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Dr. Jackal posted:With which you decrease profit and gains. I honestly can't tell if you are agreeing, disagreeing, non-sequituring, or trolling. I'm assuming non-sequitur? Yes, things that decrease risk tend to cost you money! That's what a risk premium is.
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May 28, 2011 04:48
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Bozart posted:I honestly can't tell if you are agreeing, disagreeing, non-sequituring, or trolling. I'm assuming non-sequitur? I believe we are all in agreement, I was pointing out that you forgot to mention that hedging or buying insurance isn't really de-leveraging, but just lowering the risk premium.
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May 28, 2011 17:17
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What is the difference between getting a Roth IRA through a company like Vanguard and one through my bank (BB&T)?
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May 31, 2011 19:06
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Beer4TheBeerGod posted:What is the difference between getting a Roth IRA through a company like Vanguard and one through my bank (BB&T)? Vanguard, and other brokerages, lets you invest in everything you could want to invest in. Stocks, bonds, real estate, and all variations of them. Banks that have IRAs tend to either 1) have you invest in a CD, or 2) use their own brokerage account that has higher fees than you can get elsewhere. It looks like BB&T has investments in CDs. http://www.bbt.com/bbt/personal/products/rothira/default.html While CDs are guaranteed by the federal government, they generally have lower expected rates of return than other investment options. If you want to have in effect a tax-advantaged higher-yield savings account to build up your retirement fund, then a Roth IRA with CDs would be what you want. Over the long run, the expected return is lower than other investment options since you instead accept a guaranteed return and let the bank take the risk and let the bank pocket the difference.
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May 31, 2011 19:19
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Interesting. I'm already contributing a huge amount to my TSP so I figure I can afford a bit more risk. How do you decide what to invest in? I'm using a targeted retirement fund (Lifecycle 2040) for my TSP. Do most people do the same for their IRAs?
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May 31, 2011 19:49
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I'm using the Target Retirement 2050 plan from Vanguard. I like it because it automatically reallocates funds as it gets closer to the target date. I also have the Vanguard LifeStrategy Growth fund outside of the IRA.
Yaos fucked around with this message at 00:48 on Jun 1, 2011 |
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Jun 1, 2011 00:44
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Beer4TheBeerGod posted:Interesting. I'm already contributing a huge amount to my TSP so I figure I can afford a bit more risk. How do you decide what to invest in?
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Jun 1, 2011 02:08
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So it appears my previous employer stopped, or never was, paying our retirement plan administrator, and now the administrator has withdrawn about 11% from my 401k based on these lines in the Summary Plan Description: The Plan will charge all Participants for the expenses of operating the Plan in the following manner: Unless paid by the Plan Sponsor, operating expenses will be paid from the plan participants accounts on a pro rata basis based on total account balances. The Plan will charge all Participants for the expenses of Any expenses incurred that are not paid by the Plan Sponsor will be paid by plan participants on a pro rata basis based on total account balances (if applicable to the Participant) in the following manner: Any expenses incurred that are not paid by the Plan Sponsor will be paid by plan participants on a pro rata basis based on total account balances. I have no idea when all this kicked in or what their operating expenses are, but guess learning how to rollover a 401k would be the most important thing to do right now. Is there anything else I can do besides hope they don't empty it before I finish the paperwork? cgeq fucked around with this message at 08:04 on Jun 1, 2011 |
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Jun 1, 2011 02:58
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moana posted:It depends on what you'll be using the money for, since the time horizon for different goals will change how risky you want the investments to be. The longer the time horizon, the more risky you can go (almost all stocks). The shorter the time horizon, the more safe you want your investments (bonds). If you need the money to be super safe, you can invest in CDs or in savings accounts with guaranteed interest (although right now the interest rates are super low). Are you using your IRA for the same purpose as your TSP, or do you have a different goal in mind for that money? I think the IRA would be for the same purpose as the TSP so I can ensure that tax free income. We may work towards setting up college funds for our (currently nonexistant) kids eventually, but I think for now our goal is to leverage that compound interest as much as possible. The lifecycle 2045 plan might be the best option for that.
