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pmchem posted:edit: and further, he mentions bonds -- but not a bond fund! if actually holding bonds, you're totally protected against interest-rate risk! I'm a little late, but I think you are in error. If you hold an individual bond, and want to sell it, it would still need to be sold at a discount if the market rate went up, yeah? The interest rate risk is still there, just less visible.
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Apr 19, 2021 00:50
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Skinnymansbeerbelly posted:I'm a little late, but I think you are in error. If you hold an individual bond, and want to sell it, it would still need to be sold at a discount if the market rate went up, yeah? The interest rate risk is still there, just less visible. If you had to sell the bond, that’s correct of course. But in the case of large portfolio construction with short term bonds (context of the discussion), it’s virtually certain that the bonds would be held as a bond ladder ( https://investor.vanguard.com/investing/online-trading/bond-strategies ) and they would regularly be maturing, providing access to principal money without needing to sell the bonds.
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Apr 19, 2021 00:55
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Backdoor roth newbie question: I understand the general idea of if you're not eligible for contributing to a regular Roth IRA because of income limits, you can open an IRA and then convert it to a Roth. Next year, when I've got this 1 year old backdoor Roth IRA sitting there and it's time to do this again, can I simply contribute again to the already existing IRA, then somehow transfer that into the Roth IRA? Or does the act of converting make the original IRA vanish into the newly backdoored Roth IRA. How does this work year over year? Everything I read talks about "converting" the IRA to a Roth, which reads like I'm essentially opening two new accounts every year (IRA, then Roth) to do a backdoor contribution. The boring stuff: emergency fund is set, maxing out 401k, have a Fidelity Roth IRA sitting around that I was contributing to until a couple years ago when I became ineligible, also have a Vanguard regular ol' taxable investment account that I occasionally contributed to over the past year, retirement is 20+ years out. e: whoops edit deleted a sentence, fixed. Frinkahedron fucked around with this message at 02:51 on Apr 19, 2021 |
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Apr 19, 2021 02:49
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Frinkahedron posted:Backdoor roth newbie question: I understand the general idea of if you're not eligible for contributing to a regular Roth IRA because of income limits, you can open an IRA and then convert it to a Roth. Next year, when I've got this 1 year old backdoor Roth IRA sitting there and it's time to do this again, can I simply contribute again to the already existing IRA, then somehow transfer that into the Roth IRA? Or does the act of converting make the original IRA vanish into the newly backdoored Roth IRA. How does this work year over year? Most places will just keep the old traditional IRA around until it goes inactive for a year or two, so you can keep using the same one if it still exists. You're converting the contribution (which happens to be the entire amount of the account), that's all. You can academically do partial conversions (but there's rarely-to-never any reason to do so).
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Apr 19, 2021 02:56
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The Trad IRA account sits empty all year except for the week or whatever it takes between deposit and transfer.
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Apr 19, 2021 03:04
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My spouse recently took a position, with a state institution, that offers a 403(b). A few of the providers available are Fidelity, T. Rowe Price, and TIAA. We're leaning towards Fidelity, for no particular reason other than low cost funds, and either 1. put everything into a target date fund (FHTKX or FJTKX) or 2. pick a few fund options (FXAIX, FGCKX, maybe something else) that look good to dump the contribution into. Are there any Fidelity funds that we should look at? FGCKX seems ridiculous over the last 10 years, but has one of the larger expense ratios I've seen. She's 20+ years out from retirement.
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Apr 19, 2021 22:34
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Just checked my lazy 3 fund portfolio after a few years and things seem to be pretty OK (I auto contribute to the below fixed percentages every week). Does this allocation still have pretty decent choices for Vanguard Admiral or are there better options that I haven't noticed yet? VTSAX 64% VTIAX 16% VBTLX 20%
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Apr 19, 2021 22:48
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UncleGuito posted:Just checked my lazy 3 fund portfolio after a few years and things seem to be pretty OK (I auto contribute to the below fixed percentages every week). Does this allocation still have pretty decent choices for Vanguard Admiral or are there better options that I haven't noticed yet? You're overweighted toward U.S., but some people ITT are in favor of that anyway. Vanguard's target retirement funds are closer to a 60/40 split instead of 80/20. jfff posted:Are there any Fidelity funds that we should look at? FGCKX seems ridiculous over the last 10 years, but has one of the larger expense ratios I've seen. Don't chase returns. Also the SP500 fund is the only one that I would consider to have a low expense. Everything else is a bit high by modern standards. If Fidelity doesn't have any other low cost funds, TIAA actually has some decent offerings, depending on your employer.
