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Ask HN: What is your financial “setup”?

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Re: Ask HN: What is your financial “setup”?

#131

Post by perl4ever »

sneak wrote: post #29
Hackbraten wrote: post #22

Earlier quoted context omitted.

How do you feel paying in cash helps compared to cards? I honestly don’t get it. For me, withdrawing and paying cash simply adds unnecessary complexity, and on top of that, it destroys any paper trail you may need for tracking your individual budgets. How come people (mostly in Germany, from my experience) are so obsessed with cash?

This could easily be rephrased as “How come people are so obsessed with using payment systems with real-time warrantless government surveillance for all purchases?” I honestly don’t get it. Why would you pay a percent or two to be surveilled? It creates a time stamped track log, too, which can be easily cross-referenced with (also surveilled) cellphone position. https://www.wired.com/2010/12/realtime/

Pay a percent or two? Well, there's your problem. I'm paid 2 percent "to be surveilled". Plus, it just seems nice to have over a month to pay for stuff I buy.

Re: Ask HN: What is your financial “setup”?

#132

Post by perl4ever »

alexmingoia wrote: post #72
dmerrick wrote: post #70

Earlier quoted context omitted.

I was with you until you mentioned you don't use IRAs. Tax advantage is important!

I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty. An IRA is not necessarily tax advantageous because gains are taxed as income when withdrawn, which is higher than capital gains. The choice to use IRAs is not straightforward. It's also hard to plan for any of this because tax rates can and do change. Capital gains and income tax rates may change, so I generally prefer to pay taxe…

"I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty."

I'm not a registered tax advisor, so this is not tax advice, but my impression is that you can take money out of a Roth IRA whenever you want, as long as you don't take more than you put in; the profits/returns are tax advantaged, but the original money is after-tax.

The reason why people will argue this is a bad thing to do is because you can only put so much money in per year, like $6,000 currently, and if you take money out, that doesn't add to the contribution limit.

Re: Ask HN: What is your financial “setup”?

#133

Post by PMalhotra »

A financial setup is very hard. You do not get the capital easily and you have to go through a long legal procedure for the setup and incorporation of the company. There are many laws which you must know before investing and which is necessary to know for further working. If you are establishing a Pvt Ltd company, then you can visit the link https://www.taxolawgy.com/pvt-ltd-company-registration/ for the best possible information and capital gains.

Re: Ask HN: What is your financial “setup”?

#134

Post by hootbootscoot »

sokoloff wrote: post #76
thatfrenchguy wrote: post #34

Earlier quoted context omitted.

I've automated everything except paying bills and credit card payement: I like feeling that money going away.

I automated specifically after getting a few stupid late fees in my 20s. At this point, if it’s not automated, I’m at least 25% likely to be late. Fortunately, there are only a handful of small bills that I have that aren’t automated. They’re annoying.

I noticed a 15 euro charge to "Jet Multimedia" on my internet bill one month, and made a point to not direct-debit anything due to the simple fact that a leachy parasite game co. (I've never played a game in my life) was able to latch onto my internet bill somehow.

Allegedly I signed up for this, but they could neither produce my signature, nor could they explain the mechanism by which they are allowed to agglommerate onto my internet bill, and a quick call to the ISP removed this surcharge, but wisened me up to how utterly cheap and tawdry an ISP could be.

Direct Debit had best be reserved for actually trusted actors.

Re: Ask HN: What is your financial “setup”?

#135

Post by enhdless »

jonahbenton wrote: post #104

Speaking as someone who works/consults in the financial sector, I'm afraid you really...should convince yourself...that you have to think about it. First, the penalty for the strategy of "not-thinking" just on a tactical level isn't 1-2%, more like a minimum of 10%, and a maximum of 100% or more when you take into consideration accumulation over time. Second, from a "strategic" perspective, "not-thinking" leads to "n…

Do you have any pointers on how to start thinking about all this? How should one get started?

Re: Ask HN: What is your financial “setup”?

#136

Post by alexmingoia »

newnewpdro wrote: post #125
alexmingoia wrote: post #123

Earlier quoted context omitted.

Tax deferring doesn’t necessarily equate to reduced taxes. IRAs just mean paying taxes later, at an unknown rate. All income from IRAs are taxed, principle and gains. A traditional IRA has gains taxed as income, which is higher then long-term capital gains on ETFs. Assuming tax rates don’t change, a traditional IRA will cost more taxes if the withdrawal and contribution taxable income is over roughly 40k, correct me…

Aren't you ignoring the advantage of being able to invest the money you would have paid in taxes for the entire time you've left it all in the tax-deferred account? I don't get why you're assuming you'll have to withdraw the money prematurely and incur the penalty. That's a rather pessimistic attitude, and it's not like you'd be putting all of your investment funds down this path.

