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CombatCupcake posted:I currently freelance (independent contractor) and work has been rather lousy. So I have no fulltime job or anything, money wise, other than what I do myself. Roth? Or do you have to be working for someone to start a Roth?
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Feb 17, 2010 12:47
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I believe that the rule is you have to have "Earned Income" to contribute to a Roth IRA.
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Feb 17, 2010 14:06
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flowinprose posted:As for which choice is better, I think its really a toss up. You'll hear arguments either way, but all things being equal it's probably a wash if both vehicles have the exact same investment choices within them. Alright. Since I'm already in the highest tax bracket, I see no reason to not do pretax contributions, so a regular 401(k) and traditional IRA it is then.
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Feb 17, 2010 16:38
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I've got ~$1300 in a Roth with State Farm in their target retirement plan thing. I just got a letter saying they're upping the yearly fee to $40. It's pretty lovely anyway (and expensive), so I guess it's time to go somewhere else. I see Vanguard only has the STAR fund that can start at under 3 grand. Is that decent? Should I look somewhere else to put my $1300? I'll probably start contributing to it again, I stopped a long time ago. Any suggestions?
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Feb 17, 2010 16:45
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Panthrax posted:I've got ~$1300 in a Roth with State Farm in their target retirement plan thing. I just got a letter saying they're upping the yearly fee to $40. It's pretty lovely anyway (and expensive), so I guess it's time to go somewhere else. I see Vanguard only has the STAR fund that can start at under 3 grand. Is that decent? Should I look somewhere else to put my $1300? I'll probably start contributing to it again, I stopped a long time ago. Any suggestions? I think Vanguard's STAR fund is a good place to park your money until you meet the minimums for a Target Retirement fund. It's an auto re-balancing bucket of a whole bunch of Equity and Fixed Income securities, has low fees, and when your account is just starting out I do not think it's worth the headache to try and diversify just for a few extra dollars of return a year. Make sure that you sign up for electronic delivery of statements to avoid the annual $20 fee from Vanguard for low balance accounts.
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Feb 17, 2010 17:41
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greasyhands posted:Everyone is calling this last decade "the lost decade" for a reason. So basically unless you speculated with some specific stock instead of investing in indexes during the last 10 years, you would have main no gains as of today?
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Feb 17, 2010 20:43
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DreadCthulhu posted:So basically unless you speculated with some specific stock instead of investing in indexes during the last 10 years, you would have main no gains as of today? If you had a reasonable stock/bond allocation, a reasonable allocation to international equities, and rebalanced and added new money throughout the decade (at depressed prices), and reinvested interest and dividends, you would have a substantially positive return. 80k fucked around with this message at 21:09 on Feb 17, 2010 |
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Feb 17, 2010 20:48
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80k posted:and rebalanced and added new money throughout the decade (at depressed prices) - What exactly does that mean? You mean slowly investing in all of those equities a bit at a time to average out the cost over the years? - Are there usually dividends for total market index funds? - What are some good low expense no-load funds out there for these other markets you mention? Are we talking about BRIC funds here?
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Feb 17, 2010 22:41
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DreadCthulhu posted:- What exactly does that mean? You mean slowly investing in all of those equities a bit at a time to average out the cost over the years? Suppose you have 75k/25k Stocks/Bonds, so a 75/25 split. Suppose stocks lose 1/3 of their value. Now the portfolio you have left is 50k/25k, or a 66/33 split. Rebalancing then says to sell off bonds and buy stocks until you get back to a 75/25 split. If I understand correctly.
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Feb 17, 2010 23:16
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DreadCthulhu posted:- What exactly does that mean? You mean slowly investing in all of those equities a bit at a time to average out the cost over the years? - sure. But also that over the past 10 years, hopefully you have been saving and investing regularly with new money. - Yes. - The only other market I mentioned was international, so VFWIX would be a good starting point.
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Feb 17, 2010 23:21
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80k posted:- The only other market I mentioned was international, so VFWIX would be a good starting point. Here's the thing though. There's this argument that whatever happens to the US market these days is very much likely to immediately affect the rest of the world so there's not much of a point in investing outside of the US market. For example, if I plot a TMI for the US and the fund you recommended, I get: http://www.google.com/finance?q=MUTF%3AVFWIX%2C+MUTF%3AVGTSX%2C+ Plot it over 10 years and you can see that there's essentially no difference between the two. But for example if you pick a BRIC fund such as VEIEX then you'll see that its development was already quite different.
