ERICOPOLY

The location probably makes a difference, I grew up on the east coast in a lower-middle class (at best) area, so we kind of knew that wearing OP meant that we were just following what was going on out west. That, and there were many kids who couldn't afford it, not just one or two. Same thing with Nike, it was cool to have it if you did, but most kids didn't because it was expensive, so no one got made fun of. Yes they do start young and it isn't always with clothes. In my daughters elementary school, this had to be 3rd grade, they had a big problem with a group of girls calling themselves the "3CG Club" harassing girls at recess to tears over the fact that they lived in a house with a 2 (or fewer) car garage. My daughter didn't get harassed because we have 3, but some of her friends did. This certainly would never have happened in the town I grew up in. Ridiculous. But kids will look for any differentiator they can find to construct "in" groups and "out" groups--it's natural and unless the parents talk to their kids about this sort of thing it's going to happen. The parents still behave this way -- they have clothes that are in style to belong to that implicit club of people who can afford clothes that are in style, they drive new cars to belong to that club of people who can afford to drive new cars, they belong to social clubs to belong to that group of people who are worthy of being invited to join that social club. And finally, when they give money to charity they even screw that all up -- setting up foundations in their own names or making sure their name goes onto the new building at the university. Some even named the universities after themselves. To make sure everyone knows without question how great of people they are! It's one more way to publicly flex your financial sex appeal. A guy who gives his last $100 to charity is more generous than a guy with $100million who makes a $1million donation in his name with a big ribbon cutting ceremony and media news coverage. But that really sucks it happens in 1st grade.

I looked a while back and couldn't find any that allowed you to manage the investments yourself -- you get stuck choosing from mutual funds or bond funds. The variable annuities are famous for being expensive in terms of fees, which is why I was careful to point directly to Vanguard's site. They are very inexpensive relative to most. It's about 50 basis points in total all-in fees for their bond or REIT funds wrapped in variable annuity. That's relatively high for a vanguard fund, but they know they have you over a barrel because your alternative is perhaps paying very high marginal tax rates annually. However with these very low interest rates the expense becomes a high percentage of the actual gains -- it's a bit silly. But I think if you were going to go that route, it would be better to do it with income funds that generate investment income that is normally taxed at the high personal income rate -- one that is high because you perhaps are also working at the same time. Then later when you retire your tax rate will be lower. So you use it as a tool to lower your effective tax rate, and of course you get the valuable deferral of the taxes. Especially useful if you are working at a career in California but plan to retire in a state with no income tax -- although in that case the RothIRA conversion doesn't make as much sense. But since we're talking about somebody else's parents, I figured the words "mutual funds" or "bond funds" are likely what they want anyhow. So the investment restrictions of variable annuities aren't that bad for them.

It would be easier if the OP would gives us more information. Maybe they don't have the cash to settle the tax bill without drawing down the retirement account in the process. Yes they have the cash to pay the tax bill without tapping the IRA. Furthermore they are in the 28% bracket right now but am not sure what bracket they will be in retirement. It depends on how much the IRA (if kept traditional) grows I guess, and how much they have to withdraw every year. Then they might have enough money to settle the tax bill as well as extra money to invest on top of that? Here is an idea -- the Vanguard variable annuity: https://personal.vanguard.com/us/funds/annuities The variable annuity is basically a mutual fund product that compounds tax deferred -- you get taxed on the gains as income when you withdraw them in retirement. Sound a bit like an IRA? Well... there are no contribution limits, unlike an IRA. Some people feel like a full RothIRA conversion puts them in the position of giving up the ability to dribble out income at low tax rates during retirement... don't be that way! If you can afford to do this, you can establish one of these variable annuities that also compound tax deferred -- and those earnings are what you'll withdraw at low tax rates :D

Thus, if you are a guy with a lot of real estate investments but unable to use them, ask your wife to get a realtor's license. Or if you're single and have a guy friend who is a realtor, marry him. Maybe you're just buddies, so what... you can both still go out on dates with girls... if somebody from the IRS calls it a sham just tell them you're into "open marriage" :D

That's true about "some" folks with regard to real estate. However others never experienced that. For example, I invested in rental housing in the early 2000s and I deducted all of my passive real estate losses against my Microsoft income, without limits to the amount, for a couple of years before I sold my properties. The trick is that either you or your wife needs to earn the designation of "Real Estate Professional". The funny thing is, the rental were mine, but I got the write-off anyways given that I was married to a "Real Estate Professional". Here is a recent article about the technique: http://www.inman.com/2012/09/14/real-estate-pros-can-deduct-rental-losses/

The upside to that is the government is redistributing your tax money away to others. So my line could be "I already gave at the Treasury". I mean, churches used to handle much of charity before the age of big government. That was Romney's argument about how he gave 10% of his income to the Mormon church and they handle the charitable distribution of it. Well, if that argument flies then my line could be that I paid my taxes and they handle the charitable distribution of it. I know, it's weak, but when you are in 52% tax bracket in California it actually has some merit to it.

