|
Post by westbranch on Jan 27, 2017 8:57:41 GMT -6
We have 2 mortgages, a HELOC, and a low interest vehicle loan. Keep minimum payments way below what banks require just for us to be comfortable. We still make extra payments on everything to speed things up a bit. Everything is 4% or lower, at 5% or more we would likely be trying to pay things off quicker.
I have seen people on other forums talk about not putting into retirement to buy hunting land, based on what SD has said in the past I know he isn't one of those guys. No way I would want to do that. I am not a fan of the whole/permanent life insurance for the majority of people, but I also think SD is smarter with it than the average character. I do question no more 401k contributions for the rest of the year, I am guessing you reduce it to whatever it takes to get the match? Also thought of the 5 year rule on the roth, but it looks like you have that covered.
|
|
|
Post by Foggy on Jan 27, 2017 10:25:48 GMT -6
I am with MO. I would be in no rush to pay off debt at a 4% cost of money. Money has never been so cheap to borrow in my lifetime. I wish I was young enough to take advantage of it.
Also, I have a hard time with paying interest in order to borrow YOUR MONEY (from the cash value - which is just an over-payment of your money) on a life insurance contract. To me that is just plain dumb. Take the cash value.....cancell the whole life plan and buy some term insurance. <----That's my advice and I'm sticking to it.
I do think building up some cash now may be wise. Better investment opportunities will come with time. The market is fully valued right now. I am staying in a balanced mix of stocks and bonds.....but don't expect a high level of ROI given the current market multiples. But who knows??......lots of folks been wrong about markets before.
|
|
|
Post by MoBuckChaser on Jan 27, 2017 10:26:59 GMT -6
WB, can you explain the 5 year rule on a roth IRA?
|
|
|
Post by sd51555 on Jan 27, 2017 12:18:18 GMT -6
You have some of the lowest interest rates in history. I would not scrap my investments to get rid of this great opportunity. JMO! The only stuff I'm actually selling is stuff that is either very high already (Apple, Google, Amazon, Dow Chemical, Union Pacific), or has been a complete miss on the market run up (bullion and PSX stock). Of the winners I'm selling, i'm only taking a little off the top (10-20% of the position). Lots of stuff in the middle that has room to run, and is currently doing so. SHW shot up 8% this week. GD shot up 5% today.
I'm still using about 35% leverage in the deal by having some loans on out the life insurance, but that doesn't impact the policies much, and frankly, that's why I have it at this time anyway. Insurance as a stand alone investment is pretty shitty. But when you multi-purpose it as a safe lending tool and the conservative corner of your portfolio, it works a little better. Having that lets me be more high risk in my regular portfolio.
|
|
|
Post by MoBuckChaser on Jan 27, 2017 12:22:33 GMT -6
Your Young, I would not have anything conservative as a investment until getting near retirement age. Conservative is another word for not making any money!
|
|
|
Post by sd51555 on Jan 27, 2017 12:26:27 GMT -6
Have I drummed up enough interest in the life insurance thing to start it's own thread to beat the idea around? The only reason I ask is that I go look for "insurance as an investment" articles and read through them.
I laugh at how poorly the concepts are researched, yet published by forbes and Kiplinger. The investment media does the same hit pieces on investing in precious metals. Granted, there are as many risks there as there are in buying life insurance if you don't know what you're doing.
|
|
|
Post by kl9 on Jan 27, 2017 12:26:44 GMT -6
Bullion runs in the opposite direction of the stock market. Not a good time to sell IMO
|
|
|
Post by MoBuckChaser on Jan 27, 2017 12:41:19 GMT -6
Have I drummed up enough interest in the life insurance thing to start it's own thread to beat the idea around? The only reason I ask is that I go look for "insurance as an investment" articles and read through them. I laugh at how poorly the concepts are researched, yet published by forbes and Kiplinger. The investment media does the same hit pieces on investing in precious metals. Granted, there are as many risks there as there are in buying life insurance if you don't know what you're doing. I have not seen anyone thing good about life insurance as a investment. Not much to beat around.
|
|
|
Post by MoBuckChaser on Jan 27, 2017 12:46:37 GMT -6
Bullion runs in the opposite direction of the stock market. Not a good time to sell IMO That is another thing about investing I don't get. Buy one item that goes up, while you lose money on the other Item. Its like betting on red and black on the roulette wheel.
