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Do you FIRE? Financial Independence, Retire Early


UTGrad98

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FIRE couple who retired at 50 after amassing a $4.3m net worth. They're struggling to turn on the spending machine after being frugal/cheap for most of their adult lives. It's probably not easy to flip from being a saver to a spender even though they are in zero danger of outspending their wealth.

 

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1 hour ago, Nice Guy Eddie said:

FIRE couple who retired at 50 after amassing a $4.3m net worth. They're struggling to turn on the spending machine after being frugal/cheap for most of their adult lives. It's probably not easy to flip from being a saver to a spender even though they are in zero danger of outspending their wealth.

FYI - nobody is in zero danger of outspending their wealth. Now they might have to do something stupid to do it, but there are people worth 10's or 100's of millions who find ways to spend it all

(things like investing in speculative ventures, gifting/helping friends, getting sued or not having proper insurance and needing super expensive healthcare, keeping your kids out of prison or keeping them in private schools. Look at the athletes that make generational wealth but are poor, again it shouldn't happen, but it does)

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1 hour ago, Nice Guy Eddie said:

FIRE couple who retired at 50 after amassing a $4.3m net worth. They're struggling to turn on the spending machine after being frugal/cheap for most of their adult lives. It's probably not easy to flip from being a saver to a spender even though they are in zero danger of outspending their wealth.

 

Ya I saw this. I could easily see this for many FIRE people. I like how my wife and I handled our financials. We never really went extreme in our savings. We lived a comfortable lifestyle while still saving over time. 

However, the struggle we have is adjusting to the transition from money “accumulation” to “spending”. When you’ve spent your whole life saving for retirement, it’s weird to stop doing that. 

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46 minutes ago, Wally Fairway said:

FYI - nobody is in zero danger of outspending their wealth. Now they might have to do something stupid to do it, but there are people worth 10's or 100's of millions who find ways to spend it all

(things like investing in speculative ventures, gifting/helping friends, getting sued or not having proper insurance and needing super expensive healthcare, keeping your kids out of prison or keeping them in private schools. Look at the athletes that make generational wealth but are poor, again it shouldn't happen, but it does)

Agree that anything could happen to anyone. How they invest, spend, gift, etc. can change their outlook. However the point of the podcast also hits on the theme that a frugal person is unlikely to become a spendthrift. And loosening up a bit doesn't automatically mean financial ruin.

I didn't listen to every second of the podcast/video but I was slightly surprised that this couple has real estate debt. There's nothing inherently wrong with real estate debt in retirement, if easily manageable but I would think that a FIRE couple would not have any debt. I'm in my mid 50s with only a low interest mortgage debt. I know it makes mathematical sense to not pay off my mortgage early but I don't want any debt regardless of the math as I get to 60. There is something about not owning anyone that appeals to me. My plan to save for the payoff and then make that decision at one single point instead of frequent additional payments. Or maybe I will sell before that time, and buy a new house with cash.

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On 6/26/2023 at 5:52 PM, troph said:

If you don’t want to owe anyone and you own property in Texas that will never be the case. I’m more and more convinced property tax is a major factor for retiring early in Texas. 

You're saying that property tax is a reason that people do not retire early in Texas? I could see that along with health insurance costs and general housing costs, if they don't outright own their house.

Honesty Texas is a horrible place to retire (early or not) if you are "house rich" but don't have a corresponding high income.  I know some property tax burdens lock at 65 but that doesn't mean it's not a major burden for retired people. It just means that the burden may not grow as much.

 

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1 hour ago, Nice Guy Eddie said:

You're saying that property tax is a reason that people do not retire early in Texas? I could see that along with health insurance costs and general housing costs, if they don't outright own their house.

Honesty Texas is a horrible place to retire (early or not) if you are "house rich" but don't have a corresponding high income.  I know some property tax burdens lock at 65 but that doesn't mean it's not a major burden for retired people. It just means that the burden may not grow as much.

