The Stock Market and Investing

Michaell

houdini1 said:

Michaell said:

kyfdx said:

Michaell said:

@kyfdx @gagrice - thanks.

We got paperwork from them on how to proceed. The options boil down to:

1. Cash out - will owe taxes on full disbursement
2. Delay lump sum payment - up to 5 years from date of MIL's passing, with regular disbursements, then a final payout after the 5 years are up
3. Continue Non-Qualified Stretch - we can continue with our disbursements, on our schedule and amount, and identify a beneficiary should my wife pass
4. Annuitization / Income Option - the description on this is vague, and it is suggested we call the company for more information

Guess I'll see if I can reach out to a financial advisor and seek more advice.

We aren't talking about a lot of money here, either - under $15K

For that amount of money, I wouldn't worry about the income tax hit, so much. Just whatever gets you the most cash. So, if you can cash out, without a penalty, that's the way I would go. No point in maintaining a relationship with another insurance company.

No penalties beyond the tax obligation.

Wouldn't that be tax free if considered part of an inheritance, at least federal, state may want their pound of flesh.

Good point.

Something to think about as she continues to mull over her options.

houdini1

Michaell said:

houdini1 said:

Michaell said:

kyfdx said:

Michaell said:

@kyfdx @gagrice - thanks.

We got paperwork from them on how to proceed. The options boil down to:

1. Cash out - will owe taxes on full disbursement
2. Delay lump sum payment - up to 5 years from date of MIL's passing, with regular disbursements, then a final payout after the 5 years are up
3. Continue Non-Qualified Stretch - we can continue with our disbursements, on our schedule and amount, and identify a beneficiary should my wife pass
4. Annuitization / Income Option - the description on this is vague, and it is suggested we call the company for more information

Guess I'll see if I can reach out to a financial advisor and seek more advice.

We aren't talking about a lot of money here, either - under $15K

For that amount of money, I wouldn't worry about the income tax hit, so much. Just whatever gets you the most cash. So, if you can cash out, without a penalty, that's the way I would go. No point in maintaining a relationship with another insurance company.

No penalties beyond the tax obligation.

Wouldn't that be tax free if considered part of an inheritance, at least federal, state may want their pound of flesh.

Good point.

Something to think about as she continues to mull over her options.

Shoot, I was hoping you would say not tax free, the overall total of the inheritance was over 10 million !

kyfdx

Michaell said:

houdini1 said:

Michaell said:

kyfdx said:

Michaell said:

@kyfdx @gagrice - thanks.

We got paperwork from them on how to proceed. The options boil down to:

1. Cash out - will owe taxes on full disbursement
2. Delay lump sum payment - up to 5 years from date of MIL's passing, with regular disbursements, then a final payout after the 5 years are up
3. Continue Non-Qualified Stretch - we can continue with our disbursements, on our schedule and amount, and identify a beneficiary should my wife pass
4. Annuitization / Income Option - the description on this is vague, and it is suggested we call the company for more information

Guess I'll see if I can reach out to a financial advisor and seek more advice.

We aren't talking about a lot of money here, either - under $15K

For that amount of money, I wouldn't worry about the income tax hit, so much. Just whatever gets you the most cash. So, if you can cash out, without a penalty, that's the way I would go. No point in maintaining a relationship with another insurance company.

No penalties beyond the tax obligation.

Wouldn't that be tax free if considered part of an inheritance, at least federal, state may want their pound of flesh.

Good point.

Something to think about as she continues to mull over her options.

It's not part of the estate... You are the beneficiary of an insurance contract. You won't have estate taxes, but you'll owe federal/state taxes on the captial gain, most likely. Of course, the question is: What is the basis for the gain? If it were a straight life insurance contract with a death benefit, it would be tax-free, of course.

I'm allergic to annuities, so I couldn't give you an answer on the last part.

houdini1

I am also allergic to annuities, but I would guess that the basis is whatever it was valued at at the time of death. Still best for Michael to ask an expert if he can find an honest one not trying to sell him something.

kyfdx

houdini1 said:

I am also allergic to annuities, but I would guess that the basis is whatever it was valued at at the time of death. Still best for Michael to ask an expert if he can find an honest one not trying to sell him something.

