Transcripts Including Tag: brokeragechoice

Description: Invest :: Choice of brokerage (M1, VTSAX, Fidelity, Charles Schwabb, etc)

These are the transcripts that include the tag brokeragechoice.

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018: Go Curry Cracker Capital Gains Losses Roth Conversion Go Curry Cracker Yes. Let's look at say a married couple you've got this 100k of tax free income potential but you're not actually making 100k right. Let's say you've got half of that. Well that other 50 out of the other half the other 50 k of potential tax for income. You don't want to waste it all. You know this year it's gone forever if you don't use it. So what you can do is you can take any sort of how do say, like any sort of stocks that you hold in your brokerage account in your taxable account. And if you can find 50 k of gains in there you can sell your fund with you know choose the specific shares that it works out where you where you end up with a 50 K gain and then buy it back buy a similar fund back and now you. You generated a taxable event this year you have a sale with a gain that is taxed at a rate thatjust happens to be zero. Now your basis is 50 K higher. And so next year you could do it again or not. But that money will essentially be tax free forever.
019R: How to Start with VTSAX Jonathan Mendonsa Yeah. You know I think probably there's going two pieces to this one is just kind of where Brad nice general and he used the word umbrella. I'm going to steer him towards the word buckets going forward. I think that's probably a general term that we'll be using more and more tax advantage. Bucket's it's going to be consistent with what we talked about with millionaire educator and also Jim Collins and that the whole idea is you have these carve outs. And so we try to work within those carve outs as they provide us these advantages these tax advantages typically. And then you have to work within the specific set of rules in the scenario for your life and with the FI community our thought process is that we are going to be retired significantly before the age of 60. And so the rules for us are slightly different than for the people that are retiring after 60 which is the people for which a lot of these accounts were initially created. So that kind of shifts though the rotation and how you actually view these different vehicles for our specific fi community. But but in general most of the F-I community agrees pretax is better than post-tax just because we have plans for getting all this stuff out tax free anyways and for more information so that we've covered that ad nauseum on the Roth conversion ladder and also on capital gains harvesting which was episode 17 and also the roundup for episode 17 which was 17 R and then go to check out the capital gains harvesting go to episode 18 and then the round up for that episode episode 18 R for specifics on how that would actually work. But in general kind of Brad and I think number one if you have a 401k you would definitely do that up to the match. We haven't really gotten into this but that HSA is another powerful tool that we'll talk about later. And then from there that's where the traditional IRAs come into place and they're very helpful after that. And then we start to consider the brokerage accounts. And then you would consider the Roth maybe and then you know there's a few other things from there but we always prefer a over tax. Now there's exceptions to every single one of those rules that we'll go into later. But just in general we like pretax overtaxed. Now those are the buckets that we have to work with. But now you actually take a look at the specific investment vehicles that you're going to use inside those buckets. And now that you're looking the investment vehicles inside those buckets that's what we're talking about index funds. So your options might be individual stocks or individual bonds. Index funds encompass a lot of that depending on which index you're following. And so we would try to get a index fund inside for you inside of a traditional IRA up to the fifty five hundred dollar limit. Brad any thoughts on that.