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Jun 1, 2011 03:03
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Hi BFC Goons! I've read through the whole thread, tore through Four Pillars and I'm halfway through Bogleheads after starting it this morning. Great reads and reinforced the common sense I already know even though I knew squat about investing beforehand. 2 weeks ago I opened up a Vanguard IRA and dumped the settlement money from my last job into it and maxed it out for the year. I bought into the 2050 target fund because right now with only $5k in it it really doesn't seem like enough to me to be able to diversify effectively (to me) on my own. So next year when I max my contribution it gives me the option to dump the fund of funds and bonds and buy those funds directly so I can manage my risk exposure myself. I might not do this, I might keep those funds and just wait another 2 years when I max the next contributions and then keep the 2050 fund as a safety net and play with the other $10k in my own funds. Does this seem like a reasonable strategy? Or should I not play around like that and stick with one path going with the target fund or diversify on my own to my own liking? I'm really just looking for reassurance, to me my plan sounds reasonable but I'm pretty neurotic... Woody Allen levels of neurosis despite being very disciplined I have tons more questions about bonds and other stuff but I won't go for it all in one post. Most of it's just reinforcing what I've already read but still a little confusing.
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Jun 3, 2011 01:09
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Ugh. All this talk of a softening market reminded me that I hadn't rebalanced my portfolio in while. My planned asset allocation is 70% stocks, 30% bonds. Just checked in and saw that my stock allocation had crept up to 81% stocks, 19% bonds. Probably hadn't rebalanced since the Dow was around 9,000. Wish I would have done this last week - but I'm glad I at least caught my asset allocation being that out of whack and did something before the market corrected it for me.
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Jun 3, 2011 19:30
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SeaWolf posted:Does this seem like a reasonable strategy? Or should I not play around like that and stick with one path going with the target fund or diversify on my own to my own liking? 
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Jun 3, 2011 22:03
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Question about asset allocation, and then another less common question. Me: Almost 25, income of $24k before taxes. Deferred student loans ($17k) but no other debt. I have my checking with BoA, a savings account with ING, and a Roth IRA & brokerage account with Vanguard. The Roth is in the 2050 fund. Question 1 My brokerage account has $9000 of contributions in it that come from a fund my mom set up for me as a kid, plus around $800 of growth since I moved it to Vanguard. It is good to have as a backup emergency fund and maybe I will want to use some of it to pay for a car or wedding or trip or to pay off my student loans when I'm finished with my postgrad degree, or god knows what, but I don't really have any specific goals for it. It is in these funds: VGIT ($1022) VCIT ($1081) VTI ($7645) I noticed recently that it is 100% in US assets. I'm one of those people who thinks America's best days are behind it and other countries are going to be the next big guys, so I'm a little concerned that I don't have any international holdings at all. I'm also not necessarily married to my stocks/bonds ratio. If it's not obvious, I'm a pretty hands off investor, and I fall around a 3-4 on the risk scale that Vanguard uses. Any suggestions on how to make it a more balanced portfolio? Question 2 In a month I turn 25. When I turn 25, I gain access to some money left for me by a great aunt... in England. When my brother got his (2 years ago) it was something like 8000 pounds? I know this depends a lot on what kind of thing it's in now, but in general, is it better to keep it there, or should I try to invest it in dollars instead? If not, I'll probably be back in a couple of months asking about what would be best to do with it across the pond.
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Jun 3, 2011 22:27
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Over the next few years, I'm going to be working overseas and putting about ~$100k/year into savings for retirement (or buying a house cash when the market finally bottoms). I'm 23, just getting out of the military, and haven't started any retirement planning yet. What's the best way to go about this, and how do I minimize tax exposure? I'm pretty well-versed in arcane structured finance, but I know nothing else at all.
