Originally Posted by notEnuf

That is incorrect.

Year Ended December 31, (in millions)
2019, 2018, 2017
Operating Revenue:
Passenger $42,277, $39,755, $36,947
Cargo 753, 865, 744
Other 3,977, 3,818, 3,447
Total operating revenue $47,007, $44,438, $41,138

Originally Posted by bugman61

The MBCBP is not tax free, it’s tax deferred. An important distinction that even the R&I committee neglected to mention in initial info on the plan. And I am interested in you having the option to use the plan, but not at the expense of forcing me to put $16k plus per year into an underperforming brokerage account that does more to enrich fidelity or PWC than me.

Originally Posted by notEnuf

In all diversified portfolios there is a place for low beta assets. MBCBP is that low beta asset. The amount of that asset is still up to you based on 401k and other funding choices. Your risk tolerance in the other vehicles can increase because of the MBCBP. You will never need to own bonds or expensive dividend producers again.

Originally Posted by notEnuf

In all diversified portfolios there is a place for low beta assets. MBCBP is that low beta asset. The amount of that asset is still up to you based on 401k and other funding choices. Your risk tolerance in the other vehicles can increase because of the MBCBP. You will never need to own bonds or expensive dividend producers again.

Originally Posted by Gunfighter

OK, I'll expand. Income producing real estate in red states is where you should put your money.

Passive investments in class B/C multifamily that employ cost segregation and bonus depreciation (standard practice) will generate a 60-75% passive loss (tax deduction) on the investment in year 1. Cash flows are generally in the 4-8% range annually and paid out quarterly. A cash out refinance in year 3-7 returns 50-100% of the original investment while maintaining ownership and cashflow from the asset. A sale in that same time frame generally returns 150-200% of the original investment (50-100% gain), but you lose the cash flow. In either case keep rolling the equity into more property to increase the cash flow.

Direct investment in single family or multi family investments will produce higher returns but require a more active role from the investor because of property management responsibility. This doesn't mean you are the property manager, just that you are responsible either individually or by hiring/contracting a property manager.

Direct investment in self storage is a great avenue as well. Tax deductions aren't as generous because it is a 39 year asset vs 27.5 year asset. Storage also has a higher land component, which is non depreciable. On the plus side, management of storage is much easier. In one example, we manage $30k of monthly RV storage revenue with one part time employee (8 hours per week), a call center and a couple hours per week from an in home office.

Mobile home parks and RV parks are also on the list with higher cash flow and less depreciation because they are mostly land investments.

If residential or storage isn't your style, you can buy a Dollar General store with 25% down and finance the balance. Landlord responsibilities range from limited to non-existent. In a typical lease you are responsible for "4 walls and a roof", plus anything outside. That means mowing the lawn and HVAC replacement, not changing filters or routine service and maintenance. Other NNN investments like medical office, dental and retail are also good investments once you have more experience and capital to work with.

Farmland is not my area of expertise. If I get bored after my current project, I may research it a bit.


Inflation is the biggest risk to the MBCBP. 5-6% guaranteed returns would have been a guaranteed loss for the last two years. The wealthiest people in the world profit from inflation.

All of the real estate examples above have a natural inflation adjustment. Properly leveraged you will profit from inflation as opposed to losing money to inflation like the MBCBP.
25% down, 75% leverage with 3% inflation will increase the value of your asset by 3% but represents a 12% gain on your investment.
As rental income rises with inflation, so do your expenses, but the debt service remains constant. A $200-$300 rent increase generally comes with a $100 increase in expenses. The additional $100-$200 becomes additional cash flow. This is how cash flow from real estate can double in just a few years even though the rents and valuation have only increased by 10-20%

Originally Posted by TED74

Instant tax savings of 40% without me lifting a finger sounds pretty good to me, even if the returns on that money are only 5% with extraordinarily low risk. Perhaps no where else in my portfolio will I need to hold bonds and my overall risk matrix post-MBCBP looks just like it did before MBCBP. But I will have added 10-50k more tax deferral than I had before the program was established.

DALPA was tasked with improving retirement and this seems like a win to me. It’s stated to have optional participation. If it turns out not to be optional, it won’t be implemented. If these things are good enough for high-earner private practice docs/lawyers/entrepreneurs, they’re good enough for me. Y’all want to pay the tax man first and then go crawl that money back through side gigs, property management, tenant evictions, complicated audit-attracting tax returns and hvac repair calls at 3am, it sounds like those options will all be available instead of using the MBCBP.

Originally Posted by notEnuf

In all diversified portfolios there is a place for low beta assets. MBCBP is that low beta asset. The amount of that asset is still up to you based on 401k and other funding choices. Your risk tolerance in the other vehicles can increase because of the MBCBP. You will never need to own bonds or expensive dividend producers again.

Originally Posted by TED74

I promise to reread this three times to better understand. It seems like a lot of tax deferral, but also a ton of work. I don’t want to work more, I want to work less. And if depreciation recapture is taxed at 25%, and I’m involved in a lot of turnover with short time horizons, isn’t my tax deferral rather limited? 25% is lower than my marginal tax rate, but it’s definitely not zero.

We’re also talking about 415c spillover, so perhaps only a few thousand a month that could be flowing to the MBCBP in the latter months of each year, not a large lump sum that is immediately liquid to dump into sizable real estate adventures. Instant tax savings of 40% without me lifting a finger sounds pretty good to me, even if the returns on that money are only 5% with extraordinarily low risk. Perhaps no where else in my portfolio will I need to hold bonds and my overall risk matrix post-MBCBP looks just like it did before MBCBP. But I will have added 10-50k more tax deferral than I had before the program was established.

DALPA was tasked with improving retirement and this seems like a win to me. It’s stated to have optional participation. If it turns out not to be optional, it won’t be implemented. If these things are good enough for high-earner private practice docs/lawyers/entrepreneurs, they’re good enough for me. Y’all want to pay the tax man first and then go crawl that money back through side gigs, property management, tenant evictions, complicated audit-attracting tax returns and hvac repair calls at 3am, it sounds like those options will all be available instead of using the MBCBP.

Originally Posted by Fourpaw

New memo out from Laughter.