205-Friday Q&A: Are the Advertisements Re: the Value Of Tax Loss Harvesting a Scam, Hacking the Child Labor Laws, What's the True Purpose of the Accredited Investor Rules, and Is My 401(k) The Best Way to Build Massive Wealth?

Q&A today and I handle these four questions!

1. Does tax-loss harvesting really offer the kind of benefit that companies like Wealthfront, Betterment, Personal Capital, et al claim? And can a person do it on their own without relying on a firm to do it for them?
2. Thought you should know something I recently found out. California child labor laws no longer apply once you have graduated from high school. In addition, California has a method to graduate by exam (similar to a GED, but GEDs are only available to those 18 or older). The high school proficiency exam (which is easy) can be taken by anyone who is 16 or older or who has completed 10th grade or will have completed 10th grade by the end of the academic year in which they take the test. My son, who is 15 1/2 and in 10th grade, took the exam and passed it. Nothing prevents him from continuing on in high school, but he's no longer subject to child labor laws. He's seriously considering switching to community college in September, doing that for 2 years, and then transferring to a University of California campus to finish off his college. That'd get him a solid college degree by the time he's 19. During that entire time, he'd be eligible to work whatever hours he wants. Another option we're considering is self-study (with my help; I used to be a Computer Science professor), taking a bunch of AP exams, and then entering UC at age 18 with at least one year (and possibly more) of credits.
3. Joshua, Can you weigh in on your thought about being an accredited investor and the legal limitations around it? As I understand it, I do not qualify as an accredited investor. And certain investments cannot be invested in by those who are not accredited. however, apparently the rules were supposed to have changed to allow people to make investments of these kinds without the government saying that I have to make X amount or have X amounts of savings. but, as I learned by listening to the podcast Startup (episode 7) by alex blumberg, these rules have changed with the JOBS ACT, but the FCC has been sitting on the ruling and is way overdue for implementing it so that someone like me can invest in these previously off limits investments without being told that we can't. That episode of startup really explained a lot to me, because I had wanted to invest a large amount with alex after listening to the very first episode of startup (i assumed he would be very successful because I've loved his stuff for years and he's leveraging some seriously big friends for his new venture), but I couldn't invest in something I really thought was going to be a huge success (or at least provide me with good cashflow) because of these rules. I'm also about curious why these rules exist. Were they implimented to protect people from being scammed out of their money?
4. Joshua, As a young engineer, who is single, making a salary of over $80,000 in Texas (no state income tax): Should I max out my 401k if my goal is to become very wealthy, before age 40? Or, should I invest some in my 401k and invest the rest in REITs/other, more risky assets. Of course, along the way, I will be very frugal, and live way below my means. Thank you, love the show.

Enjoy the show!

Joshua

• Evaluating The Tax Deferral And Tax Bracket Arbitrage Benefits Of Tax Loss Harvesting by Michael Kitces: https://www.kitces.com/blog/evaluating-the-tax-deferral-and-tax-bracket-arbitrage-benefits-of-tax-loss-harvesting/
• Wealthfront Tax-Loss Harvesting White Paper: https://research.wealthfront.com/whitepapers/tax-loss-harvesting/#14-comparison_of_daily_vs_one_time_i_e_end_of_year_tax_loss_harvesting
• Betterment's White Paper: Tax Loss Harvesting+™: https://www.betterment.com/resources/research/tax-loss-harvesting-white-paper/
• The Tax Harvesting Mirage by Michael Edesess: http://www.advisorperspectives.com/newsletters14/The_Tax_Harvesting_Mirage.php
• The Tax Harvesting Oasis: A Response to Michael Edesess by Daniel Egan and Boris Khentov: http://www.advisorperspectives.com/newsletters14/The_Tax_Harvesting_Oasis.php
• The Tax Harvesting Water Hole by Michael Edesess: http://www.advisorperspectives.com/newsletters14/The_Tax_Harvesting_Water_Hole.php
• Accredited Investor: http://en.wikipedia.org/wiki/Accredited_investor
• Fixed Fortunes Article: http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes-biggest-corporate-political-interests-spend-billions-get-trillions/
• Why the "Accredited Investor" Standard Fails the Average Investor: http://www.bu.edu/rbfl/files/2013/09/AccreditedInvestorStandardFails.pdf
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