If your friend lump sums right now, they will be about break even, depending on when they got out. I had thought about getting out because it did seem obvious to me that the market was going down due to uncertainty, and in this case I would have timed it about right. My son asked if I had gotten out the other day so we did the calculation to see how it works have worked out (I stayed in), and it would have saved me 7%, since I wouldn't have timed it perfectly, but as long as you get back in before the market returns to the number that you got out at, you win. I think the "never get out folks" don't realize that you don't have to time the market perfectly. But I would agree in general that you don't usually know what the market is going to do (and I don't know what is going to happen in the coming months if the tariffs "unpause", etc.
I don't know if it works for individuals, though I would assume it would. When I received scholarships from organizations that wanted to write a check directly to the college, I had them include a statement that said, "by accepting this money we agree to not reduce the aid to the student" My college endorsed the check without blinking and my aid was not reduced a penny. For any scholarships I received that did not include that statement, we got a letter the following month stating, "we noticed some changes and recalculated your aid", coincidentally, reducing my aid by exactly the same amount as the scholarship. I have had trouble with some organizations not understanding why writing that extra sentence is the difference between a $0 scholarship and actually making a difference to the student they are trying to support.
Yes. Some number of years ago there was a large number of fraudulent claims and that solidified my plan of always owing $1k or so (or more on those happy years where my income is significantly higher than the previous so just aim to prepay 100% of last year's amount). With how many people blow their "refund" badly, I've wondered if people would spend it better if it wasn't taken out all year long, though I don't recommend bad savers to owe too much, since they might already spend it before April comes around. But it is always mystifying to me how many people don't understand tax brackets and refunds.
I have had the IRS make errors (in both directions), but at least they paid interest when they made a mistake. (Though I haven't had them take as long as your example, and I didn't have to do much other than a letter and a phone call, etc. I think they've taken 6 months at the longest to resolve their mistakes)
Doesn't this idea of selling off the losers mean that you are selling when they are low, rather than selling the winners that might be at a high point? I'm not in a place where I'm looking to sell off myself but it seems like it would be a better strategy to sell high rather than selling low.
Exactly right. I'm not sure why we are subsidizing anyone who thinks they need $100k deduction on their income. I think we should lower the caps on other deductions and credits as well. Though it isn't popular (and would hurt me) I don't think the child tax credit should only be phased out at $400k. Phaseouts of various subsidies should start at $100k. Not doing so only widens the gap between the wealthy and the poor. And though, as readers of the HD, like saving money more than the average person we also can afford more than the average person, so it wouldn't have that much of an effect compared to where money could be spent elsewhere. That said, I don't really think the government is all that good at spending any money, so I'm happy putting money in my pocket for now, but it isn't a good system.
Frozen orange juice is a mystery to me. I grew up on it as well, but I married a Florida girl, who does condescend to drink the not-fresh boxed juice, so I got used to that and now the frozen concentrate is gross to me. I know some products have changed their recipes (or been bred - "red delicious" apples are different than the apples I grew up with - they have a longer shelf life but worse taste) so I've wondered if my tastes have changed or the juice...
It seems reasonable to me. The little things do add up so as long as it isn't "costing" you mental health to go to Costco's (I enjoy shopping and it is fun to have the cashier do a double take when they announce the price) then I think it is a good thing to save the $2.50 to be able to spend it on something you find more valuable.
For RET, it seems like the example you linked to proves the opposite? That you'll only break even if you live to 85 and that doesn't take into consideration all those hours working in the early years? I'm not planning to work after I start taking SS at FRA so it won't matter for me, and we aren't really planning on it, but I don't expect my wife to work after taking SS at 62. My assumption is that if she did have a reduction on in her own SS due to working is that it wouldn't get replaced when she starts taking the spousal benefit?
Comments
If your friend lump sums right now, they will be about break even, depending on when they got out. I had thought about getting out because it did seem obvious to me that the market was going down due to uncertainty, and in this case I would have timed it about right. My son asked if I had gotten out the other day so we did the calculation to see how it works have worked out (I stayed in), and it would have saved me 7%, since I wouldn't have timed it perfectly, but as long as you get back in before the market returns to the number that you got out at, you win. I think the "never get out folks" don't realize that you don't have to time the market perfectly. But I would agree in general that you don't usually know what the market is going to do (and I don't know what is going to happen in the coming months if the tariffs "unpause", etc.