I bet he gets a 1099-R from the insurance company, next year.

Michaell

kyfdx said:

houdini1 said:

I am also allergic to annuities, but I would guess that the basis is whatever it was valued at at the time of death. Still best for Michael to ask an expert if he can find an honest one not trying to sell him something.

I bet he gets a 1099-R from the insurance company, next year.

No bet - that's a given, based on the documentation that was sent to me.

What's odd is that it doesn't specifically state that taxes would be withheld if we did a lump sum disbursement, only if we chose some sort of payment disbursement.

houdini1

I hope all my investing friends are doing well. This market is driving me nuts !!

Michaell

houdini1 said:

I hope all my investing friends are doing well. This market is driving me nuts !!

Like watching a yo-yo.

cdnpinhead

Rebalance twice a year. Relax.

My policy is to keep 110-my age in stocks and the balance in money markets or bonds. It's worked remarkably well, through the 2001 fiasco and the 2008 meltdown.

But that's just me. I'm too stupid to pick stocks and/or try to time the market.

kyfdx

cdnpinhead said:

Rebalance twice a year. Relax.

My policy is to keep 110-my age in stocks and the balance in money markets or bonds. It's worked remarkably well, through the 2001 fiasco and the 2008 meltdown.

But that's just me. I'm too stupid to pick stocks and/or try to time the market.

That's a good plan, but I can't stomach bond funds. If I were to get heavy into bonds, I'd have to ladder individual bonds, rather than buy them in a mutual fund.

I think the age thing has to be adjusted for if you are still in the accumulation or payout phase, also. If you are 55 and planning on working for 10 more years, I wouldn't want to be 45% in bonds (but, that might just be me).

Inertia is a great thing for retirement investor. Put your money in, and do nothing for the long term..

cdnpinhead

Generally the fraction I don't have in stocks is in either money markets (or equivalents) or bond funds. I dick around trying to guess how much goes which way, but it's never more or less than 33% in one, sometimes it's 50% for each.

I'll stack my 10/20/30 year returns against most people. Keeping the parasites from taking a percentage each year is a big piece of it. Can you spell Vanguard. I knew you could.

kyfdx

Yeah... my company's 401K is with Vanguard. And, my wife's...

I moved all of my wife's assets there (IRAs, company stock, etc), to simplify, in case of my demise.

I use Schwab for the relatively small percentage of my assets that are in individual stocks. Their platform is easier for that.

houdini1

I was with Scottrade for several years and liked their platform. They were bought out by TD Ameritrade effective around the Feb. 27 th. Still getting used to Ameritrade. Might check out some others.

Michaell

Update on the annuity - wife decided to cash it out, via lump sum. We got to pick the federal and state tax to be withheld, so it shouldn't affect us too much on next years taxes (I hope!)

Another general question - I've got two 401(k)'s with Fidelity - my old employer, and my current employer. Am thinking about consolidating them. Or, should I roll over the old monies into an IRA, which I would have more control over?

Opinions welcome.

Sandman6472

Have been with Scottrade for years but now, it's TD Ameritrade. Luckily, they're all over the place with one being about 3 miles from the house. Still haven't received my new account number from them and haven't gone in to open a checking account yet either. Guess I'll need to rip up those old Scottrade checking account checks since they're worthless now. But am sure TD Ameritrade will send us all our new information soon enough. I get a dividend every month that I've been moving over to my old Scottrade checking account but last month I had to move it some way to an outside account, one at Wells Fargo. Think I'll go to Ameritrade in the morning and open a checking account if they have a free one.
Will agree that the market is bat [non-permissible content removed] crazy lately and though I check my holdings daily, have no need to use them yet so not going to panic. Since it's all retirement bound, just leaving it alone for the time being and hopefully won't need to use any of it until I turn 70.5 when I'll have to start taking some out each year. But until then, just letting it grow and grow!!
Had a car accident a month ago today, some kid was backing up in a parking lot across from me and floored it into my vehicle as I was pulling out of my parking space. His fault, he got a ticket for improper backing, but my car took a beating to the tune of over 8 grand already. Still in the collision shop for another week. Even if they fix it properly, probably going to trade it and get something new. Haven't financed a vehicle since I was a kid but if I do buy, might finance part and use that monthly dividend to pay it. Hate to take out a lot of cash from my holdings right now with the market being down. Still haven't decided what to do, just want to get my car back and see how it drives.

