Investing General Discussion

Sludig · Aug 2, 2023

Mist said:
SoFi Relay lets you view all your credit card balances, investment and retirement balances, etc, all in the same app, and transfer money between all your checking and savings accounts.

That's another to do, have 3 401k's floating around that I forget the company that even holds them half the time, need to get them consolidated. THough one I was leaving alone because it was supposed to be a 5-6 year vest with employer matching funds. Friend and I both were only at that sheriff for less than that before noping the fuck out. He was a couple years ahead and I didn't learn from his experiences with them.

He noticed they never reclaimed their half of his 401 (not K technically like 401h ? or something) and he sat it out the 5 years and last I knew I thought he moved it without it triggering some kind of deduction. If it was allowed to vest by just leaving it alone, makes me wonder if that's just oopsy on the agency not to go after that money for someone leaving before 5 years, or if they lied to us from the start that they'd get their half back. They had retention issues pretty bigly at the time, so why not try and make people feel forced to stay there longer.

Sludig · Aug 2, 2023

Facebook listening. No idea who these chuckle fucks are though

Cutlery · Aug 2, 2023

FOH Bros, I need some help. Didn't see a better thread for it than this. It mostly relates to retirement planning, but I figure it's basically investing, to which I know next to nothing about.

I have a pension with a company that's probably never going to go under, so I think it's a pretty safe bet it will be there when I retire. They offered me a buyout on it, cash now, or annuity for the rest of my life. The sum total of this pension would be $953/mo at age 65, for the rest of my life. The annuity option i can take today is $312/mo for the rest of my life. That one I can figure out myself - that sounds like garbage. I'm 44, so 20ish years until retirement. My grandfather is 94, and I have no reason to believe I won't live at least as long, based on my excellent health and the general longevity of my family tree. So I'm looking at probably 30 years in retirement. Based upon that, it's pretty simple to exclude the annuity, as I'd receive ~187k from that over my expected life, or almost double that from just taking the pension at 65 and living another 30 years.

The part I'm having trouble with is the lump sum payment - they're offering me $64k to buy me out completely. On the face of it - it seems ridiculous, that's like 5 years of retirement, and I'd collect way more money over my life than that. But, i'm no longer with that company, and I have a 401k now (which is pretty small, only had it for just over a year). Rate of return on it was 8% last year.

When I start trying to figure out the math on this, I'm not sure which direction to go. If we use a simple investment calculator and I assume 6% return (is that fair? I don't know), that means that I'm going to have 217.5k by 65 just off that money alone, not to mention what I put in there between now and then. But, if I'm reading this table right, that means I'm going to be getting $12k/year in interest by that point - which is more than the pension is worth (marginally, but it still is). Now, if I can just take the interest and leave the principal, this means I should be in theory way better off, no? I mean, I'd get the same "pension" out of it, but I'd have 200k to pass down to the kids or draw down as I need.

But then I start to wonder about what the actual rate of return is as you get closer to retirement - maybe it's not enough to get the same benefit as the pension is.

Basically what I'm saying is I'm not sure what the fuck I should do here. Safe money is always going to be good. Guaranteed money is always going to be good. But if I can do better than that safe money by a substantial margin, shouldn't I be exploring this option? Should I just fucking leave it? I mean, if I die, it just goes away, so there's always that threat. But on the flip side - i'm dead, what the fuck do I care?

You guys have any thoughts on what you'd do in this situation?

Big Phoenix · Aug 3, 2023

So TSMC reported subpar earnings due to downturn in cellphone/china so was kicked in the balls.
Qualcomm just reported tonight and was kicked in the balls due to outlook on cellphone/china

Apple reports tomorrow, will they too be kicked in the balls due to cellphone/china demand? And will that be dumping gasoline on this simmering fire?

TJT said:
This will be interesting because every business is so balls deep in SAAS services for everything. Building out on-prem stuff again isn't feasible either.

That's before we get into the very expansive ecosystem of smaller SAAS products that companies use left and right.

Current company is cloud/saas everything(and god is it fucking horrible seeing these people try and coordinate, endless redtape covering redtape) aside from a local DC and fileserver. And our MSP that handles our infrastructure is now trying to sale us on moving our fileserver to azure as well instead of replacing the old server running our vms.

sliverstorm · Aug 3, 2023

Cutlery said:
FOH Bros, I need some help. Didn't see a better thread for it than this. It mostly relates to retirement planning, but I figure it's basically investing, to which I know next to nothing about.

