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My stock broker sez NO!

Road Cycling “It is by riding a bicycle that you learn the contours of a country best, since you have to sweat up the hills and coast down them. Thus you remember them as they actually are, while in a motor car only a high hill impresses you, and you have no such accurate remembrance of country you have driven through as you gain by riding a bicycle.” -- Ernest Hemingway

My stock broker sez NO!

Old 10-28-02, 04:08 AM
  #1  
trmcgeehan
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My stock broker sez NO!

I'm riding a 1985 Ross road bike, which is a good bike but a real tank. I went to my stockbroker, and asked her to cash in $2,600 of my IRA so I could buy a new Trek, and she told me she wouldn't do it. She said I need these funds for my retirement. Should I get a new stock broker, or is she doing me a favor? ;-)
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Old 10-28-02, 04:16 AM
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Depends. What's more important to yuo?
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Old 10-28-02, 04:34 AM
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Hi
one has to wonder, why $2600? There are nice bikes for half that amount. Perhaps this should start with what you want in a bicycle..... Btw, I keep my witholding jacked up to get a large tax refund.
Couple grand makes a nice down payment on anything you need to do.

Last edited by late; 10-28-02 at 04:43 AM.
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Old 10-28-02, 06:01 AM
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Cashing in IRA funds to buy a bike is probably a very BAD idea. Not only will you have to pay a LARGE fee for withdrawing the funds, you will also get nailed tax-wise at the end of the year. The whole thing will probably cost you upwards of 30-35% of what you withdraw, maybe even more.
Some IRA's allow you to take loans against them. The great thing here is that the interest you pay on the loan, you are actually paying to yourself. Look into that before you think about taking a disbursement. If not, then just save up. You'll be glad you did.
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Old 10-28-02, 06:37 AM
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If she thinks it is better for you to be riding a 1985 ROSS, then she is no friend.

Better start looking for a new adviser.
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Old 10-28-02, 07:33 AM
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You ought to be able to find a Trek 1000 on clearance for $500.won't break the bank and likely better in every way than the Ross.Or,buy used.Look at it this way,that riding the bike will keep you healthy and more likely to need the retirement funds,unless you get cashed in early by a blue haired old lady in a 2 ton Buick.
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Old 10-28-02, 07:39 AM
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Originally posted by late
... Btw, I keep my witholding jacked up to get a large tax refund.
I'd much rather invest that withholding myself and gain the returns throughout the year than loan it to the IRS at zero percent interest.

-r
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Old 10-28-02, 07:43 AM
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ASK HER IF SHE'LL LET YOU BUY A FONDRIEST INSTEAD!!!!!!!That might change her mind.
 
Old 10-28-02, 08:34 AM
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Please, do not withdraw money from an IRA to buy a bike. That $2600 could be worth about 15,000 in 20 yrs at about 10% return, which is a little lower than the historical average of the stock market. Why dont you save the money for a while and then buy the bike.

Brian

PS: Your broker is doing you a favor and I hope for your sake she sticks to her guns. Its like when a friend wont let a friend drive home drunk. The drunk is usally pissed off until the morning when they realize what they did.
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Old 10-28-02, 11:27 AM
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Pulling money out of that account is a bad idea----BUUUUT----its your money---you can do what you want with it-----that's not for your broker to decide.
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Old 10-28-02, 11:52 AM
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Stop. Take several deep breaths. You need to get your bike lust under control. I'm with your stockbroker. If you have to cash in your IRA, maybe you need to find a less expensive bike.

I'm not up on IRAs, but you typically pay a pretty big tax penalty (10%?) when you withdraw pre-maturely from a retirement account. Plus, if the money was invested as pre-taxed earnings, you have to pay back taxes. (And a new bike probably won't qualify as a hardship exemption.) You lose 30-40%, very bad economics.

But, while you're looking at your IRA, check what is it being invested in. Not stocks, I hope.
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Old 10-28-02, 12:04 PM
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Originally posted by trmcgeehan
I'm riding a 1985 Ross road bike, which is a good bike but a real tank. I went to my stockbroker, and asked her to cash in $2,600 of my IRA so I could buy a new Trek, and she told me she wouldn't do it. She said I need these funds for my retirement. Should I get a new stock broker, or is she doing me a favor? ;-)
As you have read from others, and surely know yourself, taking this cash from your IRA is a horrible FINANCIAL decision.

-However, perhaps this potential new steed is worth more to you now than what the $2,600 will yield @ retirement time?

-Perhaps this new bike will inspire you to ride more, and discover new territory and new friends?

I guess you won't know the answers to those questions unless you go for the new steed. Life is all about risk and reward - some of it not related to cash, though.

Good luck with your decision, and it is YOUR decision - not your brokers.
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Old 10-28-02, 12:30 PM
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Okay, now you're in my territory. I'm a CPA and tax accountant and deal with this issue quite a bit, but usually people are using the money to go on vacation, buy a boat or refurnish their house.

If you withdraw the money, plan on having 38% of it withheld for federal income tax (28% income tax, 10% early withdrawl penalty). So, in other words, if you want $2,600 to buy your bike, you need to withdraw $4,333. If you're in the 15% tax bracket, you'll need to withdraw $3,466. If you fail to have the tax withheld you'll have a smaller refund, or owe the feds come tax time next spring.

