Unexpected 'gift'

[IGBT]

Why limit yourself to a high dividend stock. You mention Merck.

I instead bought Gilead, which is up $30 over the past few months because they have developed a single pill cure for Hep C and sell it for $1000 a pill. They don't pay a dividend, but when you buy a stock for $10 and sell it for $100, you don't really need a dividend.

 

[Van Go]

Theadyn, you sound very level headed. And you seem to have formulated a good plan. Two things you said that got my attention and convince me that you will make the right decisions: "trust God"(listen to the still, small voice) and "to thine own self be true". I don't think you can go wrong if you follow those ideas. Blessings to ya.

 

[Seraphim]

You've been given a lot of financial thoughts lol.

The main consideration is how long you are planning to hold onto money, what purpose you have it labeled for, and how likely you are to need that money early. I'm not sure that's been addressed adequately. F I'm saying things you already know, forgive me.

Stocks have mentioned, but stocks are volatile. Using dividend stocks as a source of 'income' becomes very risky. If you suddenly need the money, stock values can be very low, and when you sell the stocks you can lose a great deal of money. This is what was so damaging about the last recession: not that stock values fell 40 to 50 percent, but that the rest of the economy was forcing people to dip into their stocks to live at a time when stock values were way down. This kills the longevity of a retirement portfolio, and is one reason so many people - otherwise financially stable - will be unable to retire because they lost so much money. The coup de grace was also the simultaneous drop of home values. People may have avoided selling stocks by tapping into home equity, but due to foolish decisions on debt, they no longer had equity - in fact, they owed more than their homes were now worth.

Bonds, however, offer lower returns but they helppreserve value of the investment. There are still risks, but bonds are safer than stocks and less volatile.

Generally, an asset allocation of a certain percentage stocks and a percentage of bonds offers a choice: if you must remove money, you can choose whichever is doing well at the time and sell for a profit. Values of bonds and stocks tend to move in opposite directions. Given your age, should you choose to invest, you may want 60% stocks, 40% bonds. That's a fairly safe ratio. The stocks are making you money, the bonds are consoling volatility and providing asset protection for a portion of your funds.

Which is why I recommended the Vanguard funds, which contain stocks AND bonds. Diversification across asset types, sectors and markets. Very low cost. Theses funds are core funds for many of today's investors - both beginners and old pros.

But take no advice until you decide how long you plan to commit funds. That's your first decision.

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Above - controlling volatility, not consoling

 

[ccbreder]

I did not read this whole thread. If you are still working and don't have emergency use for the $. Put it in a IRA (fidelity is good from my experience) Get an indexed fund tied to the S&P 500. You are only 43. In twenty years you could have a nice retirement and will not regret the investment. Been there done that and didn't do it right.

 

[HarmonicaBruce]

If you suddenly need the money, stock values can be very low, and when you sell the stocks you can lose a great deal of money. This is what was so damaging about the last recession: not that stock values fell 40 to 50 percent, but that the rest of the economy was forcing people to dip into their stocks to live at a time when stock values were way down.

Seraphim and I like to follow the market. I believe it's good to keep 20% or so of your portfolio in cash. That way when a great buying opportunity presents itself you can act on it.

I agree that a Roth IRA is better than traditional. Think of it this way. With a Roth IRA you pay the taxes now, and never again. With a traditional IRA, you don't pay taxes now, you pay them when you take the money out. Now, if taxes go down, you would be better off with a traditional IRA. If taxes go up, you're better off with a Roth. Which way do you think taxes will go?

But, here's another consideration. If you want to collect food stamps, they look at your IRA. So not having an IRA, or not a very big one, could be beneficial if it enables you to qualify for food stamps.

 

[offroad]

Taxes mean nothing if you are below the poverty level. Saying that three times because it seems to be unclear. Taxes mean nothing if you are below poverty. Taxes mean nothing if you are below poverty. Why do we care about taxes at all? If your income from all sources is below the poverty threshold, and you maintain it below this amount you care nothing of taxes. Right it wrong? Do I still pay a tax on my 401k or other retirement withdrawal regardless?

