Where to Invest Money Right Now?

[Kevo]

And BTW, Kevo did not say anything in his paragraph above I didn't say in the one or two sentences before that. Not one. Now, if you're paying me $250 an hour live, you can damn well bet I'm the most gracious, nicest guy on earth. When someone on a message board sorta related to skiing, starts writing about stuff that to a professional, he has no idea what he's saying (example: walking through the creation of basis in an IRA without understanding that is what he is doing right after saying basis has nothing to do with tax). Then saying someone is out of their league.

Except that isn't true at all. You still haven't admitted that making after tax contributions to an traditional IRA and then converting it to a Roth IRA creates no basis so long as there isn't pre-tax money in said traditional IRA.

That's the entire point of everything I've said in this thread, and you still don't get it. Other people in this thread know what I'm saying is correct, yet you still keep coming back around to say that you're right while providing no evidence except that you are a CPA.

I think I get it. You're a CPA that can't admit you're wrong.

[Kevo]

Copy that. And since I only understood half of that, my last question: What kind of tax/investment advisor do I want if I want to pay a fee, not buy any products through said advisor? Look at my total picture and see where I'm missing the boat.

This is a great read on that subject- https://www.whitecoatinvestor.com/ho...ncial-advisor/

Check out the list of hourly or flat fee advisors.

In general, you probably don't want someone who charges based on assets under management (AUM) or who would put you into high expense ratio funds where they could get a kickback from the fund manager.

Flat fee or hourly advising is what you seek. Be careful, because "fee only" sounds similar but isn't.

My family uses a flat fee asset manager that is listed in that article. They have CFAs, CPAs and RICPs on staff to ensure that we don't miss anything.

The hourly route can also be good if you just want a checkup.

[Marshall Tucker]

Except that isn't true at all. You still haven't admitted that making after tax contributions to an traditional IRA and then converting it to a Roth IRA creates no basis so long as there isn't pre-tax money in said traditional IRA.

To your "point" you created basis in the traditional IRA by making an after-tax contribution. period. What you did after that contribution to the traditional IRA AFTER you created basis is irrelevant and does not change the fact that you created basis in it. But more to the fun we are having here.

Where I come from, if you construct some wild ass fact pattern, that quite literally has no applicability in the real world, for the sake of being right, we call that person an asshole. I've done thousands of tax returns over the last 30 years. I've seen a lot, and honestly have worked with families with net worth to about $150 million. I have NEVER seen a circumstance where it makes any type of logical sense to do what you propose. I'd wager that anyone who has an income limit problem with a contribution to a Roth IRA has traditional IRAs that can be converted at a far greater rate than your measly little $6k. I'd love to hear why you think that might not be the case. I'm all ears.

[jm2e]

As much as I’d love to see the highlights from a Kevo/Tucker ski-off, I’m significantly more interested in real world investment tips for the common mag.
Emphasis on something along the lines of “I’ve got a good feeling about Rich Strike”


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[Kevo]

all right man. You want to play. The frustration is that you use and throw around terms without understanding them, and then you try to smear me in the process. Where I come from we call that kind of person an asshole. but we'll set that aside for a minute.

You created basis in the traditional IRA by making an after tax contribution. Period. That's tax 101. You may have also created an excise tax problem depending on how long you left it in there and how much you contributed but we'll also set that aside for a minute. What you do next with that contribution inside the traditional IRA in which you created basis has no bearing on the fact that you created basis in the traditional IRA. None.

But see here's the thing. You want to play? Construct for me a fact pattern where your "argument" would create any type of tax advantage.

I'm all ears.

It certainly seems like you are saying that there are no tax advantage to backdoor Roth IRA contributions.

Please read this post, specifically the portion about filling out form 8606 (and the 0 basis created in the process) and tell me how it is wrong.
https://www.whitecoatinvestor.com/ba...-ira-tutorial/

The tax advantage of a backdoor Roth IRA contribution is the same tax advantage of a normal Roth IRA contribution. It just has a few extra steps to allow someone who otherwise has too much income to participate.

