Investment showdown -- beyond the Roth, SDP, & TSP

[BattleRattle]

Looking to talk to a savvy investor about relationships with an advisor and wrap fees. Please PM if willing. Thanks in advance.

[MilitaryToFinance]

On 7/17/2019 at 12:35 PM, di1630 said:

I’m going to do some math and look at my income. I might take 1/3 out ~$3k in taxes. I’m trying to stay objective but it’s tough to pay that bill.

It might be easier to pay the money vs watch a 10% correction wipe out gains.

I’m not sure my long term strategy. Never thought of this stuff when I started 18 years ago.

That’s why I’m asking you f—-ers


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Check your state as well, some states (NY and CA I know for sure) tax all capital gains as income. So you get nailed for the full state tax rate on top of your federal capital gains taxes.

[Royal]

Boys, has anyone here had any success or messed with real estate crowdfunding? The research I've done has come up a bit short.

[panchbarnes]

https://finance.yahoo.com/news/fannie-mae-freddie-mac-soaring-154600159.html

 

Cha ching!

[MilitaryToFinance]

On 8/1/2019 at 12:33 PM, Royal said:

Boys, has anyone here had any success or messed with real estate crowdfunding? The research I've done has come up a bit short.

People I know have used Fundrise and one other and been happy. But it's all bull market investing so far and I tend to be skeptical. There are lots of professionals in real estate, there are lots of banks and non-bank lenders with money they will lend against quality projects. I don't see how there isn't a massive adverse selection problem with these crowdfunding systems. If the real estate was really that attractive why do they need to crowdsource it? It's not like this is a niche area of the market where traditional lenders won't lend money so you have to get creative. There is a multi-hundred billion dollar industry built around real estate development, renovating, leasing. I want to see how well all the rosy projections from these companies survive the next recession. If you wanted to sell me on crowdfunding in 2009 when nobody wanted to lend to anybody for anything it might be a different story but with $17 Trillion of negative yielding debt around the world you have a tough time convincing me that in today's market getting funding is holding back any sort of capital investment plan.

[KWings06j]

I use Fundrise. Earning about 7% annually so far but it's been less than 2 years and I'm keeping my investment small for the time being. Interested to see what it does in the next downturn. 

[waveshaper]

Something to watch; Anyone still holding oil related energy Stocks/Funds/ETF's/etc may get a rare opportunity to take some profits in the coming days/weeks. This might be somewhat entertaining but I doubt oil will hit $100/bbl.

"Saudi Attacks Raise Spectre Of Oil At $100/bbl" 

https://www.hartenergy.com/news/saudi-attacks-raise-spectre-oil-100bbl-182765 

[Pajaro]

BLUF:  What is the actual mechanism for investing the full $57,000 in TSP while deployed to a tax free combat zone?

I haven't gone on a long deployment in a while, but am deploying on a 365 to Iraq this summer and will get the combat zone tax exclusion up to the max enlisted pay each month ($7,700).  That's $46,200 for the final 6 months of the year.  However, the TSP site says I can contribute $57,000 to TSP while deployed, which would enable me to go past the cap.  It specifies I could do $19,500 in ROTH TSP, but the remainder would have to be Traditional TSP. 

So, what's the actual mechanism to be able to invest more than $19,500 in Traditional TSP?  Normally if you try to invest more than $19,500 it won't deduct from your LES.  Are DFAS and MyPay smart enough to know and let me do it?  Or is this something I have to organize with the deployed finance folks?

Thanks, Pajaro

[jazzdude]

BLUF:  What is the actual mechanism for investing the full $57,000 in TSP while deployed to a tax free combat zone?
I haven't gone on a long deployment in a while, but am deploying on a 365 to Iraq this summer and will get the combat zone tax exclusion up to the max enlisted pay each month ($7,700).  That's $46,200 for the final 6 months of the year.  However, the TSP site says I can contribute $57,000 to TSP while deployed, which would enable me to go past the cap.  It specifies I could do $19,500 in ROTH TSP, but the remainder would have to be Traditional TSP. 
So, what's the actual mechanism to be able to invest more than $19,500 in Traditional TSP?  Normally if you try to invest more than $19,500 it won't deduct from your LES.  Are DFAS and MyPay smart enough to know and let me do it?  Or is this something I have to organize with the deployed finance folks?
Thanks, Pajaro

Deployed finance was a bit confused when I asked, but eventually figured it out. It seems to be tied to CZTE being processed, which then allows you to go above, but like you said only for traditional. I had timed my contributions to stay below 19k until a month into my deployment, and contributed above 19k after ctze started

[JBueno]

It takes some care and feeding but Doug has a good explanation on his website.

https://the-military-guide.com/maximizing-your-thrift-savings-plan-contributions-in-a-combat-zone/

 

[Breckey]

22 hours ago, Pajaro said:

BLUF:  What is the actual mechanism for investing the full $57,000 in TSP while deployed to a tax free combat zone?

