Taking money out of retirement funds to purchase cards

[Casey2296]

Originally Posted by Leon

Good thoughts, DJ.
First of all, I haven't gotten into debt over cards. I might extend a payment for a short period, but that's it. And that is because I didn't want to take money from retirement accounts. And I am still not going to do it BUT .....

...As devil's advocate. What is the difference from taking it from one account or the other AS LONG as you account for the tax implications. Let's say I want to buy a 35k card out of my 401k. Whenever I take it out, now or later, it's going to be taxed. IF I account for that, and take 50k? out, to pay the taxes, what's the difference?

(and I have both IRA and ROTHs). I just turned 61 (dang I am old).

In many cases you can get a loan against your 401K and pay yourself back with the interest going to you. Not that I'm advocating that to buy sports cards.

[raulus]

Originally Posted by Casey2296

In many cases you can get a loan against your 401K and pay yourself back with the interest going to you. Not that I'm advocating that to buy sports cards.

Yes, you can take a loan, but...

You have to pay it back within 5 years in substantially equal payments at least quarterly.

And there are pretty low limits to the amount that you can borrow. Basically the max you're going to get is $50k, and the limit could be lower for a lot of people. It's not nothing, but you're not going to buy many 52T Mantles with it.

Needless to say, there's not much of a long-term hold strategy here.

I guess if you're extra enterprising, you can put the card into the vault and borrow from the vault and use that to repay your retirement account loan. Or even better, use the vault loan to buy more cards!

[Casey2296]

Originally Posted by raulus

Yes, you can take a loan, but...

You have to pay it back within 5 years in substantially equal payments at least quarterly.

And there are pretty low limits to the amount that you can borrow. Basically the max you're going to get is $50k, and the limit could be lower for a lot of people. It's not nothing, but you're not going to buy many 52T Mantles with it.

Needless to say, there's not much of a long-term hold strategy here.

I guess if you're extra enterprising, you can put the card into the vault and borrow from the vault and use that to repay your retirement account loan. Or even better, use the vault loan to buy more cards!

I was using Leons 35K example, it would get you a 1914 CJ Cobb if you want one and you're not paying interest to anybody but yourself. If you think the Cobb is worth more in 5 years than it is now and will appreciate at a faster clip than you 401K investments then it might pencil out. If you have $400K in your 401K and you want 9% of your assets in sports cards and you wanna take a gamble then it might make sense. And that's a big might.

[raulus]

Originally Posted by Casey2296

I was using Leons 35K example, it would get you a 1914 CJ Cobb if you want one and you're not paying interest to anybody but yourself. If you think the Cobb is worth more in 5 years than it is now and will appreciate at a faster clip than you 401K investments then it might pencil out. If you have $400K in your 401K and you want 9% of your assets in sports cards and you wanna take a gamble then it might make sense. And that's a big might.

Keep in mind that the portion of your retirement account that is loaned out to you is also not growing when it's loaned out to you, other than the interest that you're paying yourself, which is usually pretty low. If the market goes nuts during that window, then you miss out.

[MR RAREBACK]

I think you will make way more on certain vintage cards then the s&p 500

[butchie_t]

I could not and would not ever think of doing this. I have been saving and planning way too long for the day I can hang up the network geek shirt and move onto the next phase. And not to mention, my wife would kill me.

More motivation in that last sentence than anything above it.

I have a little over a year left. And it just cannot get here fast enough for me.

Cheers,

Butch.

[BobbyStrawberry]

Originally Posted by butchie_t

I could not and would not ever think of doing this. .... And not to mention, my wife would kill me.

Same here. And I think she would be right!