The Stock Market thread

[Edward64]

Just my 2 cents ...

Originally Posted by bob

OK, looking for some advice from the peanut gallery here.

Current situation:
Job is stable as far as I can tell.
Only debt is car payments - both around 3.75%.
Emergency fund of 6+ months in HYSA.
Fully fund 401k each year.

Conventional wisdom says to save at least 15+% of comp as an overarching rule. The general order of priorities are:

1) Put in as much into 401k that is matched (let's say 3%).
2) Then put into Roth IRA up to IRA max (this won't be matched)
3) If you have an HSA, put funds into it up to max (HSA is not the same as FSA)
3) Then any leftovers, remaining funds into 401k up to 401k max

(If you aren't sure you understand the value of Roth, let us know and we can get into that discussion)

So, in other words, be sure to max out 401k (which you are doing), Roth IRA and HSA as much as possible first before doing below/next.

Currently spinning off about $2-3k a month in extra cash. Given your thoughts on the economy, should we:

1- Invest in the market in non retirement accounts
2- Prepay car loans
3- Save up more cash
4- Some combo of the above
5- Something else I haven't considered

Depends on how far off you are from retirement and your risk profile (how well can you sleep at nights if the markets go up-down-up-down like right now).

Because you have 6+ months of emergency already in HYSA, car interest payment is relatively reasonable, you are pretty stable at work, and assuming you have about 5+ years from retirement, I'd just put it all into a brokerage account and invest in S&P 500 (VOO), Nasdaq (SCHG) ETFs.

For #5, you may consider converting some traditional 401k/IRA into Roth IRA now. Depends on your age; how much you have in trad 401k/IRA; what tax bracket you're in and if you believe you'll be in a higher tax in retirement etc.

[PilotMan]

bob


take a vacation


seriously. Life if for living. If you've met all those financial obligations, enjoy it and take a vacation with people you love and live your life well.



Beyond that.



Your job is good, don't pay off your car loans. They're cheap, and basically free money right now anyway. You can make more money in CDs at the moment. You could push for a full year worth of emergency savings, but you'd still be able to tap your 401k for a loan if you really needed some other cash too.



If your living situation is where you want it to be you could look into another piece of real estate, or invest in non retirement investments. If you have the ability to backdoor a roth while you're maxing your 401k you could look into that too.



But all things being equal, start taking vacations and start enjoying your life beyond working for all that money.

[Swaggs]

Originally Posted by bob

OK, looking for some advice from the peanut gallery here.

Current situation:
Job is stable as far as I can tell.
Only debt is car payments - both around 3.75%.
Emergency fund of 6+ months in HYSA.
Fully fund 401k each year.

Currently spinning off about $2-3k a month in extra cash. Given your thoughts on the economy, should we:

1- Invest in the market in non retirement accounts
2- Prepay car loans
3- Save up more cash
4- Some combo of the above
5- Something else I haven't considered

How old are you? When do you want to retire (age)? Where are you with your housing/mortgage? Married - spouse's age/401K status?

I'd say keep maxing out the 401K as you are, unless you have an exceptional amount of money in it already (if that is the case, I would shift to non retirement accounts that are more accessible if you would like to consider retiring early/access the money without penalty before 59.5).

Leave the car payments as-is.

Depending on your income level, look at IRAs. Depending on income level, you can opt for pre-tax or post-tax (higher income and you cannot do pre-tax). If you are over 50, you can put some of your excess monthly money there (up to $7000/yr if under 50, $8000/yr if over - and that can be for both you and a spouse, if applicable).

HSA can be a good option, as it can reduce current taxes and you can use it now or after your retire.

If you have still have children at home (or can be a great birthday/X-mas gift for grandchildren), 529 accounts are good for saving for college or other forms of education. They are not tax free federally, but are in many states: https://smartasset.com/taxes/529-pla...or-every-state

Do some experiential things that improve your quality of life now and in the immediate future. Like PilotMan says, look into travel/vacationing. If you've been wanting to get season tickets for a sport or finish a basement/gameroom, or jump into a hobby or learning a new school, you have a pretty good budget to do some fun/enriching things for yourself and/or your family.

[bob]

Thanks for the advice. A few clarifications:

- 45 years old
- Mortgage will be paid off by age 60 if I pay as scheduled
- We have traveled quite a bit over the last 2 years as my oldest is about to go off to college and we had trips we wanted to do before then.
- I’ve maxed out any tax advantaged accounts I qualify for. Retirement seems to be in good shape.
- 529s are also in good shape.