 

[Seraphim]

Taxes mean nothing if you are below the poverty level. Saying that three times because it seems to be unclear. Taxes mean nothing if you are below poverty. Taxes mean nothing if you are below poverty. Why do we care about taxes at all? If your income from all sources is below the poverty threshold, and you maintain it below this amount you care nothing of taxes. Right it wrong? Do I still pay a tax on my 401k or other retirement withdrawal regardless?

We get it. It doesn't apply to everyone here. Should I say it three times, or do you get it?

Put out an offensive post, essentially calling people idiots, then don't expect a polite reply.

3x

 

[offroad]

Oh. Not meant as offensive to anyone. Please don't take it that way. Just aggressive expression online. Be happy people. No attack meant. You are all smart as hell.

Pushing myself off the soapbox and down the hill.

 

[SweetMarie1965]

Sometimes I think that living below the poverty level is in fact being rich; rich in different things that the wealthy rarely know. Rich in experience, rich in love, rich in natural beauty, rich in true friends, even if they are only one or two. I used to have lots of money, but then in a flash it was gone. All it takes is a little bad luck or being off in the timing of things. Looking back now, I'd take those well-off days, I would trade them for a van and a life on the road again. I have very few good memories of daily housekeeping and upkeep - drudgery. What did it bring me? Nothing. What did I lose? All those music festivals I would have loved to attend, the people I could have met, all the beautiful camping trips in autumn... all the peace and quiet. Investing in as good a van as you can afford now is probably the best thing you can do with an unexpected gift of money. Then being aware of what is freely offered to everybody if you ever need help of a kind. Life is short, enjoy it in the best possible way, by being free. Get your van, save some and let the Universe take care of the rest. It will lead you to everything you need at exactly the right time. It's slowing me down a bit right now - I broke my arm a couple of days ago. There must be a reason, so I'll take it as it is for now. The van will be there when I need it. Sometimes too much thinking messes things up. Get wings!

 

[sassypickins]

@SweetMarie ~ Sorry to hear about your arm, hope it heals well.

@Theadyn ~ I am not sure what I would do with an unexpected gift like that, but I think what you outlined for yourself sounds like good thinking. You could be on the road soon and often with a rig that will suit you better than the RV you have now.

 

[Seraphim]

Oh. Not meant as offensive to anyone. Please don't take it that way. Just aggressive expression online. Be happy people. No attack meant. You are all smart as hell.

Pushing myself off the soapbox and down the hill.

My apologies then. It's difficult online, but there are certain conventions which essentially mean, "Hey stupid" lol. Having to repeat something three times so someone 'gets it' could apparently be misconstrued.

 

[Theadyn]

Well, sold the extra vehicle yesterday. Good thing, it's insurance was coming due next month and I usually pay 6 months at a time. Got 4k out of the deal and the extra headache is gone.

The other unexpected money should be coming in the next week. As I sit here, right now, my feelings are to sit on it. Since it's close to the end of the year, and it's after tax money, I may just max out a ROTH IRA for 2014 and park part of the rest in a savings account. I said part, cause I want to keep maybe $2000 in cash, just in case a helluva deal comes along and I can snatch it up. Cash is king and sometimes good deals don't wait a day or two while you move money from savings and such (my savings account is online linked with my checking, used to be ING, it's called Capital One 360 now. Takes 2 days for it to get into my checking account).

So here goes:
$4,000 - from sale of extra vehicle
$7,000 - unexpected money from old job, after taxes
=$11,000

- $5,500 - into ROTH IRA
- $2,000 - in cash on hand
- $3,500 - in savings account

Well, that's the immediate plans anyways.

 

[Luisafernandes]

Well, sold the extra vehicle yesterday. Good thing, it's insurance was coming due next month and I usually pay 6 months at a time. Got 4k out of the deal and the extra headache is gone.