I haven't gone on a long deployment in a while, but am deploying on a 365 to Iraq this summer and will get the combat zone tax exclusion up to the max enlisted pay each month ($7,700).  That's $46,200 for the final 6 months of the year.  However, the TSP site says I can contribute $57,000 to TSP while deployed, which would enable me to go past the cap.  It specifies I could do $19,500 in ROTH TSP, but the remainder would have to be Traditional TSP. 

So, what's the actual mechanism to be able to invest more than $19,500 in Traditional TSP?  Normally if you try to invest more than $19,500 it won't deduct from your LES.  Are DFAS and MyPay smart enough to know and let me do it?  Or is this something I have to organize with the deployed finance folks?

Thanks, Pajaro

My recommendation would be to do everything you can to max out your Roth TSP while your home-station. DFAS limits Roth TSP contributions at 65% since they don't know your in a combat zone and leave some of your pay for taxes. Once you start getting the CZTE then max out the Traditional to as high as you can muster (I did 100%). These will be noted under the "TSP Exempt" section of your LES. Once keep the high Traditional TSP the entire deployment and only switch back to the Roth once you get back home. This way you will have as much in the TSP tax free as you can.

[Pajaro]

On 12/10/2019 at 10:35 AM, jazzdude said:

On 12/9/2019 at 9:28 PM, Pajaro said:

BLUF:  What is the actual mechanism for investing the full $57,000 in TSP while deployed to a tax free combat zone?
I haven't gone on a long deployment in a while, but am deploying on a 365 to Iraq this summer and will get the combat zone tax exclusion up to the max enlisted pay each month ($7,700).  That's $46,200 for the final 6 months of the year.  However, the TSP site says I can contribute $57,000 to TSP while deployed, which would enable me to go past the cap.  It specifies I could do $19,500 in ROTH TSP, but the remainder would have to be Traditional TSP. 
So, what's the actual mechanism to be able to invest more than $19,500 in Traditional TSP?  Normally if you try to invest more than $19,500 it won't deduct from your LES.  Are DFAS and MyPay smart enough to know and let me do it?  Or is this something I have to organize with the deployed finance folks?
Thanks, Pajaro

Deployed finance was a bit confused when I asked, but eventually figured it out. It seems to be tied to CZTE being processed, which then allows you to go above, but like you said only for traditional. I had timed my contributions to stay below 19k until a month into my deployment, and contributed above 19k after ctze started

 

On 12/10/2019 at 10:40 AM, JBueno said:

It takes some care and feeding but Doug has a good explanation on his website.

https://the-military-guide.com/maximizing-your-thrift-savings-plan-contributions-in-a-combat-zone/

 

 

21 hours ago, Breckey said:

My recommendation would be to do everything you can to max out your Roth TSP while your home-station. DFAS limits Roth TSP contributions at 65% since they don't know your in a combat zone and leave some of your pay for taxes. Once you start getting the CZTE then max out the Traditional to as high as you can muster (I did 100%). These will be noted under the "TSP Exempt" section of your LES. Once keep the high Traditional TSP the entire deployment and only switch back to the Roth once you get back home. This way you will have as much in the TSP tax free as you can.

Folks, this is the exact gouge I was looking for!  Thanks for the help.  

The rest of my plan is to sell some funds to generate capital gains.  With the new 2020 standard deduction for Married Filing Jointly ($24,800) and $37,500 in traditional TSP, my taxable income will be about $62,000.  Next year's new upper income limit to pay 0% capital gains tax is $80,000, so I can have $18,000 in capital gains without paying tax.

Thanks again, Pajaro

[HossHarris]

Is that 18k still taxable as income?

[nunya]

16 minutes ago, HossHarris said:

Is that 18k still taxable as income?

Not if it’s a long term capital gain. Different tax rates for W-2 income and LTCG.  The technique is called tax gain harvesting.  Wise move.

i tried to do it the year I left AD.  Then I ended up with an unexpected temp tech job (I.e. with few of the AD tax shelters) and got hammered the following April. 
 

Pajaro’s income forecast is probably more accurate than mine was.

Edited December 11, 2019 by nunya

[Pajaro]

On 12/11/2019 at 5:28 PM, HossHarris said:

Is that 18k still taxable as income?

Nunya answered this, but note that short term capital gains are taxed at the same rate as normal W-2 income.  I will be selling index funds I bought as a lieutenant 2 decades ago.  

