Making $400,000 Is Causing Problems With Investing
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- Опубликовано: 8 июн 2019
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Callers like these are much more educational than the ones that call in with credit card debt
Why do people think that anyone calling w a high income or net worth question its showing off, did it ever occur that people who ask questions and follow sound advice can be very successful, so why would they not ask more questions at that next stage ?
Right! Dont hate the rich if you want to be rich! 🤑
Kelly Lynn I’m going to correct you don’t hate them BECAUSE they’re rich
@@itzsupremedestroy4766 Lol good point!!
Yeah I never have understood that
Because they're Democrats or soaclist dummies
I haven't seen the video yet but it seems like the time of problem I'd like to have
Can’t wait to call in one day and say I’m making 500k 😂
Would love to see a Dave Ramsey reacts video! Specifically to one of the other financial advice videos that are uploaded on RUclips.
Thanks for all you do Dave!
Anna Casey me too! I’d love for him to react to FIRE financial community
One woman called up Dave and said she had too much money in the bank. I think he said you can always send it here.
This needs to happen!
Solo 401k for the business and you and your wife can put up to $56k each. Backdoor Roths apart from that for another $6k each. HSA for another $7k. That puts you well above 15% in tax sheltered accounts. Dave dropped the ball on this one.
He tends to when it comes to anything other than baby steps.
Matt Cook shots fired?
Mark Rampersad I am a huge fan of Dave’s principles for the average person in debt. But there’s a lot of more complex planning issues that he misses quite a bit of opportunity on. However, Dave’s target audience is that general population.
When it comes to higher earners, there’s many forms of planning that can be used to shelter much more than what Dave is referring to here.
No shots fired towards Dave. His principles have helped a ton of people become financially free. But there’s a big difference in planning for a person in debt, and a person who’s a business owner and high earner.
I was thinking the same thing. With my 401(k) and company match we can go up to 65,000. Dave did get some good advice because I was thinking the same thing as far as investing more. I guess index funds Is going to be the answer.
Rad Dad yeah Index funds. And when you want to draw down on them, only sell the amount you need every 2 weeks or monthly and leave the rest fully invested according to the 4% rule. Hopefully you’ll only need 2-3% of it!
This video sounded like advanced calculus being taught in Klingon.... literally no clue what they were talking about. 😂😂😂
You are now inspired to learn though, right Mr. Smith?
Believeinyourself I’ll come back to this video when I’m at that level. Right now I’m nowhere near these guys problems. 😂😂😂
@@spencersmith312 They are just talking about mutual funds that are tax efficient, which means they invest in stocks with less dividends and they the stocks are held longer term.
1. He maxed out his tax advantaged retirement options (because of his high income).
2. Dave gave him advice on where to put his extra "investment" income.
That's a nice problem to have xD
As for the details: capital gains are taxed at a different rate than ordinary income.
Capital gains are now taxed at a lower (20% rate) (fun fact: capital gains used to be taxed at a higher rate), while ordinary income is taxed at your income bracket, which for someone making $400k, is around 35%.
For stocks (mutual funds), if you hold them for less than a year, you have to pay ordinary tax rates. If you hold them for more than 12 months, you pay the capital gain rates.
Side note: for retirement account, it is tax preferred because you dont pay taxes until you make withdrawals from the account. There are differences between the 401k and Roth. I'm not familiar with how the SIMPLE plan works.
It's not too hard. Just keep watching his videos and you can catch up pretty quickly. Additionally his program called Financial Peace University is a good starting point too.
That’s a good problem to have ! This guy is in the right path
I hope I have that problem some day.
Dave: I want you to know that some people live in countries you probably never heard of and follow your advice every day! You are a great mentor and and an awesome man with integrity to his family and field! God bless you man!
I think he's heard of Egypt. Doubly so seeing that he's a devout Christian.
Deus Ex Machina I was not alluding to Egypt when I wrote my comment. I have friends from several other less known countries who still fondly follow him.
You go on ahead Sir! Always great to hear of a fellow American succeeding❤️❤️
Yeah it’s a shame more don’t have the opportunity
@@millsathn
It's America... *everyone* has the opportunity.
@@millsathn Stop
@@scorpion8rage not true
Scorpion Wouldn’t expect a different answer from someone that’s been brainwashed.
A couple of errors:
Realized vs Recognized would be the same thing except "recognized" is not a term used by the IRS. They use realized and unrealized, the later is simply gains not taken (sold). Only the realized gains are taxed.
