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All Encompassing Investment and Financial Planning Thread for the Surly 99.5%


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Posted
10 hours ago, LCHorn said:

I don’t really have any great savings ideas, but what I would recommend is to take out a HELOC on your residence.  It’ll potentially be a source of down-payment money for the next purchase, you won’t be paying interest on it if you do nothing (it’s just an untapped line of credit), the interest is 100% tax deductible if you convert it to a rental property, and no bank will approve it unless the property is owner occupied (in other words, you would need to do it now and not when you’ve moved).  

I see going with a HELOC as an unnecessary risk. If a house is almost paid off or even paid off, why go backwards. I know some argue that there’s no reason to ever get out of debt and find methods to push taxes indefinitely. Grant cardone comes to mind. This can work until it doesn’t, and then the cards fall. In 2008 many had their HELOC loan immediately due because the property value plummeted.

i also see little value in becoming a one house landlord. Either it becomes a lot of work for the owner, or the property mgr takes the profit. If I was in that situation and I wanted to live somewhere else, sell the property and buy the next house for cash. Or a small mortgage.

Posted
19 hours ago, Nice Guy Eddie said:

I see going with a HELOC as an unnecessary risk. If a house is almost paid off or even paid off, why go backwards. I know some argue that there’s no reason to ever get out of debt and find methods to push taxes indefinitely. Grant cardone comes to mind. This can work until it doesn’t, and then the cards fall. In 2008 many had their HELOC loan immediately due because the property value plummeted.

i also see little value in becoming a one house landlord. Either it becomes a lot of work for the owner, or the property mgr takes the profit. If I was in that situation and I wanted to live somewhere else, sell the property and buy the next house for cash. Or a small mortgage.

Some thoughts on why I would keep it. 

1. I’m building a rental portfolio and acquired my first property about 5 months ago. Hopefully this would be around my 5th rental by the time I move. Goal is to have them all cash flowing well by the time I retire in 20 years. This house would easily cash flow today and should be great in 20 years.

2. I’m at a place in the amortization schedule that each payment is making a good dent in the principle. Seems silly to pay 20 years of mostly interest to sell it when you (or a renter) is taking out bigger chunks each month.

3. It’s in a nice area that will be easy to get good renters that stay for years and don’t trash the place. There’s always risk with tenants but this is about as good as you can do. There’s house is well built, 4 side masonry, and I know how all the major expense items have been handled well. Shouldn’t be too many surprises.

4. I’ve got a low interest rate locked in. 

5. No guarantees for the future but it’s been appreciating nicely. Even a 4% average increase moving forward adds 25k of on paper value each year. At some point in my life, the house should be worth over a million dollars and paid off. Nice little insurance policy in old age. 

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Posted
On 2/4/2025 at 4:24 PM, 52-80 said:

iShares TLT is by far the most popular. Only 15bps of expense fees. Vanguard VGLT is most similar (~25 year avg maturity of holdings) and 4bps fees…but at this points the fees are chicken scratch. TLH targets 10-20y treasuries. I dont think in this context most people are thinking of stuff with shorter maturity.  

What about investment grade corporate bonds?  What is the risk tradeoff there?

Posted
6 hours ago, TexasEd said:

What about investment grade corporate bonds?  What is the risk tradeoff there?

Higher volatility because corp bonds are less liquid than treasuries; more sensitive to corporate news/events; and higher chance of underlying bonds being called early (good for the fund asset but they will need to reinvest)

Corporate bonds are typically shorter in maturity and lower in duration, which means their prices are less sensitive to change in interest rate environment... but there's all types and you can get a fund basket where those characteristics matches those based on treasuries. 

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Posted

If you're dealing with a self-directed account instead of a sponsored plan with limited choices, it's often worth considering a blond ladder or multiple ladders (either treasury or corporate), especially if you have a timeline for the use of the funds.

Pimco, Parametric and others will even automate the process.  Keeps a fixed and quantifiable maturity on all assets so you know what is maturing and when.

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Posted (edited)
On 2/7/2025 at 2:22 PM, Reagan1k said:

If you're dealing with a self-directed account instead of a sponsored plan with limited choices, it's often worth considering a blond ladder

image.jpeg.e44864fb81003ce465017dc0db3b6f36.jpeg

Edited by WBT
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Posted

I'm selling a commercial property soon and may be investing in something other than property for the first time in my life. Is there a realistic investing approach that is low to medium risk that can achieve say 7 to 10% annual returns accounting for the current turmoil? Is it worth getting a financial adviser or whatever to manage funds or do they just eat up a couple percent doing what a savvy individual can do on their own at relatively low risk? 

