NT: Official Personal Finances Thread

[slighted]

At what point does it make sense to hire a financial advisor?

When you're a multi-millionaire

 

[antidope]

What he said. Retail advisory is an absolute scam from my experience. Unless you have institutional wealth there's no need for it.

Once you get there though I would say it's almost necessary that you get one.

 

[206to813]

For real? I feel like we (wife and I) have too much $ in savings and don't have the time, interest, or knowledge to invest and my concern is we're missing out on opportunities to grow our $

 

[nrg1604]

There's always mutual funds.

 

[antidope]

For real? I feel like we (wife and I) have too much $ in savings and don't have the time, interest, or knowledge to invest and my concern is we're missing out on opportunities to grow our $

If that's the case then go for it. Just make sure that you interview a bunch of people and really try and get someone who is gonna provide you with a holistic advisory service and isn't just going to be a stock broker under the guise of being an advisor.

 

[girlslovewaffles]

If you don't have the time to at least get a rudimentary idea of how to invest your money, I would be cautious with hiring a financial advisor. It's possible that you end up not having time to even follow what that advisor is doing. Nothing is more dangerous than giving someone the keys to your money/future and not having the time to keep up with it. Quickest way to get ripped off or lose everything entirely.

 

[girlslovewaffles]

Any advice on how to get around the income limit for Roth IRAs?

Backdoor Roth. Google it. It's a nonsense rule that's easy to get around.

The way I understand Backdoor Roths is putting money into a 403b or 401k and rolling it over into a Roth IRA, giving you up to $36,000 in annual deposits into a Roth IRA, which is just insane to me if you can actually do it. But my pharmacist buddy went over it with his mom, who is a big wig CPA, and said it's not possible to do that.

Do you have any links on first-hand experience on the steps to do so? I've seen the calculated returns with just deposits of the limit... can't fathom the returns with $36,000 annually.

 

[capital sb]

Still agree with Anti even though you are saying you don't have the time. Moat likely the advisor will be a scam if your looking for other investments outside of stocks you will have to be hands on in the beginning at minimum.

 

[antidope]

 

 

Any advice on how to get around the income limit for Roth IRAs?

Backdoor Roth. Google it. It's a nonsense rule that's easy to get around.

The way I understand Backdoor Roths is putting money into a 403b or 401k and rolling it over into a Roth IRA, giving you up to $36,000 in annual deposits into a Roth IRA, which is just insane to me if you can actually do it. But my pharmacist buddy went over it with his mom, who is a big wig CPA, and said it's not possible to do that.

Do you have any links on first-hand experience on the steps to do so? I've seen the calculated returns with just deposits of the limit... can't fathom the returns with $36,000 annually.

That first portion is somewhat inaccurate in terms of the numbers, but in general you can do a backdoor Roth. I know someone who does it every year without fail. Where are you getting the $36k number from? Because the limits on 401(k)s and 403(b)s is $18k with a $6k catchup contribution if you're over 50. You can also do this with SEP IRA, they're pretty much traditional IRA's in the eyes of the IRS, but the contribution limit on those is $54k

Odd that the CPA would say that, its a fairly common thing. This falls too closely into the realm of giving tax advice for my liking but you should seek a second opinion.

Don't you own the Waffle truck business in Cali? Guessing you have a SEP IRA? Its possible with that too. You could do it with a 401(k) too, but if that's really your intention you could just do a Roth 401k instead of going through the headache of going through the rollover process every year and having to file the 5498's and all the other tax forms you'll need.

The backdoor Roth in my experience is for people who are maxing out their 401k(s) already and just make too much money to contribute to a Roth IRA the regular way.

http://www.cnbc.com/2017/04/04/high-earners-should-consider-a-back-door-roth-ira.html

 

[antidope]

For real? I feel like we (wife and I) have too much $ in savings and don't have the time, interest, or knowledge to invest and my concern is we're missing out on opportunities to grow our $

To follow up on this, you ever considered using a Robo-Advisor? Cuts a lot of what I said about your traditional retail advisor out of the way. It's cheap, they're typically all just using ETFs anyways, you get a good amount of input in what the asset allocation looks like, and you can easily put money in and pull money out whenever. 

Everything you said above is the reason why Robo-Advisors were created (along with the fees issue) and why they're seeing so much in inflows.

http://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

https://investorjunkie.com/35919/robo-advisors/

For what it's worth I use one for my Roth IRA and I could easily do it myself, but I prefer the Robo-Advisor for that.

