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Leperflesh posted:Doesn't the market take an upcoming dividend into account when it prices a given security? I always thought that meant that the share price would drop by an appropriate amount when the dividend is issued, so that if you immediately re-invest, you're effectively buying discounted shares on that day anyway. yea, but ixo was asking about an index fund, not individual shares. The market takes upcoming dividends of underlying shares of a fund into account but distribution schedule and yield of the actual mutual fund is a different matter.
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Mar 3, 2010 22:05
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Oh, of course. That makes sense, I had missed that detail somehow. Thanks.
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Mar 4, 2010 01:40
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Im planning to open a Roth at Vanguard in the near future. I currently have a 401(k) with my company that is matched 50% up to 6% that I contribute the full 6% to, but I would like to put more aside because that really isn't much at all. Vanguard's accounts have an opening requirement of 3000 which I'd rather not take out of savings to start due to feeling like I have job instability at the moment, so my plan was to set aside money each month in a separate account, and once I hit 3000, open the real account. That way it doesn't threaten emergency savings. I was going to open the account using one of the vanguard target series funds (likely the 2050). Is there any reason anyone here would advise against it. I'm not the most investment savvy person and I'd rather not have to manually manage the account every month. Question: If I do lose my job in the near future, would it be advisable to roll the 401(k) into the new IRA and if so, does it count towards the yearly contribution limit? Clearly taxes would have to be paid on the rollover.
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Mar 5, 2010 17:38
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That seems like a good place to start. At any point you care to, you should learn a little more and see if you want to tweak things - having finally read The Four Pillars of Investing, I can wholeheartedly recommend it as an easy but very informative book for this purpose. In any case, you shouldn't have to mess with it more than once a year. I'm not 100% sure about the rollover, but I think you would use a traditional IRA and it wouldn't affect your contribution limits or generate any taxes. I hope you have the 401k in something decent, not company stock?
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Mar 5, 2010 18:03
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FidgetyRat posted:Question: If I do lose my job in the near future, would it be advisable to roll the 401(k) into the new IRA and if so, does it count towards the yearly contribution limit? Clearly taxes would have to be paid on the rollover. Rollovers do not count towards the contribution limit. A rollover normally would go into a Traditional IRA, meaning no taxes paid. It is then up to you to determine whether or not you want to convert it to a Roth. There is no need to do this, nor to do the entire amount at one time, and is more of a matter of tax planning.
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Mar 5, 2010 18:14
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Does anyone know anything about North Carolina's TSERS (Teachers and State Employees Retirement Program) ? From this site (http://hr.unc.edu/Data/benefits/TSERS), it looks like you're required to contribute 6% of your annual salary and they contribute 8.75% of your annual salary. It doesn't look like they just give you that lumpsum when you retire though: quote:TSERS is a Defined Benefit Plan, which means retirement benefits are based on salary, years of service and a retirement factor. The formula for TSERS is: What are the thoughts on this? (I'm kind of assuming other states have something similar?)
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Mar 5, 2010 18:32
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FidgetyRat posted:Vanguard's accounts have an opening requirement of 3000 which I'd rather not take out of savings to start due to feeling like I have job instability at the moment, so my plan was to set aside money each month in a separate account, and once I hit 3000, open the real account. That way it doesn't threaten emergency savings.
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Mar 5, 2010 18:42
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FidgetyRat posted:Vanguard's accounts have an opening requirement of 3000 which I'd rather not take out of savings to start due to feeling like I have job instability at the moment, so my plan was to set aside money each month in a separate account, and once I hit 3000, open the real account. That way it doesn't threaten emergency savings. You can pull any money directly invested out of a Roth with no penalty, so if you were to throw the lump sum at it now, you could get it back any time you wanted it. Obviously this exposes the lump sum to risk. If you're worried about it, though, you could grow your separate account up to 1500 or 2000 and then toss the rest in.
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Mar 5, 2010 22:38
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Does anyone know where I can find historic ratios for the most widely-used indices? I'm trying to find the P/E ratio of the S&P 500 (and other indices) at certain points in time.
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Mar 6, 2010 04:44
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I'm a public employee, and my state has this pension and retirement system called PERS. The non-pension part is a defined contribution plan where 6% of my salary gets put in there automatically and I can't put in any more/less then that. I'm definitely going to put as much as I can into an IRA to complement the state's retirement plan, but I'm wondering if I should take part in the optional 457 plan the state offers to us as well. The only way I can put money into it is to have monthly paycheck deductions (minimum $50/month), though it comes out pre-tax. It's set up like the Vanguard targeted retirement fund where there are different funds to join based on your expected retirement year. I may be one of them lazy government employees out to suck every last dollar of the taxpayer's wallet, but the pay ain't that great and I'm not sure if I can afford to contribute to all three things just yet. I guess really I'm wondering if having even a small pre-tax deduction every month + whatever's left going into the IRA is better then putting everything I can into the IRA.