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Apr 20, 2021 02:15
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Space Fish posted:Related and recent: https://youtu.be/MyqCUmGu3Z8 Hah, that's a great video. GEMorris you should definitely watch this.
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Apr 20, 2021 03:29
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CompeAnansi posted:Hah, that's a great video. GEMorris you should definitely watch this. drat, yeah wish I had seen that years ago.
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Apr 20, 2021 04:07
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Is there anything glaring about the following 401k allocation? I tried to mimic the VFFVX target fund, but have a higher bond ratio here because I don't hold bonds in my taxable accounts These are all sub 0.1% ER funds.
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Apr 20, 2021 13:57
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I wouldn't say it's glaring, but if you're trying to approximate the market and not intentionally over-weight small-caps, you should do 45% SP 500, 10% EXT MKT.
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Apr 20, 2021 15:20
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silence_kit posted:I honestly, no-joke would recommend staying away from most of the general topic SA sub-forums, if you are prone to this kind of behavior. Almost everybody on this website, and not just C-SPAM, has convinced themselves that the world is ending, and reading all of those kinds of posts from people who have that kind of mentality is really not healthy. yeah at this point i would recommend the personal finance subreddit as a source because the sheer number of people hold the doomers at bay - also be mindful that most of the rest of the internet is like this too, but especially smaller internet communities, the only difference is what they think the solution is the internet is amazing at connecting like-minded people and helping them build negative feedback loops
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Apr 20, 2021 15:36
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colonel pineapple posted:I wouldn't say it's glaring, but if you're trying to approximate the market and not intentionally over-weight small-caps, you should do 45% SP 500, 10% EXT MKT. Thanks! I'll make the change.
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Apr 20, 2021 16:07
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If you're in an ESPP, and you had payroll deductions for it, does the company just refund the deductions if you leave? Or do they just wait until the offer date and give you the discounted shares based on the deductions?
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Apr 20, 2021 16:11
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MJP posted:If you're in an ESPP, and you had payroll deductions for it, does the company just refund the deductions if you leave? Or do they just wait until the offer date and give you the discounted shares based on the deductions? There is a tremendous amount of variation between ESPPs; it depends entirely on the specifics that your company has decided.
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Apr 20, 2021 16:17
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MJP posted:If you're in an ESPP, and you had payroll deductions for it, does the company just refund the deductions if you leave? Or do they just wait until the offer date and give you the discounted shares based on the deductions? Odds are they refund it when you leave, but no one outside of your company will actually know the answer.
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Apr 20, 2021 16:19
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Mad Wack posted:the internet is amazing at connecting like-minded people and helping them build negative feedback loops Yeah. To be more nerdly, I think it is more accurate to call it a positive feedback loop, but the end result often certainly isn’t a positive or good one! 
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Apr 20, 2021 17:31
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Turns out my work hosed up my W-2 and they have to get it corrected through ADP, which will apparently take a few weeks.  I’m gonna have to ask my CPA to help me file for an extension.Christ.
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Apr 21, 2021 15:52
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2021 contribution complete. 
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Apr 22, 2021 20:27
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I’m trying to help my friend figure out some tax-advantaged retirement account stuff. He owns a small business as a sole-proprietorship, but he’s also employed as a caregiver. His employer doesn’t offer a 401k. Is there any tax-advantaged account he can have in addition to his Roth IRA? I was reading about SEPs on investopedia, and it got me curious about them. Am I right that they essentially function like a trad. Ira with higher contribution limit, then he could just rollover once/year? Or is he disqualified from a lot of the resources available to small-business owners because he is employed elsewhere as well?
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Apr 23, 2021 16:17
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Valicious posted:I’m trying to help my friend figure out some tax-advantaged retirement account stuff. He owns a small business as a sole-proprietorship, but he’s also employed as a caregiver. His employer doesn’t offer a 401k. Is there any tax-advantaged account he can have in addition to his Roth IRA? I was reading about SEPs on investopedia, and it got me curious about them. Am I right that they essentially function like a trad. Ira with higher contribution limit, then he could just rollover once/year? I don’t know about the second job, but he’s probably eligible to enroll himself in a 401(k) from his own company. Notes from the IRS: https://www.irs.gov/retirement-plans/one-participant-401k-plans This allows him to push beyond his IRA limits, basically.
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Apr 24, 2021 05:41
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MJP posted:If you're in an ESPP, and you had payroll deductions for it, does the company just refund the deductions if you leave? Or do they just wait until the offer date and give you the discounted shares based on the deductions? When I left a company partway through an ESPP scheme, they simply refunded the contributions I'd made via a mailed cheque.
