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Motronic fucked around with this message at 02:59 on Jun 7, 2021 |
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Jun 6, 2021 21:23
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This has been an unfortunate discovery, I didn't realize it would be an issue when I move back abroad. I figured investing in the US as a US citizen wasn't a problem. e: removed dumb poo poo Grand Fromage fucked around with this message at 02:57 on Jun 7, 2021 |
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Jun 6, 2021 21:40
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Motronic fucked around with this message at 02:58 on Jun 7, 2021 |
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Jun 6, 2021 21:42
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e: removed dumb poo poo I'll keep researching, I'm in the US right now and not leaving until next year so no rush. Huge brick to be dropped on me since I finally thought I had a chance at a decent future. Living in the US long term or not investing at all are both no-gos, so I have to have something I can do abroad. Grand Fromage fucked around with this message at 02:57 on Jun 7, 2021 |
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Jun 6, 2021 22:39
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Oh, by the way:Chiasmus posted:There are 3 main types of tax-advantaged savings accounts -- Roth IRA, Traditional IRA, and 401(k) (or equivalent). I could explain all of these in detail, but the Motley Fool has already done a pretty good job right here. In general, most people would want to follow these rules: The bolded only applies over the course of a few decades. You can’t just max out your IRA and 401K once one year and expect to be all saved up for retirement. Remember that!
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Jun 6, 2021 22:43
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H110Hawk posted:Don't try to minmax your taxes by intentionally under withholding. It's a recipe for disaster. And to actually make "a few grand" the guy is either not investing in CD's or is paying far more in taxes. The lack of fdic insurance is one bad year away from having a huge tax bill with no money to pay it. Aim for a small amount owed each year and call it maxed. Gotcha, so leaving "1" for Federal Taxes should remain as such. I'll go back to him later and try to find more details. Pollyanna posted:Oh, by the way: This another point I want to bring up because I'd like to retire early and possibly change employers that might not have as a generous retirement package. Running some numbers here, to me it looks like hitting $300k is a decent sweet spot for a 401k and that'll net me a huge chunk of change if I just hit it and let it cook. Of course, I have other investments to look Social Security, Roth IRA and ideally my home will be paid off with no mortgage. What am I missing? 
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Jun 6, 2021 23:11
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Sorry, edited out.
Motronic fucked around with this message at 02:58 on Jun 7, 2021 |
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Jun 6, 2021 23:14
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e: removed dumb poo poo
Grand Fromage fucked around with this message at 02:59 on Jun 7, 2021 |
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Jun 6, 2021 23:37
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Sorry, edited out.
Motronic fucked around with this message at 02:58 on Jun 7, 2021 |
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Jun 6, 2021 23:46
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e: removed dumb poo poo
Grand Fromage fucked around with this message at 02:58 on Jun 7, 2021 |
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Jun 6, 2021 23:49
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Motronic fucked around with this message at 02:57 on Jun 7, 2021 |
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Jun 6, 2021 23:50
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I'm not trying to be snippy. I felt like I was at least semi secure and had a future for the first time in my life and it's all been pulled out from under me in the past few hours. I will stop asking questions here.
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Jun 7, 2021 00:01
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Crosby B. Alfred posted:Gotcha, so leaving "1" for Federal Taxes should remain as such. I'll go back to him later and try to find more details. You've discovered Coast FIRE. Spend a few years building a large nest egg, then let it grow itself into a respectable retirement fund. Meanwhile you can switch to a lower-pressure career or spend the money you would be investing on something else.
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Jun 7, 2021 00:11
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Grand Fromage posted:I'm not trying to be snippy. I felt like I was at least semi secure and had a future for the first time in my life and it's all been pulled out from under me in the past few hours. I will stop asking questions here. Motronic's being short with you, but they're correct that yours is a situation where the thread probably can't help beyond urging you to talk to someone who knows the answer. You probably haven't made any kind of massive blunder, and even if you erred somewhere you're not the first person to do so, so that answer is out there! And I for one would be curious to learn what you find out.
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Jun 7, 2021 00:24
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pokeyman posted:Motronic's being short with you, but they're correct that yours is a situation where the thread probably can't help beyond urging you to talk to someone who knows the answer. You probably haven't made any kind of massive blunder, and even if you erred somewhere you're not the first person to do so, so that answer is out there! Yeah, since I'm living in the US right now I haven't bent any broker rules or anything. I am going on vacation soon so I think I'll just try to forget about this until later, but I'm definitely going to keep reading, talk to Schwab and IB, and I'll effortpost everything they tell me when I do. Right now I'm just having an existential freakout on a Sunday evening when there's no one else to talk to except the internet.
