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08-07-2012, 09:29 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Chicago
Posts: 1,154
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Fiscal Cliff
Is everybody staying pat on their portfolio before we hit this so called fiscal cliff where all the tax rates will increase by the end of the year?
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08-07-2012, 09:30 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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What do you propose we do?
__________________
Numbers is hard
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08-07-2012, 09:32 AM
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#3
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,722
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 Quote:
Originally Posted by REWahoo
What do you propose we do?
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Panic, of course.
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08-07-2012, 09:39 AM
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#4
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Very little changes for us little guys, so I see no reason to do anything. We weren't paying any income taxes before and we won't be paying any income taxes after.
The Numbers Behind the Tax Debate - WSJ.com
Quote:
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In 2011, according to the Tax Policy Center, about 46% of households didn't pay any U.S. income taxes,....
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08-07-2012, 09:40 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Chicago
Posts: 1,154
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One could move everything to cash and bonds until there is some clarity.
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08-07-2012, 09:41 AM
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#6
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by ripper1
One could move everything to cash and bonds until there is some clarity.
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That sure seems foolish to me. If I do nothing, I pay no income taxes. If I move everything to cash and bonds, I will pay thousands in income taxes.
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08-07-2012, 09:45 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Aug 2005
Location: Crownsville
Posts: 3,746
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Quote:
Originally Posted by LOL!
That sure seems foolish to me. If I do nothing, I pay no income taxes. If I move everything to cash and bonds, I will pay thousands in income taxes.
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I might rebalance a little in my 401Ks and IRAs, but in the after-tax accounts, probably do nothing. Although, if there's enough of a dip at some point, I'd buy more. But, I'm not going to do anything drastic.
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08-07-2012, 09:46 AM
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#8
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,722
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Quote:
Originally Posted by ripper1
One could move everything to cash and bonds until there is some clarity.
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What happens if there is no greater clarity?
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08-07-2012, 09:48 AM
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#9
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,304
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Quote:
Originally Posted by ripper1
One could move everything to cash and bonds until there is some clarity.
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I think market timers are in the minority here, but it's your portfolio to do with as you see fit. If negative real returns on cash and low yields/uncertain bond fund NAVs (a lock to drop when interest rates rise; who knows when) look better than equity returns to you...
There will always be uncertainty...guaranteed.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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08-07-2012, 09:51 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Chicago
Posts: 1,154
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08-07-2012, 10:08 AM
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#11
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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The fiscal cliff could have pretty substantial consequences for us. It could hit us on the earned income side (not much we can do there), as well as on the passive income side (especially if dividends are taxed as ordinary income once again). We will have to pay the new Medicare surtax too. Finally, there is also a real chance for us to see higher income tax rates at the state level in 2013. Still, I am not going to make any changes until we can see what changes actually need to be made.
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08-07-2012, 10:51 AM
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#12
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by MichaelB
What happens if there is no greater clarity?
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Then we kick the can and it gets even worse the next time we approach the cliff.
I don't think the folks who are bringing us this brinksmanship with the debt and the budget seem to realize how much economic damage is being done by the massive uncertainty they are causing by refusing to do anything but repeatedly kick the can. Employers, consumers and investors are paralyzed by not knowing what the "rules" are for the long-term. So they sit on their cash and wait for a clarity that may not come.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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08-07-2012, 10:52 AM
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#13
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gone traveling
Join Date: Sep 2003
Location: DFW
Posts: 7,586
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The way things work in Washington DC, when will we ever be off the fiscal cliff? That said, I see nothing to do.
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08-07-2012, 11:07 AM
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#14
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Feb 2006
Location: Washington, DC
Posts: 11,330
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I suspect we will slip over the edge on December 31 and we may get a bit of a hit on the markets. Then some sort of compromise will get hammered out in January and the markets will bounce back (everything else being equal at the time). Bit of a hassle for payroll offices jumping back and forth on the withholding rates. The worse mess is the debt ceiling. We shouldn't even have such a thing. It should be handled automatically to cover whatever obligations the Congress vote into law. This artificial wall serves only to enable suicidal brinksmanship on the Hill by people who often voted for the very cause of the debt. I see no end to that cyclical madness.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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08-07-2012, 01:41 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Chicago
Posts: 1,154
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Like Bob Brinker said, This group in Congress is dysfunctional.
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08-08-2012, 05:59 AM
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#16
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Recycles dryer sheets
Join Date: Jun 2012
Location: Central Ga
Posts: 230
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Quote:
Originally Posted by donheff
I suspect we will slip over the edge on December 31 and we may get a bit of a hit on the markets. Then some sort of compromise will get hammered out in January and the markets will bounce back (everything else being equal at the time).
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That is what I believe and I have my mouse hovering over the Buy button when it happens... Some body will want to push the threshold and test the economics of letting it slip past the 31st...
__________________
If you want someone to believe in you - First you have to believe in yourself and then you go from there...
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08-08-2012, 06:12 AM
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#17
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2011
Posts: 8,419
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The chart I'm using shows a $69K AGI income (or IRA AGI withdrawal) will go from 15% to 28% tax rate with $58K @ 15%.
If that is so, I'd certainly be making some minor withdrawals from my IRA portfolio toward the end of December.
That said, I'm fairly sure our fearless leaders will reach an agreement right after the election.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
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08-08-2012, 12:14 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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I assume the Bush tax cuts resume next year in my retirement plan. If they don't, that's just more to spend for me.
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08-08-2012, 12:43 PM
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#19
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,304
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Quote:
Originally Posted by ripper1
Like Bob Brinker said, This group in Congress is dysfunctional.
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Reflecting a more polarized electorate than ever...every one of them was elected.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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08-08-2012, 01:04 PM
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#20
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by donheff
The worse mess is the debt ceiling. We shouldn't even have such a thing. It should be handled automatically to cover whatever obligations the Congress vote into law. This artificial wall serves only to enable suicidal brinksmanship on the Hill by people who often voted for the very cause of the debt. I see no end to that cyclical madness.
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None of them voted for any irresponsible spending or imprudent tax policies. Each assures us they voted only for the necessary stuff. It's the >other< irresponsible legislators that are the problem. The debt ceiling is like the "you've hit your limit" notice from the credit card company to the married couple that is spending irresponsibly (each on different "priorities"). It serves to make the problem a collective one (for the whole organization) and the pain focuses their efforts. It's crazy, but apparently it's necessary. The national debt seems to only hit the news when the debt ceiling looms.
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