My wife and I are in our 40's, paid the house off in December, and don't have any other debt.  Our cars are 5-6 years old and are in great shape. We have a savings plan setup for the next vehicle.





401K is being maxxed and is currently at 4X my annual salary.





We have another piece of property and are looking at getting more but don't really want to go back into debt.  I like being flexible in case of job loss, etc. and am thinking of starting my own business in another five years.





What are some ideas to invest or spend our income to help lower taxes?

 

401K and IRA maxed, or just 401K?

Gold and Silver.

Once you start you won't stop.

Mr. Pikeslayer's thread. Here

Buy Gold

Loan me some money lol

Fill up those credits cards with guns and take a home equity loan to buy guns.  Duh.

I don't have a separate IRA.  Should I?



I also don't want to invest any more into the stock market than I already am.



Someone told me that I could setup a real estate purchase through an IRA.  Is this true?



 

LOL!  No more stupid tax for us, thanks.



 

Yes, 18K + 5.5K = more than 18K.

If you wanted the short answer.

Just enjoy it.
Keep doing what you have been doing.

If you are on track to have your number when you want to retire, do this. If not, pile more away in IRA.

I'd buy real estate in a desirable area and rent it to responsible corporate types.

Gold and silver is a fool's investment.  It produces nothing.  Like anything else I'm sure people have profited on it, but I'll bet even more are in the hole on it.

Gold and silver are not investments I would allocate a significant portion of my income or portfolio to. Yes, it's very nice to put SOME  money towards them, but over the long term there are a host of investments that vastly outperform them.


Land isn't a bad investment or property as long as it produces income. I really do not recommend the speculation game because you're one law away from having it very much devalued. I would not be too terribly worried about going into debt over a property as long as there's a way to pay it. If times get extraordinarily tough, you could always just give the property to the bank or liquidate it. It's quite possible to go back and look at what some income strategies were during the depression with property and work yourself back from those to make sure you're stable.

Guns & ammo would be a heck of a better investment than silver/gold if we were to look at charts over the past 30+ years. However then you also take a gamble with laws.


For me personally, my #1 investment is real estate, then in order of where my money is tied up : Antique coins, guns , stocks, silver/gold, antiques & things of value they don't make any more.

The thing I hate about real estate is that if you own it, everybody and their brother has their hand in your pocket, from the property tax man to the repairman.  Also, I'm not a fan of leveraging an investment with debt and real estate has a high price tag to pay for with just equity.

Start digging another hole.

If necessary, save it for the business startup.

Real estate. Become a slum lord.

you could open a taxable account and put money there. What you buy would depend on your tax rate. In my case I'd look for investments that defer taxes until sold. I used to own BRK.B in an account like that. It never pays a dividend so there is no tax until you sell. Some bonds aren't taxed or let you pay the tax at maturity also.

Vegas.... A weekend of hookers and blow to celebrate

Employer do any matching of investments?


Do you have adequate insurance?  How about an umbrella policy? Supplemental medical?  Travel insurance?  Firearm rider?  Remember, you are now the "deep pockets" that gets sued.


Roth IRA?


Continue to make the home safer, stronger, and better.


Spend some money (and time) making sure your body has the staying power to enjoy the money in retirement. i.e. fitness.

IMHO, you might want to look at:

- building up a rainy day fund - 6 months of living expenses in low risk savings (CDs, Money Market, etc.)
- max out all possible retirement savings, 401K, IRA, etc.

After you've done that, look at your cash needs for the next several years. What sort of unusual expenses are you going to have?  new car?  college tuition for a child?  wedding for a daughter?  the Hawaiian vacation you've always wanted?

Start socking money away regularly for these kinds of things.  If you need the money in 3 years or less, put it in a savings account, CD or Money Market.  If you need it in 3-5 years, put it in a balanced mutual fund.  If you aren't going to need it for more than 5 years, put it in the stock market.  

The key is to figure out what you are going to need, when you are going to need it and then plan accordingly.

It won't reduce your taxes now but see if you are eligible for Roth IRAs.

They are for post tax money but when you are able to start withdrawing from them it's tax free.

Definitely get a Roth IRA.  Also research quality attorneys to aid you in setting up estate planning, trust, etc.  Next research quality tax attorneys to help you preserve the wealth you created.  Setup 5, 10, 15, 20-year plans of where you want to be in life. The greatest investment you can make is in yourself so explore community colleges, traditional colleges, skill improving classes, etc. to improve yourself.  Ever have an interest in learning to play an instrument, paint, music, etc.

True, they are called RIET's Real Estate Investment Trusts.

I would say setup a Roth IRA and go on vacation, pick up a hobby, like gold panning etc.

Has your bank called in some favors yet?  

My employer contributes approximately 20% bonus into my 401K every year.  After working for the company for 15 years, the retirement fund is looking really good.  I am looking at self directed IRA's to do some real estate investing.