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Feb 18, 2010 01:08
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DreadCthulhu posted:Here's the thing though. There's this argument that whatever happens to the US market these days is very much likely to immediately affect the rest of the world so there's not much of a point in investing outside of the US market. For example, if I plot a TMI for the US and the fund you recommended, I get: VGTSX is not the US. It is an international fund. You just plotted two funds that track nearly identical indices. The only difference between the two funds VGTSX and VFWIX is a 2% allocation to Canada in the latter! Plus, that was not a 10 yr chart. VFWIX has only existed for 2 years, so if you plot it over 10 years it resorts to a 2+ yr chart. edit: anyway, try again with 10 years with the correct funds. But whatever. Who cares what correlation you've seen in the past 10 years. Worry about the next 30 years. 80k fucked around with this message at 01:19 on Feb 18, 2010 |
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Feb 18, 2010 01:16
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80k posted:VGTSX is not the US. It is an international fund. You just plotted two funds that track nearly identical indices. The only difference between the two funds VGTSX and VFWIX is a 2% allocation to Canada in the latter! You're right, I actually meant VTSMX and not VGTSX.
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Feb 18, 2010 01:29
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DreadCthulhu posted:Here's the thing though. There's this argument that whatever happens to the US market these days is very much likely to immediately affect the rest of the world so there's not much of a point in investing outside of the US market. For example, a US-only investor before the '29 market crash had to wait something like 13 years to break even, whereas a market-cap-weighted internationally diversified investor recovered from the losses in about 6 years.
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Feb 18, 2010 01:46
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Fair enough. Is there a rule of thumb for how much I should put in domestic and how much in international? 50/50 sound good enough?
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Feb 18, 2010 02:52
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Sometimes I think it would be so much easier to just buy Target 2040 in all 3 of my investment accounts (401k, Roth, taxable) and just forget about all this rebalancing and tilting and stuff. I wonder if the tax inefficiencies of that outweigh the lowered costs. Edit: Apparently Target 2040 is 90% stock so not Target 2040. smackfu fucked around with this message at 04:22 on Feb 18, 2010 |
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Feb 18, 2010 04:09
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Out of curiosity, what's the general consensus on holding preferred stock of too-big-to-fail companies such as Bank of America and just milk the dividends?
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Feb 19, 2010 08:14
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DreadCthulhu posted:Out of curiosity, what's the general consensus on holding preferred stock of too-big-to-fail companies such as Bank of America and just milk the dividends? Too big to fail doesn't mean the equity isn't wiped out.
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Feb 19, 2010 10:08
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DuckConference posted:Too big to fail doesn't mean the equity isn't wiped out. http://www.google.com/finance?chdnp...q=NYSE:C&ntsp=0 Here's a recent article that lists some US dividend stocks you could take a look at, rather than the ailing too-big-to-fail banks: http://www.theglobeandmail.com/globe-investor/investment-ideas/ten-us-dividend-stocks-for-shaky-markets/article1472493/ As always, be careful to keep the distinction between speculating and investing clear in your head.  (Also, don't you live in Canada? Our banks are pretty good for dividends! And you'd get the tax credit!)
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Feb 19, 2010 11:25
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DreadCthulhu posted:Out of curiosity, what's the general consensus on holding preferred stock of too-big-to-fail companies such as Bank of America and just milk the dividends? In my opinion, an individual investor shouldn't bother with preferred stock. Hybrid securities do not really provide much diversification to one's portfolio. I think it would be better to just invest in common equities (domestic and foreign) and high-grade debt.
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Feb 23, 2010 06:27
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Alright, I had an emergency pop up and I had to withdraw 3k from my Roth at Vanguard. Do I have a window to put this cash back in? I haven't made a contribution for this year yet.
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Feb 23, 2010 22:35
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I want to try and max out my Roth 401k this year and read around a little bit to see how to go about doing this. I can pick only a percentage of my income to contribute and future paychecks will get that much withdrawn. I get a couple of discretionary bonuses and a raise towards the end of the year that are decent enough size and get the same percent withdrawn so its hard for me to figure out exactly how much I need to withdraw. Reading around, most articles are about over-contributing to a regular 401k but I found a couple with sub-notes regarding Roth 401k's and they said basically any amount over the annual limit will be withdrawn from your 401k and taxed (again). I guess this surprises me since I'm being taxed twice but I am not a lawyer. I read through my company's paperwork and from what I understand once you hit the cap they stop accepting contributions (and therefore matches) BUT at the end of the year they will do a lump some deposit truing you up to matches you missed out on because the annual max was hit. (The matching payment is limited per pay period, not in total, so if I contributed the full 6% of my annual salary in the first pay period they don't contribute the full 3% match then). So in all I THINK my company stops me from doing anything stupid, and the only thing I miss out on is some dollar-cost-averaging near the end of the year. Has anyone dealt with this issue? I don't know how much of it is tax codes vs. corporate policies. Any insight is appreciated.
