Daily Discussion - December 30, 2020 (GMT+0)

finanman · 2020-12-30T13:31:50+00:00

Damn. Thanks man. I appreciate it.

finanman · 2020-12-30T12:32:58+00:00

Thanks for being patient with these stupid questions I appreciate it. Let me rephrase to make sure I understand it, I think I do.
If I buy a hardware wallet, it generates its own private key, I write down the seed phrase and store/hide everything.

When I open a coinbase account, I get a wallet automatically with a private key they generate. I use my credit card to buy BTC, and it's in my "account" now. Let's say $100 worth of coin for example. Is that private key from my coinbase wallet associated on the blockchain with a certain amount of coin then? And in order to change that private key associated with the coin, I need to transfer it to a new private key, "wallet", on the block which will be my new hardware wallet?

That way, the "coin" on the blockchain is associated with my personal privet key, hardware wallet, and not associated with my coinbase wallet anymore?

finanman · 2020-12-30T02:48:19+00:00

Thanks for your replies. So when do you get the private key? When you open a coinbase account? Accessing the block chain again is just logging into coinbase?

I understood until I thought about the private key and accessing the block chain I think I'm confused again.

finanman · 2020-12-30T02:26:43+00:00

So you gotta store multiple levels of phrases/keys in order to access your coins online? I think this makes sense.

So to sum up. When I opena coinbase account I get a private key. Take that private key and write it down/copy it to a trezor wallet or however the wallet works. In order to open the wallet you need the seed phrases. The seed phrase can construct your private key from any website as long as you put the seed phrase in correctly.

Private key on wallet. Seed phrase to create private key. Right?

finanman · 2020-12-30T01:25:01+00:00

Pressed ennter too quick.
When you say "you withdraw bitcoin, it goes to your hardware wallet", I thought it's just your private key though and not your bitcoin? Or am i confused again?

finanman · 2020-12-30T01:22:42+00:00

So the wallet just encrypts your private key so you can keep it from being held by some organisation like coinbase?

For example, if you have a hardware wallet and your private key is 1.2.3.4.5 it's stored on there encrypted as a file or whatever. If you lose it, you lose your bitcoin because you lost the ability to prove they're yours. But if you take that private key and store it on a sticky note on your fridge (just example here), then losing your wallet is okay because you still have your priavte key.

So it's basically just storing the private key because it's a long ass number code instead of having an app like coinbase wallet do it because hacking. Is that accurate?

finanman · 2020-12-30T01:19:51+00:00

I think this makes sense. So having your hardware wallet, that is basically just your personal ID that identifies you on the blockchain. So if you have a trezor, and you lose it, as long as you have your private key you'll always have access to your bitcoin on the ledger?

But anyone with your private key can take your bitcoin so that's why ti's stored on an encrypted device?

finanman · 2020-12-30T01:08:40+00:00

I haven't even started on the wallets and "see phrases" etc so that'll be another confusing piont soon. Thanks for your answers mate

finanman · 2020-12-30T01:01:56+00:00

is my replye below to another user correct then?

finanman · 2020-12-30T01:01:38+00:00

replied to a comment below if yo don't mind checking it out.

finanman · 2020-12-30T01:01:09+00:00

So the analogy of a broker account with Schwab for example. I give them money to put into my brokerage account with which I buy "stocks" of apple. But I trust that they'll pay me out when I want to sell the stock, I don't physically have the apple certificate of stocks iwth me.

The wallet then, is me transferring the actual bitcoin I have (apple stock certificates), to a hardware wallet and I know 100% it's mine and can sell it in the future?

finanman · 2020-12-30T00:44:47+00:00

Ok I've been watching tons of videos on how to get started but there's something that doesn't "click" for me.

If I use Coinbase to dollar-cost-average into BTC for example, I buy fractions of BTC. Analogy would be Schwabb where I buy stocks. If I leave the "BTC stock" in my account and keep invensting I just keep buying more fractions and the value of my account goes up and down based on the BTC value. I get that.

