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Hello From Oregon
Old 05-31-2007, 08:50 AM   #1
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Hello From Oregon

Hello, I'm a new member from Oregon.

My wife and I are both right around 30, and are hoping to be able to retire in 10 years (we don't plan to retire, just want to have the option available to us).

We have investable assets of about $1.2m ($300K in a taxable account at Vanguard, and the remainder in tax deferred accounts). I conservatively estimate our home equity at around $200K, and we have $150K remaining on our mortgage (hoping to pay that off in a few years). In addition we have around $250K in unexercised employee stock options (not all are vested).

We're generally pretty conservative in our lifestyle (we save between 30% and 50% of our pre-tax income) and investments (currently mostly in Vanguard TR fund). I do dabble a little in "side hobbies", such as credit card arbitrage and derivative trading, but this is with "play money", and doesn't contribute appreciably to our bottom line.

I'm hoping to learn from others in our situation, particularly about how best to avoid or defer taxes, and strategies for exercising employee stock options. And, of course, the unanswerable questions such as "how much is enough".

Thanks!
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Old 05-31-2007, 09:24 PM   #2
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Welcome, a_fred!
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Old 05-31-2007, 10:39 PM   #3
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Quote:
Originally Posted by anonymous_fred View Post

...In addition we have around $250K in unexercised employee stock options (not all are vested).
Welcome, and as a former Oregone... remember to tell everyone that it rains incessantly and opportunities are few...

Make sure you have advise from a CPA familiar with the tax consequences of employee stock options. Once you exercise you should sell at least enough to pay the taxes.

Owning (you and the mortgage company) a home in metro Portland for anything under $400T is good shopping. Yes, there are nice neighborhoods with homes built in the 30s - 50s in that price range so if that has been your approach CONGRATULATIONS!!!

The credit card arbitrage bothers me. IMHO pay off the balance every month and shop for either the cheapest card or the one with the best benies.

Derivative trading can get out of hand IMHO. Unless you have some special expertise it is dicey. In the current market almost everyone looks like a great investor. It won't take much of a change of current to make your portfolio look like chum left by sharks in the investment sea.
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Old 06-01-2007, 12:10 AM   #4
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Welcome, and as a former Oregone... remember to tell everyone that it rains incessantly and opportunities are few...
I tell all my Bay Area friends that every chance I get!

Quote:
Make sure you have advise from a CPA familiar with the tax consequences of employee stock options. Once you exercise you should sell at least enough to pay the taxes.
I've spent a lot of time searching for a CPA (or even a website) that can describe the optimal time to cash in a stock option. Since the risk/reward equation is completely different for stock options than for stocks. But so far I've had no luck. All of our options are NQOs, and we always do a cash-sale, so fortunately the tax risks are minimal.

Quote:
Owning (you and the mortgage company) a home in metro Portland for anything under $400T is good shopping. Yes, there are nice neighborhoods with homes built in the 30s - 50s in that price range so if that has been your approach CONGRATULATIONS!!!
We actually are outside of metro pdx; we bought 5 acres about 30 minutes west of town (15 minute commute to work) and built a modest house in the late 90s. At the time it felt like a big risk (we were right out of college, new to our jobs, and with little savings), but it has turned out very well. More due to luck than planning, I'm afraid


Quote:
The credit card arbitrage bothers me. IMHO pay off the balance every month and shop for either the cheapest card or the one with the best benies.
My wife has the same opinion. I agree that it's silly -- if I'm lucky this year, I'll make about $1800 after taxes from 0% balance transfers. That's about 0.1% of our net worth, and perhaps 1.5% of our savings for the year. It hardly seems worth the effort, but then it is free money!

Quote:
Derivative trading can get out of hand IMHO. Unless you have some special expertise it is dicey. In the current market almost everyone looks like a great investor. It won't take much of a change of current to make your portfolio look like chum left by sharks in the investment sea.
Thanks for the advice on this -- my strategy is selling covered calls, which is one of the less risky trades available. But I'll admit that I'm often tempted to sell naked calls, which of course is much riskier. I've limited my "play money" to $10,000, and trade in stocks in which I have a long position. So in a worst case I limit my upside potential on those stocks. In a best case, the stock is just bouncing around in a narrow range, and I make a couple hundred dollars every time the stock drops a couple bucks.


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