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Mar 6, 2010 11:40
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Unless they're matching your 457 contributions, I'd suggest prioritizing the Roth IRA - you'll have more control. What do the expense ratios look like on your 457 options?
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Mar 6, 2010 20:36
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Through the state 457 I can only invest in the various "LifePath" series of funds which are based on your expected year of retirement, and the employer does not match any contributions. Mine would be the Lifepath 2045 or 2050. The expense ratio is 0.25%.
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Mar 7, 2010 07:37
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edit: removing my Roth brain-fart so it doesn't pollute anyone elses brain.
covener fucked around with this message at 01:37 on Mar 8, 2010 |
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Mar 8, 2010 01:23
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I was looking at my 401(k) lately as part of a new investing kick and I discovered I probably need to rebalance my investments there, right now it is: American Funds EuroPacific Growth R3 25% Maxim S & P 500 Index 20% American Funds Growth Fund of Amer R3 15% Davis NY Venture R 25% Van Kampen Comstock - R 15 which is basically 25% international and 75% large cap funds. Is this good or what? Im guessing no, but im pretty newbish. my choices for fund categories are as follows: Asset Allocation International Funds Small Cap Funds Mid Cap Funds Large Cap Funds Bond Funds Fixed Income Fund (2.65% guaranteed) i can pick out the best funds from each category but what should my overall distribution be?
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Mar 10, 2010 19:45
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You have no bonds/fixed income at all, and 25% of your money is in the venture exchange, so it's a very aggressive allocation. If say, tomorrow, your portfolio lost 50% of its value, would you be okay with that? If you are, excellent, but since people generally over-estimate their volatility tolerance it's an important question to think about.
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Mar 10, 2010 19:58
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Spandrels posted:I was looking at my 401(k) lately as part of a new investing kick and I discovered I probably need to rebalance my investments there, right now it is: It's a personal choice, but you should have some bonds to add stability to your account. I use Bogle's guidelines of Bonds = Age for myself, and I split the equity portion 60% Domestic / 40% International / 10% REIT.
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Mar 10, 2010 20:14
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DuckConference posted:You have no bonds/fixed income at all, and 25% of your money is in the venture exchange, so it's a very aggressive allocation. If say, tomorrow, your portfolio lost 50% of its value, would you be okay with that? If you are, excellent, but since people generally over-estimate their volatility tolerance it's an important question to think about. Yes, absolutely im 27 and I dont expect to retire for a while, additionally I hope by retirement age my 401(k) only makes up a portion of my income so if it takes a dive and stays down for a couple years its no big deal for me. var1ety posted:It's a personal choice, but you should have some bonds to add stability to your account. I use Bogle's guidelines of Bonds = Age for myself, and I split the equity portion 60% Domestic / 40% International / 10% REIT.
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Mar 10, 2010 23:15
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Spandrels posted:i'm not familiar with boigle's guidelines but some quick googling suggest that i should have a percentage of my 401(k) dictated by my age, so im 27, i should have 27% bonds, right? Yes, that is a good place to start, and if you decide your risk tolerance is higher or lower you can skew the number either direction.
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Mar 10, 2010 23:25
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Is there any real reason for me to self-diversify in my Roth, instead of just buying a target retirement fund? Should I fear putting all my retirement money from my work retirement accounts and my roth into the same target retirement fund? I currently have the vast majority of my money in FFFGX, relying on its internal diversification to avoid some kind of catastrophic loss.
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Mar 11, 2010 04:27
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ShaneB posted:Is there any real reason for me to self-diversify in my Roth, instead of just buying a target retirement fund? Should I fear putting all my retirement money from my work retirement accounts and my roth into the same target retirement fund? I currently have the vast majority of my money in FFFGX, relying on its internal diversification to avoid some kind of catastrophic loss. The real reason is if you don't like the allocation of the target retirement accounts, which many don't. No, why would you "fear" putting your ira and 401k in the same target retirement fund? You'll just have a consistent allocation.
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Mar 11, 2010 04:50
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Don Wrigley posted:The real reason is if you don't like the allocation of the target retirement accounts, which many don't. No, why would you "fear" putting your ira and 401k in the same target retirement fund? You'll just have a consistent allocation. I don't know, say Fidelity has some kind of internal corruption erupt and FFFGX becomes worthless overnight somehow...
