vania-janet/multiturn-rag-retrieval-data huggingface dataset:
"Re: Specifically, am I right in that everything I put on these is deducted from tax, or are there other rules? and Am I correctly understanding this as ""anything above £3,600 per year will not be deducted from your tax""? Neither interpretation seems quite right… Unless what you mean is this: The contributions (to a pension, or to the share-save scheme) are deducted from your pay before it is taxed. That's how it works for employer-run pension schemes. In other words, you are paying the gross amount you earn into the pension, not the amount after tax. It's a tax-efficient way to save, because: compared to other forms of saving: (The bit about the £3,600: you can ignore this assuming you're earning more than £3,600 a year.) What happens to the pension if you decide to move back to France or another country? In some cases you can transfer tax free. Worst case, you'd pay some tax on the transfer but not more than 25%. [See here for the current rules: https://www.gov.uk/transferring-your-pension/transferring-to-an-overseas-pension-scheme. Re: the share scheme, if by 'salary exchange' you mean salary sacrifice (where your gross pay is officially reduced by that amount e.g. £150 a month), that's even more tax-efficient, because it saves you paying the National Insurance contribution too (approx 9% of the pay packet). Conclusion: Saving into pension and company share save schemes is supremely tax-efficient and, provided you're OK with your money being locked away until you're 57 (pension) or tied up in company shares, it's understandably many people's priority to make use of these schemes before considering other forms of saving where you pay into them from your salary after tax. Now, about this: I am trying to understand how much I should put into it Should I put money into these, or should look for another way to save (how will this work out if I go back to France or another country)? Nobody here can advise you what to do since individuals' goals and circumstances are different and we don't know enough of the picture.
With a Roth, however, you pay income tax going in and nothing coming out, even though you're (eventually) getting back more than you put in. Another is gifts. Whoever gave you the gift paid the taxes on it (or the money to buy it). However, if they give you a gift valued more than a certain limit (changes every year, and there's a lifetime limit), they have to pay an additional gift tax of 35% on any amount over the limit. That's taxing taxed income (usually). There are other examples, but for the overwhelming majority of situations, if it's money you already had after any and all applicable taxes, it's not taxable even if you haven't seen that money for a while."
Just the amount contributed to the Roth 401k that you rolled over, not the conversions from regular 401k/traditional IRA (for those there are holding period limitation of 5 year from conversion), the earning on it or the employer's match (neither of these can be withdrawn without penalty as a non-qualified withdrawal). However, I'd suggest not to withdraw from Roth IRA unless you're sleeping on a bench in a park and beg strangers for a piece of bread. This is the best retirement investment you can make while you're in the lower tax brackets, and withdrawing it would reduce dramatically your tax-free retirement income.
However, since ordinary income is taxed at a higher rate than long-term capital gains, you will potentially pay more tax on the IRA withdrawal, since it will be taxed at the higher rate, if your gains are long-term rather than short term. This is doubly true if you withdraw early, incurring the extra 10% penalty. See this question for some more discussion of this issue.) In addition, I think you may be somewhat misunderstanding the nature of estimated tax. The IRS will not ""ask"" you for a quarterly estimated tax when you sell stock. The IRS does not monitor your activity and send you a bill each quarter. They may indeed check whether your reported income jibes with info they received from your bank, etc., but they'll still do that regardless of whether you got that income by selling in a taxable account or withdrawing money from an IRA, because both of those increase your taxable income. Quarterly estimated tax is not an extra tax; it is just you paying your normal income tax over the course of the year instead of all at once. If your withholdings will not cover enough of your tax liability, you must figure that out yourself and pay the estimated tax (see here); if you don't do so, you may be assessed a penalty. It doesn't matter how you got the money; if your taxable income is too high relative to your withheld tax, then you have to pay the estimated tax. Typically tax will be withheld from your IRA distribution, but if it's not withheld, you'll still owe it as estimated tax."
Taking all your assumptions: With Roth, you take $6112 from work, (let's call you tax rate 10%) pay $612 in taxes, and contribute $5500 (the max if you are younger than 50).  This $5500 will grow to $21,283 in 20 years at 7% annual growth ($5500*(1.07^20)), and you will pay no additional taxes on it. With the traditional IRA, you take $6112 from work, pay $612 in taxes, and contribute $5500.  You will receive a tax deduction at tax time of $612 for the contribution.  This money will also grow to $21,283.  This will be taxed at your ordinary income rate (which we're calling 10%), costing you $2123 at the time of withdrawal.  You will have $19,155 left over. EDIT: If you invest your tax savings from every contribution to the Traditional IRA, then the numbers wash out.  Perhaps a pivotal question is whether you believe you will have greater taxable earnings from your investments in retirement than you have in taxable earnings today -- affecting the rate at which you are taxed.
