You have $50K deposited into a new self-directed traditional IRA. What is YOUR choice of allocation
guitarwes
Posts: 9,266 ✭✭✭
Stocks are high as a kite.
Metals are ticking down.
The dollar is crazy.
Where the heck would you put it right now? Do you have a favorite growth ETF? Do you have a favorite long-term single company hold? Do you sit in cash and wait?
Real scenario. I have a couple of answers but was curious as to what most here would do.
Metals are ticking down.
The dollar is crazy.
Where the heck would you put it right now? Do you have a favorite growth ETF? Do you have a favorite long-term single company hold? Do you sit in cash and wait?
Real scenario. I have a couple of answers but was curious as to what most here would do.
@ Elite CNC Routing & Woodworks on Facebook. Check out my work.
Too many positive BST transactions with too many members to list.
Too many positive BST transactions with too many members to list.
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If this was my nestegg and I didnt have any other investment/investment accounts, I would diversify it with a good bond fund, some metals and a few select companies that have certain characteristics that meet my strict criteria.
If this was one of many of my investment options, I would try to find a short term non performing note (probably a second) that is earning 10%+ or would use it to purchase a single family home that cash flows at a 10%+ rate after debt service since this is a self directed IRA.
Just curious, what company did you select to use for your self directed?
Either way, good luck!
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
<< <i>Just curious, what company did you select to use for your self directed? >>
Had a Scottrade account already, so I just setup a traditional IRA in it.
<< <i>Correctly move in and out of USLV/DSLV. Use silver's volatility to your advantage. >>
That would be the best option if my crystal ball worked as good as yours. How about if I give you a % and I can ride on your coattail?
Too many positive BST transactions with too many members to list.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
Menomonee Falls Wisconsin USA
http://www.pcgs.com/SetRegistr...dset.aspx?s=68269&ac=1">Musky 1861 Mint Set
<< <i>Had a Scottrade account already, so I just setup a traditional IRA in it. >>
If you expect to turn profits, why not earn them tax free with a Roth IRA. The only taxes paid are on the contributions (at your normal rate). The only affect is you don't defer taxes on the portion of your income contributed to the account to end up paying taxes on all future withdraws (including profits). Tax wise, it's like you don't have the account.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I knew it would happen.
<< <i>
<< <i>Had a Scottrade account already, so I just setup a traditional IRA in it. >>
If you expect to turn profits, why not earn them tax free with a Roth IRA. The only taxes paid are on the contributions (at your normal rate). The only affect is you don't defer taxes on the portion of your income contributed to the account to end up paying taxes on all future withdraws (including profits). Tax wise, it's like you don't have the account. >>
He would have to pay taxes on the conversion to Roth in his 2015 taxes. If he can swing that, or has some tax loss that can offset some of his tax burden, then this could be an option.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
Also need to know age, how many dependants etc.
You cannot give a good answer in a vacume or lack of understanding of the total scene.
That being said, equities are at all time highs so I would not go all in there.
Stay away from leveraged day trading ETFs and funds....if you are asking this basic question they have no role for you at this time.
Diverificatipn is the key to long term financial success....thus we do need more info.
Good luck.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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<< <i>
<< <i>Had a Scottrade account already, so I just setup a traditional IRA in it. >>
If you expect to turn profits, why not earn them tax free with a Roth IRA. The only taxes paid are on the contributions (at your normal rate). The only affect is you don't defer taxes on the portion of your income contributed to the account to end up paying taxes on all future withdraws (including profits). Tax wise, it's like you don't have the account. >>
He would have to pay taxes on the conversion to Roth in his 2015 taxes. If he can swing that, or has some tax loss that can offset some of his tax burden, then this could be an option. >>
Only if he converted existing, regular IRA funds into a Roth account. Regular IRA funds were not taxed at time of deposit into IRA, therefore they get taxed at time of conversion into a Roth IRA. For those that do go the conversion route AND are eligible to withdraw from the account (with a penalty for underagers), one can easily take enough cash during the conversion to cover the end of year increase of the tax bill. The conversion itself is not subject to any penalty if the funds do not travel through the account holder's hands. I personally converted over a to a Roth, withdrew the projected increase in that year's taxes in the form of cash at the time of conversion, and paid the year end's taxes with that cash. No question at this point that it was a very wise decision as I have not only more than recovered what I paid in taxes to make the conversion, I have also built a substantial tax free portfolio.
