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DuckConference posted: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? Those who hold the mutual fund version are paying that fee. For reference, the ticker is VTMGX.
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Mar 16, 2010 06:14
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flowinprose posted: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. It's actually a 30% match, so yes, the employer match is better mathematically -- but my question was about the best way to plan a 401k rollover when I can't do a Roth conversion right away, not whether I should be paying off debt or contributing to my 401k. I'm interviewing with other companies, and currently I'm only 40% vested in that 30% match, making it effectively ~13%. And of course, once I leave there will be no matching until I qualify for the new employer's 401k (or none ever, if I go the 1099 route). Plus being in tons of high-interest debt sucks, so dealing with finances will be much more pleasant when the credit cards are gone 
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Mar 17, 2010 13:14
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Morris posted:It's actually a 30% match, so yes, the employer match is better mathematically -- but my question was about the best way to plan a 401k rollover when I can't do a Roth conversion right away, not whether I should be paying off debt or contributing to my 401k. Leperflesh and I were discussing CobiWann's situation. Sorry for the confusion, there were multiple posts in a row about very similar issues. With regards to your situation: My understanding is that if you are going to roll over the 401k into anything other than another company's 401k, then it has to first go into a traditional IRA somewhere. Then you can decide later whether you want to do a Roth conversion. Since you're already in lower part of the 25% tax bracket, unless your new job is going to triple your salary or something, then you'd be okay just waiting until you have enough to cover the taxes on the Roth conversion. If you see yourself eventually earning a lot more, then it would make sense to convert to a Roth as soon as economically feasible while you're still in a low(er) tax bracket. You're only getting 13% return on your contributions, so I'm pretty sure that it would make much more sense mathematically to just get rid of the credit card debt for now instead of continuing to make 401k contributions at your current job.
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Mar 17, 2010 16:42
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Hi guys, I have what may be a stupid question. I recently bought a house, but after spending over 16k on fixing up the house and buying furniture, appliances; my emergency fund has been whittled down to about 4k. My mortgage payments are 1200 a month so obviously 4k isn't enough for a huge emergency. What I want to know is since I have a Roth IRA and am waiting on the 8k tax credit next year if it would be better to take the risk and put my money into the Roth instead of a savings account. I can save about 500 a month, so I'm just thinking of splitting the savings each month, more into the Roth versus my savings account. So best case scenario will be nothing bad happens to me or the house for a year and I will have maxed out my Roth IRA contributions while the market is still low and will be collecting my tax credit around this time next year...possibly. Worst case, I pull the money back out of the IRA, but hopefully it's been long enough for a gain. Is this a good idea or am I just thinking things through more clearly? Thanks!
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Mar 17, 2010 17:32
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I did exactly that for exactly that reason. I put the money in my IRA, but in a money market fund so it is subject to minimal risk in case I have to withdraw the contributed portion for an emergency. I would say put as much in the Roth as you can, as long as you're pretty sure you won't need to take it out again. The down side of this is that if you use the money market, you are getting the contribution in but you aren't capturing the low prices of stocks.
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Mar 17, 2010 17:40
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An IRA is not a good spot for emergency savings, because (even if the market performs well this year) you pay penalties for withdrawing money. Also, I'm not sure it's fair to say the market is "low", and your retirement savings is not the place to speculate on the market.
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Mar 17, 2010 17:47
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In general, yes. But if it's a money market fund within a Roth IRA, there is no penalty for withdrawing the contribution amount, and there is minimal risk. The benefit is that you get that year's contribution in and hopefully get to keep it there, and that only applies if you would miss that year's opportunity otherwise.
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Mar 17, 2010 17:53
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Fair enough, and that sounds like a decent solution. It was the stock market comment that put me off, though. The Dow set a new 52-week high today. That's not to say it won't go higher, just that someone asserting that the market is currently low, and therefore now is a good time to shove your retirement savings into it, is perhaps not well-enough informed.
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Mar 17, 2010 20:38
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Haha, to be honest when I saw myself type "the low prices of stocks" I was pretty sure that was gonna be a cue for someone to jump in and make that point.
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Mar 17, 2010 22:14
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Thanks for the responses guys. I definitely won't be able to max out my Roth if I try to build up my emergency fund. I have until next April to max it out and currently have 1k contributed this year already. So I might do something like 300 into Roth 200 into emergency fund until next April. I'd really like to be able to max out my Roth contributions as I've done that every year and don't want to lose the good start.
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Mar 18, 2010 00:52
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I'm finally going to transfer my IRA away from Chase, who sucked it in after they bought out my bank. They want to charge me a $75 fee to transfer it. Is there any way to escape this dickery, or to convince Vanguard to pick it up for me?