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Apr 24, 2021 12:00
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so I could say that I finally figured out what this god damned cube is doing. Get well Lowtax.
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jokes posted:I don’t know about the second job, but he’s probably eligible to enroll himself in a 401(k) from his own company. Thanks a lot for this. I think I need to consult with a tax professional though? It would be great if he could push past the $6K/year IRA limit, as right now he’s just investing extra money in index funds in a taxable account. (Which that’s a whole issue as well I think? Don’t index funds trigger capital gains as stocks shift in and out? That’s why tax-managed indexes exist right?) What would he need to do to get the ball rolling on the solo 401k?
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Apr 24, 2021 21:16
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Valicious posted:Thanks a lot for this. I think I need to consult with a tax professional though? It would be great if he could push past the $6K/year IRA limit, as right now he’s just investing extra money in index funds in a taxable account. (Which that’s a whole issue as well I think? Don’t index funds trigger capital gains as stocks shift in and out? That’s why tax-managed indexes exist right?) In his taxable if he just puts it in VTSAX and VTIAX then he is good to go.
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Apr 25, 2021 00:40
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Valicious posted:Thanks a lot for this. I think I need to consult with a tax professional though? It would be great if he could push past the $6K/year IRA limit, as right now he’s just investing extra money in index funds in a taxable account. (Which that’s a whole issue as well I think? Don’t index funds trigger capital gains as stocks shift in and out? That’s why tax-managed indexes exist right?) Index funds that pay out dividends will be causing taxable events for shareholders. Some funds don’t really “do” dividends, and focus on growth stocks or whatever, but in a taxable account if you receive a dividend, that’s a taxable gain. To get the ball rolling, he should absolutely talk to a professional to be sure he doesn’t gently caress it up but it’s just like a phone call with a CFP. It’s a very quick and simple process, basically the employer forms a 401(k) program and the employee puts money he doesn’t need into his employer-provided 401(k). This is probably one of the most common tax things that solo companies do. jokes fucked around with this message at 15:49 on Apr 25, 2021 |
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Apr 25, 2021 15:45
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Valicious posted:Thanks a lot for this. I think I need to consult with a tax professional though? It would be great if he could push past the $6K/year IRA limit, as right now he’s just investing extra money in index funds in a taxable account. (Which that’s a whole issue as well I think? Don’t index funds trigger capital gains as stocks shift in and out? That’s why tax-managed indexes exist right?)
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Apr 25, 2021 16:02
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Ugh. Under a year ago, my dad, against my advice, gave some jamoke from PNC Bank a chunk of money from their savings to invest. I have no idea what they actually got sold, other than my dad telling me that it's somehow structured so that they can only lose so much in value (christ I hope it's not some sort of life insurance). Today, my dad gives me a call and tells me that he's going to get hit with a decent amount of STCGs because of this. I know I'm going to remember this when I'm paying for their retirement. My parents are not wealthy people. Has anyone actually successfully told their parents what to do?
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Apr 25, 2021 16:34
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Residency Evil posted:Has anyone actually successfully told their parents what to do? Nope. Mine have been and continue to be taken for various rides by their financial advisor, including some kind of whole-life insurance boondoggle that I'm sure is making their advisor rich. I've explained how bad an idea this is but they won't listen. They do have adequate money to live on, thankfully, and if there is any inheritance, I've already said to everyone involved that I want it to go 100% to my sister because I earn way more than she does, so ultimately I just try not to think about it at all.
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Apr 25, 2021 17:09
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Residency Evil posted:(christ I hope it's not some sort of life insurance). Today, my dad gives me a call and tells me that he's going to get hit with a decent amount of STCGs because of this. Good news, it's not insurance if he's getting hit with STCG! (sorry)
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Apr 25, 2021 17:20
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Kylaer posted:Nope. Mine have been and continue to be taken for various rides by their financial advisor, including some kind of whole-life insurance boondoggle that I'm sure is making their advisor rich. I've explained how bad an idea this is but they won't listen. They do have adequate money to live on, thankfully, and if there is any inheritance, I've already said to everyone involved that I want it to go 100% to my sister because I earn way more than she does, so ultimately I just try not to think about it at all. Sounds like we're in identical positions, although I get increasingly worried after seeing how much money my wife's dad spent in his last year of life  .Motronic posted:Good news, it's not insurance if he's getting hit with STCG! Thank you! I was hopeful this was the case, but wasn't sure if some Northwestern Mutual Advisor had figured out a way to sell whole life insurance that somehow gives out STCGs.