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Jun 4, 2011 05:30
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Our Gay Apparel posted:Over the next few years, I'm going to be working overseas and putting about ~$100k/year into savings for retirement (or buying a house cash when the market finally bottoms). I'm 23, just getting out of the military, and haven't started any retirement planning yet. What's the best way to go about this, and how do I minimize tax exposure? I'm pretty well-versed in arcane structured finance, but I know nothing else at all. does all the money need to be reachable? Or is some truly destined for retirement? Some ways to limit tax exposure are maxing out your 401(k), maxing out a traditional IRA, and contributing to a HSA. Right there you can shelter $16,5000 + $5,000 + $2,000 from Uncle Sam for a grand total of $23,500. So that's almost a quarter of that protected with some protection from taxes The rest depends on your timeframe and what sort of risk/reward timeframe you are looking at. If you are trying to get some appreciation and ok with risk - you can put the money into a taxable account that is relatively tax efficient. In other words, put it in a broad based index fund like the S&P 500 that incurs relatively little in the way of tax inefficiencies (although you will still pay capital gains). Or, if your risk appetite is low, you can put it into a tax-exempt bond fund for whatever duration you are looking at. Here is a good run down on tax efficiency. http://www.bogleheads.org/wiki/Principles_of_Tax-Efficient_Fund_Placement edit: one good thing about a Health Savings Account is that it is a super investment vehicle that combines the benefits of both a traditional and a Roth IRA. In other words - you can contribute pre-tax income into it and you do not have to pay any capital gains. The downside is that you have to use the money for health related expenditures. But if it is truly for retirement purposes you can leave that $2,000 for decades and then start tapping it when you are older and KNOW that you will have recurring medical expenses. So as a savings vehicle a HSA is incredible. Happydayz fucked around with this message at 05:46 on Jun 4, 2011 |
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Jun 4, 2011 05:40
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Our Gay Apparel posted:Over the next few years, I'm going to be working overseas and putting about ~$100k/year into savings for retirement (or buying a house cash when the market finally bottoms). I'm 23, just getting out of the military, and haven't started any retirement planning yet. What's the best way to go about this, and how do I minimize tax exposure? I'm pretty well-versed in arcane structured finance, but I know nothing else at all. spf3million fucked around with this message at 08:13 on Jun 4, 2011 |
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Jun 4, 2011 08:08
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spf3million posted:If you are out of the country for >330 days out of a rolling 365, you get a $92,900 exclusion for that year. So you don't start paying taxes until you earn $92,901. The problem with that is that you can not contribute to a Roth IRA on years when you make less than $92,900 because in the eyes of the IRS, you had $0 taxable income so you are ineligible to contribute to a Roth. I knew about the 92/330 days thing, but it's a rolling 365? I thought it was 330 days of that calendar tax year. That will work out extremely well for me. There won't be any years where I'm making less than 92, I'll be making about 200k a year. Hence why I wanted to minimize my tax exposure. The IRA/401k/HSA idea will work for me as well.
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Jun 4, 2011 08:45
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Yep, rolling 365. If you are gone from Nov 1, 2011 to Nov 1, 2012, you get 2/12*$92k exclusion for 2011 and 10/12*$92k for 2012. Actually you would claim 35 days prior to Nov 1 (so Sept 26 or something) through Dec 31 for 2011 since you were out of the country for a total of 330 days out of the 365 starting on Sept 26, 2011 and ending Sept 25, 2012. Then for 2012, you would claim Jan 1 through Dec 5 or 6 since you were out for 330 of the 365 starting Dec 6, 2011 through Dec 5, 2012. This is all assuming you're out from Nov 1 to Nov 1. I personally found it much easier to hire a professional familiar with the exclusion to do file my taxes since it comes out to a pretty big deduction. I keep a spreadsheet of the date and time I fly/drive internationally. This makes it much easier to file if you keep it updated. e: Also expect a pain in the rear end when they give you your return. Mine was too big for direct deposit and then they mailed it to the wrong address (West X Rd. instead of East X Rd.). And I've been out of the country so it's doubly annoying since I have to have someone else pick it up and deposit for me. It's June and I'm still waiting on it. spf3million fucked around with this message at 09:05 on Jun 4, 2011 |
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Jun 4, 2011 09:02
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spf3million posted:Yep, rolling 365. If you are gone from Nov 1, 2011 to Nov 1, 2012, you get 2/12*$92k exclusion for 2011 and 10/12*$92k for 2012.