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Feb 24, 2010 03:57
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I am looking over many threads on here to gather information on opening a Roth IRA in the semi-near future (as soon as I have a bit more saved away to contribute. Places like Vanguard have a 3k minimum). I see many references to Vanguard being the best place to open a Roth IRA at. Would everyone recommend Vanguard as the best place to begin with? What are the benefits of Vanguard over other similar companies like T. Rowe/Fidelity?
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Feb 24, 2010 20:38
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The question of where you want to open your Roth IRA begs the question, what do you plan to invest in? Do you plan to buy and sell individual stocks, or go with mutual funds? If the answer is mutual funds, I can't think of a better outfit then Vangaurd. If the answer is stocks, then someone like Scottrade might be more appropriate. Edit: I believe the benefits of Vanguard over another similar outfit is the quality of their portfolio managers. AbsentMindedWelder fucked around with this message at 20:56 on Feb 24, 2010 |
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Feb 24, 2010 20:50
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NM, I don't think this post was helpful.
PoorUser fucked around with this message at 01:38 on Feb 25, 2010 |
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Feb 24, 2010 20:52
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dv6speed posted:The question of where you want to open your Roth IRA begs the question, what do you plan to invest in? Do you plan to buy and sell individual stocks, or go with mutual funds? Definitely mutual funds through a mutual fund company. I don't have neither the ability nor the insight to pick my own individual stocks. Plus, it just seems lower maintenance to throw my money into a mutual fund and not worry about it, allowing the people who manage the fund to take care of everything for me. Otherwise, I would have to pay attention and its just more efficient not to.
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Feb 24, 2010 22:59
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Hate to break the news, but even if you buy a mutual fund... you still have to "worry" about it. Even if you don't plan to trade stocks, which is perfectly fine, I believe you have to have some knowledge on the subject, so you can analyze the holdings of the mutual fund. You can look at the prospectus all you want, listen to the fund manager talk all day, but unless you can form opinions on the top holdings of that fund, you aren't being an informed investor, and are just throwing money into the wind.
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Feb 24, 2010 23:30
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dv6speed posted:Hate to break the news, but even if you buy a mutual fund... you still have to "worry" about it. Even if you don't plan to trade stocks, which is perfectly fine, I believe you have to have some knowledge on the subject, so you can analyze the holdings of the mutual fund. No offense, but I think this is a silly opinion. Having less than extensive knowledge of investing and thinking you are in any position to intelligently analyze top holdings in a mutual fund will do you more harm than good. Either go all the way, learn a LOT, and actively manage your money, or don't waste your time pretending you have a clue. You can be successful in investing without analyzing any top holdings... just stay diversified and keep costs low (i.e. index funds and ETFs). Risk is handled by limiting your exposure to equities.
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Feb 24, 2010 23:46
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dv6speed posted:Hate to break the news, but even if you buy a mutual fund... you still have to "worry" about it. Even if you don't plan to trade stocks, which is perfectly fine, I believe you have to have some knowledge on the subject, so you can analyze the holdings of the mutual fund. Sure, I didn't mean to imply that I was going to throw my money into a fund called, "Get Rich Quick in 15 Days," because some guy told me to, and forget about it. But there is a difference between being an informed investor, who makes informed decisions geared towards long-term returns, and watching CNBC all day because I need to pay attention to what Google sued Apple over or what company accidentally put lead paint on their goods. I don't really have time for the second. The first is crucial to success. Would I like to worry enough to put my money into a mutual fund that is going to make me the most amount of money? And would I worry to do it with a reputable company that keeps my costs low? Or worry that my asset allocation is both diverse and intelligent? Of course, otherwise I would not have bothered to ask about the difference between Vanguard and other investment companies a few posts above. But the reason those companies can exist is there are people like me not clever enough to play the market themselves, and who also enjoy the convenience that an investment company allows them in not having to actively manage their money in a direct manner. Perhaps I will pick my own stocks at some point, who knows, I am just getting stared though and doing so now when I do not yet have the foresight or the intelligence to invest my hard earned money well would be nothing but harmful. PoorUser fucked around with this message at 00:14 on Feb 25, 2010 |
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Feb 25, 2010 00:09
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80k posted:No offense, but I think this is a silly opinion. 80k posted:Having less than extensive knowledge of investing and thinking you are in any position to intelligently analyze top holdings in a mutual fund will do you more harm than good. 80k posted:Either go all the way, learn a LOT, and actively manage your money, or don't waste your time pretending you have a clue. 80k posted:You can be successful in investing without analyzing any top holdings... just stay diversified and keep costs low (i.e. index funds and ETFs). Risk is handled by limiting your exposure to equities. If you don't have the time and inclination to understand investing in stocks, then you should stick to passively managed ETF's. Most people will be better served by learning how to dollar cost average an SP500 ETF like SPY, then dealing with individual stocks OR actively managed funds. Basically it comes down to this: If you don't fully understand the investment, you shouldn't invest in it. This is advice any book you pick up will tell you. How can you understand a mutual fund without knowing what's actually going on inside of it? I generally respect your opinion, 80K, over many other people in this subforum, but I have to disagree with you on this one. We are obviously talking about investing philosophy here, so we will probably have to agree to disagree.