 

I mean it’s a major factor to timing and financial comfort of retirement. Earlier retirement is easier without the property tax bill unless you live in a home that is well below your income level.  
 

2.5% on a $1m home is $25,000. If your income is $150,000 in retirement your effective tax rate on income which is what really matters is almost 17% higher because of property tax.  At this point I don’t see retirement in Texas as palatable option for me. I like nice things and I don’t want a crazy tax burden when I’m no longer making money. Housing costs in Colorado for example are pennies compared to Texas when comparing equivalent housing. 

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Just now, troph said:

I mean it’s a major factor to timing and financial comfort of retirement. Earlier retirement is easier without the property tax bill unless you live in a home that is well below your income level.  
 

2.5% on a $1m home is $25,000. If your income is $150,000 in retirement your effective tax rate on income which is what really matters is almost 17% higher because of property tax.  At this point I don’t see retirement in Texas as palatable option for me. I like nice things and I don’t want a crazy tax burden when I’m no longer making money. Housing costs in Colorado for example are pennies compared to Texas when comparing equivalent housing. 

I agree that property taxes can be punitive for someone that has a house that is valuable and is a high multiple of someone's income.

Tax policy can easily flip into political discussions but at the end of the day the govt needs its money. Texas will not add a sales tax nor will we significantly increase sales tax. The only remaining item is property tax and the maths don't math if you lower property tax.

Getting mad at Texas property tax is like getting mad at hot weather. You can leave but you can't change it. I agree that many are foolish if the retire in Texas. Retiring to a low property tax state can often be the most advantageous when it comes to optimizing personal finance.

 

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On a different note, the S&P 500 is now up 16% for the year, at the halfway point. NASDAQ up 32%. This wasn't something I expected to occur so fast. My financial independence looks a helluva lot more secure today than it did in December. 

I'm not looking to retire yet and I know anything can happen but everyone saving for the retirement should be happier these days. Unless of course you listened to the fearmongers late last year and moved out of the stock market due to recession fears.

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2 hours ago, Nice Guy Eddie said:

I agree that property taxes can be punitive for someone that has a house that is valuable and is a high multiple of someone's income.

Tax policy can easily flip into political discussions but at the end of the day the govt needs its money. Texas will not add a sales tax nor will we significantly increase sales tax. The only remaining item is property tax and the maths don't math if you lower property tax.

Getting mad at Texas property tax is like getting mad at hot weather. You can leave but you can't change it. I agree that many are foolish if the retire in Texas. Retiring to a low property tax state can often be the most advantageous when it comes to optimizing personal finance.

 

I’m not mad about it. I’m a proponent of taxes. It’s just a reality, if nice housing measured comparing value as a higher multiple of income is important to you, Texas likely won’t work. Buy less, pay less. Buy more, sorry that’s on you (and right now me). 

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1 hour ago, troph said:

I’m not mad about it. I’m a proponent of taxes. It’s just a reality, if nice housing measured comparing value as a higher multiple of income is important to you, Texas likely won’t work. Buy less, pay less. Buy more, sorry that’s on you (and right now me). 

Sorry I wasn't implying you were mad. I meant it as a general statement that many get mad at taxes especially as their income goes up and they understand how much they are paying vs services that receive. But trying to get tax revenue out of poor people doesn't work.

I agree that property taxes are an important factor with retiring in Texas. It can't be ignored and may led some to living elsewhere.

Edited by Nice Guy Eddie
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Fun thread, spent a day off and on catching up from page one. Except for the middle part where you clowns were arguing with each other about definitions and shit while all basically saying the same thing: retirement is freedom. 
 