He didn't mention a conversion, He says he "set up" a regular IRA. Regardless, all income is subject to tax, either before it goes into a Roth IRA or after it comes out of a regular IRA. The advantage with the Roth is the tax free growth and eventual tax free withdrawal(s).
When it comes to "pay me now or pay me later" regarding taxes, it is wise to "pay me now." Tax rates go up over time, not down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>Other than converting an old 401k into an IRA, how else would he be able to set up an IRA with $50k contributed in 1 year? >>
A $50K deposit into a Roth can only be made by converting from a regular IRA. With a $50K deposit most middle incomers would probably have had to pay $7-10K additionally in taxes. With wise investment decisions and enough time before retirement to "grow" the account, the $7-10K should prove to be peanuts when considering BOTH the account balance growth AND its tax free status. My point is that paying the taxes at time of conversion can, and in my case did, prove to be a good investment. FWIW, I was age 56 when I did it. Why defer taxes on $50K just to end up paying taxes on $500K? The taxman loves regular IRAs.
If one questions his ability to make the needed wise investment choices to "grow" the account he should not be self directing his investments.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Agree that no meaningful answer can be given without knowing what if any other assets(and liabilities) the person already has.
Also need to know age, how many dependants etc.
You cannot give a good answer in a vacume or lack of understanding of the total scene.
.....
.....
Diverificatipn is the key to long term financial success....thus we do need more info.
Good luck. >>
Agree with these parts. Without knowing what other holdings are out there, I would just say that for a brokerage account, the following would be how I would distribute the funds.
Also, I tend to dislike bond funds/etfs because they are NOT the same as owning the actual bonds (and I have a military pension which changes how much I'd use for bonds anyway). That size account should NOT be trading in bonds directly IMO.
For the investment accounts I would do this:
BND 5K (US bonds corp/govt/mortgage backed/mixed duration)
BNDX 5K (International bond, index based)
VNQ 10K (REIT Index)
VXUS 10K (International stocks, index)
VOO 10K (500 index)
VXF 10K (everything but the 500)
All Vanguard etfs so relatively low cost, and break out the lg cap vs med/smalls to make rebalancing easier. Boring as it gets, but for THAT TYPE of account, what I'd do with it. It may or may not be the bulk of my overall plan, but that is how I'd make a brokerage look.
Outside this, I might have cash for 1/2 to 3 years (depending on where I am in the work/retirement spectrum), PMs, a Treasury Direct account (with I-bonds and notes appropriate for medium term goals), and rental property. Along with a fairly debt free existence.
Edited to add, it could have been a rollover, so no taxes. Or if it had been funds from a traditional but non-deductible IRA then only the gains are taxed, as the funding was with after tax dollars.
Also, I looked at this as a fun opinion poll, not a serious attempt at managing his finances...I hope.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>$50K in Apple watch battery manufacturers.
You joke but this company was trading in the low teens before apple contracted them to build out parts for their near field frequency applications in the iphone.
NXPI is the symbol.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>Stocks are high as a kite.
Metals are ticking down.
The dollar is crazy.
Where the heck would you put it right now? Do you have a favorite growth ETF? Do you have a favorite long-term single company hold? Do you sit in cash and wait?
Real scenario. I have a couple of answers but was curious as to what most here would do. >>
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Stocks are high as a kite.
And perhaps poised to go higher, at least in some cases. Lowe's? The DIY thing is back in force. Costco? Fabulous employee treatment translates into happy customers AKA growth.
Then there is vice. Altria (cigarettes)? Certain casinos who are in expansion mode?
War seems to be a growing market. There's your Lockheed Martin, Raytheon.
Then anything the Baby Boomers are going to be supporting:CVS, Walgreens.
Insurance I can't figure but there MUST be money to be made there.
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Metals are ticking down.
Yeah, it's watch and see in this department.
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The dollar is crazy.
Heck, who ain't anymore?
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Where the heck would you put it right now?
Been asking myself that very question.
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Do you have a favorite growth ETF?
No.
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Do you have a favorite long-term single company hold?
If by long term you mean 10 or more years, I'm 'coat-tailing' Warren B. of Omaha on Bank of America.
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Do you sit in cash and wait?
At times of course Wes, but like yourself I just feel that this is not that time. I'm doing a (very) small vacant real estate thing, locally and within my comfort zone. But then (hopefully) there will be profits to be invested, and then there we are back to your original question.