I have a pension with a company that's probably never going to go under, so I think it's a pretty safe bet it will be there when I retire. They offered me a buyout on it, cash now, or annuity for the rest of my life. The sum total of this pension would be $953/mo at age 65, for the rest of my life. The annuity option i can take today is $312/mo for the rest of my life. That one I can figure out myself - that sounds like garbage. I'm 44, so 20ish years until retirement. My grandfather is 94, and I have no reason to believe I won't live at least as long, based on my excellent health and the general longevity of my family tree. So I'm looking at probably 30 years in retirement. Based upon that, it's pretty simple to exclude the annuity, as I'd receive ~187k from that over my expected life, or almost double that from just taking the pension at 65 and living another 30 years.

The part I'm having trouble with is the lump sum payment - they're offering me $64k to buy me out completely. On the face of it - it seems ridiculous, that's like 5 years of retirement, and I'd collect way more money over my life than that. But, i'm no longer with that company, and I have a 401k now (which is pretty small, only had it for just over a year). Rate of return on it was 8% last year.

When I start trying to figure out the math on this, I'm not sure which direction to go. If we use a simple investment calculator and I assume 6% return (is that fair? I don't know), that means that I'm going to have 217.5k by 65 just off that money alone, not to mention what I put in there between now and then. But, if I'm reading this table right, that means I'm going to be getting $12k/year in interest by that point - which is more than the pension is worth (marginally, but it still is). Now, if I can just take the interest and leave the principal, this means I should be in theory way better off, no? I mean, I'd get the same "pension" out of it, but I'd have 200k to pass down to the kids or draw down as I need.

But then I start to wonder about what the actual rate of return is as you get closer to retirement - maybe it's not enough to get the same benefit as the pension is.

Basically what I'm saying is I'm not sure what the fuck I should do here. Safe money is always going to be good. Guaranteed money is always going to be good. But if I can do better than that safe money by a substantial margin, shouldn't I be exploring this option? Should I just fucking leave it? I mean, if I die, it just goes away, so there's always that threat. But on the flip side - i'm dead, what the fuck do I care?

You guys have any thoughts on what you'd do in this situation?

Not a financial advisor, but here's one way to look at it:

First, we'll assume that even if your company does go under, your pension will be safe. I would expect that to be true or pretty close to true, but worth confirming.

Let's start with a more modest risk free rate. 20 year treasuries are at something like 4%, so we'll use a 4% interest rate.

First, we'll assume that once you hit 65, you want to draw a steady fixed monthly payment until you die 29 years later. So you do nothing but invest until 65, then you draw from your principal + interest at a fixed rate with the goal of making it $0 by 94.
At 65, you can choose from:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$123k and 312/mo	$909 = 312 + 597	$0
C (Lump Sum)	$150k and 0/mo	$731 = 0 + 731	$0

Second, let's assume you live off interest + monthly payment at 65 and leave the nest egg to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$123k and 312/mo	$722 = 312 + 410	$123,000
C (Lump Sum)	$150k and 0/mo	$501 = 0 + 731	$150,000

Third, let's assume you decide to reinvest everything until you die and leave it all to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$0	$624,000
B (Annuity)	$123k and 312/mo	$0	$596,000
C (Lump Sum)	$150k and 0/mo	$0	$479,000

The pension outperforms in the first and the third scenario, with the middle one depending on how frugal you want to be vs. what you want to leave behind.

But now, let's say you decide to take on additional risk yourself, reinvest in the market instead of in treasury bonds, and keep doing so into retirement. We'll use the 8% rate from your 401k, which is slightly below the historical S&P 500, but I'm also too lazy to change my compounding formula for stocks so it sort of evens out.

Steady fixed monthly payment until you die 29 years later:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$203k and 312/mo	$1,813 = 312 + 1501	$0
C (Lump Sum)	$347k and 0/mo	$2,566 = 0 + 2566	$0

Live off returns + monthly payment at 65 and leave the nest egg to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$203k and 312/mo	$1,665 = 312 + 1353	$203,000
C (Lump Sum)	$347k and 0/mo	$2,312 = 0 + 2312	$346,000

Reinvest everything until you die and leave it all to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$0	$1,301,000
B (Annuity)	$203k and 312/mo	$0	$2,474,000
C (Lump Sum)	$347k and 0/mo	$0	$3,502,000

If you have the appetite to ride or die in the market, Lump sum grossly outperforms; the more cash you can invest earlier, the better you can take advantage of your high risk tolerance.