In a little bit different from y’all in the sense that my career and monetary stability didn’t really take off until about 6 years ago, and I’m 43 now. Which is also around when my wife and I had our son. Which means that we’re behind many of our friends and peers on the savings front. I’m also probably different from y’all in the sense that I’m hinging my big retirement bets on an exit from my company, in which I’m a part owner. Obviously this is pretty risky by most people’s estimations, but so far so good. But there’s a huge variance there. If we sell at a decent price, I’ll feel good about retiring at 55, which is also around when my son graduates HS. I can reassess then with where we are on the house, where he goes to school etc. I don’t think I’ll be comfortable without an income until he’s out the door. If there is no exit I’m probably slogging away until 60 or so with my wife and hopefully retiring on a couple million. Which would be sub-optimal. 
 

But the goal is to have 5-6 million stocked away by 55 and then just live on basic interest. Fuck, maybe I’ll just stick it all in an annuity? I obviously haven’t heavily started researching my options yet, I don’t see much of a point until after a company exit occurs, which hopefully would be in the next 3-5 years.  
 

But I 100% dream about being retired every day, and I actively worry about being able to get there and in my timeline. I can’t fathom working and having things hanging over my head for the rest of my life. I have zero fucking worries about being bored. Shit I can blow 2 hours a day reading this website, easy. Throw in an hour or two for exercise, some reading and that’s half of every day. And all I’m really angling for is a nice property with a good view of mountains or something, and some traveling. 
 

Hope to join all you motherfuckers soon. 

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11 hours ago, Judge Roybeanbag said:

As I’m getting closer to retiring, I’m increasingly perplexed about how to access earnings on all the non-real estate stuff I have.  I can live comfortably on 4% of it, but how do you pay that 4 % out?  

That's a big question, and I would talk to someone who has helped many work that out. If you have funds in different accounts with different tax implications, you need to plan out the tax burden and the strategy of which accounts to hit first.  Then you need to decide, as you ask, how to liquidate 4% each year. If you have enough in income funds, you could just cash out the dividends but I doubt you would have that much in dividends.

I've probably listed it here but I'm a frequent listener of the Money Guy show out of Tennessee. https://moneyguy.com/ https://www.youtube.com/@MoneyGuyShow. Their main gig is a financial advisory service. https://aboundwealth.com/ I'm not telling anyone to use them. But instead find someone similar, who have helped 100s or 1000s of others transition into retirement and can advise on the pitfalls.

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12 hours ago, Judge Roybeanbag said:

As I’m getting closer to retiring, I’m increasingly perplexed about how to access earnings on all the non-real estate stuff I have.  I can live comfortably on 4% of it, but how do you pay that 4 % out?  

That’s where I’m at - it’s a different skill for sure. im trying to figure out how to convert an illiquid number that has us ready for a modest retirement (hopefully comfortable one in 5-6 years) into a consistent cash producer. 
 

from what I see here and elsewhere it’s mostly dividend stocks for a cash output, but also consistently selling some and keeping a year or more in cash or cash equivalents (money markets, CDs, etc).

For me I see two ways - first learn a new skill - this stocks and bonds and dividend thing, or two - liquidate these and invest in cash flowing real estate or in people who can do things like build houses - something we know, requires cash to get into the business making a return on capital easy to justify. Become the “money guy” for a younger entrepreneur.  
 

second seems more risky in execution but more comfortable and the first is completely foreign to me but possibly safer (and less lucrative). Heck, I don’t even know if I described the traditional route effectively.
 

 

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2 hours ago, troph said:

Heck, I don’t even know if I described the traditional route effectively.

People can invest or not invest in anything they want but I believe the traditional 4% rule is based on the idea of placing your money in the stock market at a risk level that you can continually earn/withdrawal 4% to cover your expenses. And with the plan that you do not run out of money, obviously. 

If someone wants to fund startups or take on high risk investments, I would imagine experts would advise to live on less than 4% of the entire investment portfolio. Say someone has $5m in investable assets. Put $1m aside for risky investments, and live off 4% of the remaining $4m, or 3.2% of the total of this hypothetical scenario.  If the $1m pays off, then adjust the plan. 