I knew it would happen.
<< <i>Other than converting an old 401k into an IRA, how else would he be able to set up an IRA with $50k contributed in 1 year? >>
Perhaps he simply transferred the $50K from one IRA to another? Not a big deal to change custodians.
<< <i>
<< <i>Other than converting an old 401k into an IRA, how else would he be able to set up an IRA with $50k contributed in 1 year? >>
Perhaps he simply transferred the $50K from one IRA to another? Not a big deal to change custodians. >>
as derryb mentioned, he didnt mention a conversion, he said set up.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
Do not listen to anyone who does not know your circumstances. If you convert to a Roth from a traditional you have to pay all of the taxes by the next tax return, many reasons why that doesn't make since for some people. Starting a new Roth with contributions entirely different, and makes sense a lot of the time, but that wasn't your question.
2nd piece is don't feel you have to invest all at once, investing 30-50-% while keeping powder dry(cash) to take advantage of opportunities as they present themselves in the future is not a bad idea.
Menomonee Falls Wisconsin USA
http://www.pcgs.com/SetRegistr...dset.aspx?s=68269&ac=1">Musky 1861 Mint Set
This was a 401(k) to traditional IRA rollover for myself. The company I work for discontinued their 401(k) plan and matching contributions.
Much of the rollover will go into low cost index growth ETF's, at least until we see what the elections are gonna bring. A little will go to start building piles of large cap companies. A little dry powder will be in reserve for volitility plays. My other Scottrade account will play with volitile metals and the like (as derryb suggests).
Too many positive BST transactions with too many members to list.
<< <i>
<< <i>
<< <i>Other than converting an old 401k into an IRA, how else would he be able to set up an IRA with $50k contributed in 1 year? >>
Perhaps he simply transferred the $50K from one IRA to another? Not a big deal to change custodians. >>
as derryb mentioned, he didnt mention a conversion, he said set up. >>
A transfer is NOT a conversion. You can move money from one custodian to another. For example, one could have an IRA with Vanguard; "setup" an IRA with Scottrade for the normal yearly contribution which I think is $5K now. One could then transfer the balance in the Vanguard IRA to the Scottrade IRA. Also the term to setup could just as well involve a conversion. The term setup implies creation, but he also that he already had an existing account with ST.
It would have been much simpler had he just said rollover from the gitgo.
Also if/when he decides to convert to a Roth either all or in part, they should be in separate accounts to avoid the accounting nightmare of having taxable and nontaxable funds in the same account. He'd want to check with his/an accountat to ascertain whether the conversion needs to be done on an all or none basis. Depending on his income, the tax bite + penalty could be significant. It seems to me it is generally recommended to do the conversion only if you don't have to withdraw from the account to cover the tax liability.
<< <i>The 1st piece of advice, don't follow anyone's advice who says stuff like: "Correctly move in and out of USLV/DSLV. Use silver's volatility to your advantage."
Do not listen to anyone who does not know your circumstances. If you convert to a Roth from a traditional you have to pay all of the taxes by the next tax return, many reasons why that doesn't make since for some people. Starting a new Roth with contributions entirely different, and makes sense a lot of the time, but that wasn't your question.
2nd piece is don't feel you have to invest all at once, investing 30-50-% while keeping powder dry(cash) to take advantage of opportunities as they present themselves in the future is not a bad idea. >>
If you'll bother to read the OP, he didn't ask for advice. He asked what YOU would do if the money was yours. I told him what I would do. I love it when people know the answer without even listening to the question.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
All a Roth does is allow your gains to go forward, tax free. You still pay taxes going in. The greater assumption is that you will have gains. This was appropriate in your father's world where you could invest in interest-bearing instruments such as a Treasury or a money market fund, but those days are gone.
There is no benefit to a Roth unless you are a good trader in stocks and can generate guaranteed positive results. Stocks are at all time highs and must be considered vulnerable under the present world financial conditions. Of course, the stock market climbs a wall of worry.
P.S. - a Roth could be an advantage if tax rates become onerous. By the same token, the rules on Roths could change, even though they are likely to grandfather-in existing funds.
There aren't many conservative options available anymore. I think that's by design. I think tptb want to promote stock market speculation (they've stated as much), and it seems to be working. Good luck either way.
I knew it would happen.