OT: What to do with my money? Stocks, IRA's, Fish tanks?

[Kinetic]

my 2006 taxes wooped my butt, just because I went over $5 into another tax bracket. I'm a total newb when it comes to money.

I basically stick all my money into my hobbies and an ING saving's account =P What hurt me was all the interest in my saving's getting taxed.

Now the growth in my savings wasn't really even worth it, especially after tax. I see that ING has a CD option for certain times, with rates around 5%.

But that's still taxed, and growth isn't that fantastic. The money I'm thinking of tossing around I won't need anytime soon, but sooner than retirement =) Like for a house, or 1000 gallon tank, or that aston martin on the last James Bond movie

I know you guys are good with money, or at least some of you! Any suggestions on what to do short term and perhaps long term? I know it's such a general question, but not sure where to start.

I've read a few things about investing in companies through stocks, and I'm going through a book right now... but whilst that's happening just looking for suggestions.

Thanks!

 

[Apon]

To get back into a lower tax brackect open a Roth IRA or do you have a 401k?

 

[Kinetic]

<a href=showthread.php?s=&postid=10082621#post10082621 target=_blank>Originally posted</a> by Apon
To get back into a lower tax brackect open a Roth IRA or do you have a 401k?

I have a 401K. Currently I'm putting in the minimum for company matching. I'm thinking of putting the rest of it somewhere else where it will grow more? I think I'm more leaning towards having my money grow than lowering my tax bracket.

 

[Unarce]

Since you have little experience with finance, you may want to look into buying into some Mutual Funds. The buy-in minimum is usually pretty low (even 3 digits).

A fund manager takes care of the Portfolio, spread out in different stocks, bonds, and treasuries.

Since you're still young, you could look into something perhaps in emerging markets.

 

[Mr. Ugly]

Put it all into Aussie Acans









j/k!

 

[Vincerama2]

NOTE: Tax rates are marginal. If you popped into the next tax bracket by $5, only that $5 is taxed at a higher rate.

For example, say the tax brackets are;

$0-9,999 = 10%
$10,000-20,000 = 15%

If you made $10,005 in income, then you'd pay

10% of $10,000 plus 15% of $5. you are NOT paying 15% on $10,005 dollars because you got "bumped into the next tax bracket".

Someone correct me if I'm wrong.

I agree that mutual funds are great for non-stock savvy people. The Vangaurd S&P 500 is good if you want to sorta play the stock market trend. it's basically a no-brainer fund where the "manager" simply buys shares of every company that's represented in the S&P 500 instead of choosing from a particular group of stocks. When the S&P companies do well (as seen in the S&P index) that's an indicator that your S&P index fund did well.

Most of my money is tied up in my house (bad), an ING savings account, some loser stocks, some old Canadian mutual funds. A lot of it is just wasting away waiting for some emergency (it's better off in an ING savings account, which is quite liquid) but I'm lazy and stupid.

V

 

[Kinetic]

<a href=showthread.php?s=&postid=10082712#post10082712 target=_blank>Originally posted</a> by Unarce
Since you have little experience with finance, you may want to look into buying into some Mutual Funds. The buy-in minimum is usually pretty low (even 3 digits).

A fund manager takes care of the Portfolio, spread out in different stocks, bonds, and treasuries.

Since you're still young, you could look into something perhaps in emerging markets.

emerging markets? something like the cleantech stuff that's popping up recently?

( http://www.nanosolar.com/pr5.htm )

 

[Mr. Ugly]

Heh... the next BAR meeting should be on financial planning

It's still reef related if you use the money to buy equipment and corals

 

[dmirza]

IMHO, I think that the market and real estate are way over inflated right now. I am keeping my money in CD's. When the housing market crashes lenders that have been burned by foreclosure will require a large cash downpayment to qualify people for a loan. Hold on to your cash. If you want to invest wait for the market to go down.

P.S. puting money in an IRA will bring your tax bracket down, a ROTH IRA is contributed to with after tax dollars.

 

[sid700]

Meet with a trusted Financial Planner.

edit: To lower your taxes for next year, maximize your IRA now.

 

[dmirza]

"trusted Financial Planner," isn't that an oxymoron .

If you insist on investing in the stock market just put your money in an S&P 500 index fund like Spider (ticker symbol spy). Since it has 500 companies it is diversified. Also since most of the companies in the S&P do business over seas, you will have exposure to foreign markets without taking on the huge risk of investing in emerging markets

 

[ianiwane]

<a href=showthread.php?s=&postid=10082763#post10082763 target=_blank>Originally posted</a> by Vincerama2
NOTE: Tax rates are marginal. If you popped into the next tax bracket by $5, only that $5 is taxed at a higher rate.

For example, say the tax brackets are;

$0-9,999 = 10%
$10,000-20,000 = 15%

If you made $10,005 in income, then you'd pay

10% of $10,000 plus 15% of $5. you are NOT paying 15% on $10,005 dollars because you got "bumped into the next tax bracket".

Someone correct me if I'm wrong.

I agree that mutual funds are great for non-stock savvy people. The Vangaurd S&P 500 is good if you want to sorta play the stock market trend. it's basically a no-brainer fund where the "manager" simply buys shares of every company that's represented in the S&P 500 instead of choosing from a particular group of stocks. When the S&P companies do well (as seen in the S&P index) that's an indicator that your S&P index fund did well.