Finally, let's look at the most realistic scenario: You invest in the market until you're 65 (8%), and then swap everything over to long-term treasury bonds (4%) so that you don't have to worry about a 'down year' impacting your cash flow:

Steady fixed monthly payment until you die 29 years later:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$203k and 312/mo	$1,298 = 312 + 986	$0
C (Lump Sum)	$347k and 0/mo	$1,685 = 0 +1685	$0

Live off interest + monthly payment at 65 and leave the nest egg to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$953 = 953 + 0	$0
B (Annuity)	$203k and 312/mo	$988 = 312 + 676	$203,000
C (Lump Sum)	$347k and 0/mo	$1,156 = 0 +1156	$346,000

Reinvest everything until you die and leave it all to the kids:

Plan	What you start with at 65	What you get monthly from 65 - 94	What's left over when you're dead
A (Pension)	$0 and 953/mo	$0	$624,000
B (Annuity)	$203k and 312/mo	$0	$850,000
C (Lump Sum)	$347k and 0/mo	$0	$1,104,000

Again, lump sum outperforms across all categories here--the early benefit you get from having the lump sum sitting in the market for 20 years does get you to a place where risk free interest payments coming in post-retirement outpace the fixed pension.

As you can see, the rates matter a lot in how things model out. I think this scenario probably provides the best 'decision-making' view relative to your options.

TL;DR what would I do? Knowing I was working for 20 years and wanting to keep things simple, I would take the lump sum, direct rollover into an IRA, and purchase an index fund that tracks the market.

Here's the sheet I used to develop this chart if you want to screw around with different rates/longevity (or have someone else check my work. It's been awhile : /):

As a side note, good for you for working through investing in retirement. Put in as much as you're able as early as you can.

Flobee · Aug 3, 2023

sliverstorm said:
Not a financial advisor, but here's one way to look at it:

This was a good breakdown, by all means listen to this rather than the following:

But... since I'm that guy I'll throw this out. I have my doubts about the solvency of pension funds over the next 20-40 years and the safety of a 401k tax vehicle over that same period. If we get full blown communism, for example, you're not getting any of that money. Even if we don't go that far pension funds have historically been in a lot of trouble and its not clear how they resolve that.

With that in mind perhaps the lump sum is the lower risk option, at least you're in control of the capital at that point. If the next 40 years looks like the last 40 years then this approach is potentially stupid, I just don't think that's what we're going to see.

Palum · Aug 3, 2023

Big Phoenix said:
So TSMC reported subpar earnings due to downturn in cellphone/china so was kicked in the balls.
Qualcomm just reported tonight and was kicked in the balls due to outlook on cellphone/china

Apple reports tomorrow, will they too be kicked in the balls due to cellphone/china demand? And will that be dumping gasoline on this simmering fire?

View attachment 485083

Current company is cloud/saas everything(and god is it fucking horrible seeing these people try and coordinate, endless redtape covering redtape) aside from a local DC and fileserver. And our MSP that handles our infrastructure is now trying to sale us on moving our fileserver to azure as well instead of replacing the old server running our vms.

The problem with cloud is ultimately layered regulations always increasing in scope will make it always attractive. The only thing cheaper in a heavily regulated industry is just ignoring them all.

Fogel · Aug 3, 2023

Cutlery said:
FOH Bros, I need some help. Didn't see a better thread for it than this. It mostly relates to retirement planning, but I figure it's basically investing, to which I know next to nothing about.

I have a pension with a company that's probably never going to go under, so I think it's a pretty safe bet it will be there when I retire. They offered me a buyout on it, cash now, or annuity for the rest of my life. The sum total of this pension would be $953/mo at age 65, for the rest of my life. The annuity option i can take today is $312/mo for the rest of my life. That one I can figure out myself - that sounds like garbage. I'm 44, so 20ish years until retirement. My grandfather is 94, and I have no reason to believe I won't live at least as long, based on my excellent health and the general longevity of my family tree. So I'm looking at probably 30 years in retirement. Based upon that, it's pretty simple to exclude the annuity, as I'd receive ~187k from that over my expected life, or almost double that from just taking the pension at 65 and living another 30 years.

