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Investment income

January 3rd, 2022 at 01:59 am

I just had to add up our taxable investment income - interest, dividends, capital gains - for our accountant to see if we need to make an estimated tax payment.

It came to $46,000.

There was also about another $6,000 in dividends from two inherited stocks that are still in my late cousin's name and were paid to the estate, not to me directly.

In 2022, I have to start taking RMDs from the inherited IRA. That will be about $20,000 this year.

Finally, there's just over $550,000 still sitting in the estate bank account currently earning nothing. I will gain control of those funds soon and be able to invest them. Even at a modest 3% return, that would be another $16,000/yr. Obviously more if I can do better than 3%, which I think I can.

All together, that comes to $80,000 or so in income that we can reasonably expect this year. That's before touching a penny of our retirement accounts (except that inherited IRA) and in addition to my income from work.

If it truly plays out that way, I think I'd be well-positioned to retire by the end of the year, which has been my plan. It's just nice to have some actual numbers to back it up.

8 Responses to “Investment income”

  1. Lots of ideas Says:

    I think you might want to speak with a tax professional about what to do with the 500,000. It might make sense to invest in something like a rental property, where the income would cover expenses with a little extra, and the increase in value would be non taxable until you realized it. If you held this asset until death, it would transfer to your daughter at current market value at time of death.

    Or invest in tax free bonds.

    I am sure there are other strategies too, and I know you are good at researching on your own, but your assets are reaching the point where getting information from professionals and then evaluating it might save you money in the long run.

  2. disneysteve Says:

    "It might make sense to invest in something like a rental property"

    I have exactly zero interest in being a landlord. It's just not in my skill set.

    My intent is to have that money generating additional income for us to live on through some combination of growth and income - a total return approach.

    If, down the line, we find that our portfolio has grown well beyond what our needs are, I might reconsider. I know a former poster on the boards runs a property management company and has said that some of his clients have absolutely nothing to do with their properties. They bought them and handed over all operations to the manager. Some have never even seen the homes they own. They just collect the income. I could see myself doing something like that if it was totally hands off.

    I definitely discuss things with our CPA and our CFP to make sure I'm on the right track before making any major decisions or putting ourselves in an awkward situation regarding taxes.

  3. rob62521 Says:

    I think your plan to go to a CPA or CFP is a sound one and perhaps that person can give you advice on what to do as far as investments tailored to your situation. I'm with you -- there isn't enough money in the world to entice me to be a landlord!

  4. disneysteve Says:

    Joe, I actually qualify for one of the exceptions to the inherited IRA rules as I am less than 10 years younger than the deceased. So I get to withdraw over my life expectancy but I do have to take RMDs starting the year after his death, which is this year.

  5. livingalmostlarge Says:

    It's more than enough depending on what you spend!

  6. disneysteve Says:

    "It's more than enough depending on what you spend!"

    It isn't enough at this point. Even if the portfolio consistently throws off 100K/yr in income, a lot of that is taxable so the net is lower. Also, I'm only 57 so I've got a couple more years before I can start tapping retirement accounts. This year's capital gains were unusually high. I don't expect it to be that much every year.

    Still, it's a nice chunk of money.

  7. LivingAlmostLarge Says:

    You probably will want to tax loss harvest this year and reap a bit of losses and then consolidate cash.

  8. disneysteve Says:

    " You probably will want to tax loss harvest this year and reap a bit of losses and then consolidate cash. "

    I thought of that but "unfortunately" we didn't have any losses to harvest in 2021. Everything we own was up.

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