I contribute the maximum possible to my Health Savings Account.





Good idea on insurance.  I will take a look at what have.





We are currently doing some home improvement projects to increase our investment.  I am thinking about adding solar and would appreciate any thoughts on that.





I am in pretty good physical shape.  No marathon runner but I workout regularly and definitely watch what I eat.




 
 

I currently have over 6 months of emergency fund saved in a traditional savings account.





College fund could use some help.





I am mainly looking on ways to reduce taxes with only one child at home and not for long and no mortgage.




 
 

Thanks.  I am looking into this.



 

Step 1 - $1,000 In An Emergency Fund
Step 2 - Pay Off All Debt With The Debt Snowball
Step 3 - 3 To 6 Months Expenses In Savings
Step 4 - Invest 15% Of Income Into Roth IRAs
Step 5 - And Pre-Tax Retirement Plans
Step 6 - College Funding
Step 7 - Pay Off Your Home Early
Step 8 - Build Wealth And Give!

Sounds to me like you are on step 8.

Definitely make sure you have college funding on target, and if you have the money to spare, and IF you are Roth eligible, open a Roth IRA and fund it with $5500 per year (or whatever the current max is when funding) after tax money.

Pre-tax contributions to HSA helps with taxes, and follows dame contribution limits as Roth IRA.

Beyond that, I have found you have to get creative to do much with taxes.  Unless you are tithing or have MASSIVE property taxes, your itemized deductions don't exceed your standard deduction.... so any further deductions don't help much unless they can far exceed the STD deduction.

You can choose to invest your after tax money in different places, such as purchasing a rental property, but that will only deduct against your rental income, not your personal income unless you say you are actively managing it and are under the income limitations..... so it is more of a tax sheltered income producer than it is tax reducer against your current ordinary income.


Once you have these things covered, accumulate it, invest it, donate it, and just relax.  You have done a great job!

Folks, he is looking for ways to reduce his TAXABLE INCOME, not how to invest his extra income...

Can you "start" the business now and slowly collect assets now so you're ready to open the business in the future? The land purchase (if business related) could also be a business expense. Most larger purchases would be depreciated over a few years so the purchases could be made today and would yield a decrease in taxable income for the next few years.

Current income - business losses = a decrease in taxable income...

I assume based upon your scenario you're close to retirement and plan to start a business in retirement? If that is the case the above scenario is how I would prefer to do this. The "loss years" for your business would be at a time when your primary income is high, yielding a more modest income level. Then once you retire the business will hopefully be more profitable yielding a more steady income.

Example1, you wait until retirement to acquire business assets: Your income maintains a high level, you retire and your primary income drops to nothing and your business is showing losses (your taxable income in negative and you don't really have any tax advantages)
Example2, you acquire assets now, then retire and get the business going full-swing: Your income now is reduced by business losses, you retire and your primary income goes to 0, and because a significant amount of the "losses" are behind you, the business shows a modest profit of $36k the first year.

By doing #2 you take advantage of lower taxes in these last few years of primary employment and maintain a bit of an income even after retirement.

Does that make sense?

If it's too much to handle the business acquisitions and a full-time job right now have you considered asking your employer about a phased retirement? IE, drop down to 30 hrs/wk for a period of time, then 20, then 10, then full retirement....

Do what most of my friends do.  Refi your house.  Buy new cars.  Go on expensive vacations, take out a second on your house.  Mortgage every penny of equity.  Blow it on another new car, another vacation.  

Call in sick to work a lot.  Actually get sick.  Lose job.  Have no pot left to piss in and say "woe is me, I don't have any money" a lot of times.  

Any investment advice I have ever given was ignored.  The above is what happens.  Over and over.  

My Dad was a frugal accountant when growing up.  Even he is now in that same cycle and it sounds like he might lose his house at close to 80 years old.

(Do your taxes with HR Block software.  Start putting $$$ in the IRA box.  When your taxable amount stops going down, head over to the bank and put that amount into an IRA.  Do this for yourself and your spouse.)

Every time I hear "investment" I ask them what their return on investment is.  If there is no ROI it's not an investment.

Sorry, but you are wrong.  There is no requirement for an asset to provide an ongoing dividend, or immediate ROI in order to meet the definition of "investment".

http://www.investopedia.com/terms/i/investment.asp



By definition, his statement is correct.  He is making home improvements with the HOPE of appreciation in the future.

He might be wrong, he might not get a return on the amount he puts in, but that doesn't change the definition of the word as you would incorrectly assume.

You could say "If there is no financial ROI, it isn't a 'good' investment in your opinion".  There is no way to know what the ROI is to the OP, because you don't know the amount he is putting in, nor what difference that might make in a later sale, or non-capital ROI.