The part I'm having trouble with is the lump sum payment - they're offering me $64k to buy me out completely. On the face of it - it seems ridiculous, that's like 5 years of retirement, and I'd collect way more money over my life than that. But, i'm no longer with that company, and I have a 401k now (which is pretty small, only had it for just over a year). Rate of return on it was 8% last year.

When I start trying to figure out the math on this, I'm not sure which direction to go. If we use a simple investment calculator and I assume 6% return (is that fair? I don't know), that means that I'm going to have 217.5k by 65 just off that money alone, not to mention what I put in there between now and then. But, if I'm reading this table right, that means I'm going to be getting $12k/year in interest by that point - which is more than the pension is worth (marginally, but it still is). Now, if I can just take the interest and leave the principal, this means I should be in theory way better off, no? I mean, I'd get the same "pension" out of it, but I'd have 200k to pass down to the kids or draw down as I need.

But then I start to wonder about what the actual rate of return is as you get closer to retirement - maybe it's not enough to get the same benefit as the pension is.

Basically what I'm saying is I'm not sure what the fuck I should do here. Safe money is always going to be good. Guaranteed money is always going to be good. But if I can do better than that safe money by a substantial margin, shouldn't I be exploring this option? Should I just fucking leave it? I mean, if I die, it just goes away, so there's always that threat. But on the flip side - i'm dead, what the fuck do I care?

You guys have any thoughts on what you'd do in this situation?

S&P 500 historical return is 10%. Factor in inflation and you can go with 6-7% as a good return to estimate on

Hateyou · Aug 3, 2023

Lump sum and buy a corvette. Don’t listen to these fuddy duddys.

Cutlery · Aug 3, 2023

Hateyou said:
Lump sum and buy a corvette. Don’t listen to these fuddy duddys.

Some guys did that. But they only plan on living to 65, so I can't blame em.

Sanrith Descartes · Aug 3, 2023

TLT sitting just above its final support level in the pre-market this morning. Im thinking its time to grab some here. It seems like only yesterday the 'rona had it trading around $170

edit: entry position filled at $95.25

ShakyJake · Aug 3, 2023

Big Phoenix said:
So TSMC reported subpar earnings due to downturn in cellphone/china so was kicked in the balls.
Qualcomm just reported tonight and was kicked in the balls due to outlook on cellphone/china

Apple reports tomorrow, will they too be kicked in the balls due to cellphone/china demand? And will that be dumping gasoline on this simmering fire?

View attachment 485083

Current company is cloud/saas everything(and god is it fucking horrible seeing these people try and coordinate, endless redtape covering redtape) aside from a local DC and fileserver. And our MSP that handles our infrastructure is now trying to sale us on moving our fileserver to azure as well instead of replacing the old server running our vms.

Been wondering if there's any hints at what Apple's performance will be. Also, they don't give guidance, correct? Thought I read that somewhere.

Sanrith Descartes · Aug 3, 2023

Cutlery said:
FOH Bros, I need some help. Didn't see a better thread for it than this. It mostly relates to retirement planning, but I figure it's basically investing, to which I know next to nothing about.

I have a pension with a company that's probably never going to go under, so I think it's a pretty safe bet it will be there when I retire. They offered me a buyout on it, cash now, or annuity for the rest of my life. The sum total of this pension would be $953/mo at age 65, for the rest of my life. The annuity option i can take today is $312/mo for the rest of my life. That one I can figure out myself - that sounds like garbage. I'm 44, so 20ish years until retirement. My grandfather is 94, and I have no reason to believe I won't live at least as long, based on my excellent health and the general longevity of my family tree. So I'm looking at probably 30 years in retirement. Based upon that, it's pretty simple to exclude the annuity, as I'd receive ~187k from that over my expected life, or almost double that from just taking the pension at 65 and living another 30 years.

The part I'm having trouble with is the lump sum payment - they're offering me $64k to buy me out completely. On the face of it - it seems ridiculous, that's like 5 years of retirement, and I'd collect way more money over my life than that. But, i'm no longer with that company, and I have a 401k now (which is pretty small, only had it for just over a year). Rate of return on it was 8% last year.

