Afford Anything

Tag: investing in the market

By Paula Pant

#328: Ask Paula: I’m on the Verge of Retirement and My Taxes are Rising … Help!

Sarah O Sahara’s parents sold their rentals and business of 24 years. They’d like to create a trust for their grandkids with boundaries in place to avoid entitlement. How should they structure this trust?

Renee and her husband are in their 60s, and most of their retirement funds are in pre-tax accounts. They have federal tax credits they’d like to use to move these funds into taxable accounts. Is this a sound strategy?

Anonymous “Yvette” in Canada has a fully paid off condo that she wants to turn into a rental once her new townhome is ready. Should she mortgage against the condo to reduce the mortgage on her townhome? Are there any tax benefits to having a mortgage on a rental?

Luis’s wife wants to start moonlighting in her field. Can she open and contribute to a Solo 401k even though she has a TSP account with her 9-to-5 employer?

Russell and his partner want to emigrate to Canada in the near future. Should they move their investments into Canadian funds?

My friend and former financial planner Joe Saul-Sehy joins me once again to answer your questions. Enjoy!

(Have an investing, entrepreneurship, lifestyle, or decision-making question you’d like us to answer? Submit it here!)

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By Paula Pant

#322: Ask Paula – I Want to Retire at 50; How Do I Bridge the Gap?

Jess wants to reach financial independence by the time she’s 50. But she’s worried that she doesn’t have enough money in cash or taxable brokerage accounts to bridge the gap in her first few years of retirement. What moves should she make, if any?

Yisell wants to invest money now. Should she cash out her $70,000 pension in hopes to generate more than the $1,000 per month she’s guaranteed from it?

Abbey is 22 and she would like to go back to graduate school for nurse anesthesia. Should she save up and pay for it in cash, or invest her money and take out federal loans?

Eliana enjoyed our interview with Paul Merriman on the two-fund portfolio. She’s curious about what growth stocks and value stocks are, and how they fit into a passive index fund investing strategy.

Finally, Sneezy wants to know: why aren’t stocks a good hedge against inflation?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these questions on today’s episode. Enjoy!

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By Paula Pant

#320: Ask Paula – Thinking about Money from First Principles

Rob hopes to retire at age 60, but he has a pesky mortgage balance he wants to eliminate beforehand. He and his wife expect to inherit $300,000. Should they use this money to pay off their mortgage or should they bulk up their retirement accounts?

“Billy” has two questions. One is about the tax efficiencies of ETFs vs. mutual funds, while the other is about Ginny Mae funds and whether there are bond funds that have an inverse relationship with equities.

Priya is looking for information on home equity loans: where can you get the best terms, and what are the disadvantages? Additionally, she’d like to know which city is best for rental investing: Atlanta, Dallas, or Raleigh?

My friend and former financial planner, Joe Saul-Sehy, joins me on the show to answer your questions. Let’s dive in!

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By Paula Pant

#314: Ask Paula – I’m Worried About My Parent’s Retirement. What Should I Do?

Briale opened a Variable Annuity inside a 403b at work when she was 23. She has 17 years to go before retirement. As an elementary school teacher, her pension will be $6,000 per month. Should she stop contributing to the annuity and contribute to a Roth IRA instead?

Debi has an extra $1,000 each month and isn’t sure where to save it. She also has $10,000 in a CD which will reach maturity in August 2021. Her goal is to buy a residence in the next five years. Should she save this all for a downpayment?

Dominique is concerned about her parents retirement portfolio. Their advisor charges a fee of 1.5 percent assets under management. Her parents are frugal and they don’t realize how much they’re paying. Should she talk to them, or drop the issue?

Sarah isn’t sure whether she should put more of her savings towards a Roth 401k or a 529 fund for her future kids. Which option is best if she wants financial flexibility?

Hunter put a credit freeze on his two children’s credit, which required sending each credit union documentation via mail. Experian and TransUnion confirmed the credit freeze, but Equifax didn’t. Upon calling, the representative gave Hunter a different mailing address for the documents. What should he do?

My friend and former financial planner Joe Saul-Sehy joins me once again to tackle these questions. Enjoy!

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By Paula Pant

#312: Ask Paula – How Should I Invest $5,000 Per Month?

After paying basic living expenses and maxing out their 401k’s and Roth IRAs, Caroline and her partner have $4,000 – $5,000 left each month. Where should they put this money if their goal is to simply have their money work harder for them?

Sanjay is torn between selling his townhome or renting it out. The rental numbers don’t work on his 15-year mortgage — should he refinance to a 30-year mortgage instead?

