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Upgrade posted:OK, I went with Vanguard. What's a generic three-fund portfolio? Here's a bunch of detail: https://www.bogleheads.org/wiki/Three-fund_portfolio Short version: you buy three index funds. Total US stock market (VTSAX), total international stock market (VTIAX), and total bond market (VBTLX). The younger you are, the more you should put into the stock ones. Stocks get a higher return, but bonds are safer. Generally it's advised to start stock heavy and slowly transfer to bonds as you get older and need to be sure you aren't retiring in the middle of a market crash. The exact division between them is a matter of lots of debate. Almost everyone suggests more in US than international. 60/40 or 70/30 are common divisions. Something like 60% VTSAX, 30% VTIAX, 10% VBTLX is a basic way to divide up. I'd recommend reading the article for more detail though. Here are some other ways to divide up: https://www.bogleheads.org/wiki/Lazy_portfolios
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Jul 15, 2021 00:17
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| # ? Jun 9, 2024 13:33 |
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A target date fund is also a perfectly fine set-it-and-forget-it solution if you don't want to deal with the hassle of rebalancing. Choose the year that's closest to when you'll turn 65 and look at the composition. Then if you want more or less bonds, just choose a year that's earlier or later, respectively (although 10% bonds is the lowest you can go).
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Jul 15, 2021 00:25
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Alternately, just put your money into that target date fund then never think about balancing again.
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Jul 15, 2021 00:32
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drainpipe posted:A target date fund is also a perfectly fine set-it-and-forget-it solution if you don't want to deal with the hassle of rebalancing. Choose the year that's closest to when you'll turn 65 and look at the composition. Then if you want more or less bonds, just choose a year that's earlier or later, respectively (although 10% bonds is the lowest you can go). make sure its an index target date fund..otherwise the fees
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Jul 15, 2021 00:50
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withak posted:Alternately, just put your money into that target date fund then never think about balancing again. Yeah, the target date funds are the ultimate lazy version. Nothing wrong with that if you really do not care to think about it at all.
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Jul 15, 2021 01:05
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Some target-date funds make things a bit more complicated. For example the Schwab Target Index Funds split things out into more components than the Vanguard ones, separating U.S. small cap, large cap, and real estate, international established versus emerging markets, and bonds into intermediate, short term, and inflation-protected, and also has a "cash" category. Will this make any difference compared to the more simple Vanguard approach? Who knows, I guess wait 30 years and you could find out  (Oddly enough, Schwab actually beats Vanguard on expense ratios with these funds, their 2050 fund has an ER of 0.08%, dunno how they managed that).
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Jul 15, 2021 01:15
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Kylaer posted:(Oddly enough, Schwab actually beats Vanguard on expense ratios with these funds, their 2050 fund has an ER of 0.08%, dunno how they managed that). They subsidize with revenue from their more expensive options.
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Jul 15, 2021 01:18
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I found nerdwallets IRA review ranking with SoFi at the top with 5/5. Vanguard ended up with 4/5 so I wanted to see why. I guess they got dinged a lot for not having a good active trading platform, which is not the loving thing you want with an IRA as others have said. And for not supporting crypto. I checked out SoFi and they received scores on completely different review metrics. Good poo poo.
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Jul 15, 2021 01:29
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withak posted:They subsidize with revenue from their more expensive options. it's all a shell game. look at the prospectus for schwab's index 2050 and vanguard's 2050, for example: http://connect.rightprospectus.com/Schwab/TADF/80850L783/SP?site=Funds https://advisors.vanguard.com/pub/Pdf/p308.pdf each target date fund is a fund of other funds from the respective broker. schwab charges 8 bps management fees and 5 bps for the underlying, while vanguard says it's all 12 bps for the underlying. schwab, however, then discounts by 5 bps "for so long as the investment adviser [i.e. schwab] serves as the adviser to the fund". so schwab is just discounting their own "management" fee, while vanguard claims they don't even have one of those on the target date fund (of course, the underlying funds have management fees). ultimately all those fees end up in the broker's accounts. schwab, being a public company, gives detailed quarterly SEC filings. vanguard, being privately held, is much less transparent.
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Jul 15, 2021 01:35
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In the context of retirement saving, “active investment” might mean putting a fraction of your portfolio in a small cap stock or sector fund that you feel good about and reviewing it yearly.