The other is the tax rate on dividends and capital gains, which is not 20% but 0% up to ~$80k and then 15% after. Maybe this call was in 2017 or earlier, before the TCJA.
In a mutual fund, when the fund sells you pay taxes on the gain. But when you sell the shares of the fund, don’t you pay taxes on the entire gain, effectively double taxing some of the gain? Or is the amount already taxed excluded from additional taxes at sale? (I imagine that math would get complicated fast, with multiple buys and sells).
As a business owner he can put about $56k in a 401k accountif he set it up.
This conversation was like listening to a conversation in a foreign language. I have a lot to learn! This is that money language.
Read:
Financial Samurai (Handling rich people problems and perspective)
Mr. Money Mustache (Frugality / FIRE movement)
Financial Uproar (Canadian, but similar ideas. More novice / easy to understand. Crude / funny language)
Afford Anything (Real estate and goal/budget planning)
dqydj (Stands for Don't Quit Your Day Job - Very good technical discussions. A little more advanced)
For Definitions:
Google - "Investopedia X" where X is what you want to know about.
It isn't as daunting as the lingo makes it out to be. Promise.
@@Devinfrbs Thank you!
I thought i was the only one that didnt get any of that!!!
Nice!! i have a similar situation. I max my before tax contributions at 8%. I just invest 25% more after tax.
That's a nice boat to be in! Always a good idea to build up that bridge account to carry you over in your early retirement so you don't need to touch tax-deferred investments early and incur penalties.
I haven't heard of the realized vs recognized term used that way. I've always been taught that realized gains are the gain after sale of an asset (the way he used recognized gains) which is taxed. Unrealized gains are those like when a stock goes up in a portfolio but has not been cashed out (the way he used realized gains).
That's how I've always heard it too. Unrealized = not yet sold. Realized = sold.
Realized and recognized are used in accounting where realized equals unrealized in common tongue and recognized equals realized in common tongue. That being said, I’m not hearing recognized used much at all, even in accounting
If you get ETFs instead there is no taxable event until you sell or a dividend is paid.
Dave is scared of ETFs
No load index fund... s and p fund Bc low turner over ratio.. capital gains tax after 1 year rather than regular income tax.
Do you have 400k? If no, don't give advice.
Come on the show just for that Dave Ramsey FLEX 💪 😤
Daniel Iles he didn’t even say his income ? Dave pointe it out also I hate how if someone makes a lot and needs some help or advice people say they are flexing
Why not just an etf on the s&p with physical investment and almost totally replicated?
Can only do a backdoor Roth IRA at that kind of income. Putting the money in a normal IRA but not getting the tax break due to high income and then rolling it over to a ROTH IRA.
Is anyone here from the UK? I'm looking for a programme/group just like FPU but for England
What about a Self Employed Pension with a $56k per year max?
WONDERFUL problem to have lol More money, more problems baby!
wondering would anyone recommend selling off employer stocks and using the money for a big house down payment?
@BuckeyeShuman Depends on a lot of other factors. I think Dave is against employer stocks altogether, and would advocate selling out of those regardless of the position unless there was a stiff penalty and reinvesting it into a broader fund or ETF for risk mitigation (aka Enron - lose your salary and your nest egg on the same day). Large house payments depend on where you are in the baby step process and should not affect your emergency fund at all.
Brokerage account/real estate. At that level of income you’re not going to want everything in tax protected accounts that you can’t touch until retirement anyway.
What is a simple?
what is Simple? Can someone explain?
Uhhh, what happens if your sp500 etf drops by 30% plus, while you’re accumulating to buy a property?
Dont get off the rollercoaster in the middle of the rode. That's the only way you're gonna get hurt.... wait for it go back up. Market always goes back up.
Why simple Ira...This guy should do a combination cash balance plan and individual 401k and invest the remaining cash flow after taxes and expenses into a taxable account with low turn over and low expense ratio index fund and tax exempt municipal bonds
@We who are about to die salute you because the fees are huge
whats a simples account? never heard of this
Self employment Plan.
Awesome stuff, definitely have to diversify that savings though! Real Estate, Stocks (ETFs not mutual funds, we hate these) would and depending on your age group can you put into other assets like Cryptocurrencies or Bonds.
Why, do you think mutual funds are boring.