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Apr 25, 2021 18:22
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Hey so when someone says their employer matches their 401k contribution, does that increase the contributable amount per year? Like it’s $19.5K a year that I can put in my 401k, but my employer doesn’t fund anything (military old retirement system), so I pay $19.5k a year. If my employer matched, would I only have to contribute 9.75k or could I still put in 19.5 and they would also put in 19.5?
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Apr 25, 2021 18:43
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nwin posted:Hey so when someone says their employer matches their 401k contribution, does that increase the contributable amount per year? That is independent of your $19.5k. In fact, your employer can contribute up to $57,000. Yeah, it's a stupid as it sounds, the deck is stacked, etc.
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Apr 25, 2021 18:47
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It’s on top of your contribution, and the limit only applies to your own contribution. It’s free money, always take it, never look back! Efb
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Apr 25, 2021 18:48
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Basically nobody does a full match, usually there are some terms (dollar-for-dollar up to a % of salary is common, percentage of your contributions is also common). But regardless, it doesn't reduce the amount you can contribute. Your individual elective deferral amount is capped at $19,500. Total contribution cap is like $64,500 or something.
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Apr 25, 2021 18:50
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Residency Evil posted:Ugh. Under a year ago, my dad, against my advice, gave some jamoke from PNC Bank a chunk of money from their savings to invest. I have no idea what they actually got sold, other than my dad telling me that it's somehow structured so that they can only lose so much in value (christ I hope it's not some sort of life insurance). Today, my dad gives me a call and tells me that he's going to get hit with a decent amount of STCGs because of this. I've talked to my mom and convinced her to move her money from a financial advisor (who thankfully stuck to bad but liquid mutual funds and stock-picking instead of whole-life or wacky annuity garbage) into Vanguard. You're never going to be able to just tell your parents what to do. If they feel criticized or don't want to listen to you, they're going to default back to thinking about changing your diaper and all those times four-year-old-you didn't understand how the world worked. If they're receptive to spreadsheets and numerical breakdowns, and they're willing to actually share the details of their financial situation with you, you might be able to put together Excel sheets that let the numbers do the talking. My mom's an engineer, so I was able to walk her through the "here's how much money you're leaving on the table over time with an extra point in ER and fees" calculations and let the numbers do the talking. If your parents tend to make money decisions based on social factors instead of the numbers, it'll be a lot tougher - no matter what you say, the PNC Bank guy will be able to just respond "oh, are you really going to let your kids tell you how to handle your investments?" and everything you say will just fall apart. About all you can do there is try to present images of successful investors who've gone with index funds, and the closer to them, the better. nwin posted:Hey so when someone says their employer matches their 401k contribution, does that increase the contributable amount per year? Everyone else has already covered the "matches don't hit your contribution cap" thing, but don't expect "I put in 19.5, they put in 19.5." Most matches are capped at a few percent of your salary - so, if you make $100,000 year, your employer might match the first 4% of your contributions, putting in a max of $4,000/year on top of whatever you choose to put in (as long as it's at least $4,000). Or, they might match 50% up to 10%, which would be a $5,000/year max match as long as you put in at least $10,000. Uncapped matching is very rare and usually found only at big-money employers (for instance, Google matches 50 cents on every dollar of non-backdoor contribution, no cap).
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Apr 25, 2021 18:54
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Space Gopher posted:Uncapped matching is very rare and usually found only at big-money employers (for instance, Google matches 50 cents on every dollar of non-backdoor contribution, no cap). It's also used by closely held firms of wealthy individuals to jackpot that full "employer match" into their own tax-advantaged space. That's why the limit is so high.
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Apr 25, 2021 18:57
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Space Gopher posted:I've talked to my mom and convinced her to move her money from a financial advisor (who thankfully stuck to bad but liquid mutual funds and stock-picking instead of whole-life or wacky annuity garbage) into Vanguard. Thanks for the suggestion. My dad is also an engineer (  ) so it's similarly frustrating to talk to him about it.With respect to matching, the IRS also limits the salary that contributions are based on. That number is $290k for 2021, so any percentage match is limited to a max salary of $290k. Out of curiosity, does Google really only give a max of $9750 (ie, 50% of 19.5k) for 401k contributions?
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Apr 25, 2021 19:00
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Match is a % of compensation, not amount deferred. So if you make $100k and the match is 20% that's $20k. Also overall limit "from all sources" of $57k is inclusive of the $19.5k base. So base + match + profit sharing + after tax all count together for it. Most places profit sharing is $0 except for the example Motronic gave of paying out money from the firm into the handful of people who own it tax deferred.
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Apr 25, 2021 19:17
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Match can be defined either as a % of compensation or a % deferred. We've had it work both ways at our firm at different times.
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Apr 25, 2021 19:22
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