Financial People, Halp

[RandyForRubio]

I'm trying to slowly plan for retirement. I was thinking of putting some money each year into a mutual or index fund, and then just using that as my retirement fund since savings accounts are practically useless. Not sure what the penalty rate is for taking it out though, and do I get taxed at the full amount on it? Am I better off putting it in a 401? Or maybe putting it in a 401 for a while, and then taking some of that out and putting it in a mutual fund?

Any other ideas/suggestions? Thanks in advance.

 

[Dr. Jones]

I'm trying to slowly plan for retirement. I was thinking of putting some money each year into a mutual or index fund, and then just using that as my retirement fund since savings accounts are practically useless. Not sure what the penalty rate is for taking it out though, and do I get taxed at the full amount on it? Am I better off putting it in a 401? Or maybe putting it in a 401 for a while, and then taking some of that out and putting it in a mutual fund?

Any other ideas/suggestions? Thanks in advance.

Get a good brokerage firm that supports call options within a ROTH.
Check back for what to do from there.

 

[Ron Mexico]

Get a good brokerage firm that supports call options within a ROTH.
Check back for what to do from there.

Any suggestions for a good brokerage firm? I have a ROTH with Edward Jones, I dont really like them. I am looking to move it, maybe to one I can control myself online, like fidelity.

 

[Dr. Jones]

Any suggestions for a good brokerage firm? I have a ROTH with Edward Jones, I dont really like them. I am looking to move it, maybe to one I can control myself online, like fidelity.

I prefer one locally that I can walk in, sit down, and talk.
Maybe ask the branch manager of your bank for a recommend.
If you know a wealthy savvy person in your town..

This can make the difference of utilizing very common opportunities versus opening eye-popping, potentially life-changing ones.

 

[Ron Mexico]

I prefer one locally that I can walk in, sit down, and talk.
Maybe ask the branch manager of your bank for a recommend.
If you know a wealthy savvy person in your town..

This can make the difference of utilizing very common opportunities versus opening eye-popping, potentially life-changing ones.

Okay, thanks.

 

[Dr. Jones]

Okay, thanks.

Again, a ROTH that will allow you to employ call options is a beautiful way to amass money much more quickly for retirement.

 

[RandyForRubio]

Any suggestions for a good brokerage firm? I have a ROTH with Edward Jones, I dont really like them. I am looking to move it, maybe to one I can control myself online, like fidelity.

Not sure if they're nationwide, but my dad uses DA Davidson for some of his. I think like PKM said, it matters more who you're dealing with than the company. Every company is gonna have good/bad brokers.



/that's just what I think, PKM is gonna know a ton more than me.

 

[RandyForRubio]

What's a call option?

 

[Dr. Jones]

What's a call option?

That's a long answer. Here's the gist;

Example: let's say you think Apple is going to increase in price from a current $40 per share to $60 per share. You can purchase an option to buy the stock at the current price and pay an option fee rather than buying the whole $40 amount up front. Say, $4/share.

So let's say you have $10k in your retirement, you could take $1k and buy a call option of 250 shares of Apple. The stock rises to $60 as expected and you strike. You now buy/sell at $40/$60 and you now have increased your position from $10k to $15k and no taxes paid on the gains.

Here is how I do it, though.

Using same example. Instead of buying a call option on 250 shares, I will buy it for 2500 shares... even though I don't have enough money to buy the stocks when I strike. The stock raises to $60. Now my option is "worth" $20 x 2500 or a profit of $50k. I then sell my option for $40k and let some other person or firm make an immediate and easy $10k.

So I made a fast $40k.

Now, I actually don't play the market. Real estate is my thing.
So I find a deal on real estate, buy an option to purchase it, and then find another buyer that will pay me a nice profit to purchase my option.

Real example: I bought an option on a ranch for $5k. I then found a buyer that was willing to pay $1m more for the ranch than what I had negotiated. I sell him my option for $500,000. He gets a deal, I get a profit of $495,000 that is not taxed because it was profit earned from money in my IRA.

 

[Dr. Jones]

So though there's an annual limit as to what you can place into your IRA, there is no limit as to the profit it can earn on that money used for investments.

 

[RandyForRubio]

Thanks peeks. Would rep if I could. I'll have to talk to a broker about call options as real estate isn't my game, and I don't know much about stocks nor do I have a ton of time to follow. I assume a broker could take care of that and contact me and get my approval if he wants to do one?