There isn't a one-size-fits-all 4% plan for everyone and even the traditional method has many variables that cannot be predicted. Lifetime expectancy, inflation and planned assets to pass on being three critical factors. Even the timing of the retirement and uncontrollable stock market returns can also drastically impact the results. This is why some advise to keep 3 years of expenses outside of the market (e.g. CDs) to only be touched in down years. And replenished in up years.

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cash on hand is easy. my preference is 3-4 years of cash due to risk - current conditions have challenged that for us quite frankly. it's the rest of it on a traditional plan that is hard for us extreme risk takers to work out.

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53 minutes ago, Nice Guy Eddie said:

People can invest or not invest in anything they want but I believe the traditional 4% rule is based on the idea of placing your money in the stock market at a risk level that you can continually earn/withdrawal 4% to cover your expenses. And with the plan that you do not run out of money, obviously. 

I think the 4% rule has been around long enough that it was based on long-term treasuries, and AAA rated corporate bonds. The idea was that if you draw down 4% that interest on your investment will be enough to fund the annual withdrawals. 
I am pretty sure it predates the 401k, which has RMD requirements that at about age 74 and older requires a minimum withdrawal of 4% gradually increasing from there (and many people have the bulk of their retirement in 401k (or related plans). 

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12 minutes ago, troph said:

cash on hand is easy. my preference is 3-4 years of cash due to risk - current conditions have challenged that for us quite frankly. it's the rest of it on a traditional plan that is hard for us extreme risk takers to work out.

I manage my Mothers investments, and that is much easier today than it was 2-10 years ago; now I can get 5% money market and/or CD's up to about 5 years. With her SS payment and a small spousal pension, I have about 6 years of expenses in money market & a frankenstein CD ladder for her.

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20 minutes ago, Wally Fairway said:

I think the 4% rule has been around long enough that it was based on long-term treasuries, and AAA rated corporate bonds. The idea was that if you draw down 4% that interest on your investment will be enough to fund the annual withdrawals. 
I am pretty sure it predates the 401k, which has RMD requirements that at about age 74 and older requires a minimum withdrawal of 4% gradually increasing from there (and many people have the bulk of their retirement in 401k (or related plans). 

Agree. It's also important to know what, if any, a person plans to continually invest in the market in retirement.

In a similar way, I help my mom's finances too. She has very little cash/investments but she has a decent, guaranteed retirement income. Her limited savings have to remain in a low/no-risk investment. I hesitate to even write investment as it's basically in a >4% savings account.

For me, I have practically the opposite future. Outside of SS, which I do think will be there, I don't have any guaranteed income. I will be sitting on retirement funds that I have saved and plan to leave in the market albeit with a different risk mix than today. I still plan to earn >4% but spend much less. I know the later years can require more depending on my needs.

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As I mentioned earlier in this thread, I went down the 4% rat hole over the last two years, trying to decide how I wanted to structure my portfolio. Like I often do, I ended up combining a few different strategies to address risks and unknowns:

1. Total Returns - don’t ever forget about trying to invest for total returns with a significant chunk of your portfolio.  I’ve done Monte Carlo simulations until I’m blue in the face and you need the high returns of stocks to address inflation later in life, unless your living expenses are so low in relation to your portfolio size (<2%) that you can just sit in bonds.  Dividend stocks are great for income, but often don’t deliver great total returns so be careful in your use of them.

2. Covering expenses - dividends and interest are great for converting your expenses if you can. A total stock fund kicks off 1.6% and bonds kick off 4%+.  If this doesn’t cover it, you have to either sell something or be holding extra cash. Today, it’s easy because cash is earning 5% and bonds are earning 5%+. In the future, it may be tougher if rates drop. In that scenario, adjusting your portfolio to have more income producing assets might be a good idea.  How do you decide how much to tune it? Taxes.  