So for Roth you had 7500*(returns), while for Traditional the correct amount isn't 10k*(returns)*0.75, but 10k*(returns)*0.821. You make the difference between .75 and .82 back even with the identical income. [Of course, if your $10k would take you down a marginal bracket, then it also has an 'effective' tax rate of something between the two rates.] Thus, Roth makes sense if you expect your effective tax rate to be higher in retirement than it is now. This is very possible, still, because for people like me with a mortgage, high property taxes, two kids, and student loans, my marginal tax rate is pretty low - even with a reasonably nice salary I still pay 15% on the stuff that's heading into my IRA. (Sadly, my employer has only a traditional 401k, but they also contribute to it without requiring a match so I won't complain too much.) Since I expect my eventual tax rate to be in that 18-20% at a minimum, I'd benefit from a Roth IRA right now. This matters more for people in the middle brackets - earning high 5 figure salaries as individuals or low 6 figure as a couple - because the big difference is relevant when a large percentage of your income is in the 15% and below brackets. If you're earning $200k, then so much of your income is taxed at 28-33% it doesn't make nearly as much of a difference, and odds are you can play various tricks when you're retiring to avoid having as high of a tax rate.
"Generally you do not pay taxes on insurance payouts that occur because of some kind of loss, provided you paid the premiums yourself. ""Generally, if you're paying premiums yourself, such as for homeowners insurance and auto insurance, then your insurance benefits are not a taxable event,"" says Adam Sherman, CEO of Firstrust Financial Resources in Philadelphia. ""Your benefits are reimbursement for expenses, rather than income."" It's not as straightforward for death benefits and life insurance."
I think following the professional money managers is a strategy worth considering. The buys from your favorite investors can be taken as strong signals. But you should never buy any stock blindly just because someone else bought it. Be sure do your due diligence before the purchase. The most important question is not what they bought, but why they bought it and how much. To add/comment on Freiheit's points:
My recommendation is not to pursue anything. Set up a set of index funds that hits the balance of risk and reward you're comfortable with, and settle for market rate of return. Trying to beat the experts doesn't even work for the experts.
If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you. But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. Lastly learning to value investments isn't just useful in the stock market, they are applicable to investing in any investment such as bonds, real estate, and even buying your home or running a business."
Large and well-known companies are typically a good starting point. That doesn't mean that they are the best or even above average good, but at least they don't cheat you and run with your money. A core point is someone you pay, not the company whose investment he sell you. Although the latter seems cheaper on first glance, it isn't - if you pay him, his interest is to do good work for you; if they pay him, his interest is to sell you the product with the highest payment for him. That does not imply that they are all that way; it's just a risk. There are many good advisers that live from commissions, and still don't recommend you bad investments. Depending on the amounts, you could also read up a bit and open an account with a online investment company. It is discussable, but I think the cost for an adviser only starts to become worth it if you are deep into 5 digits of money.
"I've had a MF Stock Advisor for 7 or 8 years now, and I've belong to Supernova for a couple of years. I also have money in one of their mutual funds. ""The Fool"" has a lot of very good educational information available, especially for people who are new to investing. Many people do not understand that Wall Street is in the business of making money for Wall Street, not making money for investors.  I have stayed with the Fool because their philosophy aligns with my personal investment philosophy. I look at the Stock Advisor picks; sometimes I buy them, sometimes I don't, but the analysis is very good. They also have been good at tracking their picks over time, and writing updates when specific stocks drop a certain amount. With their help, I've assembled a portfolio that I don't have to spend too much time managing, and have done pretty well from a return perspective. Stock Advisor also has a good set of forums where you can interact with other investors.  In summary, the view from the inside has been pretty good. From the outside, I think their marketing is a reflection of the fact that most people aren't very interested in a rational & conservative approach to investing in the stock market, so MF chooses to go for an approach that gets more traffic. I'm not particularly excited about it, but I'm sure they've done AB testing and have figured out what way works the best. I think that they have had money-back guarantees on some of their programs in the past, so you could try them out risk free. Not sure if those are still around."
