Financial Thread

[Mtowncyclone13]

My target retirement date fund as returned 19.8% so far this year, 8.1% over the past 5 years, and 7.7% over the past 10 years. Yes, it will go down that's a huge chunk to take out of the market to pay off a house even without paying a penalty. You said it's all employer match (which doesn't matter) you must have a great job. Keep contributing and throw extra cash at the mortgage when you can.

I recently read the majority of gains happen in only a few days time. If you miss the top 10 days of a DECADE it cuts your return potential by 32%.

 

[BCClone]

dumb question but why don't they treat each child equally? if they offered them $1k for something shouldn't they offer you the same?

Taking you either don't have kids or they are young. Not saying what CGs parents are doing is fair, but equal is not necessarily fair. Older kids get, the more you realize this.

 

[cyfanbr]

A $175,000 would only leave $131,250 after a 25% tax hit so they would need to withdraw more - making it an even worse decision. Isn't there also a 10% penalty? I think they would need to pull out about $220,000 to pay off the house.

You are right. I must have mistyped on my calculator since I was trying to get it done quickly. I couldn't remember how much the early withdraw fee was, but 10% sounds about right.

 

[ArgentCy]

Really there is more to it than that though. By doing the withdraw and paying of the house, all of the sudden this person has freed up the amount of money being spent on house payments every month. That money could be used invest in a myriad of other things - some of which could return significantly better returns than the 401k.

What is the money that gets freed up going to be used for also needs to be included in any thought process on if its a good move or not.

You lost 30% of your capital. Capital that is in an account that delays taxes. You can't recoup that easily.

 

[ricochet]

Is everyone ready for the outcome of this?

I'm assuming they paid off the house and then because they didn't have a mortgage payment went and bought 2 new cars with 84 month loans.

 

[Mtowncyclone13]

Taking you either don't have kids or they are young. Not saying what CGs parents are doing is fair, but equal is not necessarily fair. Older kids get, the more you realize this.

we have one young kid. but my sister makes 3-4 x what we make and my parents still offer her the same as they offer me for the furnace example. my dad said "you can wait til i croak to get my money or i can help you out now. either way it's being split up". can't imagine a parent planning to split their wealth in half for each kid would want to give 50k (for example) to one and none to the other.

 

[BCClone]

we have one young kid. but my sister makes 3-4 x what we make and my parents still offer her the same as they offer me for the furnace example. my dad said "you can wait til i croak to get my money or i can help you out now. either way it's being split up". can't imagine a parent planning to split their wealth in half for each kid would want to give 50k (for example) to one and none to the other.

Things that may adjust how things are divvied up imo. If one kid gets a masters, do you write a check to the other kids for the equivalent. Maybe one kid just wants a one year, 20k tech degree, do you stroke an 80k check to each of the other kids? If you have a daughter and two sons, I do, do I write a check for the amount of the wedding to my sons when they hit the age my daughter got married? If one child helped with the family business (typically farm in my day) and the other didn't, maybe there is a reason down the road that there isn't a 50/50 split.

 

[Mtowncyclone13]

Things that may adjust how things are divvied up imo. If one kid gets a masters, do you write a check to the other kids for the equivalent. Maybe one kid just wants a one year, 20k tech degree, do you stroke an 80k check to each of the other kids? If you have a daughter and two sons, I do, do I write a check for the amount of the wedding to my sons when they hit the age my daughter got married? If one child helped with the family business (typically farm in my day) and the other didn't, maybe there is a reason down the road that there isn't a 50/50 split.

we're talking about different things. i am talking about straight cash gifts not tied to an event or education. if two adult children are going to split an inheritance 50/50 then why wouldn't the parent make sure cash gifts are equally distributed from that same pot of money?

 

[Cydkar]

dumb question but why don't they treat each child equally? if they offered them $1k for something shouldn't they offer you the same?

My parents gave my sister and her husband some money so they insisted on givnig my family and equal amount. It was a small sum and Mom said she didn't want to take it with her (jokingly). It all goes to the kid's college fund or family vacation expenses but it does feel weird.

 

[Cydkar]

we're talking about different things. i am talking about straight cash gifts not tied to an event or education. if two adult children are going to split an inheritance 50/50 then why wouldn't the parent make sure cash gifts are equally distributed from that same pot of money?

One kid is certainly more of a jerk than the other.

 

[cowgirl836]

we're talking about different things. i am talking about straight cash gifts not tied to an event or education. if two adult children are going to split an inheritance 50/50 then why wouldn't the parent make sure cash gifts are equally distributed from that same pot of money?

my guess would be many people don't think of the assistance they give to young adult children as being part of an eventual inheritance the way your parents are choosing to do.