Not at the same rate they won't -- the tax drag will ensure this. My assumption is that they have the cash to settle the tax bill right now without drawing funds out of the account. In other words, they have a regular taxable brokerage account where they are investing and paying taxes on those investments. It would be easier if the OP would gives us more information. Maybe they don't have the cash to settle the tax bill without drawing down the retirement account in the process. Plus if they really do have tons and tons of cash in their taxable account, then go ahead and pay the tax bill and convert today. Then, put some of that extra taxable cash into low-cost variable annuity. Then when they withdraw the gains from the variable annuity, those withdrawals can be dribbled out to tax advantage of the low tax brackets. Basically, he needs to divulge more information about how flush his parents are. I had (and still have) a lot of money in my taxable account. So I can invest that in variable annuities where they grow just like an IRA,tax-deferred, and have similar withdrawal rules as IRAs. It's that money that I can dribble out piece by piece every year at low tax rates. So the Roth conversion was an easy decision for me, especially so because I was flush in the taxable funds department. However, I haven't invested in variable annuities yet -- it was something I was considering at the time. I was only 35 or so years old when I did the conversion. So I figured maybe some day down the road I would be working again and building up another pre-tax IRA. Plus, I was able to move to California last year because I had that big tax bite already out of the way while I was still in Washington state where they have no income tax.

True but at least you lock in the income tax rate before they raise it to 99%.

You guys are incorrect if you think it's merely whether you pay 25% tax rate now or 25% tax rate later. It is more nuanced than that. This is not merely an order of operations thing. The money you pay in tax on conversion settles the tax liability for good. But then the account compounds at 12% annualized for the next 10 years. That's (implicitly) tax-free compounding of the tax liability. How are they going to compound their taxable money at 12% annualized for 10 years when 12% is all they can achieve in a tax-deferred account? So therefore, it's not just an order of operations thing. The most important thing to consider is that there is likely no way they'll be able to achieve the same rate of compounding in their taxable accounts as in their tax-deferred accounts. Therefore, they should lock in the tax bill as soon as possible. Otherwise their tax bill will grow at a faster rate than their ability to pay for it.

I take the time to read all of your posts and I presumed your belief (based on the general tone of your posts) was that they hadn't slipped up -- merely been early. I think that true of a lot of the shareholders who are buying today. Thus, it's not the kind of "slippage" that's going to create a buying opportunity as some people are seeing it as favorable slippage.

Yet they allow you to buy $215 strike September TSLA (Tesla Motors) call options. This is likely because they want you not to take speculative bets? Yes - heaven help me if I would risk my retirement by agreeing to accept money in exchange for agreeing to purchase a security far below it's current market price. I'm probably much better off buying calls for a few pennies each on that biotech that just invented that new pill that's bound to cure everything!! :P :o They limit your allocation to such calls to a mere 100% of the portfolio. No, I don't think they've really done much to stop an investor from dangerous speculation. They disallow margin and then they allow synthetic leverage instead -- and the synthetic variety allows for far more leverage.

+1 7.5% or even 15% arent garenteed just because you have a business model, or are happy with lumpy returns. I think Al's message missed the mark.... Their business model seems better suited for smooth returns, not lumpy ones. They've had 17% annualized growth in stocks over the long term. Why not just have lumpy returns if you are satisfied with lumpy returns? The bonds seem to smooth out the returns (they perform well often when stocks are weak, and they seem to underperform vs stocks when stocks are at bottom -- but at that time they can't load up 100% in stocks because of the insurance business risk/rules). The hedges also seem to echo this -- they can't accept returns that are too lumpy, so they need to hedge and smooth it out. Without the insurance business they could accept the risk of lumpy returns.