"If by ""can we trust the analyst recommendations"" you mean ""are they right 100% of the time"" the answer is absolutely no.  Analysts are human and make mistakes, some more than others.  There are many stories of ""superstar managers"" that make killings for several straight years, then have a few bad years and lose it all back. However, don't take ""you can't trust them"" to mean that they are nefarious in some way. While there may be some that recommend stocks for selfish purposes, I suspect that the vast majority are just going off what information they have, and can't predict market behavior or future performance with perfect accuracy.  Look at many analysts' recommendations.  Do your own analysis. If you're still not comfortable buying individual stocks, then don't buy them.  Buy index funds if you are satisfied with market returns, or other mutual funds if you want to invest in specific sectors.  Or at the very least make sure you are sufficiently diversified so that you don't lose your entire investment by one bad decision.  One rule of thumb is to not have more than 10% of your entire portfolio in any one company."
This implies that you believe the guidelines given you by your broker or financial advisor are based in finance theory. Generally speaking, they are not. They are rules of thumb that seemed good to someone but are not rigorously proven either in theory or empirics. For example the notion that you should slowly shift your investments from speculative to conservative as you age is not based on sound finance theory. It just seems good to the people who give advice on such things. Nothing particularly wrong with it, I guess, but it's not remotely on par with the general concept of being well-diversified. The latter is extremely well established and verified, both in theory and in practice. Don't confuse the concept of diversification with the specific advice you have received from your advisor. A fund averaging very good returns is not an anomaly--at least going forward it will not be. There are many thousand funds and a large distribution in their historical performance. Just by random chance, some funds will have a truly outstanding track record. Perhaps the manager really was skilled. However, very careful empirical testing has shown the following: (1) You, me, and people whose profession it is to select outperforming mutual funds are unable to reliably detect which ones will outperform, except in hindsight (2) A fund that has outperformed, even over a long horizon, is not more likely to outperform in the future. No one is stopping you from putting all your money in that fund. Depending on its investment objective, you may even have decent diversification if you do so. However, please be aware that if you move your money based on historical outperformance, you will be acting on the same cognitive bias that makes gamblers believe they are on a ""hot streak"" and ""can't lose."" They can, and so can you. ======== Edit to answer a more specific line of questions =========== One of your questions is whether it makes sense to buy a number of mutual funds as part of your diversification strategy. This is a slightly more subtle question and I will indicate where there is uncertainty in my answer. Diversifying across asset classes.
"If you can afford the time and are looking for more deep, and fun, investment tips, check out http://gurufocus.com. Great for more fundamental analysis of ""Intelligent Investor"" type Benjamin Graham-style businesses.  No use scatter-shooting the stock exchange hoping to find good value businesses. Even blue-chips have an increasingly uncertain future (except IMHO certain world dominators like KO, WMT, XO and MCD)."
I disagree.  When you start giving that person money to invest, you are made very much aware that there is no guarantee that your investment will see a return or that you will ever see it again.  As long as the person managing your funds didn't do anything illegal to lose your money, then he was just doing his job as **both** the investor and he agreed upon.
There is no magic bullet here.   If you want professional management, because you think they know more about entry and exit points for short positions, have more time to monitor a position, etc... (but they might not) try a mutual fund or exchange traded fund that specializes in shorts. Note:  a lot of these may not have done so well, your mileage may vary
It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost money there before or even if he has ever had funds in it.
My former accountant, used to provide this service as part of him doing my taxes.  During the off season, he would provide a planning session and he would review strategies that I might look into.  Since he did not make any money off of providing investments, he was about as unbiased as one could be.  However, something like that might not be enough for you guys. You could go with someone online, Scottrade is going into the business of providing advice, as well as Charles Schwab or Fidelity, but you might need someone more personal. In that case, I would use my network.  Talk to people, ask who they use, like, and respect.  I would say it is very easy to find mediocre investment advisers, the good ones are hard. I would look for one that teaches.  It is very easy to tell someone what to do, much harder to teach them what is the right thing.   One thing that is easy about your situation:  Planning to buy a home.  Put money for a down payment in a high interest savings account.  What I mean by high interest, is they still pay almost nothing.  You can't really make a mistake.  If you find one with .5% instead of .85%, what is the real difference after 5 years?  About $180?
