Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-04-2011, 10:44 AM   #41
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,375
Quote:
Originally Posted by obgyn65 View Post
When I retire I hope to have some time to study investing a lot more.

I count on you guys to educate me.
I'm waiting for Brewer to retire so I can subscribe to the newsletter I hope he starts!
__________________

__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-04-2011, 10:54 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,535
Quote:
Originally Posted by TromboneAl View Post
I did my start of the year rebalancing today. Nice to lock in the 15% gain from last year. Of course if I hadn't rebalanced last year, I would have made a few thousand more in 2010.

I went down one percent to a 53% stock allocation.
I guess you "picked" a good day to rebalance after all - LOL! Congrats!

Audrey
__________________

__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 01-04-2011, 10:56 AM   #43
Thinks s/he gets paid by the post
kyounge1956's Avatar
 
Join Date: Sep 2008
Posts: 2,171
I checked my AA Dec 30, but it was still close to the targets, so I didn't do anything. Yesterday I got my automatic transfers from checking account to Roth IRA set up for this year. Regular contributions to the 457 plan don't have to be re-done annually, and for 2011, I've decided to omit the over-50 catchup contributions (which do have to be re-requested every year) at least to start off with. I had been test-driving my age 53 pension for the last two years, and that budget is just too tight for comfort. So this year, I am basing my budget on the pension I'd get if I retired on my birthday. There's a significant upward kink in benefits at age 55, which is how old I'll be in just a little while.
__________________
kyounge1956 is offline   Reply With Quote
Old 01-04-2011, 11:11 AM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RonBoyd's Avatar
 
Join Date: Dec 2007
Location: Denver, Colorado
Posts: 5,280
Quote:
Originally Posted by Bestwifeever View Post
I'm waiting for Brewer to retire so I can subscribe to the newsletter I hope he starts!
+1
__________________
"It's tough to make predictions, especially when it involves the future." ~Attributed to many
"In theory, there is no difference between theory and practice. But, in practice, there is." ~(perhaps by) Yogi Berra
"Those who have knowledge, don't predict. Those who predict, don't have knowledge."~ Lau tzu
RonBoyd is offline   Reply With Quote
Old 01-04-2011, 11:30 AM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,038
No need to pick a date to rebalance on just wait for the Whee threads and rebalance then . It works every time .
__________________
Moemg is offline   Reply With Quote
Old 01-04-2011, 02:15 PM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,201
Quote:
But it ALWAYS works this way. You ALWAYS get the next trading day pricing when you rebalance. You never get the pricing from which you do your rebalancing calcs.
If you really want to get OCD about it, you can do your rebalancing calculations a few minutes before the market closes, and do your exchange just before the bell.
__________________
Al
TromboneAl is online now   Reply With Quote
Old 01-04-2011, 02:31 PM   #47
Full time employment: Posting here.
 
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 666
Im at 68% stocks to 32% fixed. The problem is I forgot what my target was.
__________________
dm is offline   Reply With Quote
Old 01-04-2011, 03:05 PM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,535
Quote:
Originally Posted by TromboneAl View Post
If you really want to get OCD about it, you can do your rebalancing calculations a few minutes before the market closes, and do your exchange just before the bell.
Except that you don't know your mutual fund NAVs yet. You have to guesstimate. That is pretty much impossible unless you are using like an S&P500 or Wilshire 5000 type index fund.

Audrey
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 01-04-2011, 05:42 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,904
That's why I just rebalance on my own time schedule. Usually as soon as the new year starts otherwise the rebalancing becomes a chore -- kind of like the longer I wait to put away the Christmas decorations, the more it seems like a chore..so I just do it to get that over with.

If I wait for the right time (January effect? etc.) that makes me feel like I'm trying to time things..which goes against my approach.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now   Reply With Quote
Old 01-04-2011, 06:13 PM   #50
Recycles dryer sheets
 
Join Date: Feb 2010
Posts: 396
Quote:
Originally Posted by aaronc879 View Post
When you rebalance, do you take into account that $100K in tax deferred isn't worth as much as $100K in taxable?
Can someone explain to me why $100K in tax deferred isn't worth as much as $100K in taxable. I don't quite understand the logic/reasoning behind that statement.

Thank you.
__________________
nico08 is offline   Reply With Quote
Old 01-04-2011, 06:17 PM   #51
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,163
Quote:
Originally Posted by midnighter777 View Post
Can someone explain to me why $100K in tax deferred isn't worth as much as $100K in taxable. I don't quite understand the logic/reasoning behind that statement.

Thank you.
Because you have already paid the taxes on the money in your taxable accounts, but you have yet to pay the taxes on the amount in the tax deferred accounts.
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 01-04-2011, 06:25 PM   #52
Recycles dryer sheets
 
Join Date: Feb 2010
Posts: 396
Quote:
Originally Posted by Gumby View Post
Because you have already paid the taxes on the money in your taxable accounts, but you have yet to pay the taxes on the amount in the tax deferred accounts.
Ok, I understand that I will already have paid income tax on the taxable account, because the contribution came from post-tax income. But won't I still have to pay short or long term capital gains tax on that account too?

If I use the money from a tax deferred account, I will have to pay income tax and any applicable short or long term capital gains tax on that money?

I guess I get confused between income tax and capital gains tax on taxable and tax deferred accounts.

Thank you for your help.
__________________
nico08 is offline   Reply With Quote
Old 01-04-2011, 07:09 PM   #53
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,163
Quote:
Originally Posted by midnighter777 View Post
Ok, I understand that I will already have paid income tax on the taxable account, because the contribution came from post-tax income. But won't I still have to pay short or long term capital gains tax on that account too?

If I use the money from a tax deferred account, I will have to pay income tax and any applicable short or long term capital gains tax on that money?

I guess I get confused between income tax and capital gains tax on taxable and tax deferred accounts.

Thank you for your help.
Let's use some numbers for comparison. Assume you are in the 25% marginal tax bracket. Assume you are 60 years old:

Taxable account: You invest $100 in SPY, which rises 20% in a year and a day. When you sell, your gain is $20 and you pay 15% in long term capital gains. You will then have $117 ($100 plus $20 gain minus $3 tax) to spend.


Tax deferred account (e.g. 401k): You invest $100 in SPY, which rises 20% in a year and a day. When you sell and withdraw the money to spend, you will have to pay $25 in tax on the original amount. You will also have to pay $5 in tax on the $20 gain, because all gain in the 401k is treated as ordinary income. You will then have only $90 to spend ($100 plus $20 gain minus $25 tax on original amount minus $5 tax on gain).

QED -- $100 in a taxable account is worth more than $100 in a tax deferred account.
__________________

__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
22 year old trying to start smart vortgirl Hi, I am... 23 10-28-2010 06:14 PM
A New Year/A New Start Dog FIRE and Money 9 01-11-2009 01:01 PM
29 year old wants to start planning his retirement agueybana79 Hi, I am... 3 10-13-2008 08:42 PM
Jump Start a 21-Year-Old? BigMoneyJim Young Dreamers 18 06-26-2004 02:51 PM

 

 
All times are GMT -6. The time now is 11:13 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.