SVTP Financial gurus

[omj]

I spend every spare cent I have on land. Rentals, speculative, whatever.
It pays off big for me.

 

[Buckwheat 1]

Except that's the exact scenario being discussed, being able to pay your mortgage off but keeping that money invested instead. If you think every person with access to money pays cash for everything, well ok, I'm not going to sweat trying to change your mind on it.

If you'd rather pay it off, do whatever works for you.

I personally know a lot of people that I would consider wealthy. Not one of them has a mortgage or debt of any sort, and they will all tell you that is the first step to building wealth. I used to say that sort of thinking is outdated and that Dave Ramsey is a goof, but the older I get the more I see that is absolutely the best way to achieve wealth for normal working people. Looking back at how I used to look at money, even just a few years ago, makes me laugh. Debt, for normal people in normal circumstances, is the biggest scam going and will keep them trapped for a lifetime.

Debt is the weight around your neck when things go south in the economy or the stock market the make sane people put a gun in their mouth.

 

[black4vcobra]

Nobody has asked the OP how old he is. His investment strategy depends on his age and when he wants to retire.

Also, very important question here, are we talking 5, 6 or 7 figures of inheritance?

OP, you own your house free and clear right? Will you have a pension through your job/union? What type of private retirement investments do you have.

As others have mentioned, now is the time to max out your 401k and max out a Roth IRA. After that, I would invest at least some of the inheritance in low cost index funds.

As others mentioned, real estate is an option and as a plumber you are likely handy enough to do basic repairs. Just know that being a landlord can be a nightmare at times.

 

[Ohio Snake]

You'd rather pay the bank $14,000 a year to save yourself from paying the IRS $2,800-4,500 a year? You may want to rethink that logic.

For my particular situation.... yes.

Why would I shell out $400k to pay off a house I don't intend to stay in my entire life? My home appreciates in value which can be tax free gain at the time of sale.
That cash I decided to retain control of can be diversified in other investments which is liquid and tax managed for growth.

Your system and philosophy may work for your situation, but not mine.


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[Ohio Snake]

This is a very interesting conversation and one that we can all benefit from.
Just asking here but what about a whole life policy, what about buying a long term care policy, or a mix of stocks, or a index fund in the s&p 500, there are lots of options. One thing I will add to the conversation is DO NOT let money be a burden, it is a blessing, treat it as such!!

I would like to know what impact a Roth will have on SS, tell us more?

Glad you asked.
Social security benefits can be subject to taxation based on reportable income during retirement.....up to 85% of the benefit. Roth distributions are non taxable distributions which will not affect taxation of social security benefits.
You mention Whole Life insurance ( any cash value based policy including fixed, variable and indexed) can provide income tax free distribution if properly designed and funded. A policies structured as a maximum non-MEC level payment policy may fit for a healthy person. Another source of tax free income!

Life insurance can also help with chronic illness care and long term care.....see Pacific Life Premier Care for a unique look at how it can work. (I don't work for Pacific Life, just a unique product for some people).

Your asking great questions and mention great options to look at. Again, it's not always about how much money you have, it's about how much money you can keep!


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[Ohio Snake]

Nobody has asked the OP how old he is. His investment strategy depends on his age and when he wants to retire.

Also, very important question here, are we talking 5, 6 or 7 figures of inheritance?

OP, you own your house free and clear right? Will you have a pension through your job/union? What type of private retirement investments do you have.

As others have mentioned, now is the time to max out your 401k and max out a Roth IRA. After that, I would invest at least some of the inheritance in low cost index funds.

As others mentioned, real estate is an option and as a plumber you are likely handy enough to do basic repairs. Just know that being a landlord can be a nightmare at times.

