Kansas Kid said:

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Don't forget, the accredited investor rule was originally done in 1982 and the metrics to qualify haven't changed except now your primary residence is excluded. I am generally speaking a "let the buyer beware" type but there and hate government regulations. That said, in this case, ask yourself if you really are knowledgeable enough to properly evaluate these investments. Just because you meet the financial requirements doesn't mean you suddenly have a lot more knowledge about investing. If you do think you have the knowledge, good luck. I hope you hit it out of the park.

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LMCane said:

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Kansas Kid said:

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sirhc said:

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It sounds like your income currently vastly exceeds your expenses...

Are you dumping the excess just into brokerage/retirement accounts? Are you looking at other forms of alternative investments?

Curious what strategy is once someone is exceeding retirement accounts and putting a healthy amt into brokerage.

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If you plan to retire early, it is key to keep a substantial amount of money in non retirement accounts. To defer taxes as long as possible, I keep mine in low dividend paying index funds I can hold for a long time. I put in the high dividend payers and the shorter hold securities in my retirement accounts to minimize current taxes.

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I assume you are talking about trying to avoid penalties for early withdrawal?

because the taxes you pay on capital gains in a private brokerage are going to be more than the taxes in a Roth or corporate 401K correct?

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Kansas Kid said:

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LMCane said:

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Kansas Kid said:

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sirhc said:

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It sounds like your income currently vastly exceeds your expenses...

Are you dumping the excess just into brokerage/retirement accounts? Are you looking at other forms of alternative investments?

Curious what strategy is once someone is exceeding retirement accounts and putting a healthy amt into brokerage.

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If you plan to retire early, it is key to keep a substantial amount of money in non retirement accounts. To defer taxes as long as possible, I keep mine in low dividend paying index funds I can hold for a long time. I put in the high dividend payers and the shorter hold securities in my retirement accounts to minimize current taxes.

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I assume you are talking about trying to avoid penalties for early withdrawal?

because the taxes you pay on capital gains in a private brokerage are going to be more than the taxes in a Roth or corporate 401K correct?

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If you contributed to your 401k pretax, it will be ordinary income tax rate plus 10%. Below is a good summary from Schwab on taxes from Roth IRA early withdrawal.
https://www.schwab.com/ira/roth-ira/withdrawal-rules

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EliteZags said:

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LMCane said:

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Kansas Kid said:

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LMCane said:

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Kansas Kid said:

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sirhc said:

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It sounds like your income currently vastly exceeds your expenses...

Are you dumping the excess just into brokerage/retirement accounts? Are you looking at other forms of alternative investments?

Curious what strategy is once someone is exceeding retirement accounts and putting a healthy amt into brokerage.

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If you plan to retire early, it is key to keep a substantial amount of money in non retirement accounts. To defer taxes as long as possible, I keep mine in low dividend paying index funds I can hold for a long time. I put in the high dividend payers and the shorter hold securities in my retirement accounts to minimize current taxes.

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I assume you are talking about trying to avoid penalties for early withdrawal?

because the taxes you pay on capital gains in a private brokerage are going to be more than the taxes in a Roth or corporate 401K correct?

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If you contributed to your 401k pretax, it will be ordinary income tax rate plus 10%. Below is a good summary from Schwab on taxes from Roth IRA early withdrawal.
https://www.schwab.com/ira/roth-ira/withdrawal-rules

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I believe the thinking is it's better to shove as much into pre-tax 401Ks because even with ordinary tax rate plus 10%, you will be in a much lower tax bracket by the time you are taking out the funds than presently. Especially for someone like me in one of the highest tax brackets

so the corporate bonus coming on the 15th they actually told me I can decide how much I want to put into pre-tax corporate 401K and how much to be paid out in direct deposit

which actually ADDS on more taxes because it is viewed as additional income to your salary.

so I chose about 90% into retirement fund, 10% into direct deposit.

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no one planning to retire early should ever consider having to account for early withdrawal penalty just lookup Roth Conversion Ladder, or read this
https://forum.mrmoneymustache.com/taxes/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

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LMCane said:

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For the Accredited Investors on the board:

what actual steps did you take once you hit AI status?

you have to show your tax returns to an investment agency?

anyone using Ares or Icahn?

hedge funds?

I am trying to understand what my options are- I saw a report last night on youtube that Ares has an 11.6% annualized return vice 6.7% S&P.

and that it gives more access to investing in IPOs before the general public.

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Kansas Kid said:

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LMCane said:

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For the Accredited Investors on the board:

what actual steps did you take once you hit AI status?

you have to show your tax returns to an investment agency?

anyone using Ares or Icahn?

hedge funds?

I am trying to understand what my options are- I saw a report last night on youtube that Ares has an 11.6% annualized return vice 6.7% S&P.

and that it gives more access to investing in IPOs before the general public.

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I have never had to provide proof that I was an accredited investor. I have just sign a representation that I meet the criteria. The only people I have provided tax returns to are bankers related to loans I was taking out where I was principle and one real estate partnership deal where I was guaranteeing part of the deal.

As for hedge funds, there are some that have beaten the S&P (usually by using leverage and taking substantial risk) but it is hard to beat the market when you charge 2 and 20. The funds with the best track records usually have minimums measured in millions and you will have a lot of gates put up to limit your ability to pull out of the fund. I will never do a hedge fund.

Anyone talking about IPO access should be viewed with some skepticism. Can they get you the hot ones and how many shares will they be able to get you? Most can you access to the dogs but the hot deals are usually reserved for the biggest, highest fee paying clients.

I have never looked at Ares or Icahn. Btw, Ares isn't a hedge fund. They are an alternative asset manager/private equity firm. PEs have had a good run using low interest rates. It is to be determined how they do now that they have to pay for borrowing money.

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GarlandAg2012 said:

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I'm an AI and all I ever had to do was sign that I promise I qualify.

I didn't do anything once I met the threshold and only participate in things that I already have expertise in. In other words, don't change what you're doing that got you there IMO.

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Dr T and the Women said:

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I have had both experiences.. I find smaller outfits are ok with you just saying you are accredited but the larger ones need proof. I have had the investment company itself offer a third party verification service where you upload returns.. I have also had to provide a letter from my CPA for others.

As for Ares, I am kind of invested with them.. I sold my business to one of their portfolio companies

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GarlandAg2012 said:

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LMCane said:

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GarlandAg2012 said:

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I'm an AI and all I ever had to do was sign that I promise I qualify.

I didn't do anything once I met the threshold and only participate in things that I already have expertise in. In other words, don't change what you're doing that got you there IMO.

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Thanks

but all I did was invest in the stock market, bitcoin, fixed income corporate bonds, cash

I have no real estate other than ETFs, and no private equity or angel investing.

I'm only 53 so shouldn't I be a bit aggressive?

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No. The ratio of stocks to fixed income is the knob to turn for aggression. Do not get hung up on being an "accredited investor", it is meaningless to you.

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LMCane said:

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good advice as always

I agree to hold at the 10% of portfolio in accredited investor activities. I would want even less than that to start with.

is it even possible to get into something for $25,000 as an AI that you can't as non-AI?

most things I see are millions of dollars worth of investments.

and I don't really want to turn my entire private brokerage over to a firm when I have been able to grow it to $400K on my own.

I don't want to have FOMO, and at the same time I don't want to miss an opportunity to take advantage of.

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