When I start trying to figure out the math on this, I'm not sure which direction to go. If we use a simple investment calculator and I assume 6% return (is that fair? I don't know), that means that I'm going to have 217.5k by 65 just off that money alone, not to mention what I put in there between now and then. But, if I'm reading this table right, that means I'm going to be getting $12k/year in interest by that point - which is more than the pension is worth (marginally, but it still is). Now, if I can just take the interest and leave the principal, this means I should be in theory way better off, no? I mean, I'd get the same "pension" out of it, but I'd have 200k to pass down to the kids or draw down as I need.

But then I start to wonder about what the actual rate of return is as you get closer to retirement - maybe it's not enough to get the same benefit as the pension is.

Basically what I'm saying is I'm not sure what the fuck I should do here. Safe money is always going to be good. Guaranteed money is always going to be good. But if I can do better than that safe money by a substantial margin, shouldn't I be exploring this option? Should I just fucking leave it? I mean, if I die, it just goes away, so there's always that threat. But on the flip side - i'm dead, what the fuck do I care?

You guys have any thoughts on what you'd do in this situation?

I had similar options when I took early retirement from AT&T. I was hired back when they offered pensions. I did the math similar as you. For me, the math came out to take the lump sum and invest it. Fuck annuities, btw.

Since you lack the skillset as an investor, 99% of the time my suggestion is to just park the cash into an index and let it do the lifting for you over the next couple of decades. As someone else pointed out, the historical return on the S&P is about 9.75% with dividend reinvestment. While "professional" investment managers have beaten it for a year or three, no data I have seen has ever had almost no one beat it for more than 6 to 7 years in a row. I think the longest I have ever seen was a streak of 8 years. By the time management fees and taxes are removed, fund managers have to average about 12% to actually beat the SPY.

This being said, I took over my Mom's accounts about 7 years ago from Merrill. Her advisor was absolute shit. He had a 70-year old invested in emerging market bonds. And she was paying 1% of AUM in fees for the luxury of getting 4-5% annual returns each year. I applied the same basic philosophy to her accounts that I use for my own and that of other people I advise. This is... Point the vast, vast majority of you investment into an index fund or two (SPY, QQQ, ITOT, HDV) and then use a small amount to purchase individual shares in blue chip stock with bulletproof balance sheets to go overweight those companies. Examples of these companies are AAPL, MSFT, GOOGL, HD, WMT, JPM etc.

This goes counter to decades of "professional" advice for retired people which is dividends and bonds. The issue is that strategy hasnt worked in about 40 years. I have used HDV for some steady safe dividend income to supplement the index of QQQ, JEPI and ITOT. Sprinkle in some AAPL, MSFT, CSCO, PM, WMT, MCD and a few others for added weight. Her 1-year return is over 16% and her IRA generates just about enough dividend income to cover her RMD.

tldr: Take the lump sum, put it into the SPY/ITOT/QQQ with dividend reinvestment turned on and dont look at it more than once or twice a year.

Hateyou · Aug 3, 2023

Cutlery said:
Some guys did that. But they only plan on living to 65, so I can't blame em.

That’s not a plan that’s a hope.

Rangoth · Aug 3, 2023

Hateyou said:
That’s not a plan that’s a hope.

I mean…..it could be a plan.

Cutlery · Aug 3, 2023

Hateyou said:
That’s not a plan that’s a hope.

Honestly...if you saw the guys, you'd understand that 65 is pushing it.

Sanrith Descartes · Aug 3, 2023

Sanrith Descartes said:
TLT sitting just above its final support level in the pre-market this morning. Im thinking its time to grab some here. It seems like only yesterday the 'rona had it trading around $170

edit: entry position filled at $95.25

edit 2: I really suck at pre/post market trades. Like really suck badly. I need to remove my ability to trade per/post market. I think I am like 0/20 getting the price right when I trade outside of normal hours.

Sanrith Descartes said:
View attachment 485097

Blazin · Aug 3, 2023

Back into IWM this morning, take the couple % of alpha

Sanrith Descartes · Aug 3, 2023

NVDA is the thing that will not die.

Sanrith Descartes · Aug 3, 2023

Grabbed a starter position in ALB. Its been on my radar for a while and I have been tracking it. It popped on earnings this morning and then did a full reversal. I like the space. If my entry price is wrong I might add some down later.