So the “extra” money is basically what we were using for travel. I was just curious what people thought I should do in the current political and economic environment: pre-pay debt, save additional cash, or invest.

[Edward64]

45 years so 10+ years from retirement. I’d invest and be more aggressive until 3-4 years before retirement

Oh, we paid off mortgage early. I think our mortgage rate was like 2.75% and I know it made more sense financially to invest the money. But after the 2007-08 Great Recession, we just said we're going to put all the spare $ into the mortgage. Something to consider ...

[bob]

We've also got a super low rate on the mortgage so I was more inclined to pay off the higher rate car loans first (plus that helps with monthly cash flow if something does happen to the job). We'd probably get those cleared in a year or so.

That being said, we don't have a lot of non-retirement investments so maybe we should go there.

[PilotMan]

How do you feel about a 2nd real estate option?

[NobodyHere]

Have you thought about Blackjack strategy?

[bob]

Originally Posted by PilotMan

How do you feel about a 2nd real estate option?

I have enough issues keeping my primary place up. Not sure I could handle a second. Plus don’t really have the money right now for another down payment and interest rates are high.

[PilotMan]

A good piece of land with nothing on it can still hold and climb in value as good or better than other things. You won't pay on it until you cash it out, and you always have the ability to flip it at the right time and reinvest.

[RainMaker]

Originally Posted by bob

So the “extra” money is basically what we were using for travel. I was just curious what people thought I should do in the current political and economic environment: pre-pay debt, save additional cash, or invest.

Treasuries. Something like FDLXX will earn you 4% right now. And they have the added benefit of being exempt from state income tax.

[Edward64]

Originally Posted by bob

That being said, we don't have a lot of non-retirement investments so maybe we should go there.

One question for you to consider is when do you plan to retire?

If you are going to do early retirement (55?), definitely put more into non-retirement accounts as you don't want to touch your traditional IRAs until 59.5. There are tax impact, health insurance, medicare etc. implications based on when you retire and how much taxable income you'll be generating in early retirement.

Let us know what you decide to invest in ... and we always need more people to share recipes for black eye peas & greens on Jan 1.


EDIT: also check out a couple of sub that I visit. It will be overwhelming at first, but if you spend the time, you'll learn a ton.

Blocked
Blocked

[bob]

Again, sorry for delayed response.

I doubt I'll retire before 62, but that's dependent on being able to hold on to a job in my industry (software) until then, which seems iffy at times.

[Arles]

Originally Posted by Edward64

Just my 2 cents ...


Conventional wisdom says to save at least 15+% of comp as an overarching rule. The general order of priorities are:

1) Put in as much into 401k that is matched (let's say 3%).
2) Then put into Roth IRA up to IRA max (this won't be matched)
3) If you have an HSA, put funds into it up to max (HSA is not the same as FSA)
3) Then any leftovers, remaining funds into 401k up to 401k max

I would just add that my order would be:
1. 401K to company match like above (ie, they match the first 4%)
2. Max out your HSA. It's the only account that is tax free in and tax free out.
3. I would then get your 401K to around 10% if you can afford it. The one nice thing about most 401Ks is you can take a loan again your 401K for a decent rate. Right now I could borrow around 50K for around 8% (5 year payback) - but you pay yourself back the interest. That's better than maxing out a 20% credit card if an emergency happens.

My thinking on Roth vs 401K is what is your tax bracket now vs what will it be when you retire? Most people make a lot more now so the tax savings make the 401K a little better. When people start taking distributions from a Roth, most are retired and a much lower tax bracket. Both are good options though. But my main comment is max out that HSA. Creating an untaxed "Health War Chest" for when you retire is a great benefit - especially if you want to retire before 60. You can use your HSA to offset health premiums if you stop working.

[Arles]

I also prefer a brokerage account for kids over a Roth or 529 for a few reasons:
1. They can use that money for expenses outside of college when they get older. Things like their first car or an apartment in college.
2. Your tax bracket at ages 20-25 is usually pretty low so income tax+cap gains on selling positions isn't too punitive.
3. No penalty to use the money whenever you want. Your kid is 14 and makes a travel baseball team, he/she is in high school and wants to take a Europe trip, etc.

Starting a Roth for a kid that's 7 sounds great, but he can't really use any of that money until he's 60. It's better to setup an account they can use between the ages of 18 and 30 (when they make less) than a retirement account. You can also show them the value of saving and help them become good spenders/investors and that should help them do their own retirement.