[Danno]

Breaking news: Rare picture of Kevo and MT discovered!

[Garbowski]

I have been doing backdoor Roth contributions for years. It allows me to make a tax-deductible $6k contribution to a tax advantaged retirement account that I would not otherwise be able to as our income is too high and I have a retirement plan at work. I suspect many dentists here would benefit.

What the money should be invested in is a better question. I put it in boring low cost Vanguard target date or total stock market funds.

[BobMc]

As much as I’d love to see the highlights from a Kevo/Tucker ski-off, I’m significantly more interested in real world investment tips for the common mag.
Emphasis on something along the lines of “I’ve got a good feeling about Rich Strike”


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I've got a good feeling about EPD.

Midstream pipeline company, they are paid by how much goes through their pipelines not how much the liquids cost. Share price moves sympathetic with the price of oil but not drastically. The company is largely owed by the Duncan family (founders of company) so they have a stake in how it is run and would do nothing to harm share price. It yields 7% so your money stays ahead of inflation. The distributions are easily covered by FCF and they've raised the distributions for 26 years. It's rated a strong buy with price targets between $29-$33.

I currently own 771 shares and buy more on any dip.

[Marshall Tucker]

I have been doing backdoor Roth contributions for years. It allows me to make a tax-deductible $6k contribution to a tax advantaged retirement account that I would not otherwise be able to as our income is too high and I have a retirement plan at work. I suspect many dentists here would benefit.

So an honest question here. I take "for years" to mean that for at least 5 years you have had access to the ability to contribute to a "tax-advantaged retirement account." (please don't read too much into the quotes). Do you not have traditional IRAs that you can convert to roth? That's where this train is skipping the track. Just based on what i've seen, I've not seen a fact pattern in 30 years, and therefore I make the leap of logic, that is EXTREMELY rare, that someone would run into income limits on a regular roth, that has consistently saved for retirement, that would not have trad IRAs that they could convert. further, I've not seen many benfit offerings for regular 401ks that do not offer Roth.

Again, I'm not trying to be argumentative, but I think it is extremely rare that a person who consistently saves for retirement gets to say 35 or 40 years old, and does not have a Trad IRA, or does not have a 401k balance that can be converted tax free to a trad IRA, which then permits you way, way more control and ability to get money into the Roth than 6K a year; or does not have a Roth offering in their benefit package.

[Marshall Tucker]

It certainly seems like you are saying that there are no tax advantage to backdoor Roth IRA contributions.

Please read this post, specifically the portion about filling out form 8606 (and the 0 basis created in the process) and tell me how it is wrong.
https://www.whitecoatinvestor.com/ba...-ira-tutorial/

The tax advantage of a backdoor Roth IRA contribution is the same tax advantage of a normal Roth IRA contribution. It just has a few extra steps to allow someone who otherwise has too much income to participate.

OK Kevo. I asked you to construct the fact pattern, not link articles. please pay attention and do what is asked if you're gonna keep arguing this.

[Danno]

Again, I'm not trying to be argumentative

please pay attention and do what is asked if you're gonna keep arguing this.

hmmmm....

[mcphee]

Am I understanding I-Bonds correctly? If I buy now, I get 9.62%(?) for the next 6 months. The rate for 6 months after that is whatever the inflation value has been announced for that period and so on.

[Marshall Tucker]

hmmmm....

To Grabouski I was not being argumentative. To kevo yes, but he drew first blood here.

so yes. hhmmmm.

[406]

yep

Unlike BobMc, I have been selling some of my midstreams at highs. I'm moving away from individual stocks and mostly buying VOO at lows. Some VYM, VNQ, & VPU etc too. Also added a little to T, ABNB, CAT. I have been regretting the REITs and pharma gambles I bought in the last year.

[Garbowski]

So an honest question here.