Yet they allow you to buy $215 strike September TSLA (Tesla Motors) call options. This is likely because they want you not to take speculative bets?

That's a terrific idea. Thanks for sharing.

Are multiple people sharing your account? Just asking... this isn't the first time you've referred to yourself as "we".

You do need forced air ducts. Also, you will still have a furnace. Sometimes the air-source heat pump gets switched off automatically and the furnace then kicks in... this transition happens when air temperatures drop to the point where it is too inefficient to run the heat pump -- somewhere down near the freezing level. This is the point where the ground-sourced heat pump would still be operating efficiently. http://energy.gov/energysaver/articles/air-source-heat-pumps When outdoor temperatures fall below 40°F, a less-efficient panel of electric resistance coils, similar to those in your toaster, kicks in to provide indoor heating. This is why air-source heat pumps aren't always very efficient for heating in areas with cold winters. Some units now have gas-fired backup furnaces instead of electric resistance coils, allowing them to operate more efficiently.

There is also the air-sourced heat pump (like I have at my house). They are far cheaper than GSHP. The question is whether you live in a very cold climate, or not. I live in Santa Barbara region near the ocean. When the daytime high is 65 degrees average in December, why would I even consider the expense of a GSHP? I can take that extra cash and put it in solar panels, and then it's obvious. Plus, there is time-of-use metering to consider. I can generate solar power for 47 cents per kWh between 10am and 6pm when I don't need the heat to be on, and then later run the heat pump at night when the rates drop as low as 9 cents per kWh.

You still need electricity to operate the geothermal heat pump, so the solar electric system is complimentary. Ground-source heat pumps always produce less greenhouse gases than air conditioners, oil furnaces, and electric heating, but natural gas furnaces may be competitive depending on the greenhouse gas intensity of the local electricity supply. http://en.wikipedia.org/wiki/Geothermal_heat_pump

Electric vehicles will probably grow as a revenue savior for electric utilities. Given that EVs will largely charge up during the night, the utilities will then start charging more for overnight electric rates -- coupled with a future popularity for battery residential systems, the time-of-use metering will probably trend towards a flat rate throughout the day.

Not sure who provides battery backup at this time. BYD doesn't have a sales person in this country to talk to (I'm not calling their sales team in China), and Solar City's product is still in beta testing. I'd love to know what the price point is for an installed system.

This price is more like it -- $3.39 per watt installed cost: http://www.mothernaturesolar.com/ Now they just need to grow their company to include my area. quote: Our prices are so low that on average a system will pay itself off in less than 48 months!

Estate and gift taxes raised only about $14 billion last year. That’s about 1 percent of the $1.2 trillion passed down in America each year, mostly by the very rich, former Treasury Secretary Lawrence Summers estimated in a December blog post on Reuters.com. The contrast suggests “our estate tax system is broken,” he wrote. I'm not too worried that people are allowed to accumulate a lot of money. The outrage seems to be that families are keeping their money and not having it stolen from them by the public treasury?

The market is efficient, so you can't underperform it consistently. Fool's errand :)

Yes but Elon claims to have dreamed about changing the world. Well, he is changing the world but he could accelerate solar adoption if he gets these soft costs down.

So $800 per panel for installation. But look at how much a professional installer is actually paid in California: http://wiki.answers.com/Q/How_much_does_a_solar_installer_make#page3 15 to 20 per hour depending on were you work in California theres a high demand so they pay more sorry for spelling Solar Panel installer jobs are demanding and highly dangerous, because of dealings with electricity and mainly working on roof tops even at high temperatures. Considering this aspects of the job including knowledge and education required to be able to work as an installer, and in relation to other similar jobs like air conditioning, electricians etc... and also researching the cost,(about 35k for regular American home) and government involvement and backing in this industry... A regular installer after 3 months, (of course in normal economic conditions in the country) should not make less then $21.00-$29.00/hour, But you figure a professional installer can install at least 3 per hour. So at that rate you are actually paying at least $2,400 per hour to Solar City just for labor! I think what I will do is: 1) buy the equipment 2) draw and submit the plans myself to get the permit 3) offer $50 per hour to a handyman to install the modules (this will cost $1,000 total if he installs two per hour) 4) hire an electrician to run conduit up to the roof and install the junction box (probably another $1,000 at most) My total cost, fully installed, should be under $20,000 including sales tax. Now, why does Solar City charge 150% more than that???