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Well, it seems buybacks are the name of the game rather than dividends so it's really a game of hot potato of stock ownership and issuing a dividend is likely to get in the way of this paradigm.
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Dec 9, 2023 01:08
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Antillie posted:This makes me think of people who advocate for "total index funds that don't contain fossil fuel companies". Do they think that this is going to somehow to "hurt" the oil companies or whatever? Its like they don't realize that when you buy stock its not coming from the company, but from some other random investor. It also strikes me as a good way to handicap your returns long term. This sort of thing helped pressure South Africa to end apartheid, and has already impacted oil & gas companies.
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Dec 9, 2023 01:59
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pseudanonymous posted:This sort of thing helped pressure South Africa to end apartheid, and has already impacted oil & gas companies. Agreed. In the US you can especially see it with the coal companies; they are largely self-funding now because with ESG investing no one wants to touch them. So it might be hard to see but in the aggregate these decisions really do matter
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Dec 9, 2023 02:12
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I think coal mostly died an economic death. At least in the US, natural gas is cheaper and in many areas solar and/or wind.
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Dec 9, 2023 03:18
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A few years ago, I made a $720 non-deductible contribution to my trad. IRA. The following year, when I converted it all to Roth, there was only $700 due to market movements. More recently I rolled a 401k over into a trad. IRA. Now I'm converting it to Roth. Will the $20 difference from before affect the tax on this conversion?
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Dec 9, 2023 05:12
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Nope
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Dec 9, 2023 06:25
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My boss told me he's offering a Simple IRA starting in 2024. This is actually the first time I've ever had access to a workplace retirement account so I'm excited. Am I correct in that I can open a Simple IRA account at any brokerage I want? He's also asking what I think between the 2% or 3% match option. I think one is for matching contributions and the other is matching yearly salary. Which is the better deal?
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Dec 10, 2023 10:57
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Mu Zeta posted:My boss told me he's offering a Simple IRA starting in 2024. This is actually the first time I've ever had access to a workplace retirement account so I'm excited. Am I correct in that I can open a Simple IRA account at any brokerage I want? He's also asking what I think between the 2% or 3% match option. I think one is for matching contributions and the other is matching yearly salary. Which is the better deal? You can do any brokerage so long as your employer allows it. The employer may elect to, when doing the IRS paperwork, to either select any institution or one of the employer's choice. You should ask, but if they didn't tell you one, you are probably free to select. To be clear, SIMPLE IRA rules allows for two systems of employer contributions. The first is that the employer to match your contributions dollar to dollar until it hits 3% of your salary. The other option is that your employer just pay for 2% of your salary each year regardless of your contributions. You should prefer the 3% one, since that is better unless you contribute less than 3% of your pay. You should not be saving less than that.
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Dec 10, 2023 12:16
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Mu Zeta posted:My boss told me he's offering a Simple IRA starting in 2024. This is actually the first time I've ever had access to a workplace retirement account so I'm excited. Am I correct in that I can open a Simple IRA account at any brokerage I want? He's also asking what I think between the 2% or 3% match option. I think one is for matching contributions and the other is matching yearly salary. Which is the better deal? I would be somewhat surprised if your employer actually lets each employee choose their own IRA provider, though apparently that is permissible. It would be a big hassle to have to set up multiple systems, and most employees aren't going to be informed enough to have an opinion anyways. If you can choose, I am happy with my Vanguard Simple IRA. Fidelity also has a nice looking one.
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Dec 10, 2023 18:33
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Thanks. He did mention Schwab so I guess we're setting up there. I thought I could still choose but not a big deal and he already knows I've been rattling on about low cost index funds the past year. I plan to max out the $16,000 limit as soon as possible since I have a chunk of money in a taxable brokerage that I can sell to fund living expenses while I do it.
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Dec 10, 2023 18:45
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Mu Zeta posted:Thanks. He did mention Schwab so I guess we're setting up there. I thought I could still choose but not a big deal and he already knows I've been rattling on about low cost index funds the past year. I plan to max out the $16,000 limit as soon as possible since I have a chunk of money in a taxable brokerage that I can sell to fund living expenses while I do it. Honestly you want this to be successful so he keeps doing it, so you probably want him to do only one option since the amount of hassle of dealing with contributions every payroll for multiple brokerages would be enormous.
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Dec 10, 2023 19:34
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Mu Zeta posted:My boss told me he's offering a Simple IRA starting in 2024. Congrats. I kept trying to get my previous (small business) employer to do this. They never did, and I think you've officially become an adult when you think, "huh, I want a job with a 401(k)/etc." Anyway, do be aware this complicates backdoor Roth IRAs, if that's a thing your income is high enough for and you want to take advantage of.
