OT: House Offer Accepted. What A Crazy Market!

[dpb]

"...dividend-paying stocks portfolio is 5.65% average dividend..."

Rate based on acquisition price, not appreciated.

[krw]

You can't even figure out how to use a kill file. You are one dumb bastard. ...and a liar.

[Leon]

Well I have the mutual funds too. Just had a meeting with my money manager last week. Since about 2008 my portfolio has tripled. That was when I dropped my previous money manager.

I was mostly mutual funds until the crash last year. I got out before it hit bottom and back in about 3 weeks later, lower than when I got out. But with a more conservative approach, 50% bond funds and 50% mutual funds.

Even with that mix I have seen about a 30% increase in value since April last year.

[DerbyDad03]

Bond funds are mutual funds.

I assume you mean bond mutual funds and equity mutual funds.

[Leon]

Mutual bond and stock 50/50.

[dpb]

...

Been pretty hard to lose in that time frame since from the approximate lows in early 2009 the DJIA is ~4X and S&P 500 ~6X. "Rising tide..."

[Leon]

Fortunately. Unfortunately i went through the fiasco of the 1999-2000 tech bubble. My money manager was not good. I was pissed that he did not suggest to go to cash long before we did.

[dpb]

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My overall mix is closer to 60:40 when I categorize my dividend-paying stocks portfolio as "fixed income" which purpose it serves at present despite being equities. Being long-time continuous-dividend-paying stocks, as a group they don't appreciate at the same rate as those held solely/mostly for growth, so do have a somewhat similar dampening effect on overall appreciation gain, but not nearly as strong an effect in current market as do actual bonds or bond funds.

When conditions change (as they will, eventually) to a more historical pattern, I'll adjust the mix to match; meanwhile I see no reason not to ride the rocket as long as can...

Do have to pay attention and be willing to "pull the plug!" when it's time this way, though, granted, and not leave it all up to somebody else.

I certainly take broker's advice/recommendations into account, but don't wait around for him to tell me it's time to move--he has a ticker that gives him flags, but he's also got a bunch of other clients (as all do) so can't rely on being the first on the call list.

[Scott Lurndal]

Let's step back to basic definitions:

Mutual Fund

A fund where multiple individuals provide investment capital which is allocated to a class of assets, or a mix of asset classes by the fund manager.

So you can have "Bond" fund where the capital from the investors is allocated amonst one or more bonds (or a subset of bond classes such as Municipal, Industrial Aaa rated, or Junk), an "Equity" fund where the capital from the investors in the fund is allocated amongst one or more equity (AKA stock) positions. Or a fund that invests in multiple asset classes (e.g. 50/50 bonds and equities).

There are other asset classes as well that can be the target of mutual fund investment managers, such as real property (land, buildings, tangible assets or derivative financial instruments such as collateralized debt obligations).

There are also exchange traded funds (ETF) which have similar investment philosophies and goals but where the investor simply buys or sells shares in the fund on the equity markets. Examples are DIA, IVV, QQQ, et alia.

[Scott Lurndal]

Although if you enroll them in a DRIP, they do compound over time...

[dpb]

They are...and have at an annualized rate of about 7-8%.

OTOH, a portfolio concentrating on growth stocks may have doubled that over the same time frame (with much higher volatility, too).

These are not serving that purpose, however, however tempting it is to always go for the gains! :)

[Leon]

Exactly, I have had more than one conversation with moth of my money managers concerning the OBVIOUS.

It there is bad news on the networks. The long time awaited tech stocks crash leading up to the first quarter in 2000. and then The Corona virus at the first of last year.

Their answer is, it will come back. My response, why in the world ride it to the bottom? Get back in "near the bottom. Get out until the the stocks come back up. And I am not talking about knee jerk market reactions.

Yes it is hard to tell when the recovery starts but some thing are obvious.

[dpb]

I have considered letting the dividends go to cash for the income stream to satisfy the RMD, yes, but there are other places/ways in the overall portfolio to do that, so, so far, I've just let them grow in situ in order to keep roughly same balance.