I have a custodial brokerage account for my 11 year old (started when he was 8) and he thinks it is great. I show him updates every quarter and it has helped him prioritize saving. We even do some short term investments for small purchases that he loves. I put some money into RoBlox two years ago and that has gone up a ton. We used a small portion of the profits to get him a new club baseball bat he really wanted. Now when he gets extra birthday or allowance money, he wants it in that account.

[RainMaker]

I'm pretty sure you can pull out the principal of a Roth at any time without penalty.

[Arles]

Yeah, that's true. It's post tax going in. But for a little kid, there's going to be a point (5-10 years) where most is Appreciation of the asset.

It also allows you to dabble in other stocks and if one tanks, you can tax harvest against other gains. But a Roth is a solid idea, just giving another perspective.

[Edward64]

Originally Posted by Arles

I would just add that my order would be:
1. 401K to company match like above (ie, they match the first 4%)
2. Max out your HSA. It's the only account that is tax free in and tax free out.
3. I would then get your 401K to around 10% if you can afford it. The one nice thing about most 401Ks is you can take a loan again your 401K for a decent rate. Right now I could borrow around 50K for around 8% (5 year payback) - but you pay yourself back the interest. That's better than maxing out a 20% credit card if an emergency happens.

Good point, I agree that HSA should be #2.

My thinking on Roth vs 401K is what is your tax bracket now vs what will it be when you retire? Most people make a lot more now so the tax savings make the 401K a little better. When people start taking distributions from a Roth, most are retired and a much lower tax bracket.

I've watched quite a bit of YT financial planners, Roth experts etc. From what I've gathered, it's a no sure thing that your tax rate will be lower in retirement if you will have decent chunk of money in the retirement accounts.

On one end, if you think you'll have $100k in IRA/401k at retirement, then you probably don't have to worry about Roth and higher tax bracket. On the other end, if you'll have $1M+ (including pension), good chance you should seriously consider some Roth.

And another warning is ... do you believe that tax brackets will stay the same/lower as they are now? The pundits say the odds are that tax brackets will go up because of our $37T debt and one day, it's time to pay the bill for real.

[Lathum]

Not an awesome day

are we tired of all the winning yet?

[Edward64]

It's all part of the master plan. If Jerome won't do what he wants ...

Purposely, fire a bunch of people without much planning; cause a lot of market uncertainty; pepper in a lot of tariffs with your formerly BFFs; have companies forecast lower earnings etc.

... all which make businesses turn cautionary; people stop spending; resulting in an economic & market downturn; more people losing jobs etc. which then results in a recession.

Recession --> lower inflation (except for eggs)--> Jerome lowers rates


Or, it will work itself out and we'll be hitting new highs in the coming weeks.

[Edward64]

I know its sacrilegious to some but I'm not that big of a Buffet fan (famous last words). But some interesting quotes in the article.

Warren Buffett: Spend Berkshire's Record $26.8B Tax Payment 'Wisely' - Business Insider

But in 2024, Berkshire paid $26.8 billion — the most of any US company in history and about 5% of total American corporate income taxes paid that year, Buffett said. The company has now paid in aggregate more than $101 billion of income tax to the US Treasury, he added.

... an increase in Berkshire's cash pile to a record $334 billion as of December 31 (or $321 billion if you subtract $12.8 billion of payables for purchases of Treasury bills). That's roughly double the $168 billion of cash it held at the end of 2023.

For the full year, they bought $9.2 billion of stocks and sold $143 billion worth, meaning they offloaded $134 billion of stocks on a net basis.

And nice personal quote ...

"Spend it wisely," he wrote. "Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part."

My guess is Buffet see a lot of uncertainty in the markets and has increased his cash horde to buy when markets/economy fall/correct and/or to help Berkshire survive if it really crashes. If he's right, he going to make a killing. If he's wrong, he's going to get left behind on overall returns.

[Edward64]

Another article dealing with a lot (really) of money.

The Apple $500B investment implies reduced stock buybacks. Rooting for Apple, not sure if it'll work out, but very interesting to see how this plays out over the next 4 years.

Apple announces $500 billion US investment in bet 'on the future of American innovation'

Apple (AAPL) announced Monday that it will spend and invest more than $500 billion in the US over the next four years, including plans to build a new manufacturing factory, double its advanced manufacturing fund, and hire 20,000 people.

"We are bullish on the future of American innovation, and we're proud to build on our long-standing U.S. investments with this $500 billion commitment to our country’s future,” Apple CEO Tim Cook said in a statement.

