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raemart
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Hello, I have been here before and everyone helped a lot with good info. Thank you. I would like to take part of my investments to safety as I need this money within a year's time from now. I have about $230,000 in an retirement IRA and about the same amount $220,000 in my personal brokerage account, both with one of the power houses. I have another $150,000 setting on the sidelines in CD's and cash(<<this is not in question). I need to take one or the other; brokerage acct. or IRA to safety for the time being. Both accts are heavy into equities. I have about $40,000 gains in each of these accts since early 2013. I am not 59.5 years yet but will be in the summer of 2016. Trying to figure out what I can move and not move so there are no penalties and preferably no tax event. My question, can any of these 2 accts. be moved to a money market position within the IRA or brokerage acct. and not create a taxable event at this time? I do not want to be in a bond fund at this time or do I? to maintain the principle of this money? I can and will pay taxes on the brokerage acct if I have to. I had over $80,000 worth of gains in these two accts. but they have dropped to about $30,000 now for gains. Would like to take both accts to safety but don't want to generate a tax event. I have a good healthy pension and the gains would pile on federal taxes. What would you do? Thanks for all your great help here!
Post Sun Jan 17, 2016 8:30 pm
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oldguy
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You can move the $230k around inside the IRA within triggering taxes - move it to cash, bonds, or some of both. And that 's probably enough safety - it would be 63% of your $600k in 'safety', high for a 58 year-old, you're young enough to need some inflation protection. (I'm quite a bit older than you and I'm at 50%/50%).
Post Sun Jan 17, 2016 9:18 pm
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raemart
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Thanks oldguy, I spoke to a rep at the brokerage company at the end of the year and he seemed to think there would be a tax event if not left in equities or bonds. I knew that couldn't be right. The IRA is not taxed until the money is actually taken out of the IRA account. BTW, I will be 59.5 in late April, 2016 not the summer. I need that money by early summer and will only pay normal income tax on the gains with no penalties. It is slated for another rental property.

Can you recommend a good bond account with Vanguard or Fidelity?

Hey Thanks!
Post Mon Jan 18, 2016 12:36 am
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oldguy
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quote:
a good bond account with Vanguard or Fidelity?


I like to use bond funds that have about a 3-year duration, if you get longer bonds you get a higher yield but you get hit hard when rates go up. I avoid that risk in my bond funds - when I want to increase my risk level I do it "top down" - eg, I would raise my mix from 50/50 to 60/40, but stay with the 'safe' bonds.

In general, bond funds are mostly the same - ie, all 3-yr bond funds get about the same return, it is locked in the yield-curve mathematics. I have FSITX at Fidelity and VFIIX at Vanguard.

quote:
I had over $80,000 worth of gains in these two accts. but they have dropped to about $30,000 now for gains. Would like to take both accts to safety but don't want to generate a tax event.


BTW, for the most part, market timers fail. Our intuition tells us to do the wrong thing. Studies show that 'timers' sell when the market is down (after a $50k loss??). And then they wait for the market to recover so that they can get back in. Think about that last statement - "wait for a recovery to get back in". That equals "buy high". And of course, selling after a $50k loss equals "sell low". Brokers did a 23-year study of that years ago - they found that, in a 14%/year 23 years market, the timers got about 3%/yr - and the "tough it out" investors got the 14%/yr.
Post Mon Jan 18, 2016 3:06 pm
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raemart
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Thanks oldguy, I understand not to time the market. And would never unless I needed the money. I wanted to see what the market might do the first week of 2016. It tanked. 2nd week, it tanked. I knew and know this year, being an election year, would be very turbulent. Didn't think it would start so early, however. I can leave everything in place. My buys have done very well for me in the good times. I am into multi-company, large blend ETF equities- 75% and multi-company equity mutual funds-25% of what's invested. What's so hard is the downturn may get into one's principle...ugh. In the years I was working, downturns could have taken some of my principle but I just didn't have time to follow it, so I don't know, so there is that. But the market always comes back, the one thing I know for sure. I could still move some money to some good bonds.


What I could do is finance the new property. I have the cash for a big down payment and so I don't pay PMI. I have an extra $2,500-$3,000 a month, I don't need, except to fund my brokerage acct. This could make payments until I get ready to pay it off, if needed. This property has rental income so that may cover the payment. Ideally, I don't want any payments but this might be the best route to take for now. I would have no debt other than this. My monthly private retirement is very secure but they could get into trouble too and cut my monthly payments, as many companies have done in past years. This is a concern, though highly, highly unlikely but it could happen. I could go back to work too. I was dollar cost averaging but would wait until I had about $25,000 and then invest that each time, in these last years. Sometimes, I bought high, this being why I've lost so much. I have my dividends reinvested so they bought high, mostly. I only have one large buy that doesn't have a year's time yet. Will ponder this thought about financing the property. Maybe the market will have a good spring and summer.... Thank you.
Post Mon Jan 18, 2016 10:24 pm
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raemart
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I have decided to not buy the rental property until later in the year. This will give me time to save up more money to pay cash. I am also thinking about going back to work. I have been retired now since 2012, got all the stuff, through the years, off the back burner(several large house repairs and maintenance on 1 rental property), traveled and stuck my head in everywhere I've wanted. I may be ready to settle down so I have to get up in the morning. lol Still pondering the morning get-ups though :-/. I will ask about going back to work in another thread.