ALSO, if you have state income tax you'll have to pay even more.

In this case I agree with your broker. $3,500-4,500 is too much to pay for a $2,600 bicycle. Buy a used bike and start a savings account.

Last edited by WoodyUpstate; 10-28-02 at 12:32 PM.
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Old 10-29-02, 02:31 PM
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Originally posted by WoodyUpstate
Okay, now you're in my territory. I'm a CPA and tax accountant and deal with this issue quite a bit, but usually people are using the money to go on vacation, buy a boat or refurnish their house.

If you withdraw the money, plan on having 38% of it withheld for federal income tax (28% income tax, 10% early withdrawl penalty). So, in other words, if you want $2,600 to buy your bike, you need to withdraw $4,333. If you're in the 15% tax bracket, you'll need to withdraw $3,466. If you fail to have the tax withheld you'll have a smaller refund, or owe the feds come tax time next spring.

ALSO, if you have state income tax you'll have to pay even more.

In this case I agree with your broker. $3,500-4,500 is too much to pay for a $2,600 bicycle. Buy a used bike and start a savings account.
Yup, but you'd have to pay the income tax regardless. So really, it's only the 10% penalty. Right??
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Old 10-29-02, 06:42 PM
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Originally posted by bac
Yup, but you'd have to pay the income tax regardless. So really, it's only the 10% penalty. Right??
Well, potentially, if you were retired your overall income would be lower. All, or at least a larger percentage, would be taxed at the 15% bracket. And, again I'm no expert, but many retirement investment plans have their own penalties for early withdrawals. Bottom line is 'don't think of a retirement plan as a bank account.'
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Old 10-29-02, 07:07 PM
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http://www.coloradocyclist.com/commo...735&TextMode=0
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Old 10-30-02, 06:54 AM
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Remember, any good stock broker would most likely be independently wealthy. The cruddy ones are still working for a living. If a broker is so smart, then why would they need your money to invest?
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Old 10-30-02, 10:21 AM
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Well, this brings up an idea that I hold.
I don’t actually take money out of my retirement funds for cycling, but I DO consider my cycling costs as an investment in my retirement and my health care.

I’m 52. Before I started cycling I was 70 pounds heaver and my blood pressure was almost 2 times what it is now. If I had kept going that way, I wouldn’t have much of a retirement to look forward to.
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Old 10-30-02, 10:01 PM
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With such sound investment advice, we should make you the broker! Excellent point!
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Old 11-01-02, 03:42 AM
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Originally posted by trmcgeehan
I'm riding a 1985 Ross road bike, which is a good bike but a real tank. I went to my stockbroker, and asked her to cash in $2,600 of my IRA so I could buy a new Trek, and she told me she wouldn't do it. She said I need these funds for my retirement. Should I get a new stock broker, or is she doing me a favor? ;-)
If your going to base your decision on what people on an internet forum tell you, I strongly suggest that you take your broker's advice...

What the hell is with people nowadays???
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Old 11-01-02, 05:43 AM
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Originally posted by FELONIOUS MONK
If your going to base your decision on what people on an internet forum tell you, I strongly suggest that you take your broker's advice...

What the hell is with people nowadays???
Welcome to the forums Feloniuous. Great to know you think so highly of the opinions of fellow forum members.

Why not pop over to 'Introductions' and let us get to know you a little better. Good to have you aboard.
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Old 11-01-02, 11:56 AM
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Originally posted by MediaCreations

Welcome to the forums Feloniuous. Great to know you think so highly of the opinions of fellow forum members.

Why not pop over to 'Introductions' and let us get to know you a little better. Good to have you aboard.
Sorry, man; my post may have come off a little more harshly than I intended. I never said anything about the advice given on this subject but rather questioned (albeit indirectly and through the inquirer himself) the weight such advice would carry in this guy making his decision on buying a bike with his retirement money. I just don't think that asking for financial advice on a cycling forum is a very wise thing to do, regardless of the purchase being considered. It seems to me that such matters should be taken up with a financial professional if one cannot decide on his own. Please don't take it personally. And thanks for the welcome!
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Old 11-01-02, 05:15 PM
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If you look for justification to buy bicycles, then you miss the point in having toys.
Toys are the #3 reason for living.
Spend what you've got now.
Live on memories of what you had then.
And ride.
Buy the best that you can afford.
And ride.
Don't look back and lament.
That is for relationships.
Ride hills and live.
Ride flats and smile.
Ride rolling hills and lose yourself.
White trash existentialism is not just for bad movies.
Signed,
I. M. Baroque
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Old 11-01-02, 07:52 PM
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Just tell your broker you want to trade junk bonds ,penny stocks,futures or other highly commissioned products with part of the withdrawings and you will have her in your corner in no time.Just kidding like most I agree your broker is giving you sound advice if the IRA is to be an important part of your retirement funds.
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Old 11-01-02, 08:35 PM
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If he can afford a $2,600 bike he can afford the penatlies. Of course there are other ways of getting $2,600.00, some legal
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