When the OP sits down with a trained professional, those questions will be asked including taxation. It is required since the professional is rendering advice for a fee or compensation. The professional essentially is acting as a possible fiduciary.
If one maxes out a 401k deferral ( up to $18k or $24k over age 50), the phase out limits can prevent investing in a Roth IRA amongst other limitations. Most 401ks offer the Roth 401k option. One could possibly make a non deductible IRA contribution as max funding a 401k and convert the non deductible IRA to a Roth IRA ( backdoor approach).

As for worry free real estate investing and depending on if your an "accredited investor", a 1031 exchange private placement program can provide excellent cash flow without the maintenance of the property to worry about.

Again, everybody has different levels of success!


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[Ohio Snake]

Sorry to hear about your grandfather. I wouldn't sweat the money. You said yourself he amassed the money to do what he enjoyed to do. Since you were so close it seems reasonable he'd want the same for you right? Get an advisor you trust to protect the money, have it make money for you so maybe you can pass it on one day, and have some fun along the way. Seems he'd want it that way.

As for family, it's a tough lesson learned. I lost both of my parents recently and while the inheritance was hardly anything, it still managed to show some true colors. Such is life. The world is filled with assholes, it's inevitable you'll be related to some of them.



Depends on the interest rate. If you have the cash to pay it off but can get a better percentage return through investments, or a combination of investments and tax breaks, why pay it off? Plus it's a long term account for credit purposes.

Smart!


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[Ohio Snake]

IRAs are nice but the yearly contribution amount is very limiting when it comes to deciding what to do with a large lump sum.

Given your current life style and financial situation, I'd put it into a LIRP.

I'm impressed with you mentioning a LIRP. Not many people would bring that up. I utilize a LIRP for myself and spouse. Everyone gets too focused on IRA and 401ks most of the time. Your my hero!


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[tistan]

I didn't read all the responses. If it hasn't already been said, I would sit on it. The stock market and real estate markets are overpriced right now. I would way for the coming crash in either market, and then buy buy buy.

 

[Ohio Snake]

I didn't read all the responses. If it hasn't already been said, I would sit on it. The stock market and real estate markets are overpriced right now. I would way for the coming crash in either market, and then buy buy buy.

I would seek professional advice first then determine the approach. 40% of investors that got burned in 2008 crash are still sitting in cash with losses...trying to time the markets, afraid of the next crash to "happen around the corner". You can make money in any market condition if you chose the right investment vehicle.

Robo Advisor has all the answers...not!


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[Buckwheat 1]

For my particular situation.... yes.

Why would I shell out $400k to pay off a house I don't intend to stay in my entire life? My home appreciates in value which can be tax free gain at the time of sale.
That cash I decided to retain control of can be diversified in other investments which is liquid and tax managed for growth.

Your system and philosophy may work for your situation, but not mine.


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I didn't read all the responses. If it hasn't already been said, I would sit on it. The stock market and real estate markets are overpriced right now. I would way for the coming crash in either market, and then buy buy buy.

I would seek professional advice first then determine the approach. 40% of investors that got burned in 2008 crash are still sitting in cash with losses...trying to time the markets, afraid of the next crash to "happen around the corner". You can make money in any market condition if you chose the right investment vehicle.

Robo Advisor has all the answers...not!


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I think you are minimizing the risk equity markets have to real money. It is a dangerous game. Everyone is a genius in an up market.

 

[Ohio Snake]

I think you are minimizing the risk equity markets have to real money. It is a dangerous game. Everyone is a genius in an up market.

I think you assumed any market condition means equity markets and the risks involved with that particular market. It may not be as dangerous if you have have money invested correctly and according to your risk tolerances. Every investment, including fixed income, carries "risk" ranging from equity market risk, inflation risk, yield risk, etc.
One to needs to establish their risk category, investment objective, assumed rate of rate and maximum downside loss potential to help in the decision of a strategy ( tactical, defensive, MPT, etc.) and investment types to use ( stocks, bonds, ETF, PP, Alternatives, fixed indexed, etc.)

Again, the OP needs to seek a professional who will ask the right questions and work to establish his goals and objectives.