Most of my money is tied up in my house (bad), an ING savings account, some loser stocks, some old Canadian mutual funds. A lot of it is just wasting away waiting for some emergency (it's better off in an ING savings account, which is quite liquid) but I'm lazy and stupid.

V

That is right. People normally get the wrong idea that making more money and getting into a higher tax bracket is bad. But like you said you only get taxed on the higher percentage for the amount in the higer tax bracket. Tax is incremental.

 

[ianiwane]

<a href=showthread.php?s=&postid=10082745#post10082745 target=_blank>Originally posted</a> by Mr. Ugly
Put it all into Aussie Acans









j/k!

I'm with you on that one lol.

 

[Kinetic]

thanks for all the info so far, I can see funding my 20,000 gallon tank already =)

How do you know the market's inflated? Because it's been going up so much? How do I know if it's going to come back down to some more stable point, rather than setting a new level? I'm pretty much swimming in all sorts of technology based information given my career, and I do know a few companies have definitely "inflated" but seem that they may stay that way. Just curious of how you figure these things out rather than just like me sitting here looking at the news and seeing the share prices hold pretty nicely.

Again I guess this is only based on a year or so of watching those few companies =/

Maybe I can also look for a financial planner for some tips =/ but isn't that what the BAR forum is for? hehe

 

[gillies]

Tough time to get in right now: Real estate - high, stocks -high, gold - high, simple savings - cheap. Cash isn't worth the paper it's printed on. Zero percent financing kills anyone with a stuffed mattress.

Tax deferred helps if you live that long. Get in a bind early and watch forty percent disappear upon withdrawl.

Investments are based on perceived value. Most are a type of pyramid scheme with some intrinsic value attached so they are legal.

The Baby Boom generation is at their peak, when it comes to earnings and savings. They are all thinking about retirement very soon. Some are retiring now, but most are just around the corner, so they invest and their perceived value goes up. Others join in the game and add to the frenzy. On paper, they are all getting rich.

What happens when they all do retire and draw from those accounts? What happens when the base of the pyramid drops out?

Small business - good but risky
Land - good if you can hang on long enough
Gold - like land but not as exciting
Stocks - diversify and wait for your 10%
Cash - does nothing until that one big break comes along - then you either have it or you don't

Watch for a "John Gault" with some brilliant energy idea. That person is going to make Bill Gates look like a pauper.

 

[hyacinth]

Yes, a marginal tax rate means this is the rate at which your next dollar earned will be taxed. So it’s not retroactive to the dollars you already earned, and you can never make less money after getting a raise.

For example, if you were single and had $30,000 of taxable income, and got a $1,000 raise later to $31,000, your entire $31,000 will not be taxed at the 25% rate (a big jump from 15%!). Only the $350 above $30,650 would be taxed at the 25% rate. Your total taxes would then be:

10% x $7,550= $755 +
15% x ($30,650-$7,550) = $3,465
25% x ($31,000-$30,650) = $87.50
â€"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"Ã¢â‚¬"-
Total $4,307.50

So, if we again take the super-simple case of you being single and taking the standard deduction only, your post-raise gross income would have been $31,000 + $5,150 = $36,150. Paying $4,307.50 of tax on $31,650 of gross income is actually an overall or effective tax rate of only 11.9%.

That being said, maximizing 401k (15,500 max contribution for 2007), roth IRA and deductible mortgage interest are good ways to lower taxable income.

 

[ianiwane]

If people could really "predict" the market everyone would be rich. Watch some CNBC lots of "experts" have varying opinions on the same subjects. Remember one thing, if you want safety diversify (right now I am young so I am more into sticking all my eggs into one basket, lol). Mutual funds are probably the easiest way to do that. Also don't get too caught up in the daily fluctuations of the stock market. Invest your money in a good place and remember a gain is not a gain, a loss is not a loss until you sell.

 

[sfsuphysics]

Yeah, if taxes kicked your hind quarters this year it simply means they didn't take enough out, now whether you have the money now or later you might want to change the number of allowances/dependants so they will take more taxes out so you're not surprised in mid April.

As far as savings going, I wouldn't go for CDs simply because that money is locked in for that set period of time, and if you need the money in an emergency you'll pretty much lose money with the early withdraw penalties. Now in a money market account you'll gain a little bit lower than a CD, something like 4.7% as opposed to 5% but it allows for you to withdraw a set number of times so in the emergency situation.

If you a bit more on your return do like Karl said and look into mutual funds, go to some place charlesschwab.com to see everything there, you can go as risky or safe as you want, however it still is is a risk since you could lose money, I wouldn't do anything way out there on the fringe even for large return possibilities unless you know something that's going to happen. But it can be a bit less scary than outright playing the stock market.

 

[mpoletti]

<a href=showthread.php?s=&postid=10082640#post10082640 target=_blank>Originally posted</a> by Kinetic
I have a 401K. Currently I'm putting in the minimum for company matching. I'm thinking of putting the rest of it somewhere else where it will grow more? I think I'm more leaning towards having my money grow than lowering my tax bracket.

First of all, I personally would maximize your pretax dollars. FYI, I did get almost 11% return last year on my 401. Not the best piece of my portfolio, but not too bad.

 

[mcurl98]

without a doubt, max your 401k. You'll be real happy when you can retire early and do whatever you want without worrying. That may be a long ways off for you but the earlier you start, the earlier you can walk away.