Mysunsai t1_jebypyl wrote

> the more you use your credit card and pay it back on time, the higher your score gets


Paying on time is good for your score. Paying a bill of $0 is exactly as “on time” as paying a bill of $10,000, and has exactly the same effect.

Actually using the card is, at best, irrelevant, and at worst (temporarily) bad if your utilization becomes particularly high. Though utilization is not remembered month to month, so it’s not something that needs to be managed unless you are actively trying to get a loan.

So long as the card isn’t so inactive that the issuer closes the account, using it or not doesn’t matter.


Mysunsai t1_jeaqkss wrote

> 401k accounts are FDIC insured up to $250k

No they aren’t. Possibly your specific 401k could have a cash fund at an FDIC insured bank, but that still wouldn’t be the 401k that is insured, it would be the bank.

SIPC insures brokers up to $500k, which would generally cover most 401k administrators.

You should note, however, that 401k assets do not belong to the administrator anyway, broker insolvency does not effect your 401k in any significant way. SIPC coverage only really comes in if the broker is pulling a Madoff, and stealing the money while pretending to invest it.


Mysunsai t1_jaecy86 wrote

> They sound comparable with target funds being a safer option


Nobody said anything about safer.

> I’m confused because the Vanguard Target Funds have way less than your age in bonds.

Age in bonds is also the “easier” explanation, it’s something that someone without any knowledge of modern portfolio theory can probably manage to do. That doesn’t mean it is actually what modern portfolio theory says to do… just close enough that you’ll manage ok. It was the general recommendation before target date funds allowed everyone to easily access actual modern portfolio theory allocations.

You can still do whatever you want, of course, but if you don’t want to follow MPT precisely then target date funds are not for you.


Mysunsai t1_jadwwfo wrote

The underwitholding penalty is currently 7%, it varies semi-annually based on the federal short term rate.

If you routinely underpay, you will be subjected to backup withholding and the IRS will require your employer/bank/brokerage/etc. to withhold from all income irrespective of your instructions.


Mysunsai t1_jabd0un wrote

Because you paid the correct amount of taxes instead of overpaying.

A refund is not the government saying “hey, thanks for paying your taxes, have some free money.”

A refund is the government saying “your total is $15.69, you paid with a $20, your change is $4.31.”


Mysunsai t1_jaafdji wrote

In that case, your sale just results in capital losses now, unrelated to your previous taxes. If you end the year with a net capital loss, up to $3k of that reduces your other taxable income, and the rest carries forward to future years.

Your previous taxes occurred in the past, and are no longer important to anything that goes on now.


Mysunsai t1_ja9t5wu wrote

> I paid significant State and Federal (USA) Supplemental Income Tax based on the Fair Market Value (FMV) at the time.

Are you talking about alternative minimum tax?

Because otherwise, there are no taxes on exercising of ISOs, only on sale is tax applied.

Assuming you are talking about alternative minimum tax, you gain a credit for the excess taxes paid in every year you are not subject to AMT.

Since it’s now been 2 years since exercise, you are free to sell whenever, and you’ll eventually recoup the AMT (unless you are always subject to AMT, in which case you are still free to sell whenever and the AMT tax rates are just what you pay).


Mysunsai t1_j9w5ogv wrote

Those are by far the least important parts of your startup, and certainly not something you need to put money or effort into until you have the actually important stuff squared away. Partner is 100% correct, at least as far as priorities go.


Mysunsai t1_j6okoxi wrote

The bank does have to return the money.

The scammer is not the one returning the money though, the bank is. The scammer has already deposited the check in a stolen or fraudulent bank account (and/or at a check cashing location like many Walmarts), withdrawn the cash, and vanished into the ether.

This isn’t new, it’s as old as banks.


Mysunsai t1_j6ojdrj wrote

Closer to 5 years earlier at current interest rates, give or take.

There are 12 months in a year. But there are 52 weeks in a year. So if you pay every two weeks, you make 26 payments, which is the equivalent of 13 months worth of mortgage payments every year. That’s why you pay off early.


Mysunsai t1_j6ln6ht wrote

Just read the instructions for the W4.

If you put married filing jointly, your employer withholds as if you have $25k standard deduction, $20k at 10%, $60k at 12%, etc. Which is correct, those are the tax brackets for married filing jointly.

But if you have multiple jobs (eg both you and your wife work), then combined between your jobs your withholding looks like you have $50k of standard deduction, $40k at 10%, etc. So you massively underwithhold.

The solution is to follow the instructions in step 2 for multiple jobs. (Or alternatively, you could both select single instead of married filing jointly).


Mysunsai t1_j2f3b6i wrote

An IRA has nothing to do with your employer, or your payroll.

You are confused how taxes work: your paycheck withholding is not your tax, it is an estimate based ont the information you give your employer (remember form w4?, that was you telling them how much tax you think you owe). If that was incorrect, it is corrected at the end of the year (that’s your tax return, where you are refunded extra tax paid, or pay more if you didn’t pay enough). If you make an IRA contribution, you write it on your tax return to claim it as pre tax.

If you want your employer not to withhold tax on your IRA contribution, you can put that on you w4. Otherwise, you will get back any overpayment at the end of the year. In either case, it is “pre tax.” It’s just a question of when you notice the extra money.


Mysunsai t1_j2cm09e wrote

The answer, formally, is that the IRS has not yet issued any ruling on that problem, and so nobody actually knows whether that could become a problem.

The practical answer is that it is so easy to find alternatives that still have essentially perfect correlation, that it is not really worth taking a risk on it.


Mysunsai t1_j29rc8r wrote

You tell them you want to buy something. They find it and buy it for you. Just like buying anything else through a brokerage.

The vast majority of bonds you’ll find available are on the secondary markets, because that’s where the vast majority of bonds are.

If they offer the option, you may also be able to place bids at an auction through them.

I’ve never specifically used Merrill, so I can’t speak for them specifically how they display those options (as far as whatever yield you believe you are seeing). You may simply be mistaking which bond you are looking at. They may provide an estimated yield based on current market trends, as a guide, with no guarantee that’s what you’ll get. They may be offering to make a competitive bid at that price or better, with no guarantee you’ll win the auction. Or something else. Either read the description, or call and ask.


Mysunsai t1_j20d4py wrote

> are we better off sticking with a consistent savings+interest

Nothing about your savings account is consistent, just last year you would have struggled to find anything above 0.5%. Your future savings account rate is just as temporary and unknown.

> I was planning on leaving them for the full 30 years, but it seems like people who understand this stuff far better than I do choose to take them out at 5 years?

Generally speaking, inflation has not been very high in the US. The last period of high inflation was the 1970s. The last decade of historically low interest rates has been driven by the federal reserve struggling to get inflation to reach 2%, and failing.

The general expectation is that there will not be long term high inflation in the US, basically nobody expects there to be. In that kind of environment, holding I bonds for the long term would be a poor choice, and so nobody is really planning on doing so.

Luckily, you can choose to redeem whenever you want (at least, after 1 year), so at any time between now and 30 years you can adjust your strategy.


Mysunsai t1_iyemwh4 wrote

The “spirt of the law” is that you can take advantage of specific benefits in exchange for specific restrictions. Taking advantage of the benefits without any of the accompanying restrictions is the opposite of the spirit.

Stock traders don’t generally move money back and forth between checking and brokerage, he’s nothing special.