Author Topic: Converting from growth to income  (Read 1038 times)

Notaguru

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Converting from growth to income
« on: September 17, 2018, 12:25:40 PM »
About 15 months ago I sought more diversity by investing in debt instruments, so tried Lending Club with conservative borrower criteria. So far, it's been satisfactory - determined by net value of our LC account.

Having just turned 80, I decided that income is a more appropriate goal than growth. With LC, it appears that one converts from growth to income by stopping automated reinvesting, and then periodically withdrawing funds from the account. Depending on how often I withdraw, that process creates periods during which I neither have use of the funds nor are they generating income. It also looks like that will complicate our tax filings...

Is there a better way?

Roux

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Re: Converting from growth to income
« Reply #1 on: September 17, 2018, 05:16:38 PM »
Liquidp2p.com has a feature called Constant Value. This feature allows you to set a Constant Value X. Then receive weekly transfers of excess dividend payments over and above the set value, while keeping you invested at Constant Value X. We are working on Drawn Down multi-year feature, but this feature is currently not available.

Fred93

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Re: Converting from growth to income
« Reply #2 on: September 18, 2018, 02:46:31 AM »
With LC, it appears that one converts from growth to income by stopping automated reinvesting, and then periodically withdrawing funds from the account. Depending on how often I withdraw, that process creates periods during which I neither have use of the funds nor are they generating income. It also looks like that will complicate our tax filings...

This does NOT complicate your tax filings.  Your tax filings don't need to know anything about when you transfer money from one account to another.

Notaguru

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Re: Converting from growth to income
« Reply #3 on: September 18, 2018, 11:27:28 AM »
When borrower payments are re-loaned under the LC umbrella, my LC balance simply grows with no tax issues - right? But isn't there a tax consequence incurred when funds are withdrawn from LC?
At this moment, I've simply stopped automatic reinvesting - and will draw funds from LC once or twice a month. Actually, I've never done that, and wonder about the mechanism.

Is there a better way to make my LC account an INCOME machine? I'm not comfortable with LiquidP2P, simply because of the lack of user experience and track record.

??

 

arcee49

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Re: Converting from growth to income
« Reply #4 on: September 18, 2018, 01:46:28 PM »
Are you referring to investing in LC through a Qualified Plan?  I.e. IRA

If so, you can still just transfer the funds to another custodian to not pay taxes, albeit pay a fee to do it.

Fred93

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Re: Converting from growth to income
« Reply #5 on: September 18, 2018, 03:47:22 PM »
When borrower payments are re-loaned under the LC umbrella, my LC balance simply grows with no tax issues - right? But isn't there a tax consequence incurred when funds are withdrawn from LC?

The details depend on what kind of account you have at LC.

If it is a regular taxable account, then NO.  Moving money from one broker to another or from one broker to your bank account is never a taxable event.

If you have an IRA, then the answer is maybe.  There's more than one way to move money out.   The IRS allows you to move money between brokers while it is still in an IRA.  The IRS does NOT call this a "withdrawal".  Its just a movement within your IRA.  If on the other hand you "withdraw" money from your IRA to some account outside of the IRA structure, such as your bank account, then there would be a taxable event.

In either case, you can move money out with ZERO affect on your tax return or your taxes.