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Jun 7, 2021 00:26
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Motronic fucked around with this message at 02:57 on Jun 7, 2021 |
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Jun 7, 2021 00:57
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Motronic posted:I get it. I get it. I'm trying to calm down. It's just a lot all at once. I'm not doing day trading or anything, I have a couple casino stocks but 99% of my investments are in Vanguard index funds. I at least need to be able to hold index funds (or equivalent ETFs) while abroad. Preferably I'd be able to continue buying, I'll be able to wipe out my student loans with this inheritance so I won't be losing 50% of my income to that poo poo anymore. If I could put 20% of my income in every month plus what I have now, I'd be set for the future even though I'm starting so late. Might even be able to retire early in a cheaper part of the world.
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Jun 7, 2021 01:05
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Motronic fucked around with this message at 02:56 on Jun 7, 2021 |
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Jun 7, 2021 01:09
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Solumin posted:You've discovered Coast FIRE. Spend a few years building a large nest egg, then let it grow itself into a respectable retirement fund. Meanwhile you can switch to a lower-pressure career or spend the money you would be investing on something else. Ah hah! This helps and has lead to a lot of great reading this Sunday evening.
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Jun 7, 2021 01:20
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In lots of euro countries you can buy ETFs just fine but can’t buy into mutual funds because of EU regulations requiring that the key investor info documents for those funds are available in each country’s native language
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Jun 7, 2021 02:01
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It seems like a lot of the annoying expat regs are EU based. Fortunately I don't expect to live in Europe, and even if I do, as far as I can tell the rules are that you can't buy. I can't find anything that would prevent holding what you already own. Seems like these rules are mainly from the brokerages just not being assed to comply with them, the US government doesn't give a poo poo if you live on the moon as long as you're paying your taxes.
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Jun 7, 2021 02:08
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The US government really does not want you dealing with domestic banks or broker dealers from abroad. It's insanely easy for them to fall awry of terrorism laws. It can be done but most don't want to for your "free" account with "just" a few hundred k / few million in it. It's intensely stupid. Most of the problems come from how little control we have over the sprawling complicated system of banking, incorporation, and tracing money. So suddenly if you aren't a US citizen on us soil they just sort of assume you're laundering money for someone on the OFAC list of embargoed nations. Ironically the ultra wealthy don't have these problems (they can spend their way around it) and are the ones who are most likely to be doing those very things. (not because they are ultra wealthy, it's just a bit of concentric circles of "people with enough money to fund people the USA doesn't like" and "people actually doing it" are more or less concentric circles.) I think it's silly you can't do it from a list of approved nations (think Japan, much of the EU, Australia, that sort of thing.)
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Jun 7, 2021 02:57
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so how "balanced" do we need to have our retirement funds? i read the posts from friday-ish or so where people are talking small cap, large cap, 500 index, etc... does that matter that much? also another question i have. i have a rollover ira that i haven't put back into a roth ira/traditional ira.. i want to merge that into my current roth/trad ira account... couple questions on that: 1. are there any penalties i need to be aware of if i put the money into my roth or trad ira? i recall the irs only allows one of these transfers... a year? per job switch? 2. seeing how its already tax deferred money.. wouldn't i want to put it into my roth ira so i don't have to worry about which parts of the fund have already been taxed, and/or avoid the tax on the money when its eventually pulled from a trad ira? 3. if i do put this money into either IRA, does this count as part of the $6000 i'm allowed to contribute every year?