Posted
3 minutes ago, Orale said:

I'm selling a commercial property soon and may be investing in something other than property for the first time in my life. Is there a realistic investing approach that is low to medium risk that can achieve say 7 to 10% annual returns accounting for the current turmoil? Is it worth getting a financial adviser or whatever to manage funds or do they just eat up a couple percent doing what a savvy individual can do on their own at relatively low risk? 

It's quite possible to do that, even in today's market.  I'd talk to an advisor and see what they're all about.  See what kind of strategy they have for your goals.  See if it's a strategy they currently use and how that strategy is working.  It's quite possible that an advisor could get you somewhere in that range of return net of fees if they know what they're doing and have a plan.  It all comes down to time for you.  Is it worth your time to research/manage/change when you need to/etc to go it alone, or is it worth your money to pay someone to do it for you, or is there some combination of the two that would work best?   

 

 

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Posted

I’ve been investigating Roth conversions much more deeply over the last several weeks to really understand much better the true tax savings they provide, and the risk one takes on by paying a lot of taxes now vs theoretically more taxes later, long down the road. 

I’ve found that a lot of people use tools, or work with financial planners who use tools, to develop their strategy. But those tools often don’t layout a view of the cash flows in a way to more easily see what is going on in retirement with Medicare IRMAA, income taxes, capital gains, RMD’s, etc. 

Does anyone have either a good tool, or an affordable resource who really understands Roth conversions in depth? I don’t want just some person who plugs numbers into a tool. 
 

 

  • 3 weeks later...
Posted

Bump.  Still trying to find a financial advisor that is highly competent in tax optimization during retirement using Roth conversions and optimized spending plans, taking into account IMRAA, net investment tax, Roth seasoning rules, etc.  Most of the advisors I've been exposed to either operate only under an all-inclusive AUM fee for total financial planning (which we don't need today; maybe down the line yes), or are not particularly sharp enough to really understand the complexities of the tax planning. 

Posted
On 7/19/2025 at 10:16 AM, Dbeasy said:

Bump.  Still trying to find a financial advisor that is highly competent in tax optimization during retirement using Roth conversions and optimized spending plans, taking into account IMRAA, net investment tax, Roth seasoning rules, etc.  Most of the advisors I've been exposed to either operate only under an all-inclusive AUM fee for total financial planning (which we don't need today; maybe down the line yes), or are not particularly sharp enough to really understand the complexities of the tax planning. 

This is the problem I have.  a .85% annual AUM drag on my account for tax advice is just not worth it to me. Like, I want good tax advice and financial planning, but not at that cost. 

Posted
4 hours ago, Bateshorn said:

This is the problem I have.  a .85% annual AUM drag on my account for tax advice is just not worth it to me. Like, I want good tax advice and financial planning, but not at that cost. 

Its really ridiculous.  You go to all this trouble to save on taxes, only to just give it all up to a financial planner who basically has the right professional software to do the analysis correctly.  None of the consumer software products are good enough.

Posted
1 hour ago, Dbeasy said:

Its really ridiculous.  You go to all this trouble to save on taxes, only to just give it all up to a financial planner who basically has the right professional software to do the analysis correctly.  None of the consumer software products are good enough.

Everyone that's pitched me just makes me angry.  LIke, I can not beat the market for free.  I don't need to pay you to put me in a moderately aggressive etf blend. Or god forbid, Direct Indexing. 

Posted
1 hour ago, Bateshorn said:

Everyone that's pitched me just makes me angry.  LIke, I can not beat the market for free.  I don't need to pay you to put me in a moderately aggressive etf blend. Or god forbid, Direct Indexing. 

All in on ULTY it is!

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Posted

6 months from now everyone will wish they were in Yieldmax funds a year ago. The sub 6 margin rates at Robin Hood are going to make a bunch of people millionaires and retired from full time work at 30 years old.

Posted
33 minutes ago, StassneyHorn said:

6 months from now everyone will wish they were in Yieldmax funds a year ago. The sub 6 margin rates at Robin Hood are going to make a bunch of people millionaires and retired from full time work at 30 years old.

Can you explain this? I can’t quite follow what you are saying. 