The Sandman

ab348

Just prior to the initial correction 6 weeks or so back I did something smart and moved all of my mutual funds into the money market to ride this one out. So far so good. The trick will be deciding when it's over to get back in. I hate volatility.

kyfdx

Michaell said:

Update on the annuity - wife decided to cash it out, via lump sum. We got to pick the federal and state tax to be withheld, so it shouldn't affect us too much on next years taxes (I hope!)

Another general question - I've got two 401(k)'s with Fidelity - my old employer, and my current employer. Am thinking about consolidating them. Or, should I roll over the old monies into an IRA, which I would have more control over?

Opinions welcome.

First.. you have to find out if your current employer allows rollovers to their plan.

If they do, and the choices are good, and fees are low, that would be the easiest/cheapest way to keep track of it all.

Because if you are going to roll it over to an IRA, you'll likely put it with Fidelity or Vanguard or Schwab, etc.. anyway.

Michaell

kyfdx said:

Michaell said:

Update on the annuity - wife decided to cash it out, via lump sum. We got to pick the federal and state tax to be withheld, so it shouldn't affect us too much on next years taxes (I hope!)

Another general question - I've got two 401(k)'s with Fidelity - my old employer, and my current employer. Am thinking about consolidating them. Or, should I roll over the old monies into an IRA, which I would have more control over?

Opinions welcome.

First.. you have to find out if your current employer allows rollovers to their plan.

If they do, and the choices are good, and fees are low, that would be the easiest/cheapest way to keep track of it all.

Because if you are going to roll it over to an IRA, you'll likely put it with Fidelity or Vanguard or Schwab, etc.. anyway.

I will check with my employer.

berri

Also, an IRA has a few less protections such as from personal litigation than a 401K does. Probably not an issue for most, but it wouldn't hurt to take a look before you decide. On the flip side, sometimes there is a little more flexibility with an IRA.

berri

cdn's approach makes sense as long as you are dealing within tax exempt or deferred retirement vehicles, otherwise rebalancing can result in immediate year tax consequences. cdn is on the mark about trying to worry and mess around too much anticipating or reacting. That kind of stuff is a surefire way to depress your long term returns. Can make your broker happy though! One other thought if the market takes a dive, it may result in an opportunity to ditch losers or reallocate with a reduced tax effect on the net moves (as long as you steer clear of a wash).

houdini1

ab348 said:

Just prior to the initial correction 6 weeks or so back I did something smart and moved all of my mutual funds into the money market to ride this one out. So far so good. The trick will be deciding when it's over to get back in. I hate volatility.

Good move. Wish I had !

kyfdx

houdini1 said:

ab348 said:

Just prior to the initial correction 6 weeks or so back I did something smart and moved all of my mutual funds into the money market to ride this one out. So far so good. The trick will be deciding when it's over to get back in. I hate volatility.

Good move. Wish I had !

Sounds good.. when do you get back in?

houdini1

kyfdx said:

houdini1 said:

ab348 said:

Just prior to the initial correction 6 weeks or so back I did something smart and moved all of my mutual funds into the money market to ride this one out. So far so good. The trick will be deciding when it's over to get back in. I hate volatility.

Good move. Wish I had !

Sounds good.. when do you get back in?

This morning would have been nice !

cdnpinhead

Ah, yes. Timing the market.

Party on.

ab348

I am still a bit nervous. Volatility does that to me.

Michaell

ab348 said:

I am still a bit nervous. Volatility does that to me.