They should have known that this had a potential downside."" And that all assumes that we believe in 100% pure market efficiency. Which many disagree with, at least to some extent. For example, if we instead subscribe to Peter Lynch's theories about ""local knowledge"", we might believe that everyone has some personal fields of expertise where they know more than the experts. A professional stock analyst is going to follow many stocks and many not have technical experience in the field of the company. (This is especially true of small and mid cap stocks.) If you happen to be an expert in LED lighting, it is entirely feasible (at least to me) that you could be able to do a better job of ""doing homework"" on CREE than the analysts. Or if you use a specialized piece of software from a small vendor at work, and you know that the latest version stinks, then you will likely know more than the analyst does. I think it is somewhat akin to going to a doctor. We could say to ourselves ""the doctor is more knowledgeable about me than medicine, I'm just going to do what they tell me to do."" And 99% of the time, that is the right thing to do. But if we do our ""homework"" anyway, and research the symptoms, diagnoses, and drugs ourselves as well, we can do get benefits. Sometimes we just can express our preferences amongst equal solutions. Sometimes we can ask smarter questions. And sometimes we have some piece of knowledge that the doctor doesn't have and can actually make an important discovery they didn't know. (And, just like investing, sometimes we can also have just enough knowledge to be dangerous and do ourselves harm if we go against the advice of the professionals.)"
Well, what I would do would be to read every journalist's article on the subject, every academic paper, and the appropriate chapters from the CFA curriculum. I'd write down everyone's name (authors and those mentioned) and then email call them for advice. I'd try to find out who those players are, what their specific philosophies are, and then find someone i thought was really smart, had an investment philosophy that I agreed with, wasn't a dick, and then I would call them.   By the way, Warren Buffett went to Columbia to learn specifically under Ben Graham. Prior to graduation, Buffett said he'd like to work at Graham Newman for free, such was the value of the education. Benjamin Graham told him (Warren), he wasn't worth that much.   You or I literally have nothing to offer these guys that they can't get somewhere else (smarts, hard work, etc) for better. I'd be humble, attentive, and humble (did I say that already). There's an intellectual honesty that comes with admitting you don't know anything (but are willing to learn) that is very much important.  That's what I would do. Did any of that help?
"sometimes. Very often, there is two things at play: with the good ones, you exchange money for a service that cuts down on the time it takes to learn or improve certain skills. This can be done by specific trainings, this can be done by making a digestible summary of information etc.  In that case, I don't think it's a waste of time or a waste of money. However, on facebook you see a lot of ""business trainers"" that don't bring added value; the one literally repeating what facebook has in their manuals but charge for it. the ones who are not bringing new insights on how you can improve and run your business, or how you can improve your management skills... Because as your business grows, you will need to learn more of those and you'll have less time to learn them in. It's about weeding the bullshit out."
I’ll start with what worked for me, to get me hooked. This list is by no means exhaustive.   *One Up On Wall Street* by Peter Lynch discusses competitive advantages and staying close to the story of a business. Explores the concept of ‘buy what you know’. He has also written *Beating the Street*.  *The Drunkard’s Walk: How Randomness Rules Our Lives* by Leonard Mlodinow is not dissimilar to *A Random Walk Down Wall Street*, but I preferred this book as it explores the concepts of randomness and survivors bias.   *Against the Gods* by Peter Bernstein is a dense book, but in my opinion is the definitive text on the development of numbers, probability theory, and risk management. I absolutely love this book.   *The Most Important Thing* by Howard Marks is immensely readable, enjoyable, and looks at value investing for the long run. Howard Marks has been a macro behavioural investor before behavioural investing was a thing.   Speaking of behavioural biases, *Thinking, Fast and Slow* by Daniel Kahneman is a spectacular look at how your brain’s quick-trigger responses can often be wrong.  On the subject of behaviour and biases, *Influence: The Psychology of Persuasion* by Robert Cialdini is another topic-defining book  More books by long term veteran professional investment managers that should be enjoyed: - *The Little Book That (Still) Beats the Market* by Joel Greenblatt - *Beat the Crowd* by Ken Fisher - *Big Money Thinks Small* by Joel Tillinghast - *Common Stocks and Uncommon Profits* by Philip A. Fisher - *The Little Book of Behavioural Investing* by James Montier - *Margin of Safety* by Seth Klarman  And I’ll be banned from this forum without mentioning *The Intelligent Investor* by Benjamin Graham.    As per some other comments, my personal opinion is that books that describe events or periods of time like *Liars’ Poker* [80s Junk Bonds], *The Big Short* [Financial Crisis], *When Genius Failed* [the LTCM collapse, excellent read by Rogers Lowenstein], *All The Devils Are Here* [by McLean and Nocera, another Financial Crisis book, much better than Lewis’s, IMO] are all educational and quite entertaining, but don’t honestly have much to do with the actual nuts and bolts of the real financial industry.   Enjoy!