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Jul 15, 2021 01:44
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Among neat Roth options is M1 Finance. Their claim to fame is saveable "pies," or ratios for splitting money across several funds. Some investment sites/advisors will share the "pie" for a specific strategy, which an M1 user can designate as the strategy for this or that chunk of money in their account, including future deposits. The three-fund strategy is simple enough to set up, but automating future contributions is a neat feature. I don't use M1 personally, but I know people who do and I might have relied on M1 if they'd been around last time I changed brokerages. Space Fish fucked around with this message at 03:47 on Jul 15, 2021 |
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Jul 15, 2021 01:56
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Spring Heeled Jack posted:I found nerdwallets IRA review ranking with SoFi at the top with 5/5. Vanguard ended up with 4/5 so I wanted to see why. I guess they got dinged a lot for not having a good active trading platform, which is not the loving thing you want with an IRA as others have said. And for not supporting crypto. GoGoGadgetChris posted:some astro-turfing going on here, I swears it Rubs hands from over in the stock gambling thread
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Jul 15, 2021 03:35
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What little I've read from NerdWallet has smelled like reheated SEO garbage. But there's no real way to know that without some context. Also I could be wrong.
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Jul 15, 2021 03:50
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NerdWallet gets kickbacks for credit card sign ups, I would be very surprised if the same isn't true for bank and brokerage accounts. They're an SEO referral click farm. I'm in the camp that I don't need my long-term retirement investing accounts to be slick and sexy. I want reliable, trustworthy, and proven. And of course cheap. I stick with Vanguard and Fidelity. I already got burned back in the day when CapitalOne Sharebuilder shutdown and merged with eTrade. A minor headache, but still a headache. Sure there are no guarantees with anyone lasting for decades, but Vanguard or Fidelity have been around for decades and don't seem to be going anywhere any time soon.
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Jul 15, 2021 04:00
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pokeyman posted:What little I've read from NerdWallet has smelled like reheated SEO garbage. That's it. They're just like credit karma in that your info is the product. I assume they make the bulk of their money from credit card/loan/account signup/whatever referrals.
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Jul 15, 2021 04:01
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*looks at his subsidized Vanguard Target Date 2040 at 0.02% expense ratio, closes the browser for another 3 months* Retirement saving is borrrrring. I'm gonna go HELOC some crypto.
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Jul 15, 2021 05:08
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Change that “months” to “years” to optimize your retirement.
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Jul 15, 2021 05:10
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jokes posted:Change that “months” to “years” to optimize your retirement. But how am I supposed to brag on the internet about a subsidized expense ratio if I only come back every 3 years? (USER WAS PUT ON PROBATION FOR THIS POST)
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Jul 15, 2021 05:13
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Wait, what
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Jul 15, 2021 06:53
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If there was ever a thread where it'd be ok to brag about low expense ratios without needing to lampshade, this would be it!
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Jul 15, 2021 07:01
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Someone tell me what books to read about corporate bonds or just bonds in general. Fidelity is of almost no help. They just dump the entire database of bonds and go, "here have fun"
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Jul 15, 2021 07:27
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Strong Sauce posted:Someone tell me what books to read about corporate bonds or just bonds in general. Fidelity is of almost no help. They just dump the entire database of bonds and go, "here have fun" i'm not sure what level of detail you're looking for, but if you're looking for a basic to mid-level primer, the bogleheads wiki is generally where i go to get an intro to investing concepts i also found the section on bonds in bernstein's "the four pillars of investing" to be helpful in thinking about how bonds work and what type and allocation to include in my portfolio, however while i wouldn't call the information cursory it also isn't a deep dive if that's what you're looking for
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Jul 15, 2021 08:00
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pmchem posted:it's all a shell game. look at the prospectus for schwab's index 2050 and vanguard's 2050, for example: This is something I was wondering about. For funds like Lifestrategy it's a wrapper (idk what the proper term is) that contains other underlying funds - so is the Lifestrategy expense ratio just the fee that's charged to the wrapper? And the underlying funds are also charging whatever, but it's invisible? Or does the expense ratio include all the fees of the constituent funds? (also I just had a bunch of RSUs vest and have stuck a bunch into VT and almost paid off my car loan. go me)
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Jul 15, 2021 11:12
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Strong Sauce posted:Someone tell me what books to read about corporate bonds or just bonds in general. Fidelity is of almost no help. They just dump the entire database of bonds and go, "here have fun" It's amc isn't it.