 

[Dr. Jones]

Thanks peeks. Would rep if I could. I'll have to talk to a broker about call options as real estate isn't my game, and I don't know much about stocks nor do I have a ton of time to follow. I assume a broker could take care of that and contact me and get my approval if he wants to do one?

Yes. Most brokerages get squeamish doing this for folks that they perceive shouldnt be taking the risk.
Understandably.
There is risk because if the stock doesn't climb and you do not strike, you forfeit your option fee..

Like I said, I gave a very abbreviated version of how things work.
I believe you may have some possible unique circumstances that might lend itself to this... maybe I will PM when time permits.

 

[RandyForRubio]

Please do pm. Would appreciate mucho.

 

[♪alt13]

That's a long answer. Here's the gist;

Example: let's say you think Apple is going to increase in price from a current $40 per share to $60 per share. You can purchase an option to buy the stock at the current price and pay an option fee rather than buying the whole $40 amount up front. Say, $4/share.

So let's say you have $10k in your retirement, you could take $1k and buy a call option of 250 shares of Apple. The stock rises to $60 as expected and you strike. You now buy/sell at $40/$60 and you now have increased your position from $10k to $15k and no taxes paid on the gains.

Here is how I do it, though.

Using same example. Instead of buying a call option on 250 shares, I will buy it for 2500 shares... even though I don't have enough money to buy the stocks when I strike. The stock raises to $60. Now my option is "worth" $20 x 2500 or a profit of $50k. I then sell my option for $40k and let some other person or firm make an immediate and easy $10k.

So I made a fast $40k.

Now, I actually don't play the market. Real estate is my thing.
So I find a deal on real estate, buy an option to purchase it, and then find another buyer that will pay me a nice profit to purchase my option.

Real example: I bought an option on a ranch for $5k. I then found a buyer that was willing to pay $1m more for the ranch than what I had negotiated. I sell him my option for $500,000. He gets a deal, I get a profit of $495,000 that is not taxed because it was profit earned from money in my IRA.

Was this ranch already listed/up for sale or did you just approach the owner of the property out of the blue? I may have stumbled upon an opportunity in Montana. I need to approach it with tact but I have good reason to believe I could get a favorable price if I can spare the owners a headache. I still need to do some research on the area and get some more info (I just heard about this like 2 days ago). Any advice would be appreciated.

 

[RandyForRubio]

Yo alt, hit me up with some details. I know some montana land decently well.

 

[Dr. Jones]

Was this ranch already listed/up for sale or did you just approach the owner of the property out of the blue? I may have stumbled upon an opportunity in Montana. I need to approach it with tact but I have good reason to believe I could get a favorable price if I can spare the owners a headache. I still need to do some research on the area and get some more info (I just heard about this like 2 days ago). Any advice would be appreciated.

The ranch in my example was not listed (which is better).
One way is to approach and say how passionate you are about the property and would love to try to buy it... But that you need a little time to get finances together/raise the money. Ask for a great price (because that's when you make your money) and for a, say, 90 day option to purchase. That's the loose version.. The lengthier version involves how to ensure no one can circumvent you.

 

[♪alt13]

The ranch in my example was not listed (which is better).
One way is to approach and say how passionate you are about the property and would love to try to buy it... But that you need a little time to get finances together/raise the money. Ask for a great price (because that's when you make your money) and for a, say, 90 day option to purchase. That's the loose version.. The lengthier version involves how to ensure no one can circumvent you.

That's kinda what I figured. Honestly, I would be passionate about the property and if I could get the financing and run a viable ranch I would, but that may not be in the cards just yet. Would you have the property owner sing an NDNC or do you only do that with potential buyers?

 

[RandyForRubio]

Seriously Alt, I know Montana land and I wouldn't steal it from you. Depending on what you wanna use it for and other things, I could give you a hand. Hell, I might even know the people (I wouldn't say anything to them).

 

[Dr. Jones]

That's kinda what I figured. Honestly, I would be passionate about the property and if I could get the financing and run a viable ranch I would, but that may not be in the cards just yet. Would you have the property owner sing an NDNC or do you only do that with potential buyers?

Depends on the deal but typically just with buyer. Exceptions exist.

 

[Miggs]

Yes. Most brokerages get squeamish doing this for folks that they perceive shouldnt be taking the risk.
Understandably.
There is risk because if the stock doesn't climb and you do not strike, you forfeit your option fee..

Like I said, I gave a very abbreviated version of how things work.
I believe you may have some possible unique circumstances that might lend itself to this... maybe I will PM when time permits.

do the stocks only have a certain time period to go up?