3. Taxes - you want enough income to cover expenses and not much more if possible. That way you stay in lower tax brackets and can qualify for ACA subsidies if you need that for healthcare until age 65.  This also gives you headroom for Roth conversions.

4. Sequence of Returns Risk - early in retirement it’s a huge risk  a few down stock markets and you can be in trouble. Right now the market is rich by historical standards.  I use what’s called a bond tent. That’s a fancy name for holding more bonds today than I’ll hold 7-10 years from now, once SoRR has gone away. 

Those are some of the big issues around getting that 4% liquid. Also, in some periods the 4% rule gets shaky and could drop to as bad as ~3.2% depending on your tolerance for a risk of running out of money above 2-5%.  

 

 

 

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13 minutes ago, Dbeasy said:

As I mentioned earlier in this thread, I went down the 4% rat hole over the last two years, trying to decide how I wanted to structure my portfolio. Like I often do, I ended up combining a few different strategies to address risks and unknowns:

1. Total Returns - don’t ever forget about trying to invest for total returns with a significant chunk of your portfolio.  I’ve done Monte Carlo simulations until I’m blue in the face and you need the high returns of stocks to address inflation later in life, unless your living expenses are so low in relation to your portfolio size (<2%) that you can just sit in bonds.  Dividend stocks are great for income, but often don’t deliver great total returns so be careful in your use of them.

2. Covering expenses - dividends and interest are great for converting your expenses if you can. A total stock fund kicks off 1.6% and bonds kick off 4%+.  If this doesn’t cover it, you have to either sell something or be holding extra cash. Today, it’s easy because cash is earning 5% and bonds are earning 5%+. In the future, it may be tougher if rates drop. In that scenario, adjusting your portfolio to have more income producing assets might be a good idea.  How do you decide how much to tune it? Taxes.  

3. Taxes - you want enough income to cover expenses and not much more if possible. That way you stay in lower tax brackets and can qualify for ACA subsidies if you need that for healthcare until age 65.  This also gives you headroom for Roth conversions.

4. Sequence of Returns Risk - early in retirement it’s a huge risk  a few down stock markets and you can be in trouble. Right now the market is rich by historical standards.  I use what’s called a bond tent. That’s a fancy name for holding more bonds today than I’ll hold 7-10 years from now, once SoRR has gone away. 

Those are some of the big issues around getting that 4% liquid. Also, in some periods the 4% rule gets shaky and could drop to as bad as ~3.2% depending on your tolerance for a risk of running out of money above 2-5%.  

great food for thoughts. Thanks for posting. A couple of thoughts below.

Taxes - This is where Roth vs taxable strategy is key, if someone has Roth balances. The longer you can hold out in selling Roth balance, the better. Let them grow as long as possible, and in theory you can withdraw a lower %age since you do not have to plan for taxes. Obviously an individual's tax situation is are unique to them.

Sequence of Returns Risk - this is why I want a large cash fund on Day 1 that doesn't require me to sell any funds. Hopefully I'm lucky and retire in a rising market but want to be prepared. Honesty for all of my retirement goals, I see a 3 year cash amount to be the most challenging to accomplish. I'm sitting on about 1 now and tripling that in the time that I have left will need deliberate execution.

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11 minutes ago, Parliament said:

Tell her I said hi.

LOL - I sure will. Do you want to be one of her siblings, kids, a close family friend? 
It really doesn't matter because she  really can't remember anyone; but I will put in a good word from you. But only after I recap from my huge loses in the market today. I am down my entire SPY puts expiry today aan that is costing me well into triple digits, something like $360. I will never retire at this rate.

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1 hour ago, Nice Guy Eddie said:

great food for thoughts. Thanks for posting. A couple of thoughts below.

Taxes - This is where Roth vs taxable strategy is key, if someone has Roth balances. The longer you can hold out in selling Roth balance, the better. Let them grow as long as possible, and in theory you can withdraw a lower %age since you do not have to plan for taxes. Obviously an individual's tax situation is are unique to them.