Posted (edited)

Sure.
What I'm saying is its the next big thing, and that the big institutional dollars are starting to get into the fund, the way they did with MSTY, because the NAV erosion critique has "visibly" gone away with them implementing a collar strategy for their weekly trades. ULTY also invests across multiple funds that have an IV rate close to 70% or above, meme stocks, traditional blue chips, hot startups, or legacy mega cap companies with an earnings call that week etc. So the premiums are high. They have no obligation to hold these funds for longer than they feel like---they are actively traded like crazy. Along with being able to buy the underlying fund and not just otm options calls and synthetic positions, it helps limits the losses when the out of the money options go bust as the underlying can capture a percentage.

Caveman explanation
ULTY is a yieldmax fund that has an 80%+ yield and pays out weekly distributions. It has a high management fee around 1.3% but has payed out approximately 9.5 cents per share ever since switching to weekly payouts instead of monthly. Thats 52 new paychecks for you, instead of 12. Reinvest or cash out, that's up to you.

Hypothtically, at a price of $6.27 per share price right now, a 10k share buy for $62,700 averaging a .095 distro/share, would give you weekly income of approximately of $950. 950 multiplied by 52 is an extra $49,400 in your pocket for the year if it they maintain and have same success switching in and out funds currently.

For some people that means early retirement. For some that's an early switch to part time employment at Whole Foods and having them pay health insurance while your investment covers mortgage and HOA. For others, that's going to SE Asia and geoarbitrage-ing for a bit.

The margin rates being under 6% at RobinHood to loan you money to invest in income funds like ULTY that pay 80% a year is where the math comes in on managing it well and leads to the free ATM conversations on the internet.

Edited by StassneyHorn
Posted
29 minutes ago, StassneyHorn said:

Sure.
What I'm saying is its the next big thing, and that the big institutional dollars are starting to get into the fund, the way they did with MSTY, because the NAV erosion critique has "visibly" gone away with them implementing a collar strategy for their weekly trades. ULTY also invests across multiple funds that have an IV rate close to 70% or above, meme stocks, traditional blue chips, hot startups, or legacy mega cap companies with an earnings call that week etc. So the premiums are high. They have no obligation to hold these funds for longer than they feel like---they are actively traded like crazy. Along with being able to buy the underlying fund and not just otm options calls and synthetic positions, it helps limits the losses when the out of the money options go bust as the underlying can capture a percentage.

Caveman explanation
ULTY is a yieldmax fund that has an 80%+ yield and pays out weekly distributions. It has a high management fee around 1.3% but has payed out approximately 9.5 cents per share ever since switching to weekly payouts instead of monthly. Thats 52 new paychecks for you, instead of 12. Reinvest or cash out, that's up to you.

Hypothtically, at a price of $6.27 per share price right now, a 10k share buy for $62,700 averaging a .095 distro/share, would give you weekly income of approximately of $950. 950 multiplied by 52 is an extra $49,400 in your pocket for the year if it they maintain and have same success switching in and out funds currently.

For some people that means early retirement. For some that's an early switch to part time employment at Whole Foods and having them pay health insurance while your investment covers mortgage and HOA. For others, that's going to SE Asia and geoarbitrage-ing for a bit.

The margin rates being under 6% at RobinHood to loan you money to invest in income funds like ULTY that pay 80% a year is where the math comes in on managing it well and leads to the free ATM conversations on the internet.

Ok. So how are they getting 80%+ yields? Where is the return coming from? If underlying assets go up, it obviously enables payouts. But what is going up that much? And if things drop, which they will, then the crash will be significant too. Maybe not the full nav drop, but still significant. What am I not understanding? 

Posted (edited)

Out of the market options premiums with companies that have 70% Implied Volatility rates. You’ll buy call options that are anywhere from 2.5% to 10% a week out most of the time. You sell out of the contracts before they go bust and sell underlying positions if they have moved upward at all but stayed out of strike price. They change/sell out of positions almost weekly, so you don’t expect huge weekly losses to the underlying unless some major news happened, or it’s TSLA.

And when I say “you” above, I mean the options traders who have been molded on the cigarette ash of Rick Santelli and bonus paychecks to jump into the Chicago river to make the drunk managing director laugh. True vets of the game.

ULTY follow- https://youtube.com/@etf_inspector?si=Csn48BNnF336gtHr

MSTY follow and more-https://youtube.com/@retireondividends?si=F0iU7bZuRGr463w3

 

 

Edited by StassneyHorn
Posted
1 hour ago, StassneyHorn said:

Out of the market options premiums with companies that have 70% Implied Volatility rates. You’ll buy call options that are anywhere from 2.5% to 10% a week out most of the time. You sell out of the contracts before they go bust and sell underlying positions if they have moved upward at all but stayed out of strike price. They change/sell out of positions almost weekly, so you don’t expect huge weekly losses to the underlying unless some major news happened, or it’s TSLA.