Yes, every 'a real job' I have had has had access to an employer 401k (or 403b) that did some sort of matching. Always had the option to do Roth in those as well- but I go traditional in my employer plans.

I have no personal traditional IRAs other than the one I use for the backdoor roth- it has a balance for about a day every year. It took me a while to get to the point I could (or wanted to) max out my employer accounts so I never opened one, and by the time I could I was making over the limit. Maybe I'm wrong, but I figure that's not too unusual.

For me it's not really about the control- like I said I just do basic low cost Vanguard stuff and those have always been available to me in employer plans- it's about getting around "tax advantaged" contribution limits.



But anyway- I like I bonds and have maxed out this year. I just heard you can buy I-bonds for your kids- thinking about doing that with some emergency fund type cash but not sure the ramifications- I'm assuming I can just 'force' my kids to give the money back and not worry about it. Their allowance will not cover a lawyer.

[jm2e]

Am I understanding I-Bonds correctly? If I buy now, I get 9.62%(?) for the next 6 months. The rate for 6 months after that is whatever the inflation value has been announced for that period and so on.

I’m not an expert in anything. Downright idiotic with financial stuff. No interest in starting an internet fight or posting tons of links to show how well read I am.
But I do feel I can weigh in on this. For six months, you’ll get interest based on the current rate. So in affect, you’ll get half of the current rate, since six months is half a year and the rate is based on annual return, despite it changing every six months. Start over again mid year. Still, many times better than a “high interest” savings account from Ally or whoever.


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[Kevo]

So an honest question here. I take "for years" to mean that for at least 5 years you have had access to the ability to contribute to a "tax-advantaged retirement account." (please don't read too much into the quotes). Do you not have traditional IRAs that you can convert to roth? That's where this train is skipping the track. Just based on what i've seen, I've not seen a fact pattern in 30 years, and therefore I make the leap of logic, that is EXTREMELY rare, that someone would run into income limits on a regular roth, that has consistently saved for retirement, that would not have trad IRAs that they could convert. further, I've not seen many benfit offerings for regular 401ks that do not offer Roth.

Again, I'm not trying to be argumentative, but I think it is extremely rare that a person who consistently saves for retirement gets to say 35 or 40 years old, and does not have a Trad IRA, or does not have a 401k balance that can be converted tax free to a trad IRA, which then permits you way, way more control and ability to get money into the Roth than 6K a year; or does not have a Roth offering in their benefit package.

Many people get to a point in life where they would benefit from making backdoor Roth IRA contributions and they DO already have an existing traditional IRA balance from regular contributions or 401k rollovers. Many of the same people also have access to Roth offerings in their benefits package.

None of those things preclude someone from contributing to a backdoor Roth IRA or benefiting from backdoor Roth IRA contributions.

OK Kevo. I asked you to construct the fact pattern, not link articles. please pay attention and do what is asked if you're gonna keep arguing this.

I've already broken down the exact scenario point by in which someone would benefit from a backdoor Roth IRA and how one can avoid taxation on a pro-rated basis in this post- https://www.tetongravity.com/forums/...89#post6597089

Perhaps instead of rehashing what I've already stated in this thread, you could read the article and tell us all what parts of it are factually incorrect? Specifically, it would be great if you could address whether the article is correct in how it outlines how basis isn't created in the zero balance traditional IRA by making a backdoor Roth contributions through it.

I have been doing backdoor Roth contributions for years. It allows me to make a tax-deductible $6k contribution to a tax advantaged retirement account that I would not otherwise be able to as our income is too high and I have a retirement plan at work. I suspect many dentists here would benefit.

What the money should be invested in is a better question. I put it in boring low cost Vanguard target date or total stock market funds.

Awesome to hear. That makes at least three of us in this thread who benefit. I also suspect that there are others who would benefit. I invest into the same things you do (VTSAX, VTWAX, VFIFX)

[jm2e]

I've got a good feeling about EPD.
………
………
I currently own 771 shares and buy more on any dip.

