Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Early retirement strategies

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,272
17,670
Portland, OR
“I’ve often been asked, ‘What do older people do once they retire?’ Well, I have a Boomer retired friend who has a chemistry background and one of the things enjoyed most is is turning beer, whiskey, and wine into urine. And, by golly, he’s pretty damn good at it!”

I love the comment!

But since you'd already earned at least 1 of every other thing, I added the Disagree just so you'd have the sweep.

Everybody needs a reaction sweep at least once in their life :D
 

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,272
17,670
Portland, OR
He´d tell me to sell most of my TSLA and diversify, no? Not ready to do that yet... But maybe I have a wrong imagination of financial advisors, maybe it wouldn´t hurt after all. I can still not listen to him ;)..

I've been working with a couple of financial advisor / planners (different reasons leading to both), and yes - they're advising "sell TSLA, lock in those amazing hair on fire risky gains, and diversify". They don't actually say hair on fire risky, but they're thinking it :)

I ignore that advice, and have found them very helpful for understanding different mechanisms for getting money out of IRAs, figure out expenses in retirement, and asking a whole bunch of questions that help prepare for retirement - not all of which I had thought of.
 

JustSaying

Member
Supporting Member
Oct 30, 2017
440
2,396
Orange County CA
Here's a book on that subject:

The Number: What Do You Need for the Rest of Your Life and What Will It Cost? by Lee Eisenberg

Do you know your Number? What happens if you don't make it to your Number? Do you have a plan? The Number is no ordinary finance book—it offers an intriguing and entertaining tour of weath gurus, life coaches, and financial advisers, and our hopes and fears for the future. The result is a provocative field guide to your psyche and finances and an urgently useful book for anyone over thirty.
Love the book, I have given away many copies,
Here is an update to the 4% withdrawal guidelines, the "re-retire" distribution concept makes a lot of sense.
Safely Boosting Retirement Income by Harmonizing Drawdown Paths | Financial Planning Association
 
  • Helpful
Reactions: hobbes

TSLA Pilot

Active Member
Mar 12, 2013
1,952
3,798
United States
I don't recall where on these TMC Forum threads I found this info, but it appears to be an awesome way to get some cash from a large pile of TSLA shares.

The goal: HODL forever--never sell a share.

This first link is one company I've found and I'm working to get a quote from them (NO idea if they're any good; just FYI). The second is from one of our brokers, TD Ameritrade, as their rates are jaw-droppingly low, nearly free money; see for yourself . . . .

Asset-Based Loans & Mortgages - Griffin Funding

And:

Securities Based Lending - Collateral Lending | TD Ameritrade

(Note: Libor 30-day rate is about 0.15%, and has been remarkably low for a lot of history.)
 
  • Informative
Reactions: smorgasbord

dmunjal

Active Member
Aug 17, 2012
1,191
1,379
I don't recall where on these TMC Forum threads I found this info, but it appears to be an awesome way to get some cash from a large pile of TSLA shares.

The goal: HODL forever--never sell a share.

This first link is one company I've found and I'm working to get a quote from them (NO idea if they're any good; just FYI). The second is from one of our brokers, TD Ameritrade, as their rates are jaw-droppingly low, nearly free money; see for yourself . . . .

Asset-Based Loans & Mortgages - Griffin Funding

And:

Securities Based Lending - Collateral Lending | TD Ameritrade

(Note: Libor 30-day rate is about 0.15%, and has been remarkably low for a lot of history.)

This is how Musk finances his personal lifestyle. He lives like a billionaire and pays no taxes because he never sells anything and collects no salary.
 

TSLA Pilot

Active Member
Mar 12, 2013
1,952
3,798
United States
FYI: Info from TD Ameritrade "TD Bank" initial reply to my query re: collateral lending.

It almost feels that this is TDA's invitation to transfer our accounts to Interactive Brokers?!? You'd think that if they were serious about keeping us, they'd make an effort to match their margin lending rate, no?

We would love to assist you with a collateralized Line of Credit using your taxable accounts at TD Ameritrade. I have included two links for additional information on how TD Bank's collateralized lending program works. This should answer many of your questions.

We do try to match our competitors rates if they happen to lower, with the exception of Interactive Brokers. Our rates on commitment amounts $1MM- $2.999MM is 2.15% + 30 day Libor and $3MM + is 1.50% + 30 day Libor.
 