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Mar 11, 2010 06:42
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ShaneB posted:I don't know, say Fidelity has some kind of internal corruption erupt and FFFGX becomes worthless overnight somehow... That's a pretty low probability event, but yes, there are some conceivable scenarios where the fund could lose a lot of value independent of what the index is doing. Of course, then you also have to look a broker risk (are the securities in your name vs. the broker's, how much does the gov insurance protect you), the risks of the currency becoming worthless, the risk that you will get hit by a car tomorrow and should have enjoyed the money today, the risk of a major disaster wiping out the financial system... It's not unreasonable, and being split between a few investment companies might be a good idea, but it's a line of thinking that ends in a bunker in Montana filled with canned beans and ammunition.
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Mar 11, 2010 07:51
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PoopShipDestroyer fucked around with this message at 15:46 on Jun 18, 2018 |
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Mar 12, 2010 16:13
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DuckConference posted:
Tell that to the people invested with Madoff
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Mar 12, 2010 16:46
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greasyhands posted:Tell that to the people invested with Madoff Yes because Madoff was running an indexed passive mutual fund.
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Mar 12, 2010 17:35
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greasyhands posted:Tell that to the people invested with Madoff In terms of transparency and regulation, the Madoff situation is on another planet from publicly traded mutual funds (whether index or active).
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Mar 12, 2010 17:46
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greasyhands posted:Tell that to the people invested with Madoff My point is that some worrying about diversification is warranted, but if you take it too far, you end up in the bunker. So yes, if you reach the point of millions, you may want to think about things a bit, but obsessing over it won't do any good.
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Mar 12, 2010 20:57
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I have a question about Roths and Traditionals and 401(k)s and bears, oh my! Currently I'm 26 and making $37,500/year (way underpaid for my field). I contribute 10% pre-tax to an American Funds 401(k) and the company matches 30% of that. It's worth about $13,500 right now. I'm only 40% vested in the match, so if I leave it will be worth around $11,000. I may be leaving the company to take a position as a contractor. The pay will be much higher, but my primary goals right now are to pay off my credit cards and build my nonexistant savings, so my contributions over the next 6-12 months will be minimal. I don't want to keep the money in the 401(k), and don't have the money saved to do a Roth conversion. As I see it, my options are basically: - Roll over the 401(k) into a traditional IRA and continue contributing to that. - Roll over the 401(k), leave it alone, and save what I would be contributing so that I can do a Roth conversion. - Roll over the 401(k), leave it alone, and save what I would be contributing to open a new Roth. Is any one of these paths objectively better than the other, or is this an "it depends" situation?
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Mar 14, 2010 16:20
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Due to your current low income you could benefit quite a bit from doing a Roth. If you can't afford the upfront hit now, at the least I'd do that going forward. As for the difference between options 2 and 3 I think it should effectively be the same. How much credit card debt do you have and at what rate? I know retirement savings are hugely important and you are right to think about it. But if you are paying 15% APR on those balances for the ability to save for retirement, it might be wiser to just focus on paying of the cards first.
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Mar 14, 2010 16:36
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alreadybeen posted:How much credit card debt do you have and at what rate? I know retirement savings are hugely important and you are right to think about it. But if you are paying 15% APR on those balances for the ability to save for retirement, it might be wiser to just focus on paying of the cards first. That's the plan - my idea was to continue making small contributions (~$30-$50/mo) if the broker allows it, just to stay in the habit. The cards are $3200 @ 19% (Citibank - self-destructing on 4/30 because I opted out of a rate-jack) and $4350 @ 15% (Amex). If all goes well with no disasters I should be able to pay them off in a year.
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Mar 14, 2010 16:47
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Yeah, in your wildest dreams you can't expect 19% returns on retirement savings. It's made sense to make contributions thus far, because of your employer's matching (that's free money and it's more than 19%), but as soon as you lose that option, my opinion is that you should focus on paying down that debt with as much of your income as you can afford. You're young enough that you can wait a year or two without making retirement contributions and then pile back into it with a vengeance once the card debt is gone, and make up the difference. It is important to stay disciplined, though, pay off the cards fast, and get back into retirement saving within a year or two.
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Mar 15, 2010 04:57
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Leperflesh posted:Yeah, in your wildest dreams you can't expect 19% returns on retirement savings. It's made sense to make contributions thus far, because of your employer's matching (that's free money and it's more than 19%), but as soon as you lose that option, my opinion is that you should focus on paying down that debt with as much of your income as you can afford. You're young enough that you can wait a year or two without making retirement contributions and then pile back into it with a vengeance once the card debt is gone, and make up the difference. Is 33 years old still young enough for this? That's the situation I find myself in...$16,000 in credit card debt at 14.99% APR. Card's currently in a freezer and I've been drat good about keeping it that way, but I'm looking at about three years to pay it all off at $600-$700 a month. Currently, I pay 12% of my salary ($600 a month) into my 401(k) and my company matches 20% and I've been doing it for five years, and I didn't take that bad of a beating the past two years. So if I stop my 401(k) for a year, that means I could have my card paid off in a year and some change. Edit - At work now, hard numbers are at home, posting while it's in my mind before I forget.