 

[moderndarwin]

I use betterment.com

And I'm a big fan.

 

[antidope]

I use betterment.com

And I'm a big fan.

Same here dog. Huge fan of it.

 

[capital sb]

53,000 max limit for a mega backdoor roth.

http://www.madfientist.com/after-tax-contributions/

Edit : 53 was the limit in 2015 not sure what the 401K limit is now.

 

[girlslovewaffles]

 

 

Any advice on how to get around the income limit for Roth IRAs?

Backdoor Roth. Google it. It's a nonsense rule that's easy to get around.

The way I understand Backdoor Roths is putting money into a 403b or 401k and rolling it over into a Roth IRA, giving you up to $36,000 in annual deposits into a Roth IRA, which is just insane to me if you can actually do it. But my pharmacist buddy went over it with his mom, who is a big wig CPA, and said it's not possible to do that.


Do you have any links on first-hand experience on the steps to do so? I've seen the calculated returns with just deposits of the limit... can't fathom the returns with $36,000 annually.

That first portion is somewhat inaccurate in terms of the numbers, but in general you can do a backdoor Roth. I know someone who does it every year without fail. Where are you getting the $36k number from? Because the limits on 401(k)s and 403(b)s is $18k with a $6k catchup contribution if you're over 50. You can also do this with SEP IRA, they're pretty much traditional IRA's in the eyes of the IRS, but the contribution limit on those is $54k

Odd that the CPA would say that, its a fairly common thing. This falls too closely into the realm of giving tax advice for my liking but you should seek a second opinion.

Don't you own the Waffle truck business in Cali? Guessing you have a SEP IRA? Its possible with that too. You could do it with a 401(k) too, but if that's really your intention you could just do a Roth 401k instead of going through the headache of going through the rollover process every year and having to file the 5498's and all the other tax forms you'll need.

The backdoor Roth in my experience is for people who are maxing out their 401k(s) already and just make too much money to contribute to a Roth IRA the regular way.

http://www.cnbc.com/2017/04/04/high-earners-should-consider-a-back-door-roth-ira.html

Exactly what I needed, thank you.

Yeah, got the waffle truck in Cali. But I'm also going to be a resident physician next year, so while I'll be able to contribute to a Roth IRA, once I become an attending, I'm looking into ways to keep that going.

I think the $36k figure I got was from taking the contribution limit of $54k and subtracting a maxed out 401k at $18k. I saw it on a resident's personal finance blog. Either way, I definitely need to read more into it and do my own homework. Appreciate the info thus far, though.

 

[antidope]

 

 

 

 

Any advice on how to get around the income limit for Roth IRAs?

Backdoor Roth. Google it. It's a nonsense rule that's easy to get around.

The way I understand Backdoor Roths is putting money into a 403b or 401k and rolling it over into a Roth IRA, giving you up to $36,000 in annual deposits into a Roth IRA, which is just insane to me if you can actually do it. But my pharmacist buddy went over it with his mom, who is a big wig CPA, and said it's not possible to do that.


Do you have any links on first-hand experience on the steps to do so? I've seen the calculated returns with just deposits of the limit... can't fathom the returns with $36,000 annually.

That first portion is somewhat inaccurate in terms of the numbers, but in general you can do a backdoor Roth. I know someone who does it every year without fail. Where are you getting the $36k number from? Because the limits on 401(k)s and 403(b)s is $18k with a $6k catchup contribution if you're over 50. You can also do this with SEP IRA, they're pretty much traditional IRA's in the eyes of the IRS, but the contribution limit on those is $54k

Odd that the CPA would say that, its a fairly common thing. This falls too closely into the realm of giving tax advice for my liking but you should seek a second opinion.

Don't you own the Waffle truck business in Cali? Guessing you have a SEP IRA? Its possible with that too. You could do it with a 401(k) too, but if that's really your intention you could just do a Roth 401k instead of going through the headache of going through the rollover process every year and having to file the 5498's and all the other tax forms you'll need.

The backdoor Roth in my experience is for people who are maxing out their 401k(s) already and just make too much money to contribute to a Roth IRA the regular way.

http://www.cnbc.com/2017/04/04/high-earners-should-consider-a-back-door-roth-ira.html

Exactly what I needed, thank you.

Yeah, got the waffle truck in Cali. But I'm also going to be a resident physician next year, so while I'll be able to contribute to a Roth IRA, once I become an attending, I'm looking into ways to keep that going.