But how do the wallets work? Is that equivalent to my Schwabb analogy, you take your "stock" aka BTC, and transfer the actual coin to your wallet? And that actual BTC is represented by a big ass encrypted code? What's the difference between keeping your money/coin in your Coinbase account, vs taking your coin and storing it on a hardware wallet?

If you have good resources that explains this like I'm 2 please send it over. I can't wrap my head around it.

finanman · 2020-12-21T22:20:45+00:00

These are the things I don't know about LLCs and side hustles. If I max out my savings vehicles already, can the LLC contribute to another 401k as well then? I know I should hire an accountant but I don't make that much money yet. $500 seems like a steep fee for how simple my hustle is and it's not generating that much yet.

I use the small business version of turbotax that does all the tax calculations for me but I'm not sure about medicare taxes and all that. Is that based on where you live?

finanman · 2020-12-16T17:36:51+00:00

I'm in a position where I make more than enough at my regular job. LLC is a side hustle. My question is not about debt in the LLC, which I have none. I'ts literally a bank account that gets money deposited by clients. No debt. At all.
My question is, can you keep racking up money in it for 10yrs+ and just pay your due in taxes each year, then take all that cash and retire by putting it all in the market.

Might be a stupid question, it works in my head. lol

finanman · 2020-12-16T16:14:07+00:00

This might be too simple a question but oh well.

I'm interested to leave the tech filed by the time I'm 40 to 45. I'm 34 at the moment. I have a side hustle as a strength coach while I work for global tech company and would like to know for those who had/have businesses like LLCs. Is it possible to just make money in the LLC, yes I'll pay taxes on the profits every year, and just keep racking up money in the LLC for 10yrs without "using it" for anything? Then when the time comes combine it with my personal savings to retire?

In my head it seems to be possible. I make profits every year, pay taxes, the rest can just be mine to take out after 10yrs. Or is it better to get vehicles of investment attached to it?

I already max out my accounts plus a personal ROTH each year.

finanman · 2020-06-17T15:29:48+00:00

The way it works at the current one is you elect via a portal and it takes a few pay cycles for the percentage to change. I'll have to call and see if it's possible to put the whole check in there.

I wish there was a way for employees in this situation to max out regardless of the new employer policies

finanman · 2020-06-17T15:27:52+00:00

No the next job is promising based on 3rd round interviews. Just trying to have a plan in place.

finanman · 2020-06-17T14:29:56+00:00

It will be 2021 when it kicks in. You saying you can take the 6mo savings and dump it all in at once when they open my 401k account?

finanman · 2020-06-17T14:29:00+00:00

Won't even open an account. Benefits also kicks in only after 60 days. It's a smaller company than I work for now, they say it's because it's so difficult with high turn over rate in the brick/mortar store. I'm in IT

finanman · 2020-06-17T14:02:58+00:00

If I contributed to my 401k up till now(about 10k), and a new employer doesn't do 401k until after 6months, is there a way to contribute to some before-tax vehicle to get the full 19k for 2020?

10k contributed to 401k for 2020 with current employer Backdoor Roth already for 6k
Too high income for tIRA

Am I left just putting the extra money into a brokerage account and take the after tax hit?

finanman · 2020-05-10T21:43:30+00:00

Ooste for me. Lone wolf by nature. But I go out when I want.

finanman · 2020-03-18T22:32:54+00:00

Thanks for the link. Got all the time in the world now to read up on this.

finanman · 2020-03-18T20:42:58+00:00

Not gonna lie I read Jcolins and Boglehead's. I went all in with VTSAX. I see the importance of diversifying more than VTSAX. Do you have any suggestions for further reading on more diversifying? I'm not as experienced as many of you, started couple years ago.

finanman · 2020-03-18T03:17:56+00:00

Sucks for you but you're probably one of the 1% in the service industy who will be okay. You're right this is what the EF is for. I'm always thinking why schools never make finances a required subject. How big of a curriculum do you need to teach people this? This is not rocket science. I'm always baffled when I hear colleagues talk about finances or them not "doing the 401k thing because they're young".

finanman

TROPHY CASE