And when I say “you” above, I mean the options traders who have been molded on the cigarette ash of Rick Santelli and bonus paychecks to jump into the Chicago river to make the drunk managing director laugh. True vets of the game.

ULTY follow- https://youtube.com/@etf_inspector?si=Csn48BNnF336gtHr

MSTY follow and more-https://youtube.com/@retireondividends?si=F0iU7bZuRGr463w3

 

 

I like you but the level of complexity in this strategy seems too high. A premium in anything that can be utilized to generate an 80% yield can be arbed away somehow by smart money. I wish you good luck though. 

 

 

On 7/19/2025 at 9:16 AM, Dbeasy said:

Bump.  Still trying to find a financial advisor that is highly competent in tax optimization during retirement using Roth conversions and optimized spending plans, taking into account IMRAA, net investment tax, Roth seasoning rules, etc.  Most of the advisors I've been exposed to either operate only under an all-inclusive AUM fee for total financial planning (which we don't need today; maybe down the line yes), or are not particularly sharp enough to really understand the complexities of the tax planning. 

Didn't you inherit a large amount of money? I'd think with the amount you received there shoulde’ve been some network or contacts provided to you.  Ask ChiTownDoc

 

Posted
9 minutes ago, Fiscal dominance said:

I like you but the level of complexity in this strategy seems too high. A premium in anything that can be utilized to generate an 80% yield can be arbed away somehow by smart money. I wish you good luck though. 

 

 

Didn't you inherit a large amount of money? I'd think with the amount you received there shoulde’ve been some network or contacts provided to you.  Ask ChiTownDoc

 

wtf are you talking about. I haven’t inherited shit. Whatever we have we made. 

Posted
1 hour ago, blacklab said:

I have bought some ULTY which virtually guarantees it will drop in value and lower it's dividend. 

So proceed with caution.

I've had an eye on it for awhile now when the only "defense" for the fund was total return%. These are not retirement funds, they are income. You can take the dividends and spend them on long term retirement funds if you think right. @Fiscal dominance there's a couple of guys on youtube that break down daily transactions and fund holdings that might explain it better. It's been 10 years since I let my series 7 lapse, but they can make it make sense just as well. The fee you pay to the fund manager is basically saying "Youre an options guy, get me premium and preservation, bonus if it grows."

Surly will have opinions on how annoying the first guy is, and how boring the second guy is. Keep it to yourselves. You will be repeating how they do talk in 2 weeks.
@Retire on Dividend covers alot of the other funds and explains-https://www.youtube.com/@RetireonDividends
@ETF Investor, ULTY explanation-https://www.youtube.com/@ETF_Inspector

Posted
On 7/19/2025 at 9:16 AM, Dbeasy said:

Bump.  Still trying to find a financial advisor that is highly competent in tax optimization during retirement using Roth conversions and optimized spending plans, taking into account IMRAA, net investment tax, Roth seasoning rules, etc.  Most of the advisors I've been exposed to either operate only under an all-inclusive AUM fee for total financial planning (which we don't need today; maybe down the line yes), or are not particularly sharp enough to really understand the complexities of the tax planning. 

Some thoughts -- you probably know about a lot of this already:

First, if you have a choice now between a Roth 401(k) and a traditional 401(k), and you have the cash to max it out, you can effectively save more for retirement via the Roth than via the traditional 401(k).  That's important for young folks who are just getting started and may have a lower tax rate now than in their prime earning years -- or who just want to max out what they can now and let the dollars work for them for 3-4 decades before they need them.

There are a few considerations I can think about for the person that has a traditional IRA now, is approaching retirement and is thinking about how to convert it or spend it.  Here are a few:

Roth conversions help you smooth out your income during retirement without actually withdrawing the money from a tax-deferred account.  For example, if you are still in the 15% marginal tax bracket and you are OK paying that rate on your taxes, you can do an end-of-year Roth conversion to max out the bracket.  You can fully take advantage of every dollar available to you in the bracket and have your income be exactly what you want it to be.