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Mar 15, 2010 19:46
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Because of the matching, your return on the 401k contribution is more than the CC rate even if the market stays flat. So yeah, keep doing it. See if you can find some other ways to make money or cut expenses if you want to speed up the loan payoff, but three years of self-discipline won't kill you. :)
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Mar 15, 2010 19:56
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slap me silly posted:Because of the matching, your return on the 401k contribution is more than the CC rate even if the market stays flat. So yeah, keep doing it. See if you can find some other ways to make money or cut expenses if you want to speed up the loan payoff, but three years of self-discipline won't kill you. Yeah, this makes sense. Plus, instead of getting my yearly raise in June like I used to, I just found out I get it in March (same company, same position, but they negotiated a new contract last March and that's when my term of employment starts). So I'll just take my raise money and use that instead. And, you know, that whole self-discipline thing.
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Mar 15, 2010 20:11
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Yes, the only reason I recommended stopping the contributions was because Morris was going to be losing the matching when he leaves his job. If you have employer matching, that's 'free money' and almost always worth taking. You're getting 20%, plus tax advantage, which is obviously better than the 15% you're paying on your credit card debts. (Note: not always, though, if the only way to get the matching is by risking your own money in a terrible plan with no reasonable options; say, one which requires you to put all the money into a single-company stock.)
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Mar 15, 2010 21:30
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I disagree that 20% matching is better than paying off a credit card debt at 15%. If you are in the 25% income tax bracket (and assume that you'll be in the same bracket when you retire) that 20% match will eventually be taxed at 25% (or higher depending on your state tax rate). 401k plans are tax-deferred, but should not be viewed as tax exempt. Paying off debt should be viewed as equivalent to investing in a completely tax-exempt security, and a 15% tax-exempt return on investment is really equivalent to a 20% taxable ROI if your tax rate is 25%. Eliminating debt has less risk involved (think of it being equivalent of a bond that can't possibly default). Paying down credit card debt also more closely resembles investing in a more liquid asset as compared to investing in a retirement account. Thus, paying down a 15% interest debt is like investing in a completely tax-free, non-defaultable bond that has a very short maturity (and no additional fees/expenses). The alternative is investing in your 401(k) and get a starting taxable return of 20% on an investment that probably carries much more risk (it depends on your 401k portfolio) and has some expense ratio. If you ask me, paying off the debt sounds like a better idea.
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Mar 15, 2010 22:15
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That's interesting, and I hadn't looked at it that way. I guess a lot depends on those starting assumptions; what is your top marginal tax rate, and what rate do you expect to be paying when you retire (but do you still only consider top marginal rate, or total average rate, for the retirement 'income' from a 401(k)?). There is also the calculation of when you expect to retire, because the more years you have till retirement, the more years of compounding returns the 401(k) gets. I'm not really sure how to factor that into the comparison. Edit: thinking more about this: if you are thinking of paying down credit card debt as a tax-free investment, don't you need to consider that when you spent that 'negative money' in the first place, it was effectively untaxed income, too (you pay no income tax on money you spend as debt)? And the money that pays interest on that card is also post-tax. Whereas with a 401(k), the money you put in is pre-tax, and then you pay (income) tax on both the principal and the accrued earnings (employer matching plus earnings). Oh, and, presumably paying CC debts today means you're using uninflated dollars, compared to the tax you pay many years from now on the 401(k), which (assuming inflation) you pay with cheaper dollars. Right? I'm getting a headache. Leperflesh fucked around with this message at 22:30 on Mar 15, 2010 |
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Mar 15, 2010 22:23
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Actually, thinking about it a little more... I guess you can't compare them as taxable vs. tax exempt, because if he contributed $100 less to the 401k in order to pay more of the CC debt, then that $100 is going to be taxed before he can use it to pay the debt. So I guess it really is more like they are the same rate of return: 15% vs. 20%, its just that one is going to have expense ratios and more volatility, while the other is expense free and has no volatility. And paying the debt is a more liquid investment than throwing it in a 401k. Edit: so I've changed my opinion -> mathematically speaking, investing up to the maximum employer match would be better than eliminating the CC debt in this case. flowinprose fucked around with this message at 23:20 on Mar 15, 2010 |
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Mar 15, 2010 23:01
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Also, he could use a money-market fund in the 401k and remove most of the volatility while still getting the 20% match. Not that I think that's a good idea.
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Mar 16, 2010 01:10
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I recently got my annual report for the VEA shares (along with the associated mutual fund) I hold, and I noticed that they mention a 1% fee on any shares redeemed after being held less than 5 years. Is this just an issue for investment bank types doing arbitrage with the ETF or are those who hold the mutual fund version of VEA paying that 1% as well?
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Mar 16, 2010 04:03
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