advice on short term investments. I've got a sizeable chunk of change from selling my house that I need to figure out what to do with. I'm going to be renting for the next couple years and then looking to buy again when the market has hopefully returned to sanity. Main concern is just not losing buying power to inflation but also want to make sure I'm not going to lose half of it in the next correction. Any advice?

bro, that's the million dollar question for everyone (no pun intended)...real estate is in a bubble, stocks are inflated, crypto is super volatile, savings can't keep up with inflation.  if you figure it out, let us know. 🍻

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9 hours ago, KWings06j said:

Looking for advice on short term investments. I've got a sizeable chunk of change from selling my house that I need to figure out what to do with. I'm going to be renting for the next couple years and then looking to buy again when the market has hopefully returned to sanity. Main concern is just not losing buying power to inflation but also want to make sure I'm not going to lose half of it in the next correction. Any advice?

Yeah, go back in time and don't sell your house.

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6 hours ago, HeloDude said:

Don’t worry, everything is fine.  Biden told me so.  And if things like gas goes up, then that’s just the price we have to pay to fight climate change.

At least we saved 10¢ on that 4th of July Cookout!

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On 8/18/2021 at 7:18 AM, ClearedHot said:

I also have a longtime investment property that I am selling and reinvesting via the IRS 1031 provision.

Is this your first time doing a 1031? Looking for any intel/recommendations around this process 🍻

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17 minutes ago, Day Man said:

Is this your first time doing a 1031? Looking for any intel/recommendations around this process 🍻

Yes first time doing a 1031, have owned the home for 27 years.  Three items;

1.  Identify the new property soonest and have a backup.  I am lucky already had a property that I am buying from a friend.  Would have to go back and review the rules but I think you have to close on the replacement "like kind" property within 120 days.

2.  You will need an intermediary, by IRS rules you can't touch the proceeds of the sale.  In my case I have a lawyer in South Carolina (where the original property is), that performs this service.  He will hold the funds in escrow and deliver to title company in Florida upon closing on the new property.

3.  Try to find a replacement "like kind" property that is slightly more than the property you are selling.  Some of the literature says it has to be equal to or greater but checked with my CPA and you can actually go lower.  It does trigger capital gains on the difference and you don't want to pay that out of your "winnings." 

Good luck.

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How about avoiding home country bias and investing in the world instead of just looking stateside for investment opportunities? There's some good research by Meb Faber on global portfolios. Yes, here at home everything is expensive and there's not many good places to put money. But internationally that's not the case. In fact there has been research suggesting that buying the cheapest 25% countries overall beats the S and P, though will have some years of underperformance. That's the conclusion I came to. The US market is only 50% of the stock world and like 15-20% of the bond world. Anyone on here invest globally? Cambria has some interesting funds like GVAL that I've started diversifying into. Curious on everyone's thoughts.

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23 hours ago, QAZqaz said:

How about avoiding home country bias and investing in the world instead of just looking stateside for investment opportunities? There's some good research by Meb Faber on global portfolios. Yes, here at home everything is expensive and there's not many good places to put money. But internationally that's not the case. In fact there has been research suggesting that buying the cheapest 25% countries overall beats the S and P, though will have some years of underperformance. That's the conclusion I came to. The US market is only 50% of the stock world and like 15-20% of the bond world. Anyone on here invest globally? Cambria has some interesting funds like GVAL that I've started diversifying into. Curious on everyone's thoughts.

I have an international stock fund and international bond fund in my portfolio just for this reason. Majority of my investment is in the US though.

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23 hours ago, QAZqaz said:

Anyone on here invest globally?

I like picking countries with demographics I like (young populations heading to consumerism, growing industry/QoL, reasonably stable governments, etc.) and throwing money in ETFs of those countries for my IRA. Still got a few years (although getting closer quickly, it seems) until I can access my IRA without penalties, so it’s a long play hoping the numbers do their thing. But, definitely have had some decent unrealized gains on the journey thus far. 

Then again, these days, most US large/mega caps are pretty internationally diversified, so you’re getting decent exposure even investing in US companies. 