Having a regular IRA is going to require mandatory distributions at some point, although the age is going up and will eventually be 75.  You want to have *some* income if you are lucky to still be on the planet at that point, so it's nice to have some traditional IRA assets to tap.  If you live long enough, the IRS is going to want a bigger and bigger percentage each year.  If you are really lucky and have a huge IRA, you can end up losing control of your tax bracket and paying a lot.  Roth conversions before this happens can help prevent the runaway IRA.  This is a very nice problem to have ... but conversions can play a role in controlling your tax bracket late in life.

Folks with regular IRAs are allowed to contribute money directly to charity from their IRA starting at 70 1/2.  This is called a qualified charitable distribution or QCD.  If you have a charity you care about and you are getting close to that age, you can give money and be guaranteed to never pay tax on your traditional IRA donation.  That's something you can't do with Roth IRAs, since they have already been taxed.

If you are thinking about passing down IRAs to your kids, inherited traditional and Roth IRAs both allow you to take the money out over 10 years.  But the traditional distributions will count as income for your kids, and may affect their tax planning.  And the kids have to take required distributions based on their ages.  For the Roth IRA, assuming your kids don't need the money, they can wait the full 10 years and then just yank it out of the account, letting it earn tax-free money for 10 years.  Again, this is a great problem to have.

And lastly, think about where you might want to retire.  If you are sitting on 100% in Roth IRAs, you probably don't care what the state's property tax rate is.  All of your assets are post-tax, so you can move where you want.  If you are in 100% traditional IRAs, you might have a hard time justifying a move to a place like California because you will be paying California state income tax on money you earned elsewhere.  Conversely, if you earned all of your money in California and want to retire to texas, maybe traditional IRA is the best choice because you won't pay California income tax on that money (I think!) and then after you move you'll pay no state income tax on conversions or distributions.

IMHO, the Roth IRA with the ability to convert and the step up of capital gains tax at death are two of the biggest giveaways in the history of the tax code.  Might as well learn how to use them...

I am not a lawyer or an accountant, but I do have a mix of traditional and Roth IRAs.

Posted
On 7/19/2025 at 9:16 AM, Dbeasy said:

Bump.  Still trying to find a financial advisor that is highly competent in tax optimization during retirement using Roth conversions and optimized spending plans, taking into account IMRAA, net investment tax, Roth seasoning rules, etc

I guess one of the things you should consider is how long you will be holding the Roth until you retire.    It’s great that after five year you can withdraw money tax free -  but your conversion from your IRA or 401(k) will be taxed as your present income tax rate, no ?     If you let it sit in your standard IRA when you pull it out, you’ll be taxed on your then current income, whatever the hell that is.     For a lot of people, they will be in a much lower tax rate after they retire than the tax rate when they converted to the Roth.

if you are a savvy, successful investor, it seems that the money growing tax-free in your Roth could offset that tax rate differential if you do great in your Roth and then eventually take the whole thing out tax-free.  And then there is that thing where you have to figure out how much of the assets converted from your old IRA was original funds put in the IRA versus the profits and interest you earned in that IRA overtime.    I think it’s best to convert your IRA to a Roth as soon as you put it in your IRA so that becomes an easy taxable calculation.

Which is all to say I know enough about it to know that I don’t know anything about it.   I’m currently putting 8000 in an IRA and immediately converting it to my Roth for the easy math.   Also, because at my income level, I’m not allowed to contribute to a Roth, absent the conversion.   I believe each conversion you have to wait five years to pull it out tax-free.      

As an older cancer survivor I’m putting money in my Roth because I’m optimistic that I will be taking it out 5 to 10 years from now.     Financial glass half full so to speak.   

Now that we are in the age of AI and AI software, it seems possible that you can get a hell of a lot of fantastic advice (that you need to check, to be sure) without paying some schmo to tell you some basic facts that you can figure out on your own. 

My very best advice on financial matters is not to listen to me because I’m an idiot who knows nothing.

Posted

Thanks for the inputs. We are already in retirement and are at the point of deciding whether to convert and how much. Our particular situation is such that the decision to convert is not obvious for multiple reasons. I’ve built complex spreadsheets to contemplate scenarios. Because it is complex, I’m unsure whether I’ve built them correctly. The reason I need a competent advisor is for them to run the scenarios on their tools to see how it compares to what I’ve done. I need a check on the math. I also don’t want just a basic CFP because many of them don’t understand all of the complexities of Roth. They just run the scenarios through their tool and give that to clients. Those tools have a lot of assumptions that may be right or wrong for the future. I want someone to talk with about assumptions in more detail. 

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