All Forum Posts by: Sean Tracey

 You had me at "once you retire early" lol. Thanks for sharing that great advice and your experiences. I really appreciate it. To your first point, I'm highly focused on reducing the tax burden in early retirement: If my circumstances allowed for it, I would to move to a lower COL area/state without income tax and do some tax-gain harvesting. Capital gains taxes are 0% up to a point when you're in the 15% bracket.  Frugality allows for huge tax savings. 

I plan on beginning buying those 10 properties and then some soon, and at this juncture I agree on the turnkeys. Oh, and I'll be listening to your podcast episode during my walk to work tomorrow. 

@Bob E. I believe Mimi was referring to partial conversions of non-deductible IRA contributions, which would have a different set of rules but she can correct me if I'm wrong. What you're referring to is actually a recharacterization of an IRA, which as you stated can be partial.

That's another mention for notes, so it looks like I'll be doing some reading about them soon. Thanks for the suggestion. 

@Mimi H. it wouldn't allow for partial conversions unfortunately. It would take into account the total balance of all your TIRAs, SEP IRAs and Simple IRAs. The math is beyond me, but it pretty much negates the purpose of the conversion. 

@Dennis Weber I appreciate the kind words. I have often heard the Rich Dad series touted, but I haven't gotten around to reading it. I think some of the other things I've heard about the author turned me off to it, but I'm sure there is some valuable info there. I may very well pick it up at some point when time permits. 

I disagree about the stock market being for losers, though. The data, when it comes to those that have invested wisely, suggests otherwise. If you treat it like it's a casino, you're gonna probably lose. Those that stick to sound investment principles, and don't try to time the market have a very good chance at coming out ahead. I also plan to always max out my 401k, even without an employer match, due to the tax savings alone (must be around 40% marginal tax rate in NY). 

I've seen note investing mentioned on the forums, but I haven't looked into it. I'm certainly intrigued but surprised to see the words "guarantee" and "13% returns" in the same sentence lol. I'll definitely look into it, and if you have any particular posts or articles you think would be beneficial I'm all ears.

@Mimi H. that's true. To circumvent that you can do a Backdoor Roth IRA wherein you contribute to a non-deductible Traditional IRA and then convert that to the Roth. If you have existing TIRAs (SEP + Simple too) then you're subject to the pro-rata rule, and this complicates matters. You could roll your TIRAs into an employee-sponsored 401k to avoid that, but that's not always an option.

@Joe Splitrock thanks for the feedback. It doesn't surprise me that it would be difficult to find foreclosure deals that require only minor work. I'm hoping that after enough research I'll have uncovered a few different ways of getting in at the right price point. 

I agree regarding not following the herd. To me, investing is a long term proposition. I invest in the stock market whenever I have the excess capital to do so. Market fluctuations/valuations are irrelevant to me. I have no idea if things will go up or down in the short term, but over the long haul I do expect them to rise steadily. If you think you're ready to invest in the stock market, there's no better time than now. That advice would stand no matter what the current valuations were. I do not attempt to time the market since it's been proven that doing so is unlikely to work out in one's favor. 

Real estate seems to be a different animal, though. I can see an argument being made for holding cash for the right opportunity. Let's hope those right opportunities come up when I have my downpayment.

@Cliff Harrison those are some encouraging words. I've also thought about the concentrated risk associated with just owning one or two rental properties. It's actually eased my concerns about pursuing RE. I figure even if I get a bad tenant or have a few capital expenditures that lower my profit initially, I can feel confident that diversifying with other properties may reduce the impact on the overall portfolio. Longer term, things should level off at a more healthy ROI if I buy right and manage things properly. Adding leverage, equity paydown and depreciation to the mix really makes it an attractive path. Just have to be smart about the leverage aspect.

@Chris Martin you'll have to excuse my ignorance, I was too busy googling "hypothecation" to understand that you were getting at the same thing lol. Again, I'm glad to see there are methods for reducing one's reliance on cash reserves.

@Cory Tuck welcome to the forums :) 

• re TLH: I've considered it, but wasn't all that impressed with the savings once I factored in the lowered cost basis. It also took me out of the passive nature of the investing when I thought about having to lock in those losses, sell and avoid the wash sale rule. I'll probably never go with a robo-advisor for my taxable stuff, but may look into TLH again to see if it's something I'm willing to do manually. Do you know if I can use the losses against my earned income before offsetting any gains? That may make it worth my while. I don't really worry about keeping more in taxable for early retirement. You can see my earlier posts about the Roth ladder and 72t for clarification as to why. 
• I don't see myself ever investing on margin when it comes to stocks because for me that's where it's all passive. I've accepted the currently risk level, and wouldn't want to complicate things too much on that front. 
• I love the diversification aspect of real estate. I won't be going 50/50 to start, but I'll certainly be willing to consider ramping up my RE allocation if I think I'm ready for it. 
• I wouldn't argue with you on the 6%. However, I think valuations are always hitting new highs and don't see any reasons to keep my estimates lower than that. They may end up lower or higher, but we'll only know once we get there. 
• I agree on the potential hedge. I've totally embraced the concept of leverage, especially in the current interest rate environment. I'm hoping to be able to secure some good long term fixed rate terms for the properties I pick up.
• Good luck on that front. I'm sure by that time you'll have enough knowledge and experience to make that a reality.

@Thomas S. that is very interesting. I had never thought about that. Great to see that there are ways around this if someone is willing to get a little creative.

@Ryan Arth you're 100% correct on approaching things with eyes open. I appreciate the feedback. From the research I've done, I guesstimate a 50 year retirement and use a 3% withdrawal rate which has survived in 100% of backtested scenarios using something like a 60/40 stock to bond portfolio. That of course does not guarantee anything for the future, but I do base my plans on that.

I am hopeful about Real Estate because like you say, it offers that downside risk protection, but I may also be able to increase my overall return if I do things right.