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Dec 11, 2023 03:08
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What are the chances that the fixed rate on I Bonds will go up next year? I'm planning to buy some more I Bonds, since the fixed rate is more than 0% currently, but I'd like to get it in this year if possible. I don't totally understand why I Bonds do or don't have a fixed rate but I assume like so many other things in US investing, it's probably tied to Fed interest rate hikes, and since those seem to have either slowed down or stopped, I'm sort of assuming that the fixed rate on I Bonds is probably unlikely to go up in May next year or whenever it is they adjust the variable rate that's pegged to inflation. I get that I'm kind of asking people ITT to predict the future with this question, but some of you all are clearly much more plugged into economic forces and the financial world than I am so I figure somebody's probably in a better position to make an educated guess than I would be.
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Dec 12, 2023 23:19
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MockingQuantum posted:What are the chances that the fixed rate on I Bonds will go up next year? I'm planning to buy some more I Bonds, since the fixed rate is more than 0% currently, but I'd like to get it in this year if possible. I don't totally understand why I Bonds do or don't have a fixed rate but I assume like so many other things in US investing, it's probably tied to Fed interest rate hikes, and since those seem to have either slowed down or stopped, I'm sort of assuming that the fixed rate on I Bonds is probably unlikely to go up in May next year or whenever it is they adjust the variable rate that's pegged to inflation. Too soon to tell, really. There's a really good blog at tipswatch.com (they also cover I-bonds) and they've been doing relatively good at predicting I-bond rates lately, but the main factor in the fixed rate seems to be what TIPS bonds are getting at auction around the time the new fixed rate comes in, though slightly smaller. The real yield on 10 year TIPs is 2.19% right now, so my guess is if the I-Bond rate updated today it would probably be 1.5%ish. But by the time March rolls around next year that could easily be higher or lower. Of course, I-Bond purchases are limited to $10,000 a year, so depending on your situation you could buy them this year and if they go up in April try to get some more money together to buy again that year, but I admit that's highly dependent on how much you're looking to invest. Or if you don't think you'll be exceeding $10,000 in total purchases, you could put the money you have now in an interest bearing account until March and then check tipswatch who will probably have a pretty good guess at the new fixed rate around then, and if it's lower you can get in on I-bonds before the rate changes. One of the less obvious benefits of I-Bonds is that you always get 6 months of interest at the current rate when you buy them, so you're not losing anything buying them on the last day they're offered as opposed to the first* *assuming your money was collecting interest during those six months, anyways. Bremen fucked around with this message at 23:44 on Dec 12, 2023 |
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Dec 12, 2023 23:35
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MockingQuantum posted:What are the chances that the fixed rate on I Bonds will go up next year? I'm planning to buy some more I Bonds, since the fixed rate is more than 0% currently, but I'd like to get it in this year if possible. I don't totally understand why I Bonds do or don't have a fixed rate but I assume like so many other things in US investing, it's probably tied to Fed interest rate hikes, and since those seem to have either slowed down or stopped, I'm sort of assuming that the fixed rate on I Bonds is probably unlikely to go up in May next year or whenever it is they adjust the variable rate that's pegged to inflation. The fixed rate just changed 6 weeks ago, the next change will be announced in April for purchases starting in May. Usually no one even tries to guess this far out from the change. Real interest rates are more or less flat over the past couple months. Nominal rates are slightly down. So, my best guess is the next I Bond rate will be similar to the current one, but more likely to decrease than increase. I certainly wouldn't expect a large increase. If you haven't maxed out for 2023, I would (and did). Regardless of where the fixed rate goes next year, the current 1.3% rate is the highest its been since 2007.
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Dec 12, 2023 23:36
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Thanks for the info and the context, that's helpful. This in particular:drk posted:Regardless of where the fixed rate goes next year, the current 1.3% rate is the highest its been since 2007. puts the current rate in a good historical perspective. I'll probably buy the max before the end of the year, if somehow the fixed rate does go up next year, I think I have a batch that's old enough that I could sell it off and buy back in at the higher rate. I know none of my current I bonds have a fixed rate, they're all from a few years ago at least.
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Dec 12, 2023 23:50
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MockingQuantum posted:Thanks for the info and the context, that's helpful. This in particular: Oh, yeah, if you have I-bonds with 0% fixed rate I'd be maxing your $10,000 a year max converting those until they're gone.