I am going to move some investments into a bond fund(s) while I still have gains. One hates to lose their gains but it's all unrealized so that doesn't bother me as much. I will never give up on the market but for right now I can beat the market by funding myself each month, each year. After moving my IRA to a bond fund, (and maybe some of my brokerage money too) I am going to leave everything in place and hope it crawls and claws back to the good. The market always comes back, just hoping there is money left to make a comeback. This is money I have never needed so after my tweeks, I will put it out of mind and start fresh with a new batch of coin.

Thought I might take a stab at looking for a property several weeks before the election. I may get lucky and with someone desperate to sell during this time. I know that is preying but I can't help myself. It may work! And I may have the money to pay cash by then, particularly if I go back to work. In the meantime, I have a fairly perfect life and don't need any payments. Thanks for all your help here!
Post Thu Jan 21, 2016 12:48 am
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oldguy
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Well, timing the real estate market is as futile as timing the stock market. Results show that the 'timers' are forever trying to beat the market - but they do the opposite.

When I was buying rental houses, every time that I waited for prices or interest rates to come back down, I ended up buying a year later and paying more. So I learned to buy houses whenever I was ready to add a house.
Same with stocks - I accumulated monthly and never sold - forget about the price and beating the market.

You mentioned paying cash for a rental - I did the opposite, I made minimal down payments and I refinanced the houses regularly during the 40 years that I owned them. And I put that equity money into a taxable SP500 fund. In my case, that equity grew even more than the houses. Just sayin'.
Post Thu Jan 21, 2016 1:20 am
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raemart
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The property I want to buy is in another state. It will be a second home there with a mother-in-law apt. I want rental income to pay my property taxes and any other subsequent taxes there. I have looked and looked for what I want but haven't found the right property, a dream home with income. My brother will oversee everything for me once bought...he really will and do a fine job of it too! I am in cold country now and not ready to give up living in the pines. It's just too beautiful! I have been in my home here for 25 years and just hate to give it up. And it's a beautiful place too! (Extras: Close cab ride to the airport when I travel and locked bunch boxes for mail so I don't have to check it everyday, just a hint of good things). But one day I will be older than you and want to get closer to family and with just skiffs of snow, not feet. I looked very hard in 2012 but didn't find anything comparable for a good price. Again in 2014. The new state has great weather but it can get hot in summer. I do not like hot weather. I want to wind up in this state and making plans for it. But for now, I want to keep my cool summers handy and close and my winters aren't that bad either. I am in Alaska now planning for Washington State. Their home prices are comparable to ours. It's crazy! and I want east of the Cascades. Should be less expensive than Anchorage but it really isn't. One gets a little more there but very close. I understand sellers made interest payments all those years. If they can't get their money back, they were just renters. With all this said.... I really am not ready to leave as yet. Would be nice to have a second home and go back and forth but we have to roll with the punches. If I could get a great buy down that way, I would cash out one or the other accts and go for it. But hasn't happened yet. I don't really need a second big home but it's something to strive for, a goal. I know I will never duplicate what I have here but will sure give it a try! It's more important to me to not have payments and pay cash as I go. I just want to make sure I want to be down that way year round before I pull the trigger on Alaska. I worked way to hard, through the years, to move and then not like it. Going to make a trip in the fall again, looking. Thanks!
Post Thu Jan 21, 2016 4:42 am
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oldguy
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quote:
I am in Alaska now planning for Washington State. Their home prices are comparable to ours. It's crazy! and I want east of the Cascades. Should be less expensive than Anchorage but it really isn't.


WA politics has moved Far Left in the 25 years that you've been in Anchorage - expensive houses, high taxes, $15/hr min-wages at McDonalds. Over-regulation on Businesses (ask Boeing), many have left the state. But not as bad on the other side of the mountains - Yakima, etc.

Have you looked at Haines? Way warmer than Anchorage - and not much snow, they are protected by the Inlet. And much closer to the Lower-48 by road. About 1600 miles, Haines to Seattle, via Skagway.

quote:
It's more important to me to not have payments and pay cash as I go.