Post: Getting Back into the Market Now
Link to comment from May 24, 2025
I don't know if it works for individuals, though I would assume it would. When I received scholarships from organizations that wanted to write a check directly to the college, I had them include a statement that said, "by accepting this money we agree to not reduce the aid to the student" My college endorsed the check without blinking and my aid was not reduced a penny. For any scholarships I received that did not include that statement, we got a letter the following month stating, "we noticed some changes and recalculated your aid", coincidentally, reducing my aid by exactly the same amount as the scholarship. I have had trouble with some organizations not understanding why writing that extra sentence is the difference between a $0 scholarship and actually making a difference to the student they are trying to support.
Post: Gifting Confusion
Link to comment from May 18, 2025
Yes. Some number of years ago there was a large number of fraudulent claims and that solidified my plan of always owing $1k or so (or more on those happy years where my income is significantly higher than the previous so just aim to prepay 100% of last year's amount). With how many people blow their "refund" badly, I've wondered if people would spend it better if it wasn't taken out all year long, though I don't recommend bad savers to owe too much, since they might already spend it before April comes around. But it is always mystifying to me how many people don't understand tax brackets and refunds.
Post: Easy Does It
Link to comment from February 23, 2025
I have had the IRS make errors (in both directions), but at least they paid interest when they made a mistake. (Though I haven't had them take as long as your example, and I didn't have to do much other than a letter and a phone call, etc. I think they've taken 6 months at the longest to resolve their mistakes)
Post: Easy Does It
Link to comment from February 23, 2025
Doesn't this idea of selling off the losers mean that you are selling when they are low, rather than selling the winners that might be at a high point? I'm not in a place where I'm looking to sell off myself but it seems like it would be a better strategy to sell high rather than selling low.
Post: One Stock at a Time
Link to comment from February 23, 2025
My father-in-law has a percentage tier system for funding my kids' Roth's accounts.
The younger kids don't realize the value, but my older ones have read enough books to realize the value of time/compounding.Post: Getting Going
Link to comment from February 1, 2025
Exactly right. I'm not sure why we are subsidizing anyone who thinks they need $100k deduction on their income. I think we should lower the caps on other deductions and credits as well. Though it isn't popular (and would hurt me) I don't think the child tax credit should only be phased out at $400k. Phaseouts of various subsidies should start at $100k. Not doing so only widens the gap between the wealthy and the poor. And though, as readers of the HD, like saving money more than the average person we also can afford more than the average person, so it wouldn't have that much of an effect compared to where money could be spent elsewhere. That said, I don't really think the government is all that good at spending any money, so I'm happy putting money in my pocket for now, but it isn't a good system.
Post: Whither Taxes?
Link to comment from February 1, 2025
Frozen orange juice is a mystery to me. I grew up on it as well, but I married a Florida girl, who does condescend to drink the not-fresh boxed juice, so I got used to that and now the frozen concentrate is gross to me. I know some products have changed their recipes (or been bred - "red delicious" apples are different than the apples I grew up with - they have a longer shelf life but worse taste) so I've wondered if my tastes have changed or the juice...
Post: Mind Over Money
Link to comment from February 1, 2025
It seems reasonable to me. The little things do add up so as long as it isn't "costing" you mental health to go to Costco's (I enjoy shopping and it is fun to have the cashier do a double take when they announce the price) then I think it is a good thing to save the $2.50 to be able to spend it on something you find more valuable.
Post: Mind Over Money
Link to comment from February 1, 2025
For RET, it seems like the example you linked to proves the opposite? That you'll only break even if you live to 85 and that doesn't take into consideration all those hours working in the early years? I'm not planning to work after I start taking SS at FRA so it won't matter for me, and we aren't really planning on it, but I don't expect my wife to work after taking SS at 62. My assumption is that if she did have a reduction on in her own SS due to working is that it wouldn't get replaced when she starts taking the spousal benefit?
Post: Reality Check
Link to comment from January 25, 2025