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Dec 12, 2023 23:56
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Bremen posted:Oh, yeah, if you have I-bonds with 0% fixed rate I'd be maxing your $10,000 a year max converting those until they're gone. Yeah that's the plan I landed on after doing some (probably incorrect but close enough) napkin math. I checked and my oldest I bonds are under 5 years, so I'd lose the last three months of interest, but I'm pretty sure I'd effectively break even after a year on the fixed rate. So with the new rate announcements, if they announce the new rate starting May 2024 in April, would that mean I could buy I bonds at the current rate before the new rate takes effect, in the event that it drops next May?
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Dec 13, 2023 01:18
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MockingQuantum posted:Yeah that's the plan I landed on after doing some (probably incorrect but close enough) napkin math. I checked and my oldest I bonds are under 5 years, so I'd lose the last three months of interest, but I'm pretty sure I'd effectively break even after a year on the fixed rate. Yes, there is a couple weeks in April when the new rate will be known but the old rate will still be available. It's certainly not unreasonable to wait until then to decide on any 2024 purchases.
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Dec 13, 2023 01:32
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Excellent, then I have a plan. Thanks for the help as always, investing goons
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Dec 13, 2023 01:41
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I'm sitting on ~$150k between my checking and low yield savings. This money is ultimately what I live day to day off of, my eventual down payment for a house and my emergency fund. This is outside of my 401(k) and Roth IRA. In my head, I think of $100k of this as a down payment for a house and the rest is an emergency fund. I'd say $30k is plenty for 6 month COL without tightening any belts. The real number is probably like $24k for 6 month COL. I want to buy a house but I'm not on a set timeline. I'm basically waiting for the right thing at what I think is the right price. Should I be leaving this money where it's at? I feel like I should be doing better here but I am intimidated.
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Dec 13, 2023 02:16
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MockingQuantum posted:Yeah that's the plan I landed on after doing some (probably incorrect but close enough) napkin math. I checked and my oldest I bonds are under 5 years, so I'd lose the last three months of interest, but I'm pretty sure I'd effectively break even after a year on the fixed rate. Currently 0% fixed rate I-bonds are earning either 3.94% or 3.38%, depending on when they were purchased, while new ones will earn the 1.3% fixed rate on top of that. So if your i-bonds will be 5 years old in less than four months or so from when you'd be converting them, it may be worth waiting, though you also have to factor in the $10,000 limit there. It looks like 0% fixed rate i-bonds can't be much older than 3 years (or else already more than 5) so yeah, probably not worth waiting. IMHO, basically the only reason to buy an I-bond before April is if your goal is to max the $10,000 limit for this year. Otherwise there's basically no reason to buy an I-Bond before the last month they're offered if you can get similar short term interest rates elsewhere, which you can right now. As a correction to drk's post, though, while the next variable rate (what inflation was in the last 6 months) will be known in April, the new fixed rate (the one that's currently 1.3%) is never announced until the old rate is no longer available, but it's a popular target of speculation and there are usually fairly accurate guesses thrown around starting a few weeks before the period for the old one closes.
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Dec 13, 2023 02:24
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Hotbod Handsomeface posted:I'm sitting on ~$150k between my checking and low yield savings. This money is ultimately what I live day to day off of, my eventual down payment for a house and my emergency fund. This is outside of my 401(k) and Roth IRA. In my head, I think of $100k of this as a down payment for a house and the rest is an emergency fund. I'd say $30k is plenty for 6 month COL without tightening any belts. The real number is probably like $24k for 6 month COL. I want to buy a house but I'm not on a set timeline. I'm basically waiting for the right thing at what I think is the right price. Should I be leaving this money where it's at? I feel like I should be doing better here but I am intimidated. while some $ may need to be in a checking account for weekly transactions, the rest should be shunted straight to a HYSA such as Ally Bank. don't leave it in some low yield savings getting under 3%. a decent HYSA current gets >= 4% as of today. find one you like and stick with it, they all adjust to be competitive with each other regularly based on fed funds and t-bill rates. i'm assuming you do not want any duration risk and the house purchase may come "soon". otherwise you could stretch that out a bit into low duration t-bills / treasury notes / CDs. but that's probably beyond the complexity you wanna deal with right now.