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Jun 7, 2021 07:10
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Grand Fromage posted:It seems like a lot of the annoying expat regs are EU based. Fortunately I don't expect to live in Europe, and even if I do, as far as I can tell the rules are that you can't buy. I can't find anything that would prevent holding what you already own. Seems like these rules are mainly from the brokerages just not being assed to comply with them, the US government doesn't give a poo poo if you live on the moon as long as you're paying your taxes. It's not like the rest of the world can't invest in funds. Wherever you're going will probably have its own tax advantaged or whatever system that you will be able to use. You should be able to continue to hold your US investments, even if you can't contribute more. E: got through to someone at Fidelity who was very helpful and has given me a form to fill in for my stock transfer. knox_harrington fucked around with this message at 13:25 on Jun 7, 2021 |
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Jun 7, 2021 07:36
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Strong Sauce posted:so how "balanced" do we need to have our retirement funds? i read the posts from friday-ish or so where people are talking small cap, large cap, 500 index, etc... does that matter that much? Short answer: For long term buy-and-holders, total market like VTSAX or even S&P500 is more than sufficient for your goals. The only thing I would say is to maybe add some international diversification. SCV is not necessary because it adds additional complexity to your portfolio and can be a rough ride since it can underperform for long stretches. It is by no means necessary to hold. Longer answer: VTSAX and the S&P 500, being market cap weighted, are naturally tilted in terms of representation towards the largest and growthiest stocks like Apple, Google, Tesla, etc. However, riskier stocks like small cap and value stocks have historically outperformed large growth and total market, and these are the stocks that are underrepresented in a total market cap weighted index (https://www.whitecoatinvestor.com/small-cap-value-strategy/). There have also been a lot of academic work supporting this overperformance (google Fama-French for more). So one might ask why not go all in on SCV? Well, SCV is riskier as evidenced by the fact that it can underperform for long stretches of time (10+ years). We are currently in one of those periods where it has underperformed since 2008 and by a fair amount in the last 3 years (although this year has been good for SCV). These stretches can test your resolve and if you bail, you've shot yourself in the foot. I'm currently around 15% in SCV and am not looking to add much more. It's enough that I feel I can get a taste of the overperformance if it comes back, but not enough that, if it underperforms for a long stretch, I feel I'd be significantly behind others who stuck to total market funds. I also like this stuff so the additional complexity is not a big deal for me. Now I'd be lying to you if I said that there isn't any part of US valuations being crazy right now that is also motiving me to go into SCV. We are approaching internet bubble level prices, so reducing my exposure to the high valuation part of the market is definitely something that's been on my mind. Moreover, much of the US large cap overperformance can be attributed to changes in valuation rather than fundamentals (https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You). However, changing your asset allocation purely because of valuation is essentially market timing, which we all know is hard (so I admit I'm sinning a little). It's also important to note that the high valuation businesses in the internet bubble were speculative poo poo companies with no real business models while the high valuation businesses now are mostly legitimately fantastic companies with a proven track record. This is just to say that, even if these valuations are not fully justified, there may still be considerably more runway for this high valuation environment than in the late 90s. It's also important to keep in mind that investing is far less of a science than physics or even biology is so I would err towards broader strategies than more concentrated bets. Don't treat quantities like historical PE ratios as you would the speed of light or the gravitational constant. It seems silly to me to say that the heavy industrial railroad companies of the early 20th century should have the same PE as the nimble tech companies now. edit: By the way, I am by no means an expert in this. So this could be the case where a little knowledge becomes a dangerous thing. drainpipe fucked around with this message at 13:42 on Jun 7, 2021 |
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Jun 7, 2021 13:34
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I've read some arguments that the small cap value premium vanished as soon as it was identified, which to me makes absolute sense. It had a run of outperformance decades ago and since then people have been clinging to the memory and hoping it does it again.
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Jun 7, 2021 13:57
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Fama & French updated their factor research in 2020 to say they didn't know if the SCV cat was out of the bag or not. It will be a while before people acknowledge this update against the decades of prevailing performance and advice, especially if SCV continues to do well.Strong Sauce posted:so how "balanced" do we need to have our retirement funds? i read the posts from friday-ish or so where people are talking small cap, large cap, 500 index, etc... does that matter that much? The usual weighted US market balance is roughly 80% S&P 500, 20% mid and small cap. You can chuck everything into a total market index and do fine. Keep in mind that extended market funds were created to complement S&P 500 funds before total market funds were invented, so one-and-done is a tool of efficiency and convenience. Feel free to tilt more mid or small cap if the top large-cap holdings give you pause. Space Fish fucked around with this message at 14:29 on Jun 7, 2021 |
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Jun 7, 2021 14:18
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Yeah, the unfortunate thing is that it takes such a long time to be able to make any assertions statistically sound. The argument that the value premium has been arbitraged away makes sense. However, as mentioned in https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You, most of the underperformance can be explained by the increasing valuation of growth (note that this is not a peer reviewed paper and is written by a student of Fama) which one should not rationally expect to continue forever.