Could be 2020 (or 2024) before you get back in, then.

ab348

I'm still waiting for a big correction.

berri

Probably depends on your time horizon. Got 10 years or so with the money? If so, might want to dollar cost average some of that money back in. If you think you'll need it much sooner, probably best to stay away. Over a longer time frame not only does stock usually beat alternatives, but bonds and cash can lose value due to inflation more than stocks. But most of all, stay with whatever makes you more comfortable.

Mr_Shiftright

Anyone else think TESLA is going to eat it within a year? I do.

Michaell

Mr_Shiftright said:

Anyone else think TESLA is going to eat it within a year? I do.

I think the market is starting to wise up to the fundamentals - they aren't that good. Debt is trading at about .86 to the dollar, and the stock price is down, I think, 20% in the last couple of days.

kyfdx

Mr_Shiftright said:

Anyone else think TESLA is going to eat it within a year? I do.

No, even though the stock is headed south (right now), as long as people are willing to lend them money, including Elon himself, they can keep burning cash. There are just as many Tesla-philes in the stock market, as there are in the automobile world.

I don't know how it all turns out, but I don't think the day of reckoning is anywhere near. Look how long it's taken to kill Sears.

berri

I think the hope with Tesla is that it patents some serious battery improvements rather than the vehicles.

Mr_Shiftright

TESLA is kind of a fascinating case. In theory at least, as long as lenders and investors keep giving them money, then Tesla can burn cash...well....forever. Their 'profits' obviously go right back into the company's production expenses, and the cash from investors is burned up in marketing and other routine running costs--so as long as the banks and Wall St keep spitting out money, Tesla can keep shoveling cash into the furnace and keep chugging along, losing, some say, 60 million bucks A DAY. They aren't paying dividends, either.

berri

Sounds like the airlines a decade ago, except they survived on ticket revenues ahead of flights

Mr_Shiftright

I posted some questions about Tesla's future in another forum, and a Tesla loyalist wrote back: "Oh, well, Elon isn't interesting in making money. He's building the future".

Rolled my eyes on that one....

Michaell

Mr_Shiftright said:

I posted some questions about Tesla's future in another forum, and a Tesla loyalist wrote back: "Oh, well, Elon isn't interesting in making money. He's building the future".

Rolled my eyes on that one....

While Mr. Musk may not be interested in making any money, I'm sure that isn't the case with the stock- and bond holders.

I read somewhere that the gigafactory in Nevada isn't pledged against any of the obligations - yet. So, there's that asset to leverage still.

Mr_Shiftright

The gigafactory is also an interesting case---here we have a total commitment to one kind of battery. But what if there is a breakthrough by competitors in say, a solid state battery? Then Tesla becomes stuck with a massive investment in obsolete tech.

I'm really concerned about the Stock Market in general. It's one thing for an "equity bubble" to correct itself, but it's quite another for THIS type of market--a "debt bubble", to correct itself.

This so-called "great economy" is not productivity driven, it is debt driven. Americans are actually broke.

kyfdx

Are we still talking about Tesla?

Debt is low, overall for the S&P 500.

With the corporate tax cuts, I expect it to get even lower, because you don't think they'll actually increase dividends for the stock holders, do you? All of that excess cash will go to stock buybacks and debt reduction.

The tax cuts just increased corporate cash by $1 trillion over the next 10 years. They don't have any debt worries.

Trade wars? Rising interest rate environment? Headline risk? Those are the things I would worry about, if I had a 5-year time horizon. (I don't...)

Michaell

kyfdx said:

Are we still talking about Tesla?

Debt is low, overall for the S&P 500.

With the corporate tax cuts, I expect it to get even lower, because you don't think they'll actually increase dividends for the stock holders, do you? All of that excess cash will go to stock buybacks and debt reduction.

The tax cuts just increased corporate cash by $1 trillion over the next 10 years. They don't have any debt worries.

Trade wars? Rising interest rate environment? Headline risk? Those are the things I would worry about, if I had a 5-year time horizon. (I don't...)