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Dec 13, 2023 02:31
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Hotbod Handsomeface posted:I'm sitting on ~$150k between my checking and low yield savings. This money is ultimately what I live day to day off of, my eventual down payment for a house and my emergency fund. This is outside of my 401(k) and Roth IRA. In my head, I think of $100k of this as a down payment for a house and the rest is an emergency fund. I'd say $30k is plenty for 6 month COL without tightening any belts. The real number is probably like $24k for 6 month COL. I want to buy a house but I'm not on a set timeline. I'm basically waiting for the right thing at what I think is the right price. Should I be leaving this money where it's at? I feel like I should be doing better here but I am intimidated. I would say right now is exactly when you don't want to be leaving a lot of money in checking and low yield accounts; I used to keep a bunch in my checking account because even the high yield accounts and CDs were offering maybe 2% at most, but now you can easily find a high yield savings account offering 4-5%. If you want the basic recommendation, I'd say keep a month's worth of expenses, maybe 2-3 months if it makes you more comfortable, in the checking account and move the rest into a HYSA. The somewhat more imposing, but still very safe IMHO, option would be to do what I do, which is set up a Fidelity brokerage account to just keep the money in SPAXX, which currently gets 5% interest or so and you can get checks for. Plus I set it to auto-cover payments to my Fidelity credit card, which gets me 2% cash back, so I'm getting 5% interest and also 2% off all my purchases I can make with the card. This thread had a bit of discussion on that option starting with this post if you want to take a look. Bremen fucked around with this message at 02:40 on Dec 13, 2023 |
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Dec 13, 2023 02:33
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There are also some ways to go beyond the $10k yearly limit. For example you can intentionally overpay your taxes, then request your resulting tax refund be paid back to you in paper i-bonds in denominations of $25 up to a maximum of $5k. This is outside the yearly $10k limit. Spouses can also do some weird tricks involving buying ibonds as gifts for each other but then leaving them in the "gift box".
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Dec 13, 2023 02:38
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Bremen posted:As a correction to drk's post, though, while the next variable rate (what inflation was in the last 6 months) will be known in April, the new fixed rate (the one that's currently 1.3%) is never announced until the old rate is no longer available, but it's a popular target of speculation and there are usually fairly accurate guesses thrown around starting a few weeks before the period for the old one closes. My mistake, the new variable rate will be known but the fixed/composite rate will only be estimated. Either way, for next year you don't lose much to wait until the variable rate is known in April (which looks very likely to be less than the current variable rate). The major reason you wouldn't want to do this is if you expect to want to cash out the I Bonds as soon as possible, in which case a January purchase is best. Based on current rates, I don't see a 1 year I Bond looking preferable to a 1 year Treasury next January.
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Dec 13, 2023 02:58
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Bremen posted:The somewhat more imposing, but still very safe IMHO, option would be to do what I do, which is set up a Fidelity brokerage account to just keep the money in SPAXX, which currently gets 5% interest or so and you can get checks for. Plus I set it to auto-cover payments to my Fidelity credit card, which gets me 2% cash back, so I'm getting 5% interest and also 2% off all my purchases I can make with the card. This thread had a bit of discussion on that option starting with this post if you want to take a look. I was thinking about doing this too but was wondering about the expense ratio (0.42%). Am I right that the 5% yield is already factoring the 0.42% or how does that work?
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Dec 13, 2023 04:03
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Boris Galerkin posted:I was thinking about doing this too but was wondering about the expense ratio (0.42%). Am I right that the 5% yield is already factoring the 0.42% or how does that work? 5% is net of fees:  I opened a CMA a month ago or so. I'll write up a short review at some point, but the summary is, its quite good. I wish I opened it earlier.
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Dec 13, 2023 05:59
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Bremen posted:
This is what I do.
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Dec 13, 2023 12:45
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I have some money in I Bonds at a 0.4% fixed rate that just reached the 1yr mark last month. Would I be better cashing them out and putting the money in a t-bill? The plan is to use it towards a house downayment in 4-5 years. I was previously running a split of 30% AVLV/30% AVUB/14% AVIV/12% AVDV/12% AVES, but switched to 100% AVGV for the automatic rebalancing benefit. With the latest change of adding mid cap and steering even further from my ideal targets, is the benefit of continual automatic rebalancing outweighed bt a better(?) distribution/more AVUV? I’m in my mid-30s, so I’m not concerned about the higher volatility of AVUV.
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Dec 14, 2023 19:51
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Anyone know how long it takes for money from T Bills to land in your account after maturity? I had some mature today, and the line item is just labeled "MATURE", but the money isn't available.
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Dec 14, 2023 20:09
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I think it depends on the brokerage, where are you holding the bonds? For Schwab the cash shows up the following day I think, I’ve never been too religious about tracking it.
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Dec 14, 2023 20:51
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KYOON GRIFFEY JR posted:I think it depends on the brokerage, where are you holding the bonds? For Schwab the cash shows up the following day I think, I’ve never been too religious about tracking it. Schwab, yeah. I just haven't bought them before at Schwab and couldnt find a good answer. Thank you!