“Olivia” has two unrelated questions: what are our thoughts on the housing market in relation to the moratoriums on mortgage payments and emergency bans on evictions? What will happen when they go away? Additionally, what tools, questions, or resources do we recommend to have a productive financial conversation with your partner?

Kyle wants to construct a portfolio with the highest Sharpe ratios and wants to know: would the risk parity model work? What are the downsides?

“Priyanka” wants to know: do you need to submit receipts for the HSA contributions you make?

G is curious: does the stimulus check received for their children count as earned income for the kids? If so, can they put it toward the Roth IRAs they opened for their children?

My friend and former financial planner, Joe Saul-Sehy, joins me as usual to tackle these questions. Enjoy!

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By Paula Pant

#300: The Two-Fund Investment Portfolio, with Paul Merriman

Target date retirement funds are simple, automated, easy.

The problem? What’s simple might not be optimal.

Investment expert Paul Merriman joins us to discuss the two-fund portfolio, a mix of one target date fund and one small cap value fund. He describes why this could be the ultimate portfolio for buy-and-hold investors who want to boost their returns, without excessive complexity or risk.

Here’s the idea behind a two-fund portfolio:

  • Your age x 1.5 = the percentage of your portfolio in a target date fund
  • Invest the rest in a small cap value fund

According to Merriman, this simple strategy could dramatically improve long-term aggregate returns without creating too much volatility or complexity.

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Written By Paula Pant

The FIRE Take on Wall St Bets, GameStop, and Meme Stonks

The investor community is split into two factions: FIRE vs. YOLO.

The YOLO crowd includes the people who read Reddit’s r/WallStreetBets, who chase speculative trades, who place margin trades on Robinhood.

They share stock tips on Discord and bet on whatever appears in their chat feed. Earlier this week they piled investments into Galway […]

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By Paula Pant

#297: Ask Paula – Should I Househack or Pay Off My Student Loans?

George is torn between paying down his student loan debt (which he deferred) or buying a househack. Which is better for his long-term goal of reaching financial independence?

Hanan wants to figure out if a backdoor Roth IRA conversion will work for her. She also wants to investigate whether a Vanguard Institutional 500 Index Trust and a Vanguard Institutional Total Bond Market Index Trust are ideal. Are trusts different from index funds or mutual funds and if so, how?

June and her husband netted $400,000 from the sale of some golden parachute ISOs. They want to help their children pay for college and are trying to figure out how to strategically use this money. Should they pay off their home, buy rentals, fund 529s, or Roth their 401ks?

Mario is curious to know: is his two-fund portfolio at a 90/10 split is a good asset allocation for his Roth IRA?

Vivian is worried about bridging the gap between when she retires and when she claims Social Security. Will her plan of doing a Roth conversion ladder work out the way she hopes?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these five questions. Enjoy!

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By Paula Pant

#292: Ask Paula – I’m an Investor Who Likes Volatility; What Should I Buy?

Three Kids, FI has an all-equities broad stock market index portfolio that he’s held for years. He’s confident he can handle maximum volatility, so what investments can he lean into to that will provide him with great long-term returns?

Sarah is concerned: a financial advisor told her that investing in VTSAX over-indexes her in large cap funds and technology stocks. Is this true, and what should she do about it?

Alex’s wife lost her job due to the pandemic. They live in Washington state and are married filing separately due to his wife’s student loans. Can he use half of his income to qualify her for Roth IRA contributions?

Jordan is a new listener and he has three questions: should he use $100,000 to buy more rental properties or invest in a brokerage account? Should he and his wife upgrade their home and buy a property that’s worth double their current home? And finally, how can self-employed individuals who earn more lower the cost of health insurance?

I answer these four questions on today’s episode. Enjoy!

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By Erin @ Team Afford Anything

#283: Ask Paula & Joe – Could the Stock Market Be Too Much of a Gamble?

Andrea’s parents have a seemingly salesly financial advisor. He tried to get them to purchase a second life insurance policy, among other potentially pushy moves. Are her parents better off without his advice?

Teresa can’t shake the feeling that the stock market is more of a gamble than an investment. Is there any advantage to holding funds for the long-run if the market drops and you lose your gains?

June is curious about the best college planning strategies for families who are working toward, or close to, financial independence. How can you help your children while securing your financial future?

Big Sister’s little sister rents a mobile home in an area she loves. The owner wants to sell, but her little sister might not obtain financing. Should Big Sister buy the property and sell it to her via seller financing?

Managing for Mom in Massachusetts has an investment strategy that he wants to run by us. Does it make sense to shift a 50/50 stocks and bonds portfolio to 100 percent stocks, and shift back to a 50/50 split after the market returns to pre-pandemic numbers?

My friend and former financial planner Joe Saul-Sehy joins me to answer these questions. Enjoy!

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