@@jojo-eb1ib From experience, mutual funds returns are often highly dilutive and the expense ratios are rarely every worth it. You typically are much better off buying into the benchmark S&P, or an industry you enjoy following
Upgrade that SIMPLE to a 401(k) - higher contribution limits and a lot more flexibility with features and investment options. :)
Dependent on rigged market too
DonnieDarko727 I'm laughing all the way to the bank.
I was hoping the guy was going to say he was thinking of buying gold coins......and watch Dave get triggered......🤣
Why not just invest in ETFs instead of mutual funds? He always recommends mutual funds, but outside of the 401(k) that doesn't seem to make sense, for the very reason that Dave is talking about here. As far as I understand, ETFs avoid this problem of turnover taxes altogether.
Because he gets paid by a mutual fund company.
Can’t understand how someone could be intelligent enough to run a business that profits 400k a yr but cannot figure out how to invest excess funds. 🤦♂️ please.
Let me guess, you have a million profit from your investments so far
Why? He’s probably great at what he does for a living. But it’s probably not in the investing field... that’s why he turns to someone that is really good at what they do to discuss investing... make sense?
He would still have to pay yearly taxes on the dividends.
That’s what I thought unless he buys stocks that doesn’t pay dividends
Would a SEP be a good option for this guy? Wouldn't it allow him to defer taxes on his income?
For those of you wondering how to invest even more beyond the limits talked about instead of wanting to perpetuate false political stereotypes one avenue to think about is rental real estate. Before you say "I don't want to deal with that" you can hire a property manager. We take a cash flow of about 20K per year or 12% tax free thanks to depreciation offset. Then you have the benefits of equity growth for another 40K per year or 24%. Hard to beat that with taxable after tax mutual funds.
I want to have have his problem. 😁🤦♂️
What is "simple"?
Traditional 401(k).
If you have a SIMPLE IRA you are not allowed to contribute to a backdoor ROTH. Please tell me if I'm wrong.
Evgeny Krynetskiy I think you’re wrong. my boss has been doing a backdoor Roth for years.
I think that's only true of a SEP IRA
This confirms that Dave never considers taxes in any of his videos. (Ppl always comment on these videos and say why doesn't he take taxes into consideration. Others will say the callers are screened and told to provide net income.). So in general, alot of Dave's advice in terms of how quickly you can pay off debt is wayyyyy off and just unrealistic.
I feel stupid but I really don't know so.. could you (or anyone else) elaborate?
Where do i get these baby steps
Twiza Sichilima google “DAVE RAMSEY BABY STEPS.”
I think a lot of people just call Dave to ask him how he is...
Just to hear "better than I deserve" 😂
@@bc33swiby Definitely
He could also do an HSA.
Welp probably will never have this problem.
Not with that mentality.
Who pays the bill
I never thought it can be possible !
The Contributing yo Roth advice wouldn’t apply to this guy thou, You can’t contribute to Roth if you make more than 130k a year
Jay Xu Employers Sounds like he’s doing a backdoor Roth IRA conversion from a 401 which side steps the income cap.
My name is Nate and I live in Phoenix...
Nice to meet you!!!
What kind of business does he own?!?
Dirt Riderz he said he was in real estate at 5 minutes
Came to the comments to read all of the inevitable “he just called to brag” posts from the all of the people with victim mentalities. Here’s a tip...I can save you a lot of time by letting you know that there is nothing you will learn from this channel. You are your own worst enemy...not your lack of knowledge of investing or handling money. You attitude will
never allow for success. So, you might as well move on to something else.
Well said!
Exactly!! If you can’t be happy for someone who is working hard and doing well then you will never do well yourself!
Lol he’s too prideful to admit that this person should put some money into dividend paying whole life insurance aka “Rich Person Roth” for additional tax-free income.
Whole life is a scam.
LOL whole life? Hilarious
All these inflated numbers but taxes bring it back to initial investment. Phila
How do u kno after taxes hes on making back his initial investment
UNI-K
👌🏻
How about some municipal bonds, to get some tax free income?
I personally think he should start small and see if he has success with single stock investment on top of index funds. If you can't beat the market then just invest in index funds.
Stack physical silver and gold
23 with three car payments fml
Wow.. why did you do that?
Sell 2 of the cars.
Sell all 3
Nobody :
Caller: Hi Dave, I'm calling just to flex a little.
Hahaha 😆
Well they did have a long conversation to answer his questions and give advice so obviously he had a logical good question.
This all sounds like some rich guys conversation held at a country club. Us regular mortals can only dream.
Us regular mortals probably know someone who started up a business... what's stopping yours?
Kevin Hunt The current focus is of my career and battling debt. Any further questions? _Yes Sir you in the back_ 😆
My heart breaks for you 😐...
Dead man walking
Second to a million
He should invest in himself with that kind of income.
Buy gold, silver coins. Some stocks, rentals.
C B gold and silver isn’t bought for profit. It’s bought as an insurance policy. It’s bought to preserve wealth. It’s a hedge in a bad economy. If you want to trade it buy the ETF and Futures.
Even tho that 1300$ is the same as a decade ago if you owned pre2010 you’d be up on gains. As the price of an ounce was something like 600$. Now take that same 1300$ in cash in your bank account, if you don’t make at least 2% you’re losing a 1.97 on every hundred to inflation. I’m reality your 1300$ in 2010 isn’t buying you the same today in 2019. You lost 25.61. Again Gold/Silver isn’t an investment.
C B also that ounce of gold should be worth 5000$ today if you do the math on the National Debt. And silver should be around 600$. You can thank the Future Traders for keeping the prices low. On the futures market those contracts aren’t backed by the commodity, the ETF are backed.
Gold is great for stability and as a hedge but that's it. It's actually a horrible investment for the 99%, because the 99% are usually more concerned with growth, and you are not making considerable gains on something that has enormous financial mass thus very small marginal gains.
Obviously he hasn’t been listening
It can be hard to see the full scope of a scenario when you're in the midst of it, so seeking a third opinion is totally valid and advisable.
Oh boo hoo.
Great system were income from work is taxed higher than non work income....
That's because that money has already been taxed once.
Shovel extra money into a Large Whole Life policy that will build cash value gain around 4% interest and you can take tax free loans against it
Second.
Give me a break.
First to make a million haha
I made the 1000th like 🙂👋👋👋
Impressive that someone can reach such a high income but lacks basic investing knowledge. He is learning which is great though.
@We who are about to die salute you The rich have to get rich first, if you have nothing to put into savings, and you put 100% of it there, guess what. You're never rich!
The ROTH IRA is a scam for those who want to invest small amounts over the long haul and retire in a much higher tax bracket. It doesn't make sense for high earners, or if you think that the tax rates will rise dramatically. Taking a hit now means you have less available for growth, but taking the hit later means that you have more available for compounding. A major difference that people don't often mention is that a ROTH can be passed onto an heir, and then they are required to take minimum distributions over the course of their expected lifetime. So yeah, when you pass it on, will the ROTH to your youngest grandchild and they can live off of it while it continues to grow for a MUCH longer time. I could be wrong, that was something I read in an older book "The Retirement Savings Timebomb"
Just because you're good at making money, doesn't auto-calculate into you being able to know how to invest it.
Former Today Show host, Matt Laurer, did not know about dollar cost averaging until a guest on the show talk about investing.
He called in to brag. 🙄
How on Earth did he call in to brag? That's ridiculous. He had a legitimate question and got an answer from a guy who knows what he's talking about because he's been there. If you don't think it's cool that people make 400k then you really shouldn't listen to Dave because unbeknownst to many people he's banking 400k every couple of weeks.
The loud street univariably exist because sunshine intuitively groan plus a rich thumb. hideous high, tearful smash
Jesus loves you, regardless of your past. He accepts you as you are, without judging you.
Dave should change his plan to 10-15% not 15%
Max so its safe. You don't want to underpay your tax is better to pay more tax so at tax time you will either be paying less or have a tax return. You dont want them to say you payed 10% of your 400k income. When you own tax man money they often charge interest and more often than not take them years to realize.
He called in to brag
These ppl don’t have “problems” they call up just to brag about how much money they make. Pathetic
These humblebrag calls...
Here's what you do, BUY GOLD AND SILVER
How you have a 400k in Income and have money problems 🤦♂️
cus hes living like he makes 500k
Elite Investor did you all not listen
The more $ you have, the more problems trying to figure out how to manage it.
Anna Barrow These people on this comment thread obviously didn’t. Just started the video, paused it, left a comment, then left. Classic
He doesn't have money problems. Also income doesn't change anything about having money problems. If you have money problems at 40k you will have money problems at 400k.
2 Rich guys talking about how they cheat taxes...These are the kind of loopholes that need to be closed. Write your congressmen.
I buy a stock with cash that I earned and paid income on. The stock doubles, but I've not sold it. How am I cheating taxes? If you levy a tax on that increase in value, what happens when the stock goes down?
What is a simple?
what is a simple?
SIMPLE IRA