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Dec 14, 2023 21:42
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Valicious posted:I have some money in I Bonds at a 0.4% fixed rate that just reached the 1yr mark last month. Would I be better cashing them out and putting the money in a t-bill? The plan is to use it towards a house downpayment in 4-5 years. There really won't be much of a difference between those, provided you buy the treasuries to hold to maturity. You're picking between two options with the same credit, with rates that will likely be highly correlative with each other.
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Dec 14, 2023 21:50
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Right now I have a 70% stock (90% VTI, 10% VXUS) and 30% 3 year CD ladder portfolio allocation. I like the idea of the CDs because of the monthly payments and locked in rate. The predictability is nice. I'm wondering what I should do with some of my upcoming CDs that will be maturing. I don't have any state income taxes, I want to lock in the rate for at least around 1 to 5 years, and would prefer at least a 4% rate. I have a feeling that the current rates won't last forever and would like to lock it in for the near future. Are there other options that would fit my criteria with more liquidity than having to sell my CDs on the secondary market? Busy Bee fucked around with this message at 01:06 on Dec 15, 2023 |
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Dec 15, 2023 01:03
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Valicious posted:I have some money in I Bonds at a 0.4% fixed rate that just reached the 1yr mark last month. Would I be better cashing them out and putting the money in a t-bill? The plan is to use it towards a house downayment in 4-5 years. jokes posted:There really won't be much of a difference between those, provided you buy the treasuries to hold to maturity. You're picking between two options with the same credit, with rates that will likely be highly correlative with each other. Whether I-bonds would be better in treasury bills would be dependent on the inflation rate, so it's hard to say for sure, but I'd move them to something, if only another I-bond for the higher fixed rate, if you're sure you aren't going to want the money in less than a year. Cashing out the I-bond now would cost you 3 months of interest; call it maybe 1%. If we ballpark inflation at 3% for the next four years, we get: Current bond: 1*(1.03*1.004)^4 = 1.1436 New bond: .99*(1.03*1.013)^3.75 = 1.1616 (ish) So you'd get nearly 2% better rate just by swapping over to a new I-bond with the higher fixed rate, and if you end up holding longer than 4 years that will steadily improve. Treasury bills are harder to predict; they're getting nearly 5% now, but that's unlikely to last for four years with predicted rate drops. 5 year treasury bonds are currently running 3.91% yield, so if we take that as a rough prediction of how treasury bill rates will trend, we get: Treasury Bond: .99*(1.039)^4 = 1.1537 Somewhere between the two, assuming inflation averages around 3% which is a mighty big assumption. So honestly unless you're hitting your I-bond cap this year I might consider just swapping it over to a new bond.
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Dec 15, 2023 01:14
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Busy Bee posted:Right now I have a 70% stock (90% VTI, 10% VXUS) and 30% 3 year CD ladder portfolio allocation. If you want to lock in a rate and also want liquidity, just buy treasuries. 5 years are around 4% right now. Alternatively, just stick to the short end of the curve with a money market or SGOV/XHLF. They are yielding more than 5% right now, and while that rate will almost certainly come down starting next year, the total interest might not be that different. edit: the company that does XHLF also has XONE, XTWO, and XTRE for 1, 2, and 3 year target duration if you like the monthly payment ETFs but want a longer duration drk fucked around with this message at 03:02 on Dec 15, 2023 |
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Dec 15, 2023 02:55
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Valicious posted:I have some money in I Bonds at a 0.4% fixed rate that just reached the 1yr mark last month. Would I be better cashing them out and putting the money in a t-bill? The plan is to use it towards a house downayment in 4-5 years. What was your goal in holding I Bonds? Inflation protection? Short term yield? Personally I hold I Bonds, TIPS and nominal treasuries. They all have their own advantages.
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Dec 15, 2023 03:12
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drk posted:What was your goal in holding I Bonds? Inflation protection? Short term yield? At first it was saving towards a new car (was going to go electric), but decided to keep my 2016 Mazda for as long as I can. The new plan is to save towards a house, operating on a 4-5ish year timeline. I suppose the money in the I Bonds would be towards a downpayment. There's $9000, with all of it past the 1yr mark by mid-Feb. (most by end of year)
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Dec 15, 2023 08:14
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So for the people holding cash in Fidelity SPAXX, has the interest rates and returns always been comparable to normal online HYSA rates? I see they are comparable today but I’m trying to figure out if it’s always been more or less comparable.
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Dec 15, 2023 22:09
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