Win or lose, that’s the kind of buddy tip buddies want to hear from their buddies. Well, internet friends…



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[doebedoe]

I've been contributing to my Roth IRA for over a decade. In span of two years, my wife's compensation has increased 5x. Because of this we're now outside the limits for traditional Roth IRA, so I just converted to backdoor Roth. (And by "I" I mean the financial advisor in my family did it for me.) Never had a traditional IRA. Don't have a 401k. Been in gov't for last 10 years which is all pension. So maybe I'm one of those rare people?

I don't pretend to know jack about shit. Until the last year filling up my Roth, pension contributions, and saving for an emergency was basically all the extra dough I had. Not making much money makes investing way simpler.

[Diamond Joe]

Am I understanding I-Bonds correctly? If I buy now, I get 9.62%(?) for the next 6 months. The rate for 6 months after that is whatever the inflation value has been announced for that period and so on.

Yup. The only problem is, so many people are trying to buy I bonds right now, that the website crashed.
https://www.msn.com/en-us/news/us/in...out&li=BBnb7Kz
Also, there are apparently some hoops you have to jump through (printing out a form that needs to be notarized and then mailed into an address, certain stamps/seals are not acceptable, etc). Then you need to wait to hear back that your form was authorized before you can purchase.

[AdironRider]

Am I understanding I-Bonds correctly? If I buy now, I get 9.62%(?) for the next 6 months. The rate for 6 months after that is whatever the inflation value has been announced for that period and so on.

Correct. There is also a 3 month penalty of interest accrued if you cash out in under 5 years.

These were at 0% like two years ago.

[Diamond Joe]

These were at 0% like two years ago.

Thats not true, according to the Treasury Dept website

[Garbowski]

That's for this earning period only- May-Oct 2022.

When you buy I bonds you get a fixed rate that is set at purchase time and stays forever with the bond, PLUS you add the inflation pegged flexible rate. The flexible rate changes every 6 months and is 9.62% annual right now.

The fixed rate is 0% now and has been close to it for a long time. So any 9.62% composite in your chart has a 0% fixed rate from the time of purchase plus this period's 9.62% flexible.

You can see all the history here. Flexible rate was usually pretty low... because so was inflation. But was generally always better than a deposit account.
https://www.treasurydirect.gov/indiv...esandterms.htm

[Diamond Joe]

There's a fixed rate, for the life of the bond, and an inflation rate, which changes every 6 months. The formula they use to get the composite rate - the rate your money earns interest at - is a formula. So where are the composite rates from years past?

edit: never mind, I found it
https://www.treasurydirect.gov/indiv...dRateChart.pdf

[Marshall Tucker]

If I were your advisor, I'd strongly encorage you to move at least one, of not all, of the prior company 401ks trustee-to-trustee to a self-directed IRA. There are so many reasons to do that they go beyond the scope of what we're talking about. to the point at hand, though, they will let you do a lot better than 6k a year to a Roth and give you contol over your AGI, which you want for a whole host of reasons. and if you don't want or need that now, beleive me, you will down the road a bit. Cheers MT

Yes, every 'a real job' I have had has had access to an employer 401k (or 403b) that did some sort of matching. Always had the option to do Roth in those as well- but I go traditional in my employer plans.

I have no personal traditional IRAs other than the one I use for the backdoor roth- it has a balance for about a day every year. It took me a while to get to the point I could (or wanted to) max out my employer accounts so I never opened one, and by the time I could I was making over the limit. Maybe I'm wrong, but I figure that's not too unusual.

For me it's not really about the control- like I said I just do basic low cost Vanguard stuff and those have always been available to me in employer plans- it's about getting around "tax advantaged" contribution limits.



But anyway- I like I bonds and have maxed out this year. I just heard you can buy I-bonds for your kids- thinking about doing that with some emergency fund type cash but not sure the ramifications- I'm assuming I can just 'force' my kids to give the money back and not worry about it. Their allowance will not cover a lawyer.