|
|
|
Post by westbranch on Jan 27, 2017 13:16:41 GMT -6
WB, can you explain the 5 year rule on a roth IRA? There are 5 year rules for roths that apply to different situations (started as a roth IRA, converted to roth ira) generally it must be 5 years after the initial contribution before you can make distributions tax free, EVEN IF you are 59.5. This is measured from the first day of the tax year that had the contribution. So if you make a 2016 contribution on 4/15/17, it is measured from 1/1/16, so you have to wait until 1/1/21 to make any distributions without tax or penalty. Which is actually 3 years and 8 months from the contribution date. So you can convert funds from a traditional IRA, pay the income (no penalties or extra taxes), wait 5 years and access those funds. A couple links that have more details. www.kitces.com/blog/understanding-the-two-5-year-rules-for-roth-ira-contributions-and-conversions/www.irahelp.com/slottreport/3-five-year-rules-roth-iras-you-need-knowAlso, you can withdraw contributions you made to a Roth IRA anytime tax and penalty free. But as noted above, that is only contributions made directly to that Roth, not a roth that has funds from other accounts that were converted. Could it be more confusing?
|
|
|
Post by Foggy on Jan 27, 2017 13:29:07 GMT -6
If you have tax-free money accumulating.......I would not touch those dollars in order to pay off some debt. Hell......I'm getting old.....and don't intend to use my Roth money before I die. I can roll that money to my grandchildren (tax free).....and thru the magic of compounding they may have a fortune one day (IF they don't spend it). I will spend my regular IRA dollars.....only because I will have to do so.
|
|
|
Post by MoBuckChaser on Jan 27, 2017 13:30:40 GMT -6
WB, can you explain the 5 year rule on a roth IRA? There are 5 year rules for roths that apply to different situations (started as a roth IRA, converted to roth ira) generally it must be 5 years after the initial contribution before you can make distributions tax free, EVEN IF you are 59.5. This is measured from the first day of the tax year that had the contribution. So if you make a 2016 contribution on 4/15/17, it is measured from 1/1/16, so you have to wait until 1/1/21 to make any distributions without tax or penalty. Which is actually 3 years and 8 months from the contribution date. So you can convert funds from a traditional IRA, pay the income (no penalties or extra taxes), wait 5 years and access those funds. A couple links that have more details. www.kitces.com/blog/understanding-the-two-5-year-rules-for-roth-ira-contributions-and-conversions/www.irahelp.com/slottreport/3-five-year-rules-roth-iras-you-need-knowAlso, you can withdraw contributions you made to a Roth IRA anytime tax and penalty free. But as noted above, that is only contributions made directly to that Roth, not a roth that has funds from other accounts that were converted. Could it be more confusing? I think you worded it perfectly. Why would anyone put money in a Roth IRA if they plan on using the money before retirement?
|
|
|
Post by westbranch on Jan 27, 2017 14:13:43 GMT -6
The average person is putting minimal amounts into retirement accounts, usually the minimum of 3% of salary to get company match into the 401k or whatever that amount maybe. A super saver would be someone that would put another $100/mo into a roth because they read about on yahoo.com personal finance. They spend the rest of their paychecks, so if they had an emergency and didn't have a way to access their "retirement" accounts there would be an uproar.
There are a lot of high income wage earning (non self employed) types, think doctors, software engineers, executives, who are using "mega backdoor roths" to convert large amounts of after tax $ and get access to it starting in 5 years (actually less than 4). They cannot access a regular roth due to income limits, but there are some loopholes where they can convert after tax $. Makes it easier to have a pool of money that you can access before 59.5 if you decide to pull the plug on work.
|
|
|
Post by sd51555 on Jan 27, 2017 14:16:21 GMT -6
I did a backdoor Roth a few years when things were good. I liked having that little loophole available.
|
|
|
Post by kl9 on Jan 27, 2017 15:09:02 GMT -6
Bullion runs in the opposite direction of the stock market. Not a good time to sell IMO That is another thing about investing I don't get. Buy one item that goes up, while you lose money on the other Item. Its like betting on red and black on the roulette wheel. en.m.wikipedia.org/wiki/Flight-to-qualityIf you had all that figured out you'd be a billionaire in months.
|
|