Apple has approx. 164k worldwide (2024) and about 80k in US. So 20k is a pretty substantial increase in 4 years. Apple better get some of those H-1B's started now.

Additionally, the 20,000 people Apple said it will hire over the next four years will be mostly focused on R&D, silicon engineering, software development, and AI and machine learning.

I doubt tariff threat was the primary reason but still $500B over 4 years is a lot of money invested into US. So, Trump should get "some" credit for the overall FUD that's making these CEOs bend the knee.

Apple's announcement comes just days after President Donald Trump said Cook promised him hundreds of millions of dollars in US investment, and that the tech giant’s manufacturing would shift from Mexico to the US.

"They don't want to be in the tariffs," Trump said Friday.

[Arles]

A pullback has been coming hard for growth and crypto. I wouldn't be too worried long term but Feb and March tend to be awful market months. For retirement, long term accounts, etc - this is just a blip on the radar. But for YOLO speculators - be careful out there.

[Arles]

Originally Posted by Edward64

I've watched quite a bit of YT financial planners, Roth experts etc. From what I've gathered, it's a no sure thing that your tax rate will be lower in retirement if you will have decent chunk of money in the retirement accounts.

On one end, if you think you'll have $100k in IRA/401k at retirement, then you probably don't have to worry about Roth and higher tax bracket. On the other end, if you'll have $1M+ (including pension), good chance you should seriously consider some Roth.

And another warning is ... do you believe that tax brackets will stay the same/lower as they are now? The pundits say the odds are that tax brackets will go up because of our $37T debt and one day, it's time to pay the bill for real.

I'm just not sure if you need a 401K and a Roth in your 25-50 years. So if you have a good 401K match/setup, it's probably better to just stick with that. A Roth is fine and a good move for a lot of people. I just don't like having all my capital locked up in a Roth and 401K. Outside of a first home and a 50K 401K loan, there's really no great way to access it before you get close to retirement.

I have a Roth - but I don't really contribute to it anymore. For me (and again everyone is different), I go:

1. Max out 401K match
2. Max out HSA
3. Go to 14% 401K (for tax savings)
4. Put the rest in a brokerage account after a savings nest egg.

I could have doubled down on the Roth instead of brokerage account, but having the ability to have riskier positions (and tax loss harvet to offset sold gains) have pretty much made the tax hit minimal. Plus, I can spend my money whenever I want without penalty and if I don't need any - just let the shares keep building.

[Edward64]

Originally Posted by Arles

A pullback has been coming hard for growth and crypto. I wouldn't be too worried long term but Feb and March tend to be awful market months. For retirement, long term accounts, etc - this is just a blip on the radar. But for YOLO speculators - be careful out there.

Nasdaq was only down like 5-6% from high this morning, so another 7%ish by EOD today. Although it hurts, agree that it's not quite time to panic.

Still worrisome though that much of the angst is self-inflicted with what Trump is doing, much of it unnecessary as he could accomplish what he wants through negotiations vs threats.

[Edward64]

Nice day!

Nvidia to report earnings after the bell. That can extend the rally or kill it.

Crypto is still going down though. Not sure why, Trump is crypto friendly.



EDIT: Nvidia exceeded expectations, but futures are showing red, which means they did not exceed the "real" expectations. Oh well

[Kodos]

Maybe people had a really bad experience with $Trump. Except for a select few pump and dumpers.

[NobodyHere]

Originally Posted by Edward64

Nice day!

Nvidia to report earnings after the bell. That can extend the rally or kill it.

Crypto is still going down though. Not sure why, Trump is crypto friendly.

What rally?

[Edward64]

Originally Posted by NobodyHere

What rally?

Well, frak ...

Okay, let's just get that -10% correction over with.

[Edward64]

Another strong green day at open, and another drop into red after Trump opens his mouth.

The markets are wanting to rally but are getting slapped down.


Worse than expected jobless claims, consumer confidence lower, recession signal (inverted yield curve) ... hopefully, this is enough for Jerome to legitimately lower rates.

[Arles]

February is usually a crap month (and early March) for the market. Usually late March and April get it all back. The next 2-3 weeks should be good to add to positions.

[JonInMiddleGA]

Originally Posted by Edward64

as he could accomplish what he wants through negotiations vs threats.

I'm reminded of one of my favorite quotes ever. Movie? Book? Honestly don't recall at this point but one or the other I'm 99% certain.