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Jun 4, 2011 15:05
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I don't have the documents with me, but I believe it was around $150-200 to resubmit for a prior year and $250-300 for a current year. She handles all of my taxable capital gains on non-tax exempt accounts as well. I didn't shop around, just went with someone recommended to me by a co-worker so maybe there are better deals out there...? I felt like it was worth paying $300 to ensure I got a $15k return.
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Jun 4, 2011 16:24
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If I'm allowed to make the reccomendation...I have been working overseas dealing with the Foreign Earned Income exclusion since 2008 and have had my taxes done by Goon furushotakeru...he runs the tax thread at the top of the forum. Always a quick return and never hesitates to answer any questions I might have throughout the year. One thing to keep in mind as well, is that you are still taxed at the rate prior to the exclusion less what you can shelter. Dr. Kayak Paddle fucked around with this message at 00:55 on Jun 5, 2011 |
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Jun 4, 2011 21:50
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Oneiric posted:One thing to keep in mind as well, is that you are till taxed at the rate prior to the exclusion less what you can shelter. 
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Jun 4, 2011 22:41
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I've been looking at adding some high dividend yielding stocks to my Roth IRA. Been looking at the likes of RSO, PSEC and some other BDC/REIT stocks. I have $2000 left on my contribution this year which I might split between my Vanguard Targeted retirement and those stocks. Does anyone have any experience or thoughts about adding these? I'm obviously attracted to the thought of getting a 10%+ dividend yield to reinvest into Roth IRA. I am quite attracted to high risk/high reward kinds of stocks.
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Jun 6, 2011 17:01
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Why not look at VDIGX
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Jun 6, 2011 18:56
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YeahDavidLeeRoth posted:I've been looking at adding some high dividend yielding stocks to my Roth IRA. Been looking at the likes of RSO, PSEC and some other BDC/REIT stocks. I have $2000 left on my contribution this year which I might split between my Vanguard Targeted retirement and those stocks. Even though your question is for an IRA and long term, I would still suggest the stock pickers thread since they are more in tune with individual stocks where things here are generally for broad sectors and asset classes. Next year, when I get the fund minimum to keep everything above the floor, I plan on picking up Vanguard's REIT index at about 10% of my portfolio. That said, it all depends on your outlook on the real estate market. KennyG fucked around with this message at 03:47 on Jun 8, 2011 |
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Jun 8, 2011 03:38
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It seems that even though the expense ratios are high on most of my options in my 403b, I should be investing in it. I'm with OneAmerica. Can you recommend what I should invest in? I have no company match. I contribute the max amount I can to my roth IRA with vanguard (target retirement 2050) every year and I'm slowly saving up a 9 month emergency fund. I'm thinking of investing 10-15% of my income. Here are my options with their expense ratios: PIMCO Total Return - 1.15 Franklin Strategic Income - 1.18 Amer Fds Ameri High Inc Trst - 1.13 OneAmerica Asset Director - 0.89 Pax World Balanced - 1.21 Oppenheimer Value - 1.32 AmerFds Fundamental Inv - 0.99 OneAmerica Socially Responsive - 1.50 State Street Equity 500 Index - 0.70 AmerFds Grwth Fund of America - 0.99 Fidelity Adv New Insights - 1.45 AllianceBernstein S/M Cap Val - 1.35 Fidelity Adv LevCo Stk - 1.42 First Amer Mid Cap Index - 1.02 Franklin Small Cap Value - 1.64 Fidelity Adv Small Cap - 1.74 First Amer Small Cap Index - 1.12 Oppenheimer Main St Sm Cap - 1.79 Amer Fds EuroPacific Growth - 1.11 Amer Fds Capital World Gro&Inc - 1.13 Pax World Global Green - 1.65 Fidelity Adv Freedom 2050 - 1.29 They list all the other Freedom fund years as well as Freedom Income, but I figured the 2050 would be most applicable to me. Comparing these expense ratios to the VFIFX's 0.19 makes me sad. I'm thinking I should do either the Fidelity Freedom or the Equity 500 index. Any recommends would be appreciated. Edit: It seems I have a pension plan where my company contributes the amount equivalent to 5% of my income to anything of my choosing at OneAmerica. Crazak P fucked around with this message at 06:14 on Jun 10, 2011 |