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Jun 7, 2021 14:25
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drainpipe posted:I was the one who brought up small cap value and here are my thoughts. Since this thread is discussing factor investing, I feel compelled to point out that the many different "value" factor funds out there can have VERY BIG differences. I discussed some value factor index methods in detail at this post: https://forums.somethingawful.com/showthread.php?noseen=1&threadid=3259986&pagenumber=2296&perpage=40#post513372022 When people refer to a "small cap" index the one most commonly being referenced is the Russell 2000. Well, if you bought $IWN today, the iShares Russell 2000 Value ETF, you're in for a big surprise: its two top holdings are insanely "valued" meme stocks AMC and GME. If you buy $VBR today, the Vanguard Small-Cap Value ETF, those are nowhere near the top holdings (and maybe not in it at all; I didn't download the PCF). It's very important to investigate the methods and holdings for any fund you buy into!
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Jun 7, 2021 16:25
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knox_harrington posted:It's not like the rest of the world can't invest in funds. Wherever you're going will probably have its own tax advantaged or whatever system that you will be able to use. You should be able to continue to hold your US investments, even if you can't contribute more. Even in places that allow US citizens to invest locally, you get absolutely wrecked on taxes if you buy on foreign exchanges. The only consistent advice I've found is that for normal people, the tax penalties to foreign investments are so punishing it's never worth doing. You can do US index funds that hold global stocks but directly investing in a foreign stock market is the one that sucks. Another instance of rules to try to keep rich people from hiding their money that only affects regular expats and the rich can just spend their way around.
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Jun 7, 2021 18:36
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Grand Fromage posted:Even in places that allow US citizens to invest locally, you get absolutely wrecked on taxes if you buy on foreign exchanges. The only consistent advice I've found is that for normal people, the tax penalties to foreign investments are so punishing it's never worth doing. You can do US index funds that hold global stocks but directly investing in a foreign stock market is the one that sucks. Are you saying the local country has higher taxes than the USA or that its higher for expats? Because the USA has some of the lowest tax rates in the world. If you are reading about people who are complaining blindly about taxes I would stop now or it will rot your brain. You have to make a profit to pay taxes, then you are generally just splitting hairs on how much. From there you live in the society where you're paying those taxes. If you are worrying yourself about what the ultra wealthy are doing I would also stop. It's not going to help you. You have to live your life. Vote and advocate for the change you want to see but try not to get wound up in it.
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Jun 7, 2021 18:44
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They're probably talking about PFICs. "If a foreign-based mutual fund or partnership has at least one U.S. shareholder, it's designated as a Passive Foreign Investment Company, or PFIC" https://www.investopedia.com/terms/p/pfic.asp My understanding is that the IRS treatment of PFICs makes avoiding them preferable. But yeah, that may be biased by tax wonks.
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Jun 7, 2021 19:03
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It's extra stuff for expats, levied by the US. Anyway it doesn't matter since I'm not going to do it. If I settle down somewhere to live long term and gain local citizenship it's worth considering, but as long as I'm moving around between countries there's zero point using local brokerages instead of just using an international account with IB or Schwab or whatever I find that works for me.
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Jun 7, 2021 19:05
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pmchem posted:Since this thread is discussing factor investing, I feel compelled to point out that the many different "value" factor funds out there can have VERY BIG differences. I discussed some value factor index methods in detail at this post: I agree 100% that it's important if you're going to start playing with factor investing to investigate what you're investing in. But, I want to add to this that while it's totally true the top two holdings of Russell 2000 last week were, briefly, AMC theaters and Gamestop: this isn't the same alarming overweighting that you see in the S&P500, where the top five companies (Apple, Microsoft, Amazon, Facebook, Google, technically the top six stocks) constitute 20% of the entire fund due to their huge market weight compared to most of the trailing 490 or so constituents. https://finance.yahoo.com/quote/IWM/holdings?ltr=1 https://www.ishares.com/us/products/239710/ishares-russell-2000-etf These two lists differ because the top 10 holdings change so rapidly that two sites reporting the weightings from two different days pretty close to each other will have different lists. The second link shows values from June 4th, the first is live. Friday, AMC and GME were the #2 and #3 holdings (and casino company Caesers Entertainment was #1 lol), but neither exceeded 0.5% weight of the index, and right now GME is ~0.35ish while AMC is back outside the top ten. This shows you a new fact that's worth understanding, though, which is that because the Russ 2000's components are all much much smaller companies than the largest ones in the S&P500, and because the index has four times more components, the components at the top of the index are a bunch of similar-sized companies so there's a lot of churn as they swap places from relatively small moves in their stocks. Any stock in the index that briefly spikes can easily jump hundreds of ranks in the space of hours. There's a lot of churn, too. That's the nature of the bag, basically, it's 2000 companies that all aspire to join the top 500 but are all under around $30B in market cap, with the smallest at around $100M or less. It's a lot more diversified of an index, but containing much riskier companies, but market weighting has much less significant of an impact on relative holdings. Leperflesh fucked around with this message at 19:10 on Jun 7, 2021 |
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Jun 7, 2021 19:08
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Inept posted:They're probably talking about PFICs. "If a foreign-based mutual fund or partnership has at least one U.S. shareholder, it's designated as a Passive Foreign Investment Company, or PFIC" https://www.investopedia.com/terms/p/pfic.asp Yeah this is it. Believe me, I'm rolling my eyes at the people who are rearranging their entire portfolio to shave 0.05% tax off. But doing the PFIC poo poo + the amount of effort it would require to sell or try to move assets between brokerages between countries every time I move, instead of just setting up something US based that accepts expat business, isn't worth it.