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Jul 15, 2021 11:13
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knox_harrington posted:This is something I was wondering about. For funds like Lifestrategy it's a wrapper (idk what the proper term is) that contains other underlying funds - so is the Lifestrategy expense ratio just the fee that's charged to the wrapper? And the underlying funds are also charging whatever, but it's invisible? that’s a smart question with a non obvious answer. but it goes back to the prospectus bits I quoted. the ER the customer sees is total ER, and the prospectus breaks it down into how much is from the underlying vs how much managing the fund of funds. if I have this wrong, please, someone correct me. but there’s a paper that discusses it as part of digging into the “cost” of using TDFs, here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3707755 “Off Target: On the Underperformance of Target-Date Funds” and a relevant quote from it: quote:Table 1 shows that TDFs’ total fees can be broken down into fund-of-funds fees and underlying holdings’ fees. Fund-of-funds fees are charged at the TDF level and can be thought of as the cost of adjusting asset allocations among the underlying funds to follow a TDF’s glide path.9 The underlying funds are almost exclusively mutual funds themselves, with their own management fees thatarepaidfromtheTDFassetsandtherebypassedthroughtoinvestors.10 Typically,underlying holdings’ fees make up 60-80% of total fees, with the remainder attributable to fund-of-funds fees. There are several notable exceptions. First, Vanguard does not charge a fund-of-funds fee. Because Vanguard is the largest fund family by assets, annual asset-weighted fund-of-funds fees are much lower than their equal-weighted counterparts. Second, some fund families have moved to charging only fund-of-funds fees. For example, in 2017 Fidelity began waiving underlying holdings’ fees in some of their TDFs, and instead adopted flat (and much higher) fund-of-funds fees. straight up mobile pasting from pdf so any typos in quote are due to that
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Jul 15, 2021 13:12
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drainpipe posted:A target date fund is also a perfectly fine set-it-and-forget-it solution if you don't want to deal with the hassle of rebalancing. Choose the year that's closest to when you'll turn 65 and look at the composition. Then if you want more or less bonds, just choose a year that's earlier or later, respectively (although 10% bonds is the lowest you can go). If you do use a target fund, make sure it’s an index fund like VFFVX, and that it’s in a tax-advantaged account! e.g. an IRA or a 401k. Target funds rebalance a lot and you’ll get hit by fees if it isn’t tax-advantaged. I have a regular account at Vanguard where most of my savings reside, and that handles the funds individually instead. (US, int, bonds).
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Jul 15, 2021 14:20
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Another question: once you’ve maxed out your tax advantages vehicles, is the only option to just plow it into the market? I guess I could buy SPY!
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Jul 15, 2021 17:47
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Upgrade posted:Another question: once you’ve maxed out your tax advantages vehicles, is the only option to just plow it into the market? I guess I could buy SPY! Assuming you've paid off debt and have an emergency fund appropriate to your anticipated needs, yes, the next step is taxable investing. Taxable investing isn't as good as tax-advantaged investing, obviously, but it's far preferable over having your money sit around as cash getting eaten by inflation. You're solidly in "good problem to have" territory if you have to worry about the taxes on a brokerage. One thing you might want to do is up your paycheck withholding slightly, if your employer lets you do that, because otherwise dividend payments will end up making you owe money at tax time. Of course, dividends are unpredictable so picking just how much extra to hold back is an open question 
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Jul 15, 2021 17:57
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Im a fan of doing the same thing in your taxable account as you are in your tax-advantaged account, unless it makes sense to look into tax savings like via muni bonds/ETFs or whatever based on your income. If it works in one it’ll work in the other, also accounting for dividends isn’t a big deal if you go through a proper brokerage who shoots you a 1099.
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Jul 15, 2021 19:25
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jokes posted:Im a fan of doing the same thing in your taxable account as you are in your tax-advantaged account, unless it makes sense to look into tax savings like via muni bonds/ETFs or whatever based on your income. If it works in one it’ll work in the other, also accounting for dividends isn’t a big deal if you go through a proper brokerage who shoots you a 1099. It's one more step to look at the big pool of money across all accounts and allocate the tax heavy stuff (bond allocation) outside the taxable account, rather than having all 3 funds in your myriad of accounts. This especially is important if there is only 1 good fund period in your 401k. That might be more mental math than folks want to do, and that's fine. Everyone has their limit of care, that's mine. My taxable is nearly 100% total international for the foreign tax credit stuff.
