On An Interview With a Wealthy Retiree About His Taxes

@madrassoup Honestly, you should really just know that long-term capital gains are taxed at a lower amount and that deductions lower your taxable income. If you know that income tax should be ~33% of total income, I'm very surprised that you don't also know that long term capital gains is like 15-20%. Re: ethics of low investment tax rates, it's worth keeping in mind that this invested money was already taxed once, as income. Then it got invested instead of being consumed (or foolishly stowed under a mattress for 20 years I guess). Since investment fuels future growth, it's not necessarily desirable to strongly tax investment gains (discouraging investment), and since the investor has already paid tax on the income, the investor shouldn't necessarily feel guilty about his good investment. Now, there are of course some distributional issues here, but capital gains is probably not as efficient a solution for these as, for example, estate taxes, which are really low and treat inherited assets in a strange and low-tax way.

Posted on March 24, 2015 at 12:45 pm 3

On The One-way Gift

Yeah, dude, adults do this. For one, you have received enough mediocre birthday presents by now to understand that really great gifts are really rare. So if you find something for someone that is totally perfect, why wait until their birthday? You might forget, waffle, or whatever. And then also you shouldn't feel as much pressure to give a mediocre present or gift card at the official times.

Posted on March 3, 2015 at 12:14 pm 1

On A List of Costs Associated With Buying Our Home

For what it's worth, given the alternative of websites like Redfin, you are effectively paying the realtor even if as a buyer you are not directly charged commission. I believe that Redfin acts as the buying agent and gets the standard 3% cut of the 6% commission, rebating you a 1.5% share. (selling agent obviously gets other 3%, and if you don't have a selling agent, they usually take all 6%. messed up, man.)

Posted on February 27, 2015 at 11:58 am 0

On How an Entry-level Investment Banker Does Money

@ronswansonluva Oops, my bad.

Posted on February 20, 2015 at 3:19 pm 0

On How an Entry-level Investment Banker Does Money

@thisisatest I thought the max was like $20k. He could be doing that pretty easily, and the $4k/month take-home figure seems to imply that he is.

Posted on February 20, 2015 at 1:56 pm 1

On How an Entry-level Investment Banker Does Money

@thisisatest Agree that $4k/month take-home sounds too low for $120k per year, even net of insurance, etc (single young person so probably quite cheap) and 15% 401k contributions.

Posted on February 20, 2015 at 1:50 pm 0

On How an Entry-level Investment Banker Does Money

Turning down a risk-free 7% return (what he would get by paying down his student debt) is pretty confident. Getting a 9-12% return consistently on his 401k is too impressive to last forever, or else he is already set for life since that is a golden goose skill. Also worth mentioning that it sounds like he is more than maxing out his 401k, and this excess isn't getting the special tax treatment, so at least consider shifting these savings to debt. Even if the above wasn't persuasive (ie, he feels he can significantly outperform 7% investing or really wants liquidity for a house), now that he has a good job, he should definitely be able to shift his student debt into a more attractive loan, as 7% is really a pretty high interest rate these days, especially given the special nature of student debt (doesn't go away in bankruptcy).

Posted on February 20, 2015 at 1:40 pm 0

On Retirement Leakage

@aetataureate This sounds very unusual to me and is definitely not normal.

Posted on February 12, 2015 at 1:48 pm 0

On Retirement Leakage

@aetataureate It's shocking that you are seeing these! Banks like to manage your money; they make money by charging a fee (hopefully you have chosen a retirement account with a low fee). Not only should you be able to find a bank with no rollover fee, you should be able to find a bank that will pay you to give them your money!

Posted on February 12, 2015 at 11:17 am 0

On We Literally Cannot All Be Middle-Class

I think that this article misses why a lot of the "affluent" do not feel rich: although they have money to have relatively nice things and do not have to consider budgets a factor when fulfilling basic needs, they have basically no prospect of retiring while they are still in the prime of their life. Sometimes the very affluent are criticized for wanting to live in a good school district or make a significant contribution to college. Imagine, however, that an affluent family decided to make no contribution to their child's education for "selfish" reasons like saving in order to retire very early. Is this not something that we would criticize even more strongly?

Posted on February 3, 2015 at 9:15 am 0