  • Informative
Reactions: riverFox and Rarity

EV forever

Member
Supporting Member
Apr 23, 2016
846
6,521
Irvine, CA
FYI: Info from TD Ameritrade "TD Bank" initial reply to my query re: collateral lending.

It almost feels that this is TDA's invitation to transfer our accounts to Interactive Brokers?!? You'd think that if they were serious about keeping us, they'd make an effort to match their margin lending rate, no?

We would love to assist you with a collateralized Line of Credit using your taxable accounts at TD Ameritrade. I have included two links for additional information on how TD Bank's collateralized lending program works. This should answer many of your questions.

We do try to match our competitors rates if they happen to lower, with the exception of Interactive Brokers. Our rates on commitment amounts $1MM- $2.999MM is 2.15% + 30 day Libor and $3MM + is 1.50% + 30 day Libor.

So this would be about 2.3% rate on loans between 1 to 3MM, correct? Fidelity is almost 6%!!
Might be time to look for alternates for us.
 

MP3Mike

Well-Known Member
Feb 1, 2016
17,284
41,972
Oregon
So this would be about 2.3% rate on loans between 1 to 3MM, correct? Fidelity is almost 6%!!
Might be time to look for alternates for us.

If you are price shopping look at Schwab as well if you fall in the 2.5M to 3M range: Pledged Asset Line® | Schwab Bank | Charles Schwab

Loan Value Of Collateral at Origination Interest Rate Spread
$100,000 to <$250,000 4.50%
$250,000 to <$500,000 3.25%
$500,000 to <$1,000,000 2.75%
$1,000,000 to <$2,500,000 2.25%
$2,500,000 and above 1.75%

(The spread is the amount over the one month LIBOR you pay.)
 

TSLA Pilot

Active Member
Mar 12, 2013
1,952
3,798
United States
If you are price shopping look at Schwab as well if you fall in the 2.5M to 3M range: Pledged Asset Line® | Schwab Bank | Charles Schwab

Loan Value Of Collateral at Origination Interest Rate Spread
$100,000 to <$250,000 4.50%
$250,000 to <$500,000 3.25%
$500,000 to <$1,000,000 2.75%
$1,000,000 to <$2,500,000 2.25%
$2,500,000 and above 1.75%

(The spread is the amount over the one month LIBOR you pay.)

FYI: There's an easy to use calculator on here which tells you exactly what your rate will be for the amount borrowed; very useful, and damning for TDA and others as the rates are about HALF of what the others charge. On a 7-figure loan that's huge, esp. over time . . . and, yes, I'm "frugal" which is why there's so much in the account in the first place:)

Interactive Brokers Margin Rates

The only catch that I'm aware of is that IBKR used to (or still?) have special requirements for margin with TSLA shares. (Anyone know if that's still the case?)
 

Chenkers

Member
Supporting Member
Apr 28, 2019
617
7,122
Melbourne, AU
The only catch that I'm aware of is that IBKR used to (or still?) have special requirements for margin with TSLA shares. (Anyone know if that's still the case?)

Yes its still the case (I've had to just buy a cheap Put to keep my portfolio margin limit in check). The published margin rate from IBKR for TSLA is 40% but the actual rate is much higher, something like 75%. This adds a House Based margin requirements above the standard rate, specifically for TSLA. I believe it may be based on their Collateral Value Pricing (CVP) policy that lowers the cost value of TSLA shares that you can borrow against.

This Reddit post provides some explanation of the CVP policy: https://www.reddit.com/r/teslainves..._for_ib_investors_tsla_margin_rate_currently/
 
Last edited:

reardencode

Member
Supporting Member
Mar 9, 2019
247
1,006
Seattle, WA
Yes its still the case (I've had to just buy a cheap Put to keep my portfolio margin limit in check). The published margin rate from IBKR for TSLA is 40% but the actual rate is much higher, something like 75%. This adds a House Based margin requirements above the standard rate, specifically for TSLA. I believe it may be based on their Collateral Value Pricing (CVP) policy that lowers the cost value of TSLA shares that you can borrow against.

This Reddit post provides some explanation of the CVP policy: https://www.reddit.com/r/teslainves..._for_ib_investors_tsla_margin_rate_currently/
Thanks for the link! Been trying to understand IBKR margin since I switched from Fidelity. May have to migrate another account to take better advantage.
 

CatB

Member
Supporting Member
Mar 2, 2013
910
784
Alexandria, VA
I hope this is the right place for this question. Roth IRA thread is closed.

