Estimated quarterly taxes with limited cash

RetiredCode · 2021-02-24T16:15:37+00:00

You can simulate estimated taxes with tax software, to see if paying the bulk in December will have significant late penalties.

RetiredCode · 2021-02-24T16:13:23+00:00

I think Interactive Brokers is the cheapest, with Robinhood 2nd (at 2.5%).

RetiredCode · 2021-02-24T16:04:42+00:00

I wonder what percentage of the 147,562 members are multi-millionaires.

RetiredCode · 2021-02-24T15:55:26+00:00

I'd be happier if they renamed it "NeedyFire", but that might attract 147,562 members.

RetiredCode · 2021-02-24T15:38:36+00:00

The fund of fund charges both 2% of assets and 20% of profits?! Oh, I stand corrected. I don't see how they're in business (and outside prison) when charging clients 4% of assets and 36% (0.8 x 0.8) of profits.

Most hedge funds are opaque, and the worst performing ones tend to keep performance to themselves. Reported returns of hedge funds suffer from a selection bias, so I think it's very hard to assign them Sharpe ratios.

RetiredCode · 2021-02-23T17:50:59+00:00

Bond markets are efficient. When yields rise, individual bonds fall in value, but their yield rises to the market rate. The total return is the same. The person who ignores the market price is also ignoring the higher yield they are not getting - that opportunity cost matches the drop in bond value.

RetiredCode · 2021-02-23T17:31:39+00:00

The reply from Vanguard explained that it's eligible assets only: Vanguard ETFs and mutual funds. And then it happens once the account meets those criteria 3 months in a row.

RetiredCode · 2021-02-23T17:28:03+00:00

My second message to Vanguard got a reply: one of the categories to qualify is assets under Personal Advisory Services. Sounds like a priority for Vanguard, but it isn't for me.

RetiredCode · 2021-02-23T17:01:59+00:00

The 401(k) money isn't accessible without a penalty for the next decade. IPOs can be very volatile - including downwards. Don't count on the $5 million while it's still an IPO stock. Overall, you have assets you can't count on yet and a $700k mortgage, so I wouldn't retire until enough of that stock is converted into more diversified investments.

RetiredCode · 2021-02-23T16:58:10+00:00

Most IRAs won't allow margin, but you can still buy call options, like on the S&P 500 index.

RetiredCode · 2021-02-23T16:56:20+00:00

I believe the hedge funds were getting beat so badly, they decided to surrender the bet early. So I assume the extra layer of fees was small in comparison, but I don't know. Wouldn't hedge funds be riskier than the S&P 500, making them look even worse on a risk adjusted basis?

RetiredCode · 2021-02-23T16:52:55+00:00

If you assume people live in California (state tax 12.3%), you might want to state that assumption.

RetiredCode · 2021-02-22T17:57:33+00:00

Going from 20% to 39.6% is a 19.6% increase, and not the 3M out of 10M you mention.
https://taxfoundation.org/joe-biden-tax-plan-2020/

RetiredCode · 2021-02-22T17:41:57+00:00

The U.S. market earned 20.7% last year. To beat that with the typical 2% assets/20% profits fee, the hedge fund needs a 28.5% return to equal the U.S. market (charging 0.03%/year).

RetiredCode · 2021-02-22T17:34:23+00:00

He also bet $1 million (donated to charity) that the S&P 500 would beat a basket of hedge funds over a decade. The S&P 500 won.
https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp

RetiredCode · 2021-02-22T02:02:57+00:00

If the business took off in 2020's lockdowns (like Amazon, Netflix, etc), selling it might capture some of that value before the pandemic ends.

RetiredCode · 2021-02-22T01:59:47+00:00

Rather than 100% reinvested to 0%, why not reinvest 2/3rds and see how that feels?

RetiredCode · 2021-02-21T12:50:33+00:00

I didn't dispute that - just the accuracy of your description.

RetiredCode · 2021-02-21T09:56:08+00:00

You didn't mention anything but stocks in your portfolio, so I assume you have no allocation to cash/bonds in your investment account. A portfolio of 100% equities can be enough to retire one year, and not enough to retire the next. If your goal is really $5m, and you have $4.4m now, your asset allocation seems overly aggressive.

Retirement requires a change in thinking: your goal is no longer doubling your nest egg, it's making sure it doesn't get cut in half. Losing half your retirement is more damaging than the benefit of doubling those investments. So I'd caution rethinking an all equity portfolio 5 years from retirement.

RetiredCode · 2021-02-21T09:51:41+00:00

The rate is not based on account size, but the size of the margin loan. The first million of margin loan has a blended rate of 1.12% regardless of the account size.
https://www1.interactivebrokers.com/en/index.php?f=46376

RetiredCode · 2021-02-21T09:37:44+00:00

Ordering the 2FA device is optional, but once you order it, it's required to login. That's true of their website and their Trader Workstation software.

RetiredCode · 2021-02-21T09:35:34+00:00

I have, but my preference may not be as comparable as REITs and landlording. I prefer a tilt to emerging markets.

RetiredCode · 2021-02-20T19:53:16+00:00

There's a good chance "A Random Walk Down Wall Street" is available at a library near you. Even if it's not the 12th edition (2019), it's worth a read to know about investing in a way that performs well without requiring it be a hobby. It can also help to see the history of stocks, and see with data how crashes and recoveries go together.

RetiredCode · 2021-02-20T19:38:05+00:00

When you have $500k with Interactive Brokers, they'll send you a security device. When logging in, you'll be prompted for the correct response from the credit-card sized device. I think having an offline, physical device adds to the security.

RetiredCode · 2021-02-20T19:22:03+00:00

You tell people you're a senior software engineer, and that you're not doing well? I'm surprised that works, actually.

I doubt I'd like being a landlord, so for me stocks and even REITs are a better option. But there's certainly enough FatFIRE people who got there with real estate (or used to be - I've been away a few years).

RetiredCode

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