024R: The Friday Roundup Brad Barrett Yeah there's certainly a lot to go through here I'm going to try to answer everything if I possibly can. So the short answer is yes. This is just a savings account. That's how you think about it. When Jonathan talks about his different buckets there are your tax advantages are tax deferred ones right. You have the traditional IRA you have 401K you have the 403B the 457 all those different things. Those are very specific buckets that are generally regarded as retirement accounts but other than that you have money just sitting there in your savings or checking account. That's just your normal life savings. But when it's sitting in your savings or checking account it's earning essentially nothing. So in order to put that money to work and to really truly see the value of compounding over many many decades you need to invest in the stock market. You just you just need to. And in our opinion and in the opinion of many of our guests VTSAX is the best way to do it. So yeah you're essentially just opening a standard brokerage account at Vanguard. And that might be the term they use or it might not be but it's just a standard account there. And you're just buying VTSAX within that bucket as opposed to being the money just sitting and checking account it's in Vanguard and you're buying VTSAX. with that money. Very very straightforward honestly nothing nothing to be concerned with there. Though I understand the confusion here because we are all used to thinking in terms of these buckets but just think about it as your checking account just the money just happens to be sitting in Vanguard instead. The next question you ask is about are you paying the taxes every time you put money into the account. How does this work. And so OK. This is a very good question and you definitely are not paying taxes every time you move money into the account. This again is just this is essentially as we call it your taxable savings. And I think that is part of the confusion here. And there's no better term than I know of if anybody out in the audience has has a better term that we can use just to adopt for the future. Please send it to us. But we just call it and most people called your taxable savings which means this is just your regular money. So there's no taxable event that goes on here whether you have the money sitting in your checking account or you have it sitting in Vanguard where you purchase the VTSAX because the taxable event has already happened. The taxable event is you earned income and that goes on your 1040 tax return each year. And of course you backout whatever deductions you may have standard deduction personal exemptions things like that that money is then taxed. And this is essentially the money left over. This is the money that you have in your regular savings. So there's no taxable event that goes on here at all. Nothing when you put the money in there's no concern here. Again not to beat a dead horse but instead of sitting your checking account it's actually working for you in Vanguard. And just last point that I do want to touch on because you did mention the taxes while there's no taxable event when you purchased these because they are traditional savings accounts essentially there are taxable events throughout the year. There are dividend distributions and there are capital gains. But that said investing in an index fund is the most efficient way to go about this because index funds just by their very nature have low turnover and there's very little selling of individual stocks inside that index fund. So there are very few opportunities for capital gains within within this fund whereas if you're in an actively managed fund that brilliant manager is going to try to prove his brilliance by buying and selling things and this will almost invariably lead to a significantly higher rate of capital gains within within that fund within those sells. So that's going to get passed on to you as the fund holder. So there actually will you'll see capital gains every year even though you're not actually seeing any cash. So you have to report that on your income tax return. But in many cases like it's not specifically coming through to you into your bank account if you will. So that said VTSAX is the most efficient way to do that and minimize your tax liability in in the current year as well. So we think it's a slam dunk and yeah hopefully we answered your question well enough.
040: Money Metagame Noah "Mr. Money MetaGame" Bouillon Sure. So we bought the house and not long after that we started really digging into our finances because we were going to check out all the big boxes that adults do like buy the house and then we're like well what are we doing with our money like what's the purpose of it. And then when we discovered FI having financial freedom became that purpose. So then we just kind of crank everything up from there. And the first step was definitely maxing out our 401k's because up till that point we were just following the general advice of just putting in enough to get the match. So we were contributing something but nowhere near the max. So we we cranked both of those up. I cranked up my contribution to the HSA that I had available and then we both maxed out Roth IRAs and even started saving extra money in a brokerage account like our lifestyle didn't actually change that much. But we had a purpose for the money we were saving instead of just going into a checking account and then eventually going towards a big trip or a house purchase or something else like it was going into investments that had a specific purpose of getting us to FI.
041: The High Cost of Living path to FI Paige Sam Yeah I would say that's that's true. And we're not talking a whole lot of money. But the fact that it was in the right place and that it was easy for me to if I've found that I had bunch of paychecks that year and had extra money left over at the end of the year I could electronically transfer from my checking account into this brokerage account just with the click of a button. And then that would continue because it was an easy thing to do.
042: The Green Swan Why Start a Business When You Can Buy One JW - the Green Swan Yeah I think my goal is is irrespective of how the business does. I'll probably hit FI in a handful of years maybe five or six years. My wife and I the business I don't know about the passive income stream or how that will be incorporated into FI but ideally we'll have that kind of on the side or as as icing on the cake to our you know taxable brokerage account and our retirement accounts that will then be the primary basis for our financial independence.
047: The Cult of Home Ownership Millennial Revolution Bryce - Wanderer from Millennial Revolution I think I think it's OK to make mistakes especially when it comes to starting investing. They get really scared and that goes through this kind of analysis paralysis kind of thing where especially when you start investing there's so much stuff going on so many do I buy this mutual fund do I open this brokerage account what do I put inside of a 401k or what I put inside of like a roth IRA and this concept and because there's so much complexity seemingly complexity to investing it makes people just kind of freeze up and say I'm not going to deal with this now maybe I'm going to deal with this next year. And that's actually the exact wrong way to do it because what you want to do is you want to get in there and try it and you want to make mistakes early on in your career. And when there's not a lot of money involved and the longer you kind of delay that figuring out how money works the worse off shape that you get or your retirement gets delayed because you are doing things that it takes more time to compound. And that just hurts everyone. So it's just like go ahead try it out make mistakes and learn from them and then recover. And that's kind of what I would think I would tell my my my younger self.