The other unexpected money should be coming in the next week. As I sit here, right now, my feelings are to sit on it. Since it's close to the end of the year, and it's after tax money, I may just max out a ROTH IRA for 2014 and park part of the rest in a savings account. I said part, cause I want to keep maybe $2000 in cash, just in case a helluva deal comes along and I can snatch it up. Cash is king and sometimes good deals don't wait a day or two while you move money from savings and such (my savings account is online linked with my checking, used to be ING, it's called Capital One 360 now. Takes 2 days for it to get into my checking account).

So here goes:
$4,000 - from sale of extra vehicle
$7,000 - unexpected money from old job, after taxes
=$11,000

- $5,500 - into ROTH IRA
- $2,000 - in cash on hand
- $3,500 - in savings account

Well, that's the immediate plans anyways.

I will give you...a million Bangladeshi [emoji384][emoji384][emoji384][emoji384][emoji384][emoji384] for those few [emoji385]. It's a heck of a deal [emoji106][emoji56]

 

[Seraphim]

Well, sold the extra vehicle yesterday. Good thing, it's insurance was coming due next month and I usually pay 6 months at a time. Got 4k out of the deal and the extra headache is gone.

The other unexpected money should be coming in the next week. As I sit here, right now, my feelings are to sit on it. Since it's close to the end of the year, and it's after tax money, I may just max out a ROTH IRA for 2014 and park part of the rest in a savings account. I said part, cause I want to keep maybe $2000 in cash, just in case a helluva deal comes along and I can snatch it up. Cash is king and sometimes good deals don't wait a day or two while you move money from savings and such (my savings account is online linked with my checking, used to be ING, it's called Capital One 360 now. Takes 2 days for it to get into my checking account).

So here goes:
$4,000 - from sale of extra vehicle
$7,000 - unexpected money from old job, after taxes
=$11,000

- $5,500 - into ROTH IRA
- $2,000 - in cash on hand
- $3,500 - in savings account

Well, that's the immediate plans anyways.

Good plan. Vehicle money, ready at hand emergency money, investment money.

What are some of the investment options inside the IRA? I'm not familiar with Roths.

I will mention Vanguard again, because you can open your IRA with them, and they have some great low cost funds. No, I don't work for VG lol. But even Warren Buffet advised his heirs, that once they inherit his money just to stick it in a low cost index fund such as Vanguards. If you need funds from VG account, alone call or online transaction and the money's in your checking account two days later - no transaction fee.

 

[Theadyn]

I've been eyeing Vanguard for a few years already, actually. Most of the stuff I was looking at (VTSAX for example) you had to have a minimum before you could invest, which I didn't have at the time.

Was thinking Roth since it's after tax money and not taxed when withdrawn, but there are income minimums for the max contributions. Will think more on this... more research!! But alas, must get ready for the Turkey Day up ahead.. 4 days of it, eek!!

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I will give you...a million Bangladeshi [emoji384][emoji384][emoji384][emoji384][emoji384][emoji384] for those few [emoji385]. It's a heck of a deal [emoji106][emoji56]

Ummm.. no

 

[Seraphim]

VTSAX is an Admiral fund - they have the exact same fund with a different ticker number in the Imvestor class. Just a slightly higher annual fee. Still very very cheap. Minimum of $1000 investment. I HIGHLY recommend that fund. I keep 54% of my investment assets there.

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Max out the Roth and put the rest in a taxable account. Vanguard will advise how to set it up for free, and answer any questions.

---

VTSMX is the investor share Ticker of VTSAX. Minimum $3k (my error) and a cost of .17%. That's $1.70 a year

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$1.70 a year per $1000 - $8.50 a year for $5000.