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Jun 10, 2011 05:45
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Quick little question about Vanguard... I'm not quite ready to invest the other half of my severance as I planned in a few days with the market outlook looking like it's ready to slide again when all the financial easing ends on top of the other problems that it suppressed... So at least not in the early summer... If I transfer the money instead into one of Vanguards money market funds for now, when I'm ready to invest more into the Target fund I'm not going to be subject to any fees or costs, right? I'm sure that's the case since Vanguard is all about not eating up little fees but I didn't see anything explicit on the website and i just want to be sure I'm not going about this inefficiently.
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Jun 10, 2011 16:13
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SeaWolf posted:Quick little question about Vanguard... When I opened my Roth with Vanguard, I initially put my contribution in their money market fund, then switched it over to one of the target date funds a few days later. No fees for me, but I don't know for sure if that's always the case or if there were some special circumstances. Give them a call?
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Jun 10, 2011 16:45
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Crazak P posted:State Street Equity 500 Index - 0.70
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Jun 10, 2011 16:56
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Crazak P posted:It seems that even though the expense ratios are high on most of my options in my 403b, I should be investing in it. I'm with OneAmerica. Can you recommend what I should invest in? The problem would be that your total allocation would start tilting: 1) more large cap 2) more U.S. 3) more towards equities than the TR 2050 holds. You could just deal with that, or start pulling money from TR 2050 and putting amounts in, e.g., total international, U.S. small cap, and total bond market. e: Switching to, e.g., TR 2030 would help reverse the equity tilt
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Jun 10, 2011 16:56
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I've got about $25k in a savings account earning .08%. That's awful. I started with about 10K as a freshman and I've grown the amount over the last four years. Now that I'm ready to graduate, it's time to get my finances in order as well. I'm looking for an investment vehicle for this vehicle that's as easy to access as a savings account. I don't mind 2-3 day transfer times, but I need to be able to make multiple deposits and withdraws a month. This is my nest egg, so nothing too risky, but I hate seeing it evaporate away. Absolute investment beginner here, point me in the right direction and I will learn.
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Jun 11, 2011 00:29
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Well if you want access like a savings account you are going to be limited to, best case scenario, about 1%. Something like ING direct or Smarty Pig would be an option. If you need multiple (more than 6) out flows per month, then you are looking at high interest checking likely from someone like Ally Bank(.9% right now). Welcome to financial reality. Even long-term, 10 year treasuries are paying 3%. Risk and (potential) return are highly correlated. If you want safe, you don't get high interest; the contrapositive is also true. If it's your nest egg, how often are you pulling your money out? What do you mean by nest egg? If you mean retirement, are you at least putting $5k a year into a ROTH IRA? More details please.
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Jun 11, 2011 00:55
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wanderlost posted:This is my nest egg, so nothing too risky, but I hate seeing it evaporate away.