050: Domestic GeoArbitrage Freedom is Groovy Mr Groovy Well we were still getting our sea legs so to speak with personal finance at that time. Believe it or not it was in bank of America. It was in a savings account. And Mrs. Groovy was very fortunate. She kept her new york job. She gave her two weeks notice and the company liked her so much they said they want her telecommute. So that was a big win. we weren't expecting that. So she kept her job and she worked from home which was awesome. A New York salary of New York benefit. It was great. So basically we had this big chunk of money even after buying a condo I forget the exact numbers over 200000. It almost sickens me. Looking back on it we just are a dollar cost averaging which today I wouldn't do. But back then we started doing our Roths at the time and it was maybe 300 something a month to max out for the whole year and we put $3000 into a brokerage account with Fidelity every month.
053: MillMoneyMan Bobby "Millennial Money Man" Hoyt Yeah yeah. So after that Mike was my wife's father's best friend. He just kind of took me under his wing and I'd go and hang out at his pool shop and he was kind of in the process of tearing down his business in a way like shutting things down very slowly and he decided that he wanted to he saw that I had kind of like an entrepreneurial spirit, but probably didn't know it yet and he just he started teaching me everything he could about about personal finance. He's a really seasoned investor and he had obviously built a very successful business too. So I mean he would literally would go up there and drink a couple of beers and he'd pull out his P&L statements and he'd pull out like he pull up his accounting program be like this is how you do accounting and he pull out his stock accounts his brokerage accounts. And walked me through everything and let me see all the numbers. Looking back on it it's pretty fascinating that he did that. And he's a he's a great friend of mine now and we have like a 40 year age gap almost. But he just he mentored me through that whole process and that was that was how I learned about personal finance and how I got interested. And then obviously you know now I'm immersed in this kind of weird culture that we have. So that's how I learned about things now. That was how it started.
078: Travis Hornsby Travis Hornsby Yeah. So in that document if you go through it there's actually parts of it that include all these different repayment programs and these different forgiveness programs in that document. So discussing this with lawyers this is why they think that every proposal for repealing and replacing these different income driven and loan forgiveness programs that we've seen have all grandfathered in people who already have the debt outstanding because you agreed to this promissory note with specific terms and conditions. Now people who don't already have the debt haven't agreed to anything. And that's why the proposals to repeal a lot of these programs or change them affect people that are entering a graduate program starting in July 1st 2019. So if somebody is already in school they should be safe to use all these different strategies if somebody has already graduated. They should be safe to use all these strategies. But if you're thinking about going to grad school in the next couple of years you need to be very careful. So that's the answer I give in terms of the. Could you wake up in these loan forgiveness programs get appealed one thing another. Another point way to look at this is student loans are one point five trillion and if you compare that to mortgage debt it's about eight trillion in mortgage debt. So 1.5 trillion of student loans is a massive massive problem. If they made the student loan system for current borrowers signigicantly less friendly that would potentially create a financial crisis. So in some regard it might not be possible to make the loan programs that much worse for people who already have debt because of what you could do to the economy. So the best program that PSL program just to recap that's a 10 year Forgivenes program that the balance at the end of it is wiped away tax free. That's the best program right. That's the one that people qualify for. Only if they work full time at a government or not for profit employer. Now the programs that are available to literally everybody that has a job. That's just the standard loan forgiveness programs on the pay as you earn the revised pay as you earn and the income based repayment programs. that's available to anyone whether you're working at a Wall Street bank or you're unemployed and the way that works is you pay again 10 or 15 percent of your discretionary income. But you have to do it for 20 to 25 years instead of 10. And at the end of that period if you have a low income your balance is going to be pretty high. And then you have to pay taxes on that forgiven balance. So what I help people do is figure out how do you prepare for that tax bomb. How much do you have to save each month to be able to pay this tax bomb. And does doing that make more sense from a math perspective than paying the loans back. And if somebody has got that two to one debt to income ratio we're talking about like that veterinarian that had 80 thousand of income and 380000 of student debt that veterinarian can actually reach a point where they're going to be F.I. one day by maximizing their retirement accounts contributing a lot to their brokerage accounts and preparing for this tax bomb by going for a more of a 20 to 25 year loan forgiveness strategy even though they're not employed at a not for profit or public sector place. So very complex all kinds of strategies. The take home messages is that there's hope for people like you have members of your community that felt like hey this FI stuff sounds so exciting. Like I'd love to be able to save a lot of my income but I would be literally paying 70 percent of my income to my state loans for the next 10 years. That person can achieve F.I. and they maybe didn't think they could before.

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