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Jun 7, 2021 19:11
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Leperflesh posted:I agree 100% that it's important if you're going to start playing with factor investing to investigate what you're investing in. Totally agreed w/ you re: S&P 500 being very top-heavy, but let's clarify a few things about Russell 2000 ETFs for anyone else reading this -- The yahoo link is not live % assets. I don't know what it is, but whatever it is, it's not live. iShares updates their ETF homepage portfolio holdings daily, so at market open today, for IWM (the iShares Russell 2000 ETF) the #2 holding was AMC and #3 was GME. Both of those stocks are up more than NVAX today, so there is no way NVAX can be #2 in "live" IWM right now, ahead of those stocks. AMC is definitely in the top 10 of IWM right now. My post was referring to IWN ( https://www.ishares.com/us/products/239712/ishares-russell-2000-value-etf ) the iShares Russell 2000 Value ETF, not IWM, the general Russell 2000 ETF. In IWN, AMC is #1 and GME is #2 as of market open today. CZR is further down in the top 10. AMC and GME combine for a bit above 2% of the index. You didn't state otherwise, but, I want anyone reading this to understand it because we were kind of talking past each other; I was focused on "small-cap value" funds while IWM is just plain "small caps".
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Jun 7, 2021 19:20
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hello, I'm in the process of considering a job switch and moving into a role which as of right now does not have any retirement options (with a plan to add a matched 401k in the next few years). what are my options in terms of non-employer vehicles? I know my first option would be maxing a roth ira, but what would be the next step after the $6,000 contribution is reached? my goal would be to contribute roughly $15,000 after tax
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Jun 8, 2021 05:50
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Owlspiracy posted:hello, I'm in the process of considering a job switch and moving into a role which as of right now does not have any retirement options (with a plan to add a matched 401k in the next few years). what are my options in terms of non-employer vehicles? I know my first option would be maxing a roth ira, but what would be the next step after the $6,000 contribution is reached? my goal would be to contribute roughly $15,000 after tax Roth or Trad IRA, HSA if available, ESPP if available and not awful, possibly a 529, then just a good ol' brokerage account.
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Jun 8, 2021 07:54
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CubicalSucrose posted:Roth or Trad IRA, HSA if available, ESPP if available and not awful, possibly a 529, then just a good ol' brokerage account. I would strike 529. They are not a retirement vehicle and offer little in the way of advantages outside of their very narrow scope of use. Unrelated: 4th times a charm, got my younger kids ssn yesterday. Hilariously I also got a notice that his ATIN expires in 3 months. To all you people not getting mail from the IRS I've gotten like 4 things this month.  Used it to open a 529 for him. Do as I say not as I do.
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Jun 8, 2021 15:51
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529s are good if you're fairly certain someone in your family will need that money for education. They're a massive headache if they don't get used for that purpose and you have to figure out some other way to get the money out. My wife had a decent 529 from her grandparents, but ended up not really needing any of the money for college/post-grad because she went a different route than anybody expected when the account was set up 30 years ago or whatever. Withdrawing from a 529 for non-qualified expenses means a fairly decent tax burden (if the account's been around for a while and making money) plus usually a 10% fee on top of that.
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Jun 8, 2021 16:19
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