Anthony Capital, LLC
Matthew is an avid learner and as such, sees his role as a guide who helps clients as they navigate saving for retirement and spending in retirement. His training as an Retirement Management Analyst informs every aspect of his planning and centers every decision on the client. He has taught hundreds of seminars touching on subjects ranging from debt solutions, investing, Social Security, pensions, insurance, and other financial topics, with the emphasis being on what trade offs are made when each is selected.
Living in San Antonio, known as Military City USA, Matthew has become an expert in optimizing the financial lives of public as well as private sector employees. Matthew recognized a huge need for benefits education and basic financial planning among government employees. To serve this need, he started Federal Benefits and Retirement (fedbenretire.org) and teamed up with the nonprofit The Society for Financial Awareness to offer trainings and private consultations at no cost to federal employees. This collaboration has given thousands of federal employees access to fiduciary advice formerly reserved for the more affluent and has created millions in dollars of value for them and their families.
With everyone in the industry clamoring to proclaim their fiduciary status, Matthew is quick to point out that that actually requires more than honesty and transparency. Though without those one cannot claim to be advising, without a broad understanding of finance one cannot claim to be a true advisor.
Matthew is the 8th of 11 children, which he will tell you was an education in and of itself. He has graduated from Dixie State University and Brigham Young University, and has also taken numerous post-graduate courses including a 4 month stint in Medical School. He speaks fluent Thai and enjoys traveling whenever occasion permits. He enjoys being a father to 3 boys and husband to a beautiful and creative wife.
Brigham Young University
Assets Under Management:
IRS rules state that if you have lived in the property for 2 out of the last 5 years, you would pay NO capital gains taxes on any increase in value up to $250,000 over what you had purchased the house for originally.
So in the scenario you presented, if you paid $150,000 for the townhouse and you sold it for $400,000 you would pay no taxes on the sale as long as you live there for at least the next 2 years. (If you're married and the house is in both names, you can exempt $250,000 x2 = $500,000 total from taxes).
Anything over the limit would cause your normal long term capital gains taxes to kick in for whatever tax bracket you are in currently.
Great question. Generally withdrawing early is frowned upon in financial circles- often because it is unwise for the client, sometimes because the manager is worried about assets under management. The underlying question is can I pay the taxman more right now so that I can pay the Bank less.
Let's look deeper at the numbers to determine what is right* for you (*this is hypothetical given I don't have all your financial information and is done in rough numbers for education purposes only).
If you withdraw $10,000 you will only take home roughly $7,500 after 15% tax and 10% penalty assuming you make ~$45,000 a year or less. If you need the full $10,000 and have it available in your IRA, then we would need to take $13,350 to get the $10,000 you need to payoff the card balances. Total cost = $3,350 taxes.
(Again, if you are making $97,000 or less that could be closer to $15,000 withdrawal with a $5,000 cost)
Pay $500 a month over the next 2 years to pay off the cards. Total cost = $1,709 interest
(However, if it takes you more than 3.8 years to pay off the loans then your total interest cost increases to $3,400!)
In summary, the rough numbers seem to suggest that you'd be better off cutting money out of some other part of your budget to set up an accelerated payment plan rather than take the withdrawal.
Great job getting retirement plans up and running right out of the gate!
Your current allocation to simple IRA is a great start and if that's all you can afford then sit tight. Just be sure your investments are more aggressively geared toward growth as you have plenty of years before retirement.
However, if you can spare a bit more (especially after January) then by all means put what you can spare away for later. Generally, younger people who can put more away in the early years get compounding interest on their side which really comes in handy if you later get married, have children, or become disabled. Planning so early in your career also gives you much better lifestyle options later in your career for taking lower paying jobs in better locations, switching to lower paying vocations your passionate about like teaching, more time for hobbies, or even early retirement. Remember, nobody every complains about having too much money at retirement!
Here are a couple of ideas for how that extra money could be put away:
1- You could increase your simple IRA contribution up to 7% and still not exceed the $12,500 annual limit. This is the most simple option and has the advantage of not having to pay taxes now.
2- You could open a Roth IRA with the extra money. This has the advantage of diversifying your retirement tax situation without affecting what you've been paying in taxes. Another advantage would be diversification of investment choices potentially over what is offered in your Simple IRA. (I generally default to this with people in your age category but that's just general advice).
As far as which option is best for you, how much, into what, where, and with who- all those questions if you can't figure out on your own, I'd have to say you'd need to sit down with someone to resolve.
Simply put, yes you can invest in hedge funds assuming you meet the funds criteria for membership.
Those requirements usually follow the SEC minimum rule: you must have $1,000,000 net worth (assets- debts= net worth) OR have made over $250,000 for the last 2 years and will make at least that much this year as well ($300,000 for married couples). Those requirements are set to assure that the investor is an "accredited investor" and therefore should have the accumen to understand and the assets to risk on the advanced and aggressive nature of Hedge fund investments. Of course, individual Hedge funds can have much higher minimum net worth or investment requirements. Technically Hedge funds are allowed have up to 35 non-accredited investors enter the fund- that is over the lifetime limit of the fund. But again, people with less than $1,000,000 have much more conservative investment needs and cannot afford to risk as much. So to keep it simple, they will usually just stick to the million requirement.
For those investors who get cut out by the minimum requirements, some hedge funds will have investment funds that operate on a "similar" framework to their Hedge fund but that is available to retail investors. They do not duplicate the results of the Hedge fund but are usually positioned to mimic it's investments. These have appeal for those who want to play with the big boys but don't quite have the cash yet.
Perhaps instead of CAN you, we should look at SHOULD you. For the ultra high net worth, Hedge funds can offer access to the complex types of investments that they need to grow and protect their wealth. But if you have $1,500,000 - $5,000,000, though you certainly have the option to get into various Hedge funds and probably have even been to a dinner or event sponsored by a fund, consider this before you dive in. Warren Buffett runs Berkshire Hathaway. Not a hedge fund but with shares costing $293,000 a piece at today's rate, it definitely appeals to an exclusive crowd. He made a bad investment in 1993 (Dexter Shoes) and lost $433,000,000 of the funds money. That's $5,000,000,000 in today's dollars. He was frustrated and angry with himself for the poor decision and it hurt his track record and cost investors in his fund a bit of money. But it doesn't seem to have been catastrophic for any of them. How many investors could handle that? Even a pool of investors worth an average of $3,000,000 a piece would struggle to stomach that kind of loss.
In summary, Hedge funds are an investment option for those with the money or connections. But it would be ignorant to do something just because you can. A more balanced approach would be to create an overall plan or strategy based around your income needs, expected lifestyle, and final legacy you wish to leave. From there, the investment tools you utilize will not be just because you can or even just throwing crud at the wall, but rather part of a more organized whole- because in holistic financial planning "the whole is greater than the sum of the parts."
You can draw it over the 5 years. If you take that route, you do not need to take anything out this year- so long as the account balance is $0 by the times the 5 years is done.
Of course, depending on how much it is, whether you've been taking money out, and if you really want to stretch it, you could take the required minimum distributions out and take that over your lifetime as it continues to increase.