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Feb 25, 2010 00:27
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PoorUser posted:You can read his prospectus, but the proof is in the pudding.
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Feb 25, 2010 00:29
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dv6speed posted:If you don't have the time and inclination to understand investing in stocks, then you should stick to passively managed ETF's. Most people will be better served by learning how to dollar cost average an SP500 ETF like SPY, than dealing with individual stocks OR actively managed funds. As far as PoorUser is concerned, I think this is the key point to take away from this discussion. I'm not really sure why there seems to be an argument evolving here. You and 80k seem to both be in agreement on what you said in the quote above.
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Feb 25, 2010 00:47
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dv6speed posted:I'm not saying you need to watch CNBC all day, and spend hours upon hours every day researching stocks. I'm saying you need to have an understanding about stocks, and how to evaluate whether a stock is something you are willing to own or not, to see if you agree with the basic philosophy of your fund manager. You're right, and I'll definitely do that, I think we just had a different idea of what "not worrying" meant. As for now, I'll put 1k into the STAR fund on Vanguard later tonight, just to get the account up and running. Put more in as I get it and am able to learn.
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Feb 25, 2010 01:20
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There are plenty of low cost, diversified active funds from well established management companies. Looking at the Vanguard family alone... Vanguard's International Value, Equity Income, International Explorer, Primecap, Wellington, Wellesley, Dividend Growth, and plenty of others are all active funds and are perfectly suitable for investors who do not care to learn how to analyze top holdings. The STAR fund is a collection of active funds. Do you need to be a CFA charterholder to own that? Or are we going to settle with familiarity with CNBC squack to give us a sense of confidence that we can nitpick the fund manager's choices? I agree that it is better to stick with passive investments. But even the biggest indexing proponents (like William Bernstein and John Bogle) have stated in books and in interviews that active funds are still appropriate for the know-nothing investor who has no interest in analyzing stocks, as long as there is attention on costs and tax consequences. If you know how to analyze stocks, great. But it is not a prerequisite. Note that I usually do not defend active funds, and still heavily recommend indexing.
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Feb 25, 2010 01:59
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dv6speed posted:I'm not saying you need to watch CNBC all day, and spend hours upon hours every day researching stocks. I'm saying you need to have an understanding about stocks, and how to evaluate whether a stock is something you are willing to own or not, to see if you agree with the basic philosophy of your fund manager. I get what you're saying, and you're right obviously knowing something about anything you're doing is always a good thing, but when someone has $5k sitting in a checking account on top of 6mo of expenses and refuses to learn a single thing about long-term investing, that individual should still just drop the $5k into a Roth IRA with the default safest fund Vanguard gives them for their target retirement age. I think that's the point the previous guy was trying to make.
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Feb 25, 2010 02:48
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80k posted:If you know how to analyze stocks, great. But it is not a prerequisite. Note that I usually do not defend active funds, and still heavily recommend indexing. Ironically, most active funds do as well. Apart from a few concentrated positions they throw in to justify their fees, nearly all large active funds do engage in what is effectively indexing in order to not significantly lag the market for too many quarters, or their investors will abandon them.
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Feb 25, 2010 02:58
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Just finished reading The Four Pillars of Investing, and his argument for indexing (that actively managed funds do just as good on average as the market, so your share is really market minus fees) is pretty drat convincing to me.
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Feb 25, 2010 03:03
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I typically do not like actively managed mutual funds. However, there are fund managers out there that can help you consistently beat the SP500, but you have to work hard to find them, and their funds may or may not always be open to new investment. *cough* Ken Heebner *cough*
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Feb 25, 2010 03:42
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theitguys posted:Alright, I had an emergency pop up and I had to withdraw 3k from my Roth at Vanguard. Do I have a window to put this cash back in? I haven't made a contribution for this year yet. No. Once the money is out, it's out. You can replace it with new contributions subject to the annual limit, but you can't ever go back and re-contribute withdrawn money.
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Feb 25, 2010 03:54
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SlapActionJackson posted:No. Once the money is out, it's out. You can replace it with new contributions subject to the annual limit, but you can't ever go back and re-contribute withdrawn money. poo poo. Is it just traditional IRA's that have the 60 day replacement?
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Feb 25, 2010 14:42
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