I would do the opposite - I would retain your cash/stocks and get a 30-yr-fixed rate mortgage. (US mortgages give you cheapest money in the world, the average guy can get the use of capital, guaranteed for 30 yrs, for only about 4%). That way you keep full use of your own money safe in the bank. As for "having payments", that's what all of the money in the bank is for, set up auto payments. By keeping your own money, you don't have to prepay taxes, you can wait until you are 70.5 and just sell a little each year (keeps you in a low bracket). If you cash out enough to buy a house at age >59.5, you'll pay >28% to the IRS, eg, a $200k house would cost over $275k ($75k to the IRS).
Post Thu Jan 21, 2016 3:49 pm
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raemart
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I will be in the Lewis and Clark Valley on the WA side of the river. Quite conservative and they don't put up with a lot of Western WA's politics and BS. Spokane and eastern WA sail their own ship. They have the temperament of nothern Idaho, bullets, beans and brawn.(Huge, huge law enforcement retirement on the Idaho side). Spokane is considered 'Little Anchorage'. My family is all from that area. WA does not have an income tax and no sales tax on food, RX or personal services(haircuts, etc. last time I checked) . My area has combined tax; state, city or county of about 7.5% on anything else but above.<<Should be doable with a rental. Oil has dropped and Alaska is considering an income tax and sales tax. It's a pretty for sure thing. They will take the earnings of the AKPFD and use that, as well, to balance the budget. Cutting the PFD pay-out too. Some say $300 per year, if that.<<Simple pocket change. PFD is a 'rainy day' fund(think *Norway, although they got the idea from us) and balancing the state budget is what it should be used for. They can never touch the PFD corpus and that will always be there. The AK taxes are estimated for about 2017. My plans are to buy in WA and become a resident there and go back and forth between the two(2) homes, at least for a couple of years. So I am leaving conservative and going to conservative. Suits me just fine. Our beautiful America may need bullets, beans and brawn one day...

I haven't given up on taking a loan but going to use my savings for a huge down payment. And I know taking a low interest loan is the better deal and leaving my market money in place. I can buy a fixer-upper for what cash I have and will save(I always want a project!) But, more so, may decide to go turn-key and a small loan.

*Norway started their PFD after Alaska. Their's is much more flush than AK because they drill for their own natural resources. We had/have the oil companies extract our natural resources for us.
Post Thu Jan 21, 2016 11:12 pm
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raemart
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I haven't moved any investments so far. After really studying my portfolio, I can't see much to move. I really can't find the down side to my buys. I am heavy into low cost ETF fund(s) and they have really done well for me. Really like the structure of an ETF fund! My first ETF buy into my retirement acct. was $100,000. That will be the first to go if I re-balance. My mutual funds are smaller buys and, if I do any moves and changes, will let these do my re-balancing. Going to let everything ride for the time being. The more I look at bond funds, the more I would rather be in cash. Bonds are not the best place to be in a good market and just so, so in the bad times. I don't want or need the income they throw off in the bad times. I see the market has rallied! Glad I haven't moved anything. Even more glad that I was able to talk it out and thanks to oldguy for his posts. Going to stay put as long as my gains carry me. Thanks for this forum and to oldguy! Go, go market!

I forgot to add earlier too that property taxes are going up to in Anchorage, again. We have had no income tax or sales tax in Anchorage for 35 years+ but we do have very high property tax. The property tax in WA state is somewhat less=PLUS! BTW, I have been in Alaska steady now for 40 years come this spring. You can not beat our cool summers! Still courting the thought of a loan. Thanks to all!
Post Fri Jan 22, 2016 7:07 pm
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raemart
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Update: I moved my IRA Retirement ETF's(75% IRA portfolio) to cash early mid-day on Tuesday, Jan. 26th, 2016. The market was up on Tuesday and got some gains back. I was reading around earlier in the day and came across an article talking about 'don't be greedy' and to take one's gains and be happy with it . The read struck me and caused me pause. I know I will probably never get the price from early 2013 again but it felt good to go to safety with this. The IRA won't generate any taxes as long as it's not realized. I know, I will miss future gains but will save my principle money plus a some gains, now. I can always get back in at some point just as I did in 2013. I think(know) this year will be a tumultuous market. I left all my short money in the market and my IRA mutual funds in place. The market really took a hit today, Jan 27th, 2016 and I look for more of the same this year. I just do not think it's going to be a good year. Going to stay in cash with this part of portfolio until everything settles down by year's end. I have left my personal brokerage account in the original buys so those are hanging out there for the hits. Hoping we have good times but I just don't see it happening this year. If I had made these buys years and years ago, I would have left everything in place and rode it out. But with only a few years in from 2013, my buys don't have the time or grade to carry it for the very worst of times we may have. Just to let you know, I did buckle. But think I made a good choice on the move to cash. Not for everyone but probably best for me. Still pretty sure I will take a loan when time comes and leave my accts alone. Thank you for all your especially good help here! You guys rock!

It shows Thursday, Jan 28th but today is Wed., the 27th. I posted this a little after 12 noon today, Wed. My times and dates show correct on computer. This is a U.S. forum, correct?
Post Wed Jan 27, 2016 9:29 pm
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raemart
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Thanks to oldguy for all his posts on this. I did go to safety in my IRA, at the end of January, 2016, and put all my long buys into a laddered CD, a few days later, to cover about 9-months. This time frame will get past this possibly turbulent election year safely with some gains, smaller but still some gains at the end. I left all my IRA short buys in place and will let them ride the market. I didn't bother my personal brokerage account at all and left everything there in place since my inception. This allocation works better for me at this time. Hoping we have a very, very good year in 2016! Thanks for all your help here.
Post Tue Apr 12, 2016 11:17 pm
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