I like the idea of moving some TSLA to a Roth, but would have to create a backdoor conversion.
Can I transfer some stock this year (paying income taxes on it, naturally) and some in future years? Or even multiple times in a year? (dollar averaging)
If I only get one shot this year, I better think about it carefully.
If I only get one shot in my liefetime, I really better think about it!

TIA and sorry my google-fu skills failed me. Am hoping someone here has done this, or happens to know, and yes, I get and accept “not an advice” and ymmv.
 

The Raza

Member
Dec 15, 2017
41
33
Connecticut
I hope this is the right place for this question. Roth IRA thread is closed.

I like the idea of moving some TSLA to a Roth, but would have to create a backdoor conversion.
Can I transfer some stock this year (paying income taxes on it, naturally) and some in future years? Or even multiple times in a year? (dollar averaging)
If I only get one shot this year, I better think about it carefully.
If I only get one shot in my liefetime, I really better think about it!

TIA and sorry my google-fu skills failed me. Am hoping someone here has done this, or happens to know, and yes, I get and accept “not an advice” and ymmv.

Maybe I'm misunderstanding what you're trying to do - but I don't believe a "backdoor conversion" would be ideal with already purchased stock. A Roth Backdoor conversion is used when someone makes over the Roth Contribution limit ($139k in 2020 for individual) but wants to take advantage of an IRS loophole to still stuff $6k ($7k if you're older than 50) into their Roth IRA anyways.

They do this by first opening up a traditional IRA and funding $6k from their bank (post-tax dollars) and then immediately converting that traditional IRA into a Roth IRA. While that $6k is undergoing the conversion process, it should really be in a money market fund - otherwise you'll have some tax work to do on gains / losses next year. I've done this with Vanguard and the process is fairly easy - but I've not done anything related to stocks in the conversion. I believe another simplification for tax purposes is to have no open traditional IRAs for this backdoor process to work.

If you already have a traditional IRA accounts (say because you rolled your prior employment 401ks together) with stocks, I'm not sure how much benefit you'll get by only converting a portion of that traditional IRA to a Roth IRA.

And you don't get one specific shot in your life time, you can do backdoor Roth conversions every year. This link may help you.
Backdoor Roth IRA 2020: A Step by Step Guide with Vanguard
 
  • Informative
Reactions: CatB

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,272
17,670
Portland, OR
Has anybody else tried to leverage Fidelity into providing them with significantly better margin rates than their published rates?

I'm finding the idea of a margin loan over outright sale of shares might be a valuable addition to my collection of tools for generating a living until age 60 and I have full access to my retirement accounts (which can then take over for a margin loan).

But paying 6-8% doesn't appeal to me.


I'm hoping others have done this, with success, and can tell me (us) about what they did. Otherwise I'm just gonna call the financial advisor they assigned me and have a discussion.
 

CatB

Member
Supporting Member
Mar 2, 2013
910
784
Alexandria, VA
Maybe I'm misunderstanding what you're trying to do - but I don't believe a "backdoor conversion" would be ideal with already purchased stock. A Roth Backdoor conversion is used when someone makes over the Roth Contribution limit ($139k in 2020 for individual) but wants to take advantage of an IRS loophole to still stuff $6k ($7k if you're older than 50) into their Roth IRA anyways.

They do this by first opening up a traditional IRA and funding $6k from their bank (post-tax dollars) and then immediately converting that traditional IRA into a Roth IRA. While that $6k is undergoing the conversion process, it should really be in a money market fund - otherwise you'll have some tax work to do on gains / losses next year. I've done this with Vanguard and the process is fairly easy - but I've not done anything related to stocks in the conversion. I believe another simplification for tax purposes is to have no open traditional IRAs for this backdoor process to work.

If you already have a traditional IRA accounts (say because you rolled your prior employment 401ks together) with stocks, I'm not sure how much benefit you'll get by only converting a portion of that traditional IRA to a Roth IRA.

And you don't get one specific shot in your life time, you can do backdoor Roth conversions every year. This link may help you.
Backdoor Roth IRA 2020: A Step by Step Guide with Vanguard

Thanks, I have 401k at my employer, which I will just let ride. I have a rolled-over account which is where most of my TSLA is, and then I have a traditional IRA (funded with after-tax dollars, so gains would be taxed proportionally when I take distributions). My Schwab guy just said I could roll over stocks directly, so sounds like it would just be up to my accountant to calculate however much needs to be taxed as income.
 

TSLA Pilot

Active Member
Mar 12, 2013
1,952
3,798
United States
Has anybody else tried to leverage Fidelity into providing them with significantly better margin rates than their published rates?