You have to withdraw at some point (after age 59-1/2 unless the law changes), and you’ll pay income taxes on principle and gains then. Taxes on principle will be paid either way. If you give to your children, they will pay taxes on the principle + inheritance tax.

The idea with tax deferral was that when you retire, your fixed withdrawal income will have a lower income tax rate than when you contributed, but as capital gains and income tax are now, that isn’t necessarily true depending on your contribution and withdrawal income.

Roth IRA was then created as a response to the well founded concern that income taxes will rise negating any tax advantage to deferral, but Roth wasn’t able to pass the legislation without severe compromises like contribution limits, and gains taxes as income on withdrawal.

Re: Ask HN: What is your financial “setup”?

#137

Post by alexmingoia »

farisjarrah wrote: post #124
alexmingoia wrote: post #123

Earlier quoted context omitted.

Tax deferring doesn’t necessarily equate to reduced taxes. IRAs just mean paying taxes later, at an unknown rate. All income from IRAs are taxed, principle and gains. A traditional IRA has gains taxed as income, which is higher then long-term capital gains on ETFs. Assuming tax rates don’t change, a traditional IRA will cost more taxes if the withdrawal and contribution taxable income is over roughly 40k, correct me…

You can also do a Roth IRA which allows you to pay tax on it now.

Sure, and IIRC like a traditional IRA gains are taxed as income. So there’s not necessarily any tax benefit versus a traditional savings account invested in ETFs, depending on withdrawal and contribution incomes.

Re: Ask HN: What is your financial “setup”?

#138

Post by newnewpdro »

alexmingoia wrote: post #136
newnewpdro wrote: post #125

Earlier quoted context omitted.

Aren't you ignoring the advantage of being able to invest the money you would have paid in taxes for the entire time you've left it all in the tax-deferred account? I don't get why you're assuming you'll have to withdraw the money prematurely and incur the penalty. That's a rather pessimistic attitude, and it's not like you'd be putting all of your investment funds down this path.

You have to withdraw at some point (after age 59-1/2 unless the law changes), and you’ll pay income taxes on principle and gains then. Taxes on principle will be paid either way. If you give to your children, they will pay taxes on the principle + inheritance tax. The idea with tax deferral was that when you retire, your fixed withdrawal income will have a lower income tax rate than when you contributed, but as capit…

You pay tax on it eventually, like you said with the lower tax rate when your income will be presumably lower.

But in the mean time, which can be a very long time, you're free to invest those deferred tax dollars. That can add up to a significant amount, over a large number of years.

It's not something to trivially dismiss.

Re: Ask HN: What is your financial “setup”?

#139

Post by alexmingoia »

perl4ever wrote: post #132
alexmingoia wrote: post #72

Earlier quoted context omitted.

I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty. An IRA is not necessarily tax advantageous because gains are taxed as income when withdrawn, which is higher than capital gains. The choice to use IRAs is not straightforward. It's also hard to plan for any of this because tax rates can and do change. Capital gains and income tax rates may change, so I generally prefer to pay taxe…

"I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty." I'm not a registered tax advisor, so this is not tax advice, but my impression is that you can take money out of a Roth IRA whenever you want, as long as you don't take more than you put in; the profits/returns are tax advantaged, but the original money is after-tax. The reason why people will argue this is a bad thing to do is…

In my mind Roth IRAs will only be advantageous if income tax rates are higher in the future. But that’s true of money kept in savings as well, since it’s already taxed. And Roth IRA gains IIRC are taxed as income at withdrawal, which is higher than capital gains right now. I might be wrong about that though.

I don’t see how a Roth IRA is really any different than keeping money in a traditional savings account, besides the withdrawal rules.

Re: Ask HN: What is your financial “setup”?

#140

Post by [deleted] »

newnewpdro wrote: post #138
alexmingoia wrote: post #136

Earlier quoted context omitted.

You have to withdraw at some point (after age 59-1/2 unless the law changes), and you’ll pay income taxes on principle and gains then. Taxes on principle will be paid either way. If you give to your children, they will pay taxes on the principle + inheritance tax. The idea with tax deferral was that when you retire, your fixed withdrawal income will have a lower income tax rate than when you contributed, but as capit…

You pay tax on it eventually , like you said with the lower tax rate when your income will be presumably lower. But in the mean time, which can be a very long time, you're free to invest those deferred tax dollars. That can add up to a significant amount, over a large number of years. It's not something to trivially dismiss.

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