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15 hours ago, FDNYOldGuy said:

I like picking countries with demographics I like (young populations heading to consumerism, growing industry/QoL, reasonably stable governments, etc.) and throwing money in ETFs of those countries for my IRA. Still got a few years (although getting closer quickly, it seems) until I can access my IRA without penalties, so it’s a long play hoping the numbers do their thing. But, definitely have had some decent unrealized gains on the journey thus far. 

Then again, these days, most US large/mega caps are pretty internationally diversified, so you’re getting decent exposure even investing in US companies. 

Take a look at this article:

https://mebfaber.com/2019/01/06/you-would-have-missed-961-in-gains-using-the-cape-ratio-and-thats-a-good-thing/

"This strategy beat the S&P 500 by four percentage points per year.  Despite higher volatility (mostly the good “upside” volatility, by the way), it still resulted in a higher Sharpe ratio and lower drawdowns than sitting in expensive US stocks."

The chart that goes along with that quote is definitely worth looking at. CAPE might just be another metric you use to pick countries that look appealing to you. The point though, is these days I'm coming to the conclusion that diversification away from large companies / US companies might be a wise move. It is true that borders matter less and less, but if you're investing in expensive companies, international or not,  your future expected returns will still go down.

WRT investing in mega caps when they are the largest cap company at the time...see chart below. 

 

mega cap investing.jpg

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On 10/13/2021 at 10:42 AM, QAZqaz said:

Take a look at this article:

https://mebfaber.com/2019/01/06/you-would-have-missed-961-in-gains-using-the-cape-ratio-and-thats-a-good-thing/

"This strategy beat the S&P 500 by four percentage points per year.  Despite higher volatility (mostly the good “upside” volatility, by the way), it still resulted in a higher Sharpe ratio and lower drawdowns than sitting in expensive US stocks."

The chart that goes along with that quote is definitely worth looking at. CAPE might just be another metric you use to pick countries that look appealing to you. The point though, is these days I'm coming to the conclusion that diversification away from large companies / US companies might be a wise move. It is true that borders matter less and less, but if you're investing in expensive companies, international or not,  your future expected returns will still go down.

WRT investing in mega caps when they are the largest cap company at the time...see chart below. 

 

mega cap investing.jpg

Interesting article, definitely need to explore his website a bit more. Curious of course what others opinions on this metric are. 

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On 9/14/2021 at 9:43 AM, SocialD said:

 

No, Roth TSP/401k would still be a thing.  It's just saying you can't convert after tax monies into a Roth IRA.  This would mean most of us "rich" guys wouldn't be able to contribute to our Roth IRAs via the "back-door" or "mega back-door," like we do now.  It's simply a money grab by the dems...something we've all known they've wanted to do for a long time.

A lot of us Delta guys (not sure what other companies have the option) use this to stuff our Roth IRAs to the gills. As an example, last year I used the "mega-back door roth," to convert 30k into my Roth IRA and was still able to contribute 6k into a traditional IRA (after tax), the convert that into my Roth IRA.  So even though I made too much to directly contribute to my Roth IRA, I was still able to put 36k into it.  That option would go away.  Not the end of the world, but certainly a loss in a very nice benefit.

This is just the start of what they really want to do, because us rich guys are so greedy and "we didn't earn that."  Means testing SS, eventual taxing of our currently "tax-free" Roth TSP/IRAs will likely be the next things in their sites.  I'm certainly not planning on getting SS as part of my retirement plan, if it's there, cool more beer money.

 

If that still doesn't make sense, check this out. It's different than the standard back-door roth.

So to pull this onion back some... I need some help.  Bad on me, but I didn't realize I would be over the ROTH contribution AGI limit this year, so 1) I believe my only option is to recharacterize those contributions to a newly opened traditional IRA, correct? 2) am I then able to reduce my tax burden on those contributions, since they are now traditional?   I do not have another traditional IRA, but I a SEP IRA through my employer, TSP, and my wife has a simple IRA... do I have to worry about the pro-rata bs? 3) can I then at some point in the future, convert the traditional back to a roth ala the backdoor method above?  Yes, I probably need an accountant, but I want to learn something before I do...

