Hey y’all! I have been thinking that this community could use a weekly discussion thread. Feel free to comment below with anything and everything money related that is better suited to a conversation or a quick question and answer than a full post. Some ideas include:
- Journaling about an ongoing job search
- Asking for ideas about how to manage an emergency fund
- Logging recent stock trades
- Talking about the impact of inflation on your budget
- Your plans for maximizing the rewards on a credit card
Again, those are just suggestions, if there’s really anything you’d like to talk about related to finance in your life, feel free to put it here.
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Bought some VTSAX this week, might fuck around and buy some more next week too. The next few days would be prime tax loss harvesting time for vanguard funds (due to dividend intervals), but the market’s up so I can’t do that. There’s really nothing fun to talk about when you’re doing it boglehead style.
I don’t even spend enough money to meet these new credit card bonus thresholds anymore. I made a few thousand churning cards and bank bonuses in the past, but now they’re all like $100 for $1500 spend. It doesn’t seem worth the effort.
Does Lemmy have a financial independence/early retirement community?
Edit: I found one (always forget about this tool): /c/fire@lemmy.ml
Would you care to explain the tax loss harvesting point? Is it just that the fund price drops a bit post dividend and you can squeeze out a bit more “loss”?
There are still some good credit card bonuses out there. I am working on assembling the Chase Trifecta, and right now that involves using the Freedom Unlimited card on all groceries to get 5% back. I don’t think that promotion is still going, but I am pretty sure that both the Freedom Unlimited and Freedom Flex are offering $200 back on $500 in the first 3 months, though you do have to be careful about really churning them because I think Chase gets mad if you apply to too many cards in a certain time frame.
As far as FI/RE goes, on Beehaw at least that community is mixed in with general finance. I think we’re just about the size to start having a viable general finance community, and if we split it up we would see even less activity.
Would you care to explain the tax loss harvesting point? Is it just that the fund price drops a bit post dividend and you can squeeze out a bit more “loss”?
TLH in a nutshell is just that you sell a stock for less than you bought it for, then turn around and buy a near-identical stock to keep your position in the market. So for example If I buy VTSAX for $100, and 5 months later it’s worth $80, I will sell VTSAX for $80 and use that to buy $80 worth of VFIAX. VTSAX is total american market index, VFIAX is S&P 500 - they’re effectively the same thing, but they’re different enough that they don’t count for a wash sale. What this ultimately does is allow me to claim -$20 on my income that year and pay less taxes, while losing no actual equity in the market.
When selling/buying stocks for TLH you ideally pay attention to qualified dividends, meaning that you need to own a stock 60 days before its dividend date to get qualified dividends. Most vanguard funds pay out dividends every 3 months, so there’s a ~30 day window where you can shuffle stocks around and still acquire qualified dividends status before the next dividends hit.
There’s a handful of gotchas you need to be aware of when doing TLH, mainly revolving around wash sales, so I would recommend you read a real guide if you’re gonna try it: https://www.whitecoatinvestor.com/tax-loss-harvesting/
It’s a small optimization, mainly worth doing all at once when there’s a big market downturn. If I can claim like 10-20k worth of losses at once I’ll do it. I’m not going to TLH over $300. I personally have a calendar reminder every 3 months to check the market and determine if I should TLH. My reminder is coming up this week, but the market is doing well so nothing I’ve bought has lost any value.
There are still some good credit card bonuses out there. I am working on assembling the Chase Trifecta, and right now that involves using the Freedom Unlimited card on all groceries to get 5% back. I don’t think that promotion is still going, but I am pretty sure that both the Freedom Unlimited and Freedom Flex are offering $200 back on $500 in the first 3 months, though you do have to be careful about really churning them because I think Chase gets mad if you apply to too many cards in a certain time frame.
I’ve got two freedom cards already unfortunately (old freedom, freedom flex). I don’t really do the points cards because I don’t travel much. I’m under 5/24 by a ways at this point so I don’t think Chase would be too mad if they had any other cards that I cared about. But otherwise I’ve got like 14 credit cards and I’ve done all the good ones at this point. Cancelling and reapplying might the best option at some point, but like I said I find it hard to care about that level of effort for $100 sometimes.
As far as FI/RE goes, on Beehaw at least that community is mixed in with general finance. I think we’re just about the size to start having a viable general finance community, and if we split it up we would see even less activity.
Yeah true. This general thread is a good idea, since everyone’s at a different point in their financial journey, and interaction on dedicated posts might be low.
My understanding of TLH is that it just delays taxes. You’ll have to pay them eventually, but possibly at a lower rate. It seems like a lot of work for a so-so potential benefit. If I had enough money for it to be worth the effort, I’d probably have enough money to pay some one (or a robot) to do it for me.
Generally, yes. It’s been a while since I’ve thought about it so the exact mechanics elude me, but I think you will be paying it later at a lower tax rate (e.g. your tax rate during retirement) only for each yearly 3k you deduct from your income. Your long-term/short-term losses from TLH still exist in a bucket waiting to be converted to 3k every year, and if you end up realizing stock gains at any point in your life, your remaining bucket losses will cancel them out before you realize those gains. For gains cancelled this way I think it’s a direct push, e.g. no tax difference?