I think the $36k figure I got was from taking the contribution limit of $54k and subtracting a maxed out 401k at $18k. I saw it on a resident's personal finance blog. Either way, I definitely need to read more into it and do my own homework. Appreciate the info thus far, though.

Yeah thats what BeezyGotSole is talking about. 

I feel you, right now I have my retirement stuff set up as a traditional 401(k) and a Roth IRA. I'm cool with that for the time being, once I start making more I can start going into the weeds on what my 401(k) allows and see if I can do the Mega backdoor. 

 

[girlslovewaffles]

Seems like maxing out just those 2 should be good enough for a nice retirement? What else can you dabble in? I was thinking of setting something up w Fidelity and dropping money into index funds as another safe long-term thing. And have some money for risker investments.

 

[capital sb]

Real estate , multifamily homes (small apartments) to be exact .

Most investors aim for $200 net profit per unit : 25 units = $5000/mo , 50 units = $10,000/mo , 100 units $20,000/mo

25 units isn't hard to achieve can be done in 1-3 years depending on your strategy . Can be achieved with 75K-150K cash with profits reinvested .

You all do realize that with a 4% safe withdrawl rate with 1 million in your 401K you will only be withdrawing 40,000/yr, $3,333/mo ? some extra with dividends.

 

[girlslovewaffles]

Real estate , multifamily homes (small apartments) to be exact .

Most investors aim for $200 net profit per unit : 25 units = $5000/mo , 50 units = $10,000/mo , 100 units $20,000/mo

25 units isn't hard to achieve can be done in 1-3 years depending on your strategy . Can be achieved with 75K-150K cash with profits reinvested .

You all do realize that with a 4% safe withdrawl rate with 1 million in your 401K you will only be withdrawing 40,000/yr, $3,333/mo ? some extra with dividends.

I don't have experience, but it always seemed like commercial has less headaches than residential. Educate me.

And is that net profit after management fees, mortgage, etc? Where are you getting that $200 figure from?

Finally, what do you mean by 4% safe withdrawal rate?

 

[capital sb]

I don't have experience, but it always seemed like commercial has less headaches than residential. Educate me.

And is that net profit after management fees, mortgage, etc? Where are you getting that $200 figure from?

Finally, what do you mean by 4% safe withdrawal rate?

The $200/unit /mo is a number that a lot of investors aim for net profit. Net includes all fees, mortgage, capex, management, etc.

Some people aim for $100/unit /mo + equity at time of closing etc. Don't have to be an expert, study up do your research (biggerpockets.com) and start off with a duplex then build up from there. duplex,4 unit, 5 unit,6 unit,8 unit = 25 units.

4% safe withdrawl rate is the yearly rate of withdrawing money in retirement to not run out before you die. I feel like if people knew the real numbers they would look at other investment options instead of heavily funding their 401K.

 

[capital sb]

I only contribute up to the match in my 401K and keep increasing my monthly cash flow through my businesses and real estate investments . As my cash flow increases I will get my stock portfolio to my target number and keep reinvesting in outside ventures. I'm also 24, so my timeline is different but my goal is to be done with corporate by 35 at the latest .

 

[206to813]

To follow up on this, you ever considered using a Robo-Advisor? Cuts a lot of what I said about your traditional retail advisor out of the way. It's cheap, they're typically all just using ETFs anyways, you get a good amount of input in what the asset allocation looks like, and you can easily put money in and pull money out whenever. 

Everything you said above is the reason why Robo-Advisors were created (along with the fees issue) and why they're seeing so much in inflows.

http://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

https://investorjunkie.com/35919/robo-advisors/

For what it's worth I use one for my Roth IRA and I could easily do it myself, but I prefer the Robo-Advisor for that.

Thanks brother I'm going to look into this

 

[based mod]

I only contribute up to the match in my 401K and keep increasing my monthly cash flow through my businesses and real estate investments . As my cash flow increases I will get my stock portfolio to my target number and keep reinvesting in outside ventures. I'm also 24, so my timeline is different but my goal is to be done with corporate by 35 at the latest .

Fooled me. Good job man.

 

[girlslovewaffles]

Yeah, pretty impressive for a 24yo. What is your background?

 

[アミーゴ]

About to purchase my 3rd property. Wish I got into commercial instead of residential.

 

[northoaklandfc]

About to purchase my 3rd property. Wish I got into commercial instead of residential.

You mind explaining why that is?

I've got a growing sum earmarked for buying my first property.

Was thinking of taking advantage of one of the FHA first time home buyer loans in the future.

How does commercial differ from residential?