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Why go with an IRA? Capital gains on $5k won't be significant, and if you're income is below a certain point, you don't pay capital gains tax, anyway. I don't know your age, but if finances force you to use that money, what are the penalties for early withdrawal from a Roth? No penalties or costs if you withdraw from a Vanguard taxable account. Personally, the only reason I'd use an IRA is for an immediate tax break, which Roths don't provide (as I understand). I'd just create one taxable account and not worry about it.

Just set up a taxable account for my son, with some inheritance money he received. He may want to buy a house, or other major purchase, somewhere down the road, and that money's available without penalty. He makes under $20k and won't pay on capital gains. I forget what the income break is on capital gains.

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On VTSMX 10% YTD, about 29% last year (this is HIGHLY unusual). Morningstar has a free account with an education center, and provides information on all,stocks, funds, bonds etc. well worth a look. Don't become a premium member.

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Premium members pay...

 

[HarmonicaBruce]

... if you are below poverty....why do we care about taxes at all?

I understand offroad's frustration. This is a forum about living cheap, and we're talking about roth vs traditional ira's. Of course the only reason we care about taxes is because we have to pay them, and we need to keep ALL our money. I never thought social security would still be around when I was old enough to collect it, but it is. Just having $10,000 and a small monthly income can go a real long way toward living comfortably in one's retirement. But, for younger people who don't have any kind of retirement account, I'd think they need to find some way to make enough money to fund a lifestyle they enjoy. This will likely entail a career. There might be an easier way, but I don't know what it is.

 

[Luisafernandes]

I've been eyeing Vanguard for a few years already, actually. Most of the stuff I was looking at (VTSAX for example) you had to have a minimum before you could invest, which I didn't have at the time.

Was thinking Roth since it's after tax money and not taxed when withdrawn, but there are income minimums for the max contributions. Will think more on this... more research!! But alas, must get ready for the Turkey Day up ahead.. 4 days of it, eek!!

---

Ummm.. no

---

[emoji35][emoji15][emoji6]

 

[Seraphim]

I understand offroad's frustration. This is a forum about living cheap, and we're talking about roth vs traditional ira's. Of course the only reason we care about taxes is because we have to pay them, and we need to keep ALL our money. I never thought social security would still be around when I was old enough to collect it, but it is. Just having $10,000 and a small monthly income can go a real long way toward living comfortably in one's retirement. But, for younger people who don't have any kind of retirement account, I'd think they need to find some way to make enough money to fund a lifestyle they enjoy. This will likely entail a career. There might be an easier way, but I don't know what it is.

Living cheap does not necessarily equate to living in poverty. I've met people who made a median income, lived cheap all their lives, saved and invested what they didn't use, and are well off by most standards. They didn't live within their means, they lived well below their means. One can meet the site's expectation of living cheap, without being in poverty.

And, last time I checked Bobs opening page, it stated for those who live, thought about living, or want to live a cheap RV lifestyle ( or words to that effect).

Cheap is also a relative term. The people buying stocks here never mentioned how much money they may or may not have. They may just have a little, and enjoy buying and selling - as a hobby. I don't know, nor does anyone else here.

When Bob sets an income limit to join the site, rather than a desire to love cheaply, more cheaply, or just cheaper than one has in the past, I'm sure he'll announce it.

If someone doesn't like that there is a thread on stocks, they don't have to click the link to the thread. There are threads I don't follow because I have no interest. Others are free to do the same.

We are not responsible for other people's frustrations... and I mean that with no animus towards Offroad or anyone else.

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Plus, if someone has had a sudden windfall they want to keep, which you have already inferred is a positive idea, they need somewhere to ask about investing. This forum is a good spot.

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Why shouldn't they want their nest egg to grow as efficiently as possible?

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Correction to above: not love cheaply, but love cheaply. Everyone knows it's impossible to love cheaply lol.

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I hate this auto correct keyboard...

 

[Theadyn]

I hate this auto correct keyboard...

Haha





It is interesting to get other's points of views. As first questioned, it's a 'What would YOU do' thread. All views are welcome.

Investing is very confusing for me, so other's insights are helpful, thanks!!