Sequence of Returns Risk - this is why I want a large cash fund on Day 1 that doesn't require me to sell any funds. Hopefully I'm lucky and retire in a rising market but want to be prepared. Honesty for all of my retirement goals, I see a 3 year cash amount to be the most challenging to accomplish. I'm sitting on about 1 now and tripling that in the time that I have left will need deliberate execution.

Right now we are in an inverted yield curve so holding a lot of cash makes sense. But, if rates drop substantially then you wouldn’t be earning much in that cash for three years. If you have a big enough portfolio where that cash isn’t part of the 4% calculation, then you are fine and it doesn’t matter. But if those cash funds are an important part of your portfolio return, then not having a good return on those funds for three years introduces a little bit of risk of running out of money over a full retirement period of day 30 years.  

One way to deal with that is to invest in individual bonds, or bond funds with a target end date. It eliminates interest rate risk, and allows you to earn a higher interest rate than cash, reducing your long term risk of running out of money. Of course none of this is applicable in an inverted yield curve environment.

This three bucket approach of looking at your portfolio helps some people sleep better, rather than just blindly selling bonds or stocks every year.

I have something like that. I would typically keep 2 years cash (more right now for many reasons), and a few years in bonds with targeted maturities for years 3-5. The rest goes into stocks/stock funds, intermediate and long term bonds/funds, and alternative assets. 

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Question for those who are liquid $4mm or $5mm or $Xmm

Do you have that money across a variety of banks at the FDIC insurable limit? Protecting liquid cash from a bank collapse has been in back of my mind since SVB. I read NBA superstar Giannis A. keeps the limit of $250k in cash across like 50 banks or something. Seems ridiculous. 

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23 minutes ago, HonkeyVape said:

Question for those who are liquid $4mm or $5mm or $Xmm

Do you have that money across a variety of banks at the FDIC insurable limit? Protecting liquid cash from a bank collapse has been in back of my mind since SVB. I read NBA superstar Giannis A. keeps the limit of $250k in cash across like 50 banks or something. Seems ridiculous. 

Stop thinking like a poor person.  

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1 hour ago, HonkeyVape said:

Question for those who are liquid $4mm or $5mm or $Xmm

Do you have that money across a variety of banks at the FDIC insurable limit? Protecting liquid cash from a bank collapse has been in back of my mind since SVB. I read NBA superstar Giannis A. keeps the limit of $250k in cash across like 50 banks or something. Seems ridiculous. 

I will not exceed FDIC limits on cash because there is no compensation for the risk.  matter of course. We've had as many as 3 banks with money on deposit and multiple accounts at times but all insured, none exceeding the limit. I think it's a grave mistake to exceed FDIC for cash without a commensurate return.  

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I will not exceed FDIC limits on cash because there is no compensation for the risk.  matter of course. We've had as many as 3 banks with money on deposit and multiple accounts at times but all insured, none exceeding the limit. I think it's a grave mistake to exceed FDIC for cash without a commensurate return.  

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2 hours ago, txduck87 said:


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you wanna see rich grown men turn into giant groveling little bitches? well there are many ways, but one way though is for their bank to go under and their deposits are over the limit.  as for the risk, I mean we've only seen massive banks fail in the last 15 years at a frequency that would make you a dumbass to hold cash in any bank above the FDIC limit.

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12 hours ago, HonkeyVape said:

Question for those who are liquid $4mm or $5mm or $Xmm

Do you have that money across a variety of banks at the FDIC insurable limit? Protecting liquid cash from a bank collapse has been in back of my mind since SVB. I read NBA superstar Giannis A. keeps the limit of $250k in cash across like 50 banks or something. Seems ridiculous. 

https://duckduckgo.com/?t=ffab&q=insured+cash+sweep&ia=web

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Yeah Fidelity does this for me as part of account services… not really an “out there” concept.  On the other hand, money market funds pay close to what a six month CD does right now so I’ve let all my CDs mature and roll into MM.  I am not sure if they’re the ideal vehicle when things are staying choppy for another year or two.