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[tistan]

I would seek professional advice first then determine the approach. 40% of investors that got burned in 2008 crash are still sitting in cash with losses...trying to time the markets, afraid of the next crash to "happen around the corner". You can make money in any market condition if you chose the right investment vehicle.

Robo Advisor has all the answers...not!


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He is not an investor right now, he's liquid. Wait until the next big crash and buy up all the bargains. Markets move in 10 year cycles, we are do for a crash. It doesn't make sense to invest now when you know a crash is coming.

 

[Buckwheat 1]

I think you assumed any market condition means equity markets and the risks involved with that particular market. It may not be as dangerous if you have have money invested correctly and according to your risk tolerances. Every investment, including fixed income, carries "risk" ranging from equity market risk, inflation risk, yield risk, etc.
One to needs to establish their risk category, investment objective, assumed rate of rate and maximum downside loss potential to help in the decision of a strategy ( tactical, defensive, MPT, etc.) and investment types to use ( stocks, bonds, ETF, PP, Alternatives, fixed indexed, etc.)

Again, the OP needs to seek a professional who will ask the right questions and work to establish his goals and objectives.




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Being a skeptic and trusting nothing I sold everything Nov 5 2007. I saw what was coming.

 

[ssj4sadie]

I mean seriously, in the OP he said he wasn't going to seek professional advice. This is really just a vent session about him not getting all of the inheritance. He claims the high road, yet jumps in the ditches to ridicule family. I've seen this before and it's sickening the length at which someone will go to justify what they think should be theirs.

 

[Ohio Snake]

He is not an investor right now, he's liquid. Wait until the next big crash and buy up all the bargains. Markets move in 10 year cycles, we are do for a crash. It doesn't make sense to invest now when you know a crash is coming.

When is the next big crash?

The equity market, on average, actually cycles down( bear) every 7 years and for approximately 14 months.

What will cause the crash?

I'll guess the student loan debt bubble?????? ......as the federal funds rate increases????? During the the current low interest rate environment which on average may last 31 years ( we are 9 years into the current low interest rate environment)????China??? North Korea????.

I am assuming your cash is in a savings account waiting for the trigger to the "crash".


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[Ohio Snake]

I mean seriously, in the OP he said he wasn't going to seek professional advice. This is really just a vent session about him not getting all of the inheritance. He claims the high road, yet jumps in the ditches to ridicule family. I've seen this before and it's sickening the length at which someone will go to justify what they think should be theirs.

Yep. It's up to the OP to seek advice if he wants It. We know very little about him , his inheritance and his financial situation.

But its interesting to discuss the different philosophies and experiences of investors without being product specific. Everyone has their own way to invest ( or save money). Success is relevant to your perception of what worth you've accumulated at a certain point of your life.


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[ssj4sadie]

Yep. It's up to the OP to seek advice if he wants It. We know very little about him , his inheritance and his financial situation.

But its interesting to discuss the different philosophies and experiences of investors without being product specific. Everyone has their own way to invest ( or save money). Success is relevant to your perception of what worth you've accumulated at a certain point of your life.


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Don't get me wrong. The conversations spurred by the OP are interesting. But it's not the intent of it.

 

[Ohio Snake]

Don't get me wrong. The conversations spurred by the OP are interesting. But it's not the intent of it.

I know what you mean. It's interesting to see the different recommendations based on everyone's experiences and successes though.


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[rotor_powerd]

For my particular situation.... yes.

Why would I shell out $400k to pay off a house I don't intend to stay in my entire life? My home appreciates in value which can be tax free gain at the time of sale.
That cash I decided to retain control of can be diversified in other investments which is liquid and tax managed for growth.

Your system and philosophy may work for your situation, but not mine.


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Normal people don't have 400 grand laying around to pay off their mortgage (normal people also don't have a 400k mortgage). If you have that much cash laying around, and a mortgage that big, then you've done something wrong or won the lottery after living beyond your means.