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Jun 11, 2011 05:54
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wanderlost posted:I've got about $25k in a savings account earning .08%. That's awful. If you're willing to take on risk for not great rewards, you could try something like GE Interest Plus. Unlike savings accounts, it is not FDIC backed so there is certainly risk, but GE is also a pretty stable company. Right now, if you put in between $15k - $50k, you get a 1.36% rate, which up until recently was totally comparable to the FDIC backed-no risk Smarty Pig so it was completely not worth it. Now, I guess, it could be, if you really think 1.36% is worth the risk over the FDIC backed 1% accounts around now. http://www.geinterestplus.com/en/ Your other option would be a high interest checking account. Perhaps check locally to see if you can find anything or something like http://redneckbank.com/ (sold out but gives you an idea of what to look for) but realize that these come with monthly requirements like direct deposit and a minimum debit card requirement to get those rates, and there's usually a maximum limit of $10k - $25k and anything over that will earn a much lower rate. KarmaCandy fucked around with this message at 02:00 on Jun 13, 2011 |
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Jun 13, 2011 01:58
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wanderlost posted:I've got about $25k in a savings account earning .08%. That's awful. If you are going into the job market then you can take advantage of accounts like HSBC (about 1% interest at the moment) where there are brick and mortar banks along with less lovely interest rates, while still being FDIC insured, and no fees if you do direct deposit. Don't know why they aren't mentioned often. I personally find that the ability to go to a branch and talk to a person quite reassuring, and so does my wife. Plus they are all over the world, which is great for vacations.
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Jun 14, 2011 04:54
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Bozart posted:If you are going into the job market then you can take advantage of accounts like HSBC (about 1% interest at the moment) where there are brick and mortar banks along with less lovely interest rates, while still being FDIC insured, and no fees if you do direct deposit. SmartyPig, ING and most other online banks are FDIC insured as well. HSBC may be 'all over the world' but it still dependends if they are local to you. For example, there are none in Illinois. I have nothing against the Hongkong and Shanghai Banking Corporation but I fail to see what's special in your recommendation. Can you also explain what 'going into the job market' will have to do with his rates at HSBC? Edit: KarmaKandy, would you really give up your FDIC protection for .3% interest? If I'm not getting 100% protection, I would rather head at least into bonds or something with the same "super-low-amazingly-safe-almost-as-good-as-money" vehicle that would pay 3% or 4%. It's an awful large risk premium for the return difference. KennyG fucked around with this message at 13:50 on Jun 14, 2011 |
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Jun 14, 2011 13:45
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KennyG posted:Edit: KarmaKandy, would you really give up your FDIC protection for .3% interest? If I'm not getting 100% protection, I would rather head at least into bonds or something with the same "super-low-amazingly-safe-almost-as-good-as-money" vehicle that would pay 3% or 4%. It's an awful large risk premium for the return difference. I'm not sure where you got the idea that I was recommending it as some super awesome option or anything but it is an option that meets his needs considering he wants to use it as a savings account. I have no clue how much he values .3% or how he feels about GE as a company. It's exact as I said, it's an option if you're willing to take on risk for not great rewards.
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Jun 14, 2011 16:54
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KarmaCandy posted:If you're willing to take on risk for not great rewards, you could try something like GE Interest Plus. Unlike savings accounts, it is not FDIC backed so there is certainly risk, but GE is also a pretty stable company. Right now, if you put in between $15k - $50k, you get a 1.36% rate, which up until recently was totally comparable to the FDIC backed-no risk Smarty Pig so it was completely not worth it. Now, I guess, it could be, if you really think 1.36% is worth the risk over the FDIC backed 1% accounts around now. http://www.geinterestplus.com/en/ Smarty Pig is still at 1.35% though.
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Jun 14, 2011 18:59
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Inept posted:Smarty Pig is still at 1.35% though. Sure, until tomorrow. Then it drops to 1.1%. I'm assuming he had a slightly longer investment plan in mind.
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Jun 14, 2011 21:11
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KennyG posted:Can you also explain what 'going into the job market' will have to do with his rates at HSBC? If you have direct deposit (because you have a job) then you don't have account minimums or fees.
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Jun 15, 2011 06:01
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