Trade issues and interest rates are the two things on my radar. I still don't see the tax cuts going to expansion, but to stock buybacks and token bonuses to employees.

Interest rates should come back up, if for no reason than to lure money back into savings vehicles (who wants a CD that pays 1%?)

ab348

The problem with interest rate increases is that it will hit many govts very hard. If rates go back to where they were even fairly recently, say in the late '90s or early '00s, debt service costs for governments could double or triple. That money has to come from somewhere. Where I live that cost for the provincial (i.e. state) govt is about 9% of their total expenditure every year. If that were to go to 20% there would be blood in the streets.

The effect on consumer debt could also be very nasty in some cases.

Mr_Shiftright

Too many factors from all angles. The FEDS have nowhere to go--nothing left to manipulate anymore in case of recession.

berri

The last crash involved tech kicking it off as I remember

Mr_Shiftright

I find the entire situation pretty alarming, personally.

isellhondas

kyfdx said:

Mr_Shiftright said:

Anyone else think TESLA is going to eat it within a year? I do.

No, even though the stock is headed south (right now), as long as people are willing to lend them money, including Elon himself, they can keep burning cash. There are just as many Tesla-philes in the stock market, as there are in the automobile world.

I don't know how it all turns out, but I don't think the day of reckoning is anywhere near. Look how long it's taken to kill Sears.

As a former Sears manager it really hurts me to say this but they are on life support and nobody has quite decided to reach over and pull the plug. I could write chapters outlining my thoughts as to how this could have happened but it has and people can draw their own conclusions. It really saddens me more than it should.

Heard just last week that two of their flagship stores in So California have either closed or about to. Westminster and Laguna Hills. When they were new they sparkled and were alive with energy as were it's employees. Slowly....things changed and not in a good way.

isellhondas

Mr_Shiftright said:

Anyone else think TESLA is going to eat it within a year? I do.

I wouldn't be at all surprised. Instead of focusing on Gee Whiz gimmicks, self driving cars etc they should have directed their focus to battery technology. I don't think that was much of a priority.

Mr_Shiftright

I think Tesla's mistake was focusing on the autonomous driving technology. The general public isn't that hot on it.

I wonder what a Tesla collapse would do to the overall EV market? Many automakers have put a great deal of money into advancing EV technology.

gagrice

Mr_Shiftright said:

I posted some questions about Tesla's future in another forum, and a Tesla loyalist wrote back: "Oh, well, Elon isn't interesting in making money. He's building the future".

Rolled my eyes on that one....

IMO, Elon Musk is a Con Artist of the highest order. Or marketing genius if that sounds better. He has lost his first round in court with TSLA stockholders, on that VERY shady purchase of Solar City, before it folded. Now he is doing the same thing to early responders with his solar roof that he did with Tesla Model 3 pre orders. I don't know about you, but putting an untested solar roof onto my home for about 5 times the cost of a conventional roof is crazy. Several companies have tried these solar tiles and dumped them. Including Dow Chemical. I think people will tire of throwing good money after bad with TSLA. Most of Musk's net worth is in stock. TSLA is down more than 30% since last September.

https://news.energysage.com/should-i-wait-for-tesla-solar-roof/

Dow gives it another shot. Should make life tough for Tesla.

https://pv-magazine-usa.com/2017/10/04/back-from-the-dead-new-deal-could-revive-dow-solar-shingles/

berri

I think Tesla's mistake was focusing on the autonomous driving technology. The general public isn't that hot on it.
I don't think Tesla is alone on this. Ford pops into my mind, as well as others. Hopefully the new Ford management will get more realistic and start focusing on product.

circlew

Remeber, 401K's have management fees on top of the other costs in the funds. I rolled over my 401K (into my Vanguard IRA) which was managed by Vanguard 5 years ago when they consolidated the investments into 8 "new" funds (no more Idex 500!!). I am on autopilot now at lower costs.

houdini1

Mr_Shiftright said:

Anyone else think TESLA is going to eat it within a year? I do.

Agree, but maybe not within a year.