Since they haven't done quite as well as the overall portfolio, they have slipped some in the overall mix percentage; I did buy into one here in the recent downturn to boost the overall up a little and also was a real opportunity to raise the effective dividend rate by bringing down the average cost/share a little.

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[Leon]

Of course. I have been pretty heavily invested since 1993. It is complicated listing all of the types of investments I have been involved with. Mutual Property investments did not go well for me. Mutual Medical has not been bad. Those are two separate smaller accounts.

[Leon]

On 5/2/2021 2:43 PM, DerbyDad03 wrote: Snip

So I have indicated that there is not a shortage of building materials in this area. A new subdivision is being built across the street from our subdivision, about 1/16 mile from our home.

The infrastructure began in early December and about half of the streets have gone in since March, they are still hauling dirt and pouring concrete.

The model home started going up over the concrete foundation week before last and or Monday two weeks ago. In a MUD meeting this morning the builder rep, Meritage Homes, gave us updates. The model will be completed this week. 3 weeks start to finish after the foundation was poured. The home looks finished on the outside. 6 more foundations were poured yesterday morning. In all there should be 130 or so homes and estimated build out will be at the end of the year.

[Leon]

I learned a few days ago that RMD can be rolled over in to a ROTH IRA with no RMD from those IRA's

[dpb]

On 5/11/2021 5:39 PM, Leon wrote: ...

Not exactly "rolled over"; you can convert, but it's not painless by any stretch for most.

I've converted some, but it ain't a no-brainer it's agonna' be a win in any short time.

You pay tax on it first at ordinary marginal income rates unless you have post-tax contributions inside the ordinary IRA.

Plus, RMDs are not eligible to be rolled over and you must take the RMD, anyway. Thus, whatever you convert will first be ordinary income above and beyond that of the RMD for the year. And, that extra can be enough extra to kick in the AMT bite to make the pain even more.

If you can stand that immediate pain, then remember that a distribution from a Roth is tax- and penalty-free after a five-year aging period.

If you're of an age that you debate buying green bananas, ... :)

I shoulda' done starting 30 years ago; now it's pretty painful first bite to undergo.

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[DerbyDad03]

Another option...

If you donate to charities, you may be able to do the donations directly from your IRA and not pay any taxes on the RMD. They are called Qualified Charitable Donations. You just can't take possession of the funds. You have to have them sent directly to the charity(s).

Plus side: Even though the RMD age has been raised to 72, they still allow QCD's starting at age 70-1/2. They would have screwed a lot of charities out of donations if they didn't make that exception.

So, all you "kids" out there...donate!

[DerbyDad03]

Sort of...distribution of funds from contributions/conversions is allowed at any time. It's the *growth* that can't be withdrawn tax/penalty free prior to 59 1/2 or before 5 years, whichever is longer. There are also exceptions to that rule. IRS Publication 590-B can be a fun read. ;-)

[dpb]

On 5/11/2021 7:18 PM, DerbyDad03 wrote: ...

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If one does have to take the RMD, the QCD is a no-brainer for _any_ charitable deductions, no matter the size.

If you're going to donate anyway, it's throwing money down the tax hole, otherwise.

In particular, a QCD is even better than a charitable contribution--the latter is a tax deduction but from income; the QCD portion of an RMD is not even counted as income; it's just reported as nontaxable.

It's especially easy if your IRA is set up with check-writing privileges-- you can write the check yourself rather than have the holder of the IRA do it for you.

The only limitation on a QCD to qualified charity is $100K/year.

With the higher personal exemption, many who used to be able to itemize and no longer can do so; the QCD is a savior in that regards for those in the RMD boat.

The CARES Act did add a provision that each can deduct up to $300 in charitable contributions ($600 joint return) even if don't itemize deductions. This was extended into 2021 by the last stimulus bill; it's not permanent law so likely will sunset with the demands for higher taxes all the proposals are going to generate.

The 100% AGI deduction is still in play if you're between 59-1/2 and

70-1/2 for withdrawals from a conventional IRA but not RMD.

As always, "consult your own tax professional" :) but having been President of the local community college foundation for last 10 years or so, I've become pretty familiar with the rules for nonprofits.

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