I could also reduce my taxable income by another $29,500 if I invest that much in traditional IRA and traditional TSP next year.  I thought about it, but it would save me only $4,500 in taxes (15% of $29,500).  I figured that the tax free growth of the ROTH IRA and ROTH TSP would pretty easily outweigh the $4,500 in tax savings.

[Ryder1587]

What’s everyone buying with the market down?  I’ve bought all the airlines , Vegas casinos , theme parks, etc.  high risk / high reward.  You can buy now for 1/3 the price from last month.  Crazy times. 

[nsplayr]

So far just dollar-cost averaging some extra cash into VFIAX (S&P 500). Might buy some specific stocks like DAL that got extra-beat up, but I'm usually inclined just to index, set it and forget it.

[MilitaryToFinance]

I'm not a big fan of the index here. It's still quite expensive, in fact if you look at revised estimates for 2020 earnings you are paying the same P/E today as you were at the market peak in early February. Hardly a steal.  We're also still at almost 2x Sales when historic average is 1.5x and that's on trailing revenues.

There are some interesting cheap stocks out there although I would avoid airlines and casinos given poor balance sheets and incredibly high operating leverage. The government bailout of the airlines includes warrants which are massively dilutive to the equity in order to save the businesses from bankruptcy. That's not a good thing for those buying today. Aircraft lessors look like a much better bet at 0.3x book value. There are a bunch of junior gold miners who are still discounting ~$1,300 gold when spot is now $1,690 (I did a basket approach here because the risk of any individual miner can still be high). Crude tankers are getting a huge lift from the oil contango that still isn't fully priced in. Some smaller regional banks are now down to 0.5x book, even after they take some loan losses here they're probably ~0.7x book. Gun and ammo companies are getting hit despite the highest ever YoY NICS reading in March and Sportsman's Warehouse saying they are restricting the amount of ammo you can buy each day so they have enough to go around.

[pawnman]

21 hours ago, Ryder1587 said:

What’s everyone buying with the market down?  I’ve bought all the airlines , Vegas casinos , theme parks, etc.  high risk / high reward.  You can buy now for 1/3 the price from last month.  Crazy times. 

Bought a bunch of Disney a couple weeks ago, when it was at ~$90 a share...down from over $150.

[mcbush]

Harvested some capital losses and pushed that cash into oil/energy on 23 Mar. Otherwise just boosting regular contributions to passive funds.

[di1630]

Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


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[BashiChuni]

2 hours ago, di1630 said:

Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


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careful with this one.

 

"USO's Benchmark is the near month crude oil futures contract traded on the NYMEX. If the near month futures contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The crude oil contract is WTI light, sweet crude oil delivered to Cushing, Oklahoma.

USO invests primarily in listed crude oil futures contracts and other oil-related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less."

-https://www.uscfinvestments.com/uso

"Since all futures contracts have an expiration date, the United States Oil Fund must actively roll its front-month futures contract to the WTI crude oil futures contract expiring in the next month to avoid taking delivery of the commodity. The fund primarily holds front-month futures contracts on crude oil and has to roll over its futures contracts every month. For example, if it holds WTI crude oil futures contracts that expire in September 2020, it must roll over its contracts and purchase those that expire in October 2020."

https://www.investopedia.com/articles/markets/081116/uso-good-way-invest-oil-uso.asp

full disclosure i've lost about 2k on this fund cause my dumbass threw in a bunch of money at "oil" in march. guys on cnbc have warned against retail investors jumping into USO....basically said it's a fund for more advanced institutional investors

from FORBES:

"The solution here is for USO’s fund administrators to dissolve it, as happened with XIV.  Those administrators made a minute change in the fund’s composition last week—shifting holdings to the second- and third-month contracts instead of fully rolling over from the front-month contract to the second-month contract two weeks prior to expiration——but that was merely the proverbial shifting of the deck chairs on the Titanic.  USO has outlived its usefulness, if it ever had any."

https://www.forbes.com/sites/jimcollins/2020/04/20/the-us-oil-etf-uso-is-the-culprit-behind-oils-massive-plunge/#2de48ed524e8

Edited April 21, 2020 by BashiChuni

[MilitaryToFinance]

15 hours ago, di1630 said:

Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


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Bashi pretty much hit the nail on the head but if you still own it, sell it today. They suspending creation of units, the whole ETF is broken and is now trading at a premium to NAV which should not happen. It is very likely this ETF is worth $0 in a month. No matter how much you already lost, you will probably lose 100% of what you have left if you continue to hold it.

[Ryder1587]

Slowly starting to climb back up. 

[gearhog]

6 hours ago, Ryder1587 said:

Slowly starting to climb back up. 

Don't get suckered. You are here: