Talking stocks, trading, and investing in general

[patrickBOOTH]

I just found out that shares awarded to me years back are now vested. Sell share. Buy shoes. BOOM.

 

[jbarwick]

Rough life when you cannot fund the exercise price and makes sense that a company takes 80% for people that go that route.

 

[UnFacconable]

How confident are you in a successful exit?

Rough life when you cannot fund the exercise price and makes sense that a company takes 80% for people that go that route.

I’m not certain that the company will have a successful exit. A relatively small swing in transaction value could have a big impact on my share value. So it’s not so much that I can’t afford to exercise, it’s just that I’m not certain it’s a good investment and would tie up a lot of free cash until an exit happens. That said, the total value could be significant so I don’t just want to walk away with nothing.

I’m working every angle at this point.

 

[jbarwick]

I’m not certain that the company will have a successful exit. A relatively small swing in transaction value could have a big impact on my share value. So it’s not so much that I can’t afford to exercise, it’s just that I’m not certain it’s a good investment and would tie up a lot of free cash until an exit happens. That said, the total value could be significant so I don’t just want to walk away with nothing.

I’m working every angle at this point.

What's the hold period after a public offering? Those 6 month hold periods are a bear because everyone comes out of lockup at once and the price usually drops.

Also what % of your net worth would be tied to company stock? I would never hold more than 10% personally but then again I am not a senior exec. If somehow I was fine with say 50% of my net worth going to $0 then it may be different...I'd also likely have at least 8-figures by that point...

 

[patrickBOOTH]

Yeah unless I was making insane money I wouldn't want more than 10% in my Company.

 

[Omega Male]

This could go in any number of threads I guess. Takes patience but it's high quality.

https://www.perell.com/blog/what-the-hell-is-going-on

 

[jbarwick]

Interesting article on how you can fund a Roth IRA with after-tax 401k plan contributions. This is not universally available but something worth looking into if you are phased out of Roth contributions and you max out pre-tax 401k contributions. I still have a few years before I have to worry about this but would be able to take advantage of at least part of this based on my wife's 401k plan.

https://humbledollar.com/2018/10/seeking-zero/

 

[Piobaire]

Headlines amuse me. I've noticed that for the last several months on Market Watch if the markets are down more than half a percent it's big scary adjectives. Today, at this moment, the indexes are all up .75-1% and it's a "modest" rise.

 

[patrickBOOTH]

It's true. Down a tick, and RECESSION IS HERE!!!!!

 

[imatlas]

Interesting article on how you can fund a Roth IRA with after-tax 401k plan contributions. This is not universally available but something worth looking into if you are phased out of Roth contributions and you max out pre-tax 401k contributions. I still have a few years before I have to worry about this but would be able to take advantage of at least part of this based on my wife's 401k plan.

https://humbledollar.com/2018/10/seeking-zero/

I’m in this boat. This is interesting but I worry that point 2 would trip me up - I’m terrible about tracking this kind of stuff long-term.

 

[otc]

Interesting article on how you can fund a Roth IRA with after-tax 401k plan contributions. This is not universally available but something worth looking into if you are phased out of Roth contributions and you max out pre-tax 401k contributions. I still have a few years before I have to worry about this but would be able to take advantage of at least part of this based on my wife's 401k plan.

https://humbledollar.com/2018/10/seeking-zero/

I've been meaning to ask my employer about excess contributions. There are some other similar tricks you can do with 401ks as well.

The problem with the above strategy is that you have to be really careful about keeping good records and making sure your employer will be able to do the separate checks thing at the end...and you run the risk that things have changed to the point where this plan no longer works by the time you leave/retire.

The other problem with that strategy is that all of the investment growth on your excess contributions has to go the traditional route...only the principal can go into the Roth without triggering taxes, but if you have a long time horizon before leaving the company, the principal may be small vs the gains.

Both of those problems are avoidable: I think I have posted about the "Mega Backdoor Roth" before. It takes the above strategy a step further by leveraging 401k plans that allow you to make non-hardship withdrawls (or "in-service" distributions). If your plan allows both features, then you can do the backdoor roth transaction every year. This gains you 3 things: 1) saves you from future uncertainty about whether the scheme will still work in 15 years, 2) gets the taxed principal into a roth fast so you aren't paying extra taxes on gains, and 3) frees up money for non-retirement use since principal withdrawals from a Roth are unpenalized and untaxed.


Of course there's one big caveat to all of this--it is still subject to the same thing that Piob always bitches about: if you have existing traditional IRA assets, the conversion will trigger taxes. Of course, it also means that someone with enough income could potentially be putting $40k+ into a Roth every year...the benefits of that may outweigh the downside of having to pay taxes on trad IRA holdings today.

 

[otc]

I’m in this boat. This is interesting but I worry that point 2 would trip me up - I’m terrible about tracking this kind of stuff long-term.

See my post above. If you can talk your HR department into allowing the two necessary features, you can do this without worrying about point #2.

Random article describing it (maybe not the best, but it has the general overview): https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira/

 

[jbarwick]

Sounds like I need to first complete Step #1: Make more money.

 

[Omega Male]

Sounds like I need to first complete Step #1: Make more money.

60% of the time, it works every time.

 

[Piobaire]

Not a bad week.