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Jul 15, 2021 19:41
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GhostofJohnMuir posted:i'm not sure what level of detail you're looking for, but if you're looking for a basic to mid-level primer, the bogleheads wiki is generally where i go to get an intro to investing concepts thanks simple enough for me to get into. Kylaer posted:Assuming you've paid off debt and have an emergency fund appropriate to your anticipated needs, yes, the next step is taxable investing. Taxable investing isn't as good as tax-advantaged investing, obviously, but it's far preferable over having your money sit around as cash getting eaten by inflation. You're solidly in "good problem to have" territory if you have to worry about the taxes on a brokerage. One thing you might want to do is up your paycheck withholding slightly, if your employer lets you do that, because otherwise dividend payments will end up making you owe money at tax time. Of course, dividends are unpredictable so picking just how much extra to hold back is an open question i knew i should have taken a loss on $AHT instead of getting out with a slight profit. now the tax man will come for me $20 profit  H110Hawk posted:It's one more step to look at the big pool of money across all accounts and allocate the tax heavy stuff (bond allocation) outside the taxable account, rather than having all 3 funds in your myriad of accounts. This especially is important if there is only 1 good fund period in your 401k. isn't foreign tax credit to offset double taxation? so you're still getting taxed anyways right?
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Jul 15, 2021 20:12
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Strong Sauce posted:isn't foreign tax credit to offset double taxation? so you're still getting taxed anyways right? Yes.
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Jul 15, 2021 20:24
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Strong Sauce posted:isn't foreign tax credit to offset double taxation? so you're still getting taxed anyways right? You take the drag no matter what, but in a taxable one uncle sam gives me some back. At least that's how I understand it.
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Jul 15, 2021 20:44
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H110Hawk posted:You take the drag no matter what, but in a taxable one uncle sam gives me some back. At least that's how I understand it. This is true, and it warrants prioritizing international over domestic stocks for taxable account placement... but only if international funds have similar qualified dividend rate and yield, or not much worse than domestic. But this has not been the case for a very long time. We generally need to make tax placement decisions on the order of decades, not years, so the jury is always still out. But the past half a decade has been an example where my placement of international, and especially emerging market, stocks in taxable has been quite costly for me.
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Jul 15, 2021 21:10
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Seems like no one actually knows the best answer to the 'which assets should go in taxable vs tax-advantaged' question. I've seen reasonable arguments for putting bonds in taxable because despite the higher tax drag, the lower performance and current low yields may make them relatively tax efficient, and by putting stocks in tax advantaged accounts you can effectively expand your tax advantaged space in a way. Good news is that tax optimization via decisions on where to place assets seems like it matters far less than saving enough and maxing out your tax advantaged space in general.
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Jul 16, 2021 08:54
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The overwhelmingly accepted groupthink here is: Things that don’t cause taxable events in taxable accounts. Things that cause taxable events in tax-advantaged accounts. or, said another way: Only assets that produce qualified dividends in taxable accounts. Preferably, no dividends at all. All other assets in tax-advantaged. a final, general way of expressing this: Stocks in taxable. Do not hold REITs in taxable accounts!!!! Bonds in tax-advantaged.
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Jul 16, 2021 13:01
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I put money in ETF. ETF number go up. Number give more money later
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Jul 16, 2021 13:09
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Chu020 posted:Seems like no one actually knows the best answer to the 'which assets should go in taxable vs tax-advantaged' question. I've seen reasonable arguments for putting bonds in taxable because despite the higher tax drag, the lower performance and current low yields may make them relatively tax efficient, and by putting stocks in tax advantaged accounts you can effectively expand your tax advantaged space in a way. Good news is that tax optimization via decisions on where to place assets seems like it matters far less than saving enough and maxing out your tax advantaged space in general. For extreme detail - https://earlyretirementnow.com/2020/02/05/asset-location-do-bonds-belong-in-retirement-accounts-swr-series-35/
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Jul 16, 2021 14:35
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Exactly, aside from obvious things like REITs it's a big 'it depends' essentially, but the overall effect on the final outcome is small compared to doing the big things (save enough, max out tax advantaged space, avoid high fees) right. But this thread gets toward the small optimization stuff too since everyone's generally already on board with the basics so have at it.
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Jul 16, 2021 15:17
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Not sure if this the right thread or not, but do you guys know of any accounts that offer something like: 1. A good return on cash (ie, HYSA) 2. A checking account 3. A brokerage account 4. The ability to essentially keep spare cash either in the HYSA or in the brokerage account, with instructions to essentially say "hey, if my checking account ever overdrafts, try the savings account first, then if that doesn't work, give me some margin or something against the brokerage account?" I think Vanguard used to have something like this (maybe minus the HYSA), but got rid of it. I currently primarily bank with Schwab, which has 2-4, but doesn't have 1. Our investing is split between Vanguard/Fidelity/TIAA, but our brokerage account is with Vanguard.
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Jul 16, 2021 16:45
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