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(11-02-2021, 02:49 PM)ken-do-nim Wrote: (11-02-2021, 02:08 PM)fenders53 Wrote: I can't even imagine #6. The small piece of my world that is risk free is my paid off home. If I want to gamble I will ask my broker for margin. Sounds like a Reddit kid YOLA plan. This will fuel our next crash. At the risk of being impolite it's an idiotic strategy that will have a high price eventually.
You are entitled to your opinion but it can be absolutely the right move depending upon a person's situation. It was for me this past March. I, however, wasn't even close to paid off. I went from 27 years of mortgage remaining back to 30, and my rate lowered in the process.
Ric Edelman wrote about this in his book "The Truth About Money". He advises people to always carry a mortgage. I probably wouldn't recommend a cash-out refinance if the rate is higher.
When you talk to Ric next tell him I said he is a moron. Keep borrowing money to finance 3X leveraged equity positions. We'll chat about this in a few years. My last comment stands. Same foolishness that got people wrecked in all the crashes for the past 90 years. Works until it doesn't.
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(11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns. Pro's fall short but it's fun to try and with experience you have a chance.
Well I actually have shares in SPLG, which is a lower cost alternate to SPY. My goal isn't to beat the market per se. With trading, my goal is strictly to generate investment income to put in to my dividend investments. In other words, short term trading would feed long term investing.
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(11-02-2021, 03:07 PM)fenders53 Wrote: (11-02-2021, 02:49 PM)ken-do-nim Wrote: (11-02-2021, 02:08 PM)fenders53 Wrote: I can't even imagine #6. The small piece of my world that is risk free is my paid off home. If I want to gamble I will ask my broker for margin. Sounds like a Reddit kid YOLA plan. This will fuel our next crash. At the risk of being impolite it's an idiotic strategy that will have a high price eventually.
You are entitled to your opinion but it can be absolutely the right move depending upon a person's situation. It was for me this past March. I, however, wasn't even close to paid off. I went from 27 years of mortgage remaining back to 30, and my rate lowered in the process.
Ric Edelman wrote about this in his book "The Truth About Money". He advises people to always carry a mortgage. I probably wouldn't recommend a cash-out refinance if the rate is higher.
When you talk to Ric next tell him I said he is a moron. Keep borrowing money to finance 3X leveraged equity positions. We'll chat about this in a few years. My last comment stands. Same foolishness that got people wrecked in all the crashes for the past 90 years. Works until it doesn't.
(11-02-2021, 05:10 PM)Navi Wrote: (11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns. Pro's fall short but it's fun to try and with experience you have a chance.
Well I actually have shares in SPLG, which is a lower cost alternate to SPY. My goal isn't to beat the market per se. With trading, my goal is strictly to generate investment income to put in to my dividend investments. In other words, short term trading would feed long term investing.
I'm always fascinated by the various S&P 500 funds.
Year-to-date...
VFIAX: 24.83% (what my 401k uses)
FXAIX: 24.89% (what my daughter's 529 uses)
SPY: 25.25%
SPLG: 25.25%
VOO: 25.27% (what I use in my taxable account)
VOO is still champs 
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(11-02-2021, 05:10 PM)Navi Wrote: (11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns. Pro's fall short but it's fun to try and with experience you have a chance.
Well I actually have shares in SPLG, which is a lower cost alternate to SPY. My goal isn't to beat the market per se. With trading, my goal is strictly to generate investment income to put in to my dividend investments. In other words, short term trading would feed long term investing.
SPY isn't the end all metric, but it is a close approximation of the total US stock market the past 100 years. I use it as a guide with risk adjustment applied. IMO if you are 25 you should expose yourself to more risk. At 50 maybe match the risk. Nearing retirement back off. I matched the SPY performance most of my investing career, which is not shocking as half my portfolio was a SPY index fund. I have beaten the SPY the past 12 months which is a small miracle as my port is typically 30% in cash. That won't happen often but it's a big win because my risk was less. I highly encourage young investors to trade with a small part of their port. The education value is enormous.
Long way around saying I don't care if I beat the index anymore, but I should pay attention to it. If the SPY is rising 15% and my way yields 5%, it's probably time to stop humoring myself and just put most of my money there. I find swing trading much easier now, but I paid my dues learning.
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(11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns. Pro's fall short but it's fun to try and with experience you have a chance.
A great chance because the funds struggle to beat the market due to the fund's size. They cannot get in or out of a large position w/o moving the market to their detriment.