 

[BCClone]

we're talking about different things. i am talking about straight cash gifts not tied to an event or education. if two adult children are going to split an inheritance 50/50 then why wouldn't the parent make sure cash gifts are equally distributed from that same pot of money?

Guess what I was saying was maybe needs are different. My oldest sister is 18 years older than me. She has grandkids older than my youngest. My mom helped the oldest grandkids due to needs my sister couldn't help with, but my kids didn't get anything. Just different situations. with my siblings so spread out, it didn't make sense to go equal.

My basic thoughts are, my parents money is their money. I don't expect anything. If they give me anything, fine, if my sisters get something, good for them. It's theirs.

 

[BCClone]

my guess would be many people don't think of the assistance they give to young adult children as being part of an eventual inheritance the way your parents are choosing to do.

Pretty much what I was struggling to suggest. Thanks, CG.

 

[Mtowncyclone13]

I am in the same boat. Never expected. Always appreciated.

 

[cowgirl836]

Pretty much what I was struggling to suggest. Thanks, CG.

yeah I get what you were both saying, and thought you were maybe on different wavelengths.

it's one thing to start handing out inheritance money as the parents' wish. Adult kids shouldn't complain when that happens and should appreciate what they get.

It's something different if say, they are paying 100% the cost of one kids' college education and refusing to give a dime to another. Or give $50 to one at Xmas and $500 to the other.

 

[BCClone]

yeah I get what you were both saying, and thought you were maybe on different wavelengths.

it's one thing to start handing out inheritance money as the parents' wish. Adult kids shouldn't complain when that happens and should appreciate what they get.

It's something different if say, they are paying 100% the cost of one kids' college education and refusing to give a dime to another. Or give $50 to one at Xmas and $500 to the other.

I understand how the last can create hard feelings. Would think it would be best to give extras in private, or those getting them to keep their mouths shut. I will say, from what I've noticed from friends who have adult children, those that they don't need to financially help or parent in some way, are the ones that the parents do seem to speak most fondly and proudly of to their friends. It sounds backwards, but they eye them as the responsible ones.

 

[DurangoCy]

I now make a fair bit more than my parents ever did thru their careers and am mid 30's but they did ok, inherited some cash/land, and will retire comfortably this year/next year. I don't really need anything, but they still get me (and my brother who's in a similar boat, but with a family) way too nice of Christmas presents and chip in for airfare when we roll home quite often. It's completely not necessary and I'd rather they just do things they like, but I kinda think helping their kids out is what parents like to do.

They've started letting me run their taxable investment accounts rather than let them sit idle in mm accounts or crappy investments, so hopefully they'll get 10 fold more than chipping in for plane tickets, etc.

Had grandparents sell a farm in the 90's which should've been enough for them to live very well in retirement, but they just bought a house and let the rest sit in a savings account or bought bs life insurance that returned 1% for 20 years. My grandma died last year and it was sad how little she had left and it's not like they wasted anything.

 

[Bobber]

I now make a fair bit more than my parents ever did thru their careers and am mid 30's but they did ok, inherited some cash/land, and will retire comfortably this year/next year. I don't really need anything, but they still get me (and my brother who's in a similar boat, but with a family) way too nice of Christmas presents and chip in for airfare when we roll home quite often. It's completely not necessary and I'd rather they just do things they like, but I kinda think helping their kids out is what parents like to do.

They've started letting me run their taxable investment accounts rather than let them sit idle in mm accounts or crappy investments, so hopefully they'll get 10 fold more than chipping in for plane tickets, etc.

Had grandparents sell a farm in the 90's which should've been enough for them to live very well in retirement, but they just bought a house and let the rest sit in a savings account or bought bs life insurance that returned 1% for 20 years. My grandma died last year and it was sad how little she had left and it's not like they wasted anything.

Same boat as you, just a little further down the road. Yes that's what parents do...

Have some cousins who have been too conservative in their investments and now it is catching up with them like your Grandparents. My family has generally been more progressive, successful and aggressive with our investments and that creates some tension between the families...Everybody makes their own choices..

 

[SCNCY]

With the market back near all time highs, does anyone think its time to sell some stuff off? I ask this as politicians are about ready to take on tax reform. From what I have read, the market is expecting a big tax break for businesses and that this is already priced in to the market. This is evidence by the big uptick in the market on the same days he released is tax plan. I guess part of me is expecting that any tax reform is not going to be as good as advertised and as a result, you will see a drop in the market as a result.

Thoughts on this?

 

[SpokaneCY]

my guess would be many people don't think of the assistance they give to young adult children as being part of an eventual inheritance the way your parents are choosing to do.

I'm the youngest of 3 and have made many life choices that put me and my wife at a distinct advantage over my sisters. I'll get 1/3rd when it happens, but through the years my folks have helped my $i$ters in fairly $ignificant way$. We have come to look at it as a (back-handed) compliment on our long history of good decisions.