Either way, it’s a small optimization, and totally worth skipping if you don’t care. Because you can only claim up to 3k per year (rolling), it’s just so easy to TLH 10-20k during a market downturn and coast off the 3k/year for a while. It’s something bogleheads do because there’s nothing else to do. It’s effort that you can turn into guaranteed money, which is rare when it comes to the stock market.
Alright broad rundown time so I can reference on future posts:
For retirement I am currently following a portfolio allocation from Ben Felix, adapted for the U.S. by this website, with a 15% bond allocation. For those who don’t want to click through, this is essentially a total market portfolio that makes sure to cover domestic and international equities, with a bias towards small cap value stocks, which historically have shown additional returns over large growth stocks. The bond allocation is more by accident if I am being honest, and I will probably gradually reduce it as I am pretty young and I find the arguments presented for lifecycle investing pretty convincing, though not actually convincing enough to leverage my retirement without the direct advice of a financial advisor. I am more or less hitting my target allocation now, as I just finished a 401k rollover and was able to get everything the way I wanted.
I have a small hobby investing account, funded from my hobby budget and currently less than $1k in total after getting a $100 bonus for funding the account. The investments there are mostly picked based on what I think is interesting, including the following:
- Funds
- NTSX: Efficient core fund that uses futures to replicate a 90/60 leveraged stock/bond portfolio, for only 0.2% in fees
- RSP: S&P 500 index fund that holds all 500 stocks in equal weight rather than market cap weighting. This keeps the portfolio from being mostly the top few countries, ideally improving diversification.
- MUB: Municipal bond fund, this is a taxable account and I thought it would be fun. Plus lending to local governments makes me feel like I’m doing my civic duty.
- VBR: Small cap value ETF from Vanguard, tries to capture the size and value premia. I also hold this in my retirement accounts for my domestic small cap value allocation.
- DISV: Dimensional small cap value international fund, similar to VBR but outside the US. I hold similar fund AVDV in my retirement accounts
- ICLN: Renewable energy fund, because oil companies suck
- Individual Stocks
- These were selected on the basis of small companies trading at or near book who had consistently beaten earnings expectations around last fall. It’s been mixed success, but a lot of fun! These are sized at ~1/4 the size of my individual fund positions
- MHO: U.S. homebuilder, up around 80%
- CLS: Software and hardware provider for logistics solutions, up around 27%
- UNM: Insurance company, they do life and critical illness but not main healthcare, up around 17%
- WRK: Paper packaging company, down around 30%. I let a cheap valuation blind me to the fact that they don’t actually make that much money, and their Q2 reports were BAD.
For things that are too risky or capital intensive for my hobby account, I have a paper trading account. Right now this is mostly options strategies, and it’s a good thing it’s not a real trading account because I fat finger the app on my phone regularly enough that it would be a problem lol. Anyway, the main plays there are:
- Bullish call spread on F using LEAPS. This was originally a backratio spread which I think is a neat defined risk trade but I wanted to roll it out to a further strike date and messed it up.
- Poor mans covered call on GLD. I originally opened a relatively deep in the money LEAP position on GLD during the debt ceiling talks, thinking it would be a nicely leveraged way to get some exposure to gold in the event that things went south there. Happily, the government continues to function, and so I decided to use the position as a way to practice the PMCC, though realistically I should just close the position and take my loss.
- Iron condors on SPX opened on Fridays to expire on Mondays. Originally I thought this would be a very pure theta play, but upon further review I am shorting vega. I don’t think this is an egregious trade overall given how volatility has declined in the last few months, though it has burned me the last two weeks and I think my timing and management of the trade could be significantly improved.
Sounds like a solid plan. I link Ben Felix’s videos to people a lot. As far as small cap tilt etc, the most important thing is that you’re putting money into stocks consistently and letting it grow. There’s a tendency to sweat the small stuff with passive investing because it feels like you should be doing something, but in reality it’s a gamble that’s probably only worth a few days of extra work before you retire.
I’m personally 0% bonds in the accumulation phase but everyone has their own opinions on that sort of thing. My strategy is just setting up a bond tent around retirement and ignoring bonds otherwise
- Funds
Since you mentioned credit card rewards, I received another promotion for the Shop Your Way credit card (spend $750 and get $50 back for online purchases). I thought people were kidding about how often it gives cash back promotions, but I’ve had the card since November and have already gotten $485 back in just promotion dollars. Add in the Raise discount and it has been by far the most rewarding cash back card I’m aware of.
Huh, I have never heard of that one. I’ll have to look into it. As I mentioned in my other comment, I am working on assembling the Chase Trifecta of cards, which should help me pay for the majority of my travel needs via points. How do the redemptions work on the Shop Your Way card?
It’s a weird card in that the ShopYourWay program is originally the points program for Sears and KMart. However, the points can be redeemed for gift cards on Raise at $.01/each. So at 3% back on dining & groceries and 5% back on gas combined with constant bonus offers, I’m averaging like 8% back each purchase. It doesn’t come with any travel perks, but as long as points can be redeemed on Raise it’s an amazing cash back card for my needs.