I'm finding the idea of a margin loan over outright sale of shares might be a valuable addition to my collection of tools for generating a living until age 60 and I have full access to my retirement accounts (which can then take over for a margin loan).

But paying 6-8% doesn't appeal to me.


I'm hoping others have done this, with success, and can tell me (us) about what they did. Otherwise I'm just gonna call the financial advisor they assigned me and have a discussion.

If I were you, I would print these out and bring them with you.

Nothing like the implied, "I'm closing my accounts and moving them elsewhere" to get their attention.

Please let us know how it goes as we too are in this boat!

Interactive Brokers Margin Rates

(Tip: Plug in your account balance to see your actual, very low, interest rate. Then print.)

And:

Securities Based Lending - Collateral Lending | TD Ameritrade
 
  • Helpful
Reactions: adiggs and riverFox

clmason

Member
Sep 29, 2011
603
1,047
San Diego
Closest thread I could find.

I’m curious what others here who are homeowners with mortgages are thinking. I could pay off my mortgage with my TSLA gains. I’d have to sell 25% of my shares. And my mortgage rate is now 2.75% thanks to a refinance at current rates.

So on one hand the no mortgage payment would be life changing but it would come at a cost of selling 1/4 of my TSLA position. And the low rate vs. future TSLA growth... so curious what others may be thinking.

Not making any move just yet...
 
  • Like
Reactions: MikeC

Prunesquallor

His cardinal virtue? An undamaged brain.
Supporting Member
Dec 19, 2018
3,791
43,684
Houston/Galveston
All (especially @tesla Pilot, @EV forever, @adiggs):

I may be in the position to finally retire (again) early next year, and I’m looking at some options for providing supplemental monthly income from my taxable U.S. E*TRADE portfolio – 90% TSLA and 10% combination of ARKG, ARKF and BPTRX. I’d like to solicit your ideas and suggestions about three strategies I’m considering.


Option 1: Selling shares at opportune times during the year. Margin account would be used to smooth the outflow if needed, but margin total kept near zero. These would all be long-term cap gains, so tax would be 15% for me. The yearly income I would need plus taxes would equal about 15% of my current portfolio. As long as TSLA SP grows >15%/year, this should last forever.

Pros: No debt (as long as margin amount stays small). No danger of margin calls.

Cons: Taxes. Reduction in shares slows portfolio growth potential.


Option 2: Use margin (current max on this account is 40% of portfolio value). Margin interest is 7.95%. I would simply use margin for income. The yearly income I would need plus interest on the margin would equal about 14% of my current portfolio. As long as TSLA SP grows >14%/year, this should last forever. However, the margin amount would continue to grow at a constant rate (but still stay within maximum allowable portfolio percentage).

Pros: No reduction of shares, so greater portfolio growth potential. No taxes. Margin debt not reflected in credit report.

Cons: Debt with moderately high interest rate. Potential for margin call if deep SP hit.


Option 3: Use Line of Credit. Portfolio is collateral, interest rate 3.84%. LOC would be used for income. The yearly income I would need plus interest on the loan would equal about 13% of my current portfolio. As long as TSLA SP grows > 13%/year, this should last forever. However, the loan amount would continue to grow at a constant rate (but still stay within the maximum allowable portfolio percentage).

Pros: No reduction of shares, so greater portfolio growth potential. No taxes. Moderately low interest rate (doubt this is tax deductible interest).

Cons: Debt. Potential for margin call if deep SP hit. Debt would presumably be reflected in credit report.


I have neglected the effect of inflation in all of these options.
Do these strategies make sense? Is one clearly superior? Have I missed any other options?

Thanks for your help.
 
  • Like
Reactions: Christine69420

Christine69420

Autopilot's Assistant
Supporting Member
Oct 19, 2018
1,407
17,749
Scandiwegian
Clmason I belive the question is about risk. If TSLA lost much of it's value would you have problems paying the mortgage? Do you sleep well at night when thinking about this?

My answers to these questions are no and yes. So I will keep my mortgage and probably increase it soon. My TSLA shares will be used to finance items from the fun categories.

On the other hand it depends on the size of your investment. If it's ordinary sized like mine - and that is what it sounds like - I'd just keep it as is. But if there is no way you can spend it all you might as well pay down the mortgage.

So how do you sleep?
 

Products we're discussing on TMC...

About Us

Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.

Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


SUPPORT TMC
Top