"The only way to negotiate is with my knee on his chest and my knife at his throat"

I've seen a couple of attributions for it since it made the rounds in the early 2000s but I'm quite certain I'd come across it well before than.

[Edward64]

Weird frakking day. Not going to complain though ending up 1.4%+ for all three markets, considering this past week.

Starts off moderately in the green, then goes red after the WH fiasco, and now recovered up 1.4%+ by EOD. Good riddance to Feb, tired of the whiplash, ready to start a fresh new month.

[Lathum]

It’s going to get far worse starting March 4th.

[Edward64]

Here's 1 of 2

Generally, if there are 2 consecutive quarters of negative growth, we're in a recession. It wasn't declared in 2022 but it is still a good indicator ...

And now the first ...

https://www.cnbc.com/2025/02/28/the-...tor-says-.html

The Atlanta Fed’s GDPNow tracker of incoming data is indicating that gross domestic product is on pace to shrink by 1.5% for the first quarter.

While the tracker is volatile through the quarter and typically becomes more reliable much later in the quarter, it does coincide with some other indicators showing a growth slowdown.

Good guess that many will say Trump brought us this, and I won't disagree he caused at least some of it. However, I'll wait for what the analysts say whenever it comes out, because I can believe Jerome overshot by not relaxing rates more/quicker.

[NobodyHere]

Is this what winning is like?

[Arles]

Originally Posted by Lathum

It’s going to get far worse starting March 4th.

Financial markets tend to be "buy the rumor, sell the news". I think a lot of the tariff risk has been priced in the past few weeks with market movement. QQQ is down almost 7% in the past 10 days - I think we get a small bump this week. It's pretty rare for the S&P or QQQ to dump 6-8% and not recover after.

[Edward64]

Originally Posted by NobodyHere

Is this what winning is like?

Actually, yes … if you buy puts

[Ksyrup]

We bought a putz. Close enough.

[Danny]

Originally Posted by Arles

Financial markets tend to be "buy the rumor, sell the news". I think a lot of the tariff risk has been priced in the past few weeks with market movement. QQQ is down almost 7% in the past 10 days - I think we get a small bump this week. It's pretty rare for the S&P or QQQ to dump 6-8% and not recover after.

Im certainly not an expert but I think expecting typical stock performance in this presidency is a bit foolish. This is very different from his first presidency with the dramatic changes and anxiety and potential for who knows what the f will happen on a daily basis.

[Edward64]

Obviously, NOT fun but still too soon to panic.

S&P at 5,849 from a high of 6,147 from just a couple weeks ago. So down -4.8% from high and -.5 YTD. The Nasdaq is worse, down -9% from high and -5% YTD.

A correction is -10%, a bear market is -20%, and a recession normally is 2 quarters of negative GDP.


Dems best bet to winning is a recession, bad economy, bad markets etc. to galvanize voters in 2026. However, if there is a recession by 3Q, that would mean there's time for us to come out of a recession and possibly an upward trending economy & markets for Nov 2026. If we're going to have a recession anyways, best time is around 2Q or 3Q 2026.

[Lathum]

Dow drops 400 more as soon as it opens. So much winning.

[Kodos]

Over the past week+, I have been rolling over a couple of my wife's old 401(k)s into a Rollover IRA. So far, my timing has been unintentionally pretty darn good. Nice time to have her money out of the market and safely on the sideline.

[sovereignstar v2]

Someone knows the right aliens

[Kodos]

Originally Posted by sovereignstar v2

Someone knows the right aliens

I can neither confirm nor deny your statement.

[Edward64]

Wow, Nasdaq down about 1.5%+ and back to green at +.48%. Other indexes have trimmed their losses quite a bit also.

Haven't seen anything in the news yet but something has to be happening and r/wsb seems confused also? Not going to complain but wonder what has happened.

[Kodos]

Originally Posted by Edward64

Not going to complain but wonder what has happened.

Every time I gloat even a little bit....

[albionmoonlight]

Somewhere On Wall Street:

“Sir, we just got reports that Kodos’s wife is not being hurt by this!”

“Dammit! OK, everybody buy back your stocks. And next time don’t start selling until we get confirmation that her money is back in the market!”

[Danny]

And back down it went

[Kodos]

Originally Posted by albionmoonlight

Somewhere On Wall Street:

“Sir, we just got reports that Kodos’s wife is not being hurt by this!”

“Dammit! OK, everybody buy back your stocks. And next time don’t start selling until we get confirmation that her money is back in the market!”