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49 minutes ago, Tonka said:

So to pull this onion back some... I need some help.  Bad on me, but I didn't realize I would be over the ROTH contribution AGI limit this year, so 1) I believe my only option is to recharacterize those contributions to a newly opened traditional IRA, correct? 2) am I then able to reduce my tax burden on those contributions, since they are now traditional?   I do not have another traditional IRA, but I a SEP IRA through my employer, TSP, and my wife has a simple IRA... do I have to worry about the pro-rata bs? 3) can I then at some point in the future, convert the traditional back to a roth ala the backdoor method above?  Yes, I probably need an accountant, but I want to learn something before I do...

So, it’s been awhile since I was deep in this stuff, so please check my work. But, if you’re over the Roth limit, you won’t be able to write off the Traditional money, either. The income limit is what cuts you off from either benefit. 

That said, you can still open up a Traditional IRA that you CANNOT write off the contribution and quickly wrangle the backdoor Roth re-characterization. Seriously, you can open your Traditional one day, put your contribution in, then roll it to the Roth the following day. You should avoid tax implications/pro rata if you don’t invest in anything in the Traditional account.

Here’s a good article that goes over it pretty well.

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Nice, at least in that article they specifically say “traditional” and not mention sep or simple iras… so I’m thinking I’ll be in the clear.  Also wonder if I should just go ahead and start contributing to the Roth again this year and do the same thing next year.

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8 hours ago, Tonka said:

Also wonder if I should just go ahead and start contributing to the Roth again this year and do the same thing next year.

Always worth a shot, but you could hit the same bumps with income. You could just plan on doing the same backdoor option with contributions.
 

Or you can look into Roth TSP (if you’re still in/an ART) or Roth 401k if you’re in Gen Pop. You won’t have the options to invest in securities outside of those plans’ offerings, but it’s an easy way to contribute to a Roth option and not have the income caps (and more than the $6k/yr). You can also roll them over after you retire into your already-established Roth IRA and avoid the RMD requirement. 

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Good video... I'll just give a bottom line for the younger guys (because this is something I had no awareness of - and one day you might be surprised)... there is an Modified Adjusted Gross Income (MAGI) limit to investing in the ROTH IRA, if you are over that limit and still invest in a ROTH IRA you are penalized (6%?) yearly until you do something "legal" with those contributions... if you realize you invested too much, you have until the tax filing dead line to "recharacterize" the ROTH contributions into a traditional (or something else? not sure) ... and currently (2022) it is now legal to the convert the traditional to a ROTH (crazy I know!)  The recharacterization is though it happened in the original year (2021) and the conversion happens in the current year (2022)...

There are a lot of caveats and gotchas (so do the research) and most likely this loop hole is going to be fixed this year. 

 

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https://www.irahelp.com/slottreport/pro-rata-rule-explained-–-you-are-not-getting-double-taxed#:~:text=The pro-rata rule dictates,tax-free and taxable funds.

One of the Gotchas - pro rata rule, basically you pay tax on a % of that conversion that is commensurate with your current IRA pre-tax to after-tx ratio (don't think of this as ROTH to traditional ratio, but all within ALL of your deductible IRAs).  This includes traditional, SEP, and SIMPLE... most likely all the $ you have in those are pre-tax $ and the $ you are converting from the traditional to the ROTH is after-tax.  So if you have a lot in those accounts, you are going to pay tax on almost all of that conversion... crazy.

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I know this is a “Beyond the…” thread, but am I the only dude who didn’t realize that Roth TSP has no income limits? Any advantage (or possibility) of to trying to recharacterize my Trad TSP into the Roth?

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I know this is a “Beyond the…” thread, but am I the only dude who didn’t realize that Roth TSP has no income limits? Any advantage (or possibility) of to trying to recharacterize my Trad TSP into the Roth?

It’s not possible to rollover your Traditional TSP to ROTH TSP. Best option would be to roll it into your ROTH IRA post separation/retirement, if it is still allowed.


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Alright, a question for any of you that invest in bullion. So I recently bought some Platinum Eagles. How can a state charge sales tax on what is officially United States legal tender?

I realize the face value is only $100 but according to the mint's own website it is legal tender (even if the face value is a nominal value). The wholesalers I checked with (Cal Numismatic, JM bullion, apmex)) all say states are now collecting sales tax on bullion coins sales (even ones that are US Mint products and are U.S. legal tender). I've never paid sales tax on US coins before and it doesn't seem right to pay on official US minted coins.

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