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(11-02-2021, 01:58 PM)ken-do-nim Wrote: (11-02-2021, 01:31 PM)ChadR Wrote: Ken, I would advise you not to do #7. Turning a primary residence into a rental is a mistake. You are giving up to $250k ($500k) tax free profit from the sale of your primary residence. If you turn it into a rental, you have a lower depreciable base and you just gave up a huge tax free gain. If you really want a rental, sell the house and then turn around a buy a rental for what you just sold your primary residence for.
Wow, I didn't know that! Thanks for the advice!
You can regain your favorable tax position again if you wish. Have to live in it 3of the past 5 years or something like that, I might be a little foggy on that it's been awhile since I've looked into that.
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Buy a crappy house in a good area and rehab it while you live there, sell it or re-fi (and rent) and repeat.
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(11-02-2021, 07:30 PM)NilesMike Wrote: (11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns. Pro's fall short but it's fun to try and with experience you have a chance.
A great chance because the funds struggle to beat the market due to the fund's size. They cannot get in or out of a large position w/o moving the market to their detriment.
The active management pros aren't our goal. It's that evil SPY index fund.
(11-02-2021, 07:32 PM)NilesMike Wrote: (11-02-2021, 01:58 PM)ken-do-nim Wrote: (11-02-2021, 01:31 PM)ChadR Wrote: Ken, I would advise you not to do #7. Turning a primary residence into a rental is a mistake. You are giving up to $250k ($500k) tax free profit from the sale of your primary residence. If you turn it into a rental, you have a lower depreciable base and you just gave up a huge tax free gain. If you really want a rental, sell the house and then turn around a buy a rental for what you just sold your primary residence for.
Wow, I didn't know that! Thanks for the advice!
You can regain your favorable tax position again if you wish. Have to live in it 3of the past 5 years or something like that, I might be a little foggy on that it's been awhile since I've looked into that.
This method will work a little bit. Problem with this method is that you have to take the gain you have and allocate it between primary residence years and rental years. So depending on how long it was a rental, you could make a big portion of the gain taxable.
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(11-03-2021, 09:57 AM)ChadR Wrote: (11-02-2021, 07:32 PM)NilesMike Wrote: (11-02-2021, 01:58 PM)ken-do-nim Wrote: (11-02-2021, 01:31 PM)ChadR Wrote: Ken, I would advise you not to do #7. Turning a primary residence into a rental is a mistake. You are giving up to $250k ($500k) tax free profit from the sale of your primary residence. If you turn it into a rental, you have a lower depreciable base and you just gave up a huge tax free gain. If you really want a rental, sell the house and then turn around a buy a rental for what you just sold your primary residence for.
Wow, I didn't know that! Thanks for the advice!
You can regain your favorable tax position again if you wish. Have to live in it 3of the past 5 years or something like that, I might be a little foggy on that it's been awhile since I've looked into that.
This method will work a little bit. Problem with this method is that you have to take the gain you have and allocate it between primary residence years and rental years. So depending on how long it was a rental, you could make a big portion of the gain taxable.
Could you provide a citation for that because I have not found that to be the case.
https://www.irs.gov/taxtopics/tc701
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Taxes or rental issues aside, a modest first home is an outstanding way to free up cash early in your investment life. It will also develop some basic home renovation skills. You don't have to perform things way outside your skillset. Once you get past the handyman skill level, labor costs are crazy high.
I think I mentioned HD charges $1000 for a basic water heater install. You might buy five of those in your lifetime. What if you bought shares with that money over 40 years?
(11-04-2021, 05:34 AM)NilesMike Wrote: (11-03-2021, 09:57 AM)ChadR Wrote: (11-02-2021, 07:32 PM)NilesMike Wrote: (11-02-2021, 01:58 PM)ken-do-nim Wrote: (11-02-2021, 01:31 PM)ChadR Wrote: Ken, I would advise you not to do #7. Turning a primary residence into a rental is a mistake. You are giving up to $250k ($500k) tax free profit from the sale of your primary residence. If you turn it into a rental, you have a lower depreciable base and you just gave up a huge tax free gain. If you really want a rental, sell the house and then turn around a buy a rental for what you just sold your primary residence for.
Wow, I didn't know that! Thanks for the advice!
You can regain your favorable tax position again if you wish. Have to live in it 3of the past 5 years or something like that, I might be a little foggy on that it's been awhile since I've looked into that.
This method will work a little bit. Problem with this method is that you have to take the gain you have and allocate it between primary residence years and rental years. So depending on how long it was a rental, you could make a big portion of the gain taxable.
Could you provide a citation for that because I have not found that to be the case.
https://www.irs.gov/taxtopics/tc701
Property (Basis, Sale of Home, etc.) 5 | Internal Revenue Service (irs.gov)
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