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One question that keeps popping up in my head…. So if as a couple filing jointly, you have less than $83k annual income, you don’t pay capital gains tax.  Does that mean if I sell a property and fall below that income threshold when I sell it, I don’t have to pay on the gain?  
 

Maybe should go in the dumb question amnesty thread. It’s pertinent because I have a hunk of real estate that’s worth well north of $1 million but if I sold it now the tax burden would take a bite.

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12 hours ago, Judge Roybeanbag said:

One question that keeps popping up in my head…. So if as a couple filing jointly, you have less than $83k annual income, you don’t pay capital gains tax.  Does that mean if I sell a property and fall below that income threshold when I sell it, I don’t have to pay on the gain?  
 

Maybe should go in the dumb question amnesty thread. It’s pertinent because I have a hunk of real estate that’s worth well north of $1 million but if I sold it now the tax burden would take a bite.

Is the gain on the property not more than 83k? If you have held it for any length of time I would think it would be. 

Basically the first 89k? (I think) for a married couple of capital gains is taxed at zero, then 89k-550k of gains is taxed at 15%. 

But your W-2 income does not effect capitol gains rates (assuming you are not surly 1%). 

Edited by hornbri
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3 minutes ago, hornbri said:

Is the gain on the property not more than 83k? If you have held it for any length of time I would think it would be. 

 

Well yeah it’s more than $83k.  I guess that answers my question.  I paid around $100k amortized when I bought it.   It’s worth about $1.5 million now.  

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14 hours ago, Judge Roybeanbag said:

One question that keeps popping up in my head…. So if as a couple filing jointly, you have less than $83k annual income, you don’t pay capital gains tax.  Does that mean if I sell a property and fall below that income threshold when I sell it, I don’t have to pay on the gain?  
 

Maybe should go in the dumb question amnesty thread. It’s pertinent because I have a hunk of real estate that’s worth well north of $1 million but if I sold it now the tax burden would take a bite.

If you live in a property for 2 of 5 years you don’t have to pay taxes on gains of $250k if single or $500k if married. 


You might also look into 1031 exchange.

I’m not tax professional and also am probably reading your situation incorrectly but just wanted throw out those 2 ideas.

 

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3 hours ago, Judge Roybeanbag said:

Well yeah it’s more than $83k.  I guess that answers my question.  I paid around $100k amortized when I bought it.   It’s worth about $1.5 million now.  

Yeah with a 1.4M profit you are going to want a way to offset those taxes. If you have any stock losses you can use in the same year that could help. Otherwise you might want to start reading about 1031 exchanges. 

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  • 4 weeks later...

I really like Pimco and Blackrock funds.  Pimco has PDI and another that I can’t think of now.  Blackrock has the best tax exempt California muni fund.  A lot of people like the new JP Morgan fund, JEPI, but I think it’s limited in upside on bull markets.

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I also like the pimco closed end bond funds, like pDI, pdo, Pty, etc. it’s a good way to play high yield bonds, because index funds like from vanguard don’t do as well. With junk you need to be selective and actively manage.

For preferred stocks I like pffa. It’s a way to get higher yield without individual security risk. There’s also pff but it’s a passive index.  For preferreds I believe active management is important.

For more plain vanilla investing, VYM and VYMI are nice higher dividend etfs from vanguard.

None of this is investment advice, just my opinion.   

 

Edited by Dbeasy
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PAXS was the other Pimco vehicle I was thinking of.  The one big downside to Pimco besides their NAV to price is their expenses, but that yield is amazing.  So much so that a lot of people keep predicting they will need to cut distributions (especially on PDI) but it hasn’t happened yet.

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