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Mar 19, 2010 23:25
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How are they xferring it? Maybe a check will be cheaper than a wire
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Mar 20, 2010 00:27
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Or maybe they're just gouging him... I got the same crap from Mainstay when I dumped their poo poo a long time ago. $80 "transfer fee" plus of course all the back-end sales charges. Cocks
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Mar 20, 2010 01:12
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Vice President posted:I'm finally going to transfer my IRA away from Chase, who sucked it in after they bought out my bank. They want to charge me a $75 fee to transfer it. Is there any way to escape this dickery, or to convince Vanguard to pick it up for me? A lot of brokerage houses impose "transfer out" fees in order to lock in clients. You might be able to get this fee redeemed by your new broker if you have a big account. If you have a small account, say a few thousand dollars, you pretty much have to eat the fee.
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Mar 20, 2010 02:54
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What do you all think of the TIAA-CREF Traditional Annuity? My wife's college uses TIAA-CREF for their retirement plan, and she has the option to use this retirement plan. There is information about it here: http://www.tiaa-cref.org/public/performance/retirement/profiles/4001.html It seems to offer a guaranteed 3% return, and right now the return is 4%. For info, we are both in our early 30s. It seems like the advantages of it are that it generally beats inflation and from what I can tell is pretty stable and secure (it IS your father's retirement plan). The disadvantages seem to be that it doesn't have as large a return as an index fund or whatever. Personally, the market makes me really wary, given that several of my family members have been more-or-less wiped out.
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Mar 20, 2010 19:52
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It is literally my father's retirement plan. It's also one of my options, but I decided to put most of my money in the market instead. If you're going to reduce your risk (and expected return) with an annuity type of thing, TIAA is one of the best places to go. Your family members' experiences may have been bad luck, poor planning, or both - and they may or may not be a good reason for you to avoid stock market index funds. If you have the energy for it, learn up on portfolio planning. A little knowledge can get you a long way, and the book "Four Pillars of Investing" recommended in the retirement thread is quite good. Edit: This is the retirement thread... slap me silly fucked around with this message at 20:34 on Mar 20, 2010 |
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Mar 20, 2010 20:24
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I'm about to make my 2009 Roth IRA contribution and I've been learning more about investing, but I'd like some advice because I don't know enough yet. I'm only on chapter 2 of "The Four Pillars of Investing". I have about $7k in the Vanguard Target 2050 fund and I'm wondering if I should put my next $5k in that same fund or into an index fund like the Vanguard 500. I'm 25 and make $36k a year with a $50k debt in student loans at 6.625%. In the future, should I make month contributions or one lump contribution? Also, I know no one can predict the market, but I feel like right now isn't the best time to make the contribution since the market is high, should I wait or just contribute? Thanks.
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Mar 23, 2010 06:27
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Crazak P posted:I'm about to make my 2009 Roth IRA contribution and I've been learning more about investing, but I'd like some advice because I don't know enough yet. I'm only on chapter 2 of "The Four Pillars of Investing". Yikes, those student loans are fairly high at 6.625%. I'm not as familiar with US tax shelters as Canadian ones, but it might be worth paying down your loans before investing more.
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Mar 23, 2010 06:36
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I know. It's $10 a day in interest! I could be eating out everyday for 20 years. I'm trying to get a non-profit or government job so I can get loan forgiveness, but I can't bank on that happening, so I'm trying to aggressively pay it off. I have $5k that I'm planning using towards my student loan for this year, in addition to the payments I'm making monthly ($375). In about a year, I'll get a 2.25% interest rate reduction. Should I still put the $5k for the roth into the student loan? Crazak P fucked around with this message at 07:11 on Mar 23, 2010 |
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Mar 23, 2010 07:09
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Crazak P posted:I have $5k that I'm planning using towards my student loan for this year, in addition to the payments I'm making monthly ($375). In about a year, I'll get a 2.25% interest rate reduction. You can deduct your interest so that makes the rate more like 5%, and with next year's deduction the rate will be more like 3%. Is the rate fixed or variable? If the rate is going to be 3% effective next year then the Roth would be a better option. With that much in student loan debt, you won't be making much net profit with your investments since you pay so much in interest. However, the nice thing about having it in investments vs paying off student loans directly is that you still have access to the money should you need it emergently (vs once you use it to pay off loans it is gone).
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Mar 23, 2010 14:41
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The interest rate is fixed. The deduction is one of those one time deals you get after 48 consecutive payments. I guess since I've read in a lot of places about compound interest and how I should invest as early as I can to take advantage of that, I've been wanting to put that money in my Roth. Also, I'm not sure what my employment status will be in the future. I'm thinking about joining the peace corps or teaching english in another country. This would mean my income would be very low. If this happened, would it be better for my money to be put into my student loans? With peace corps, I believe I can defer my loans until after I'm finished and can get 2 years of credit towards loan forgiveness. I won't have any money for Roth contributions for 2 years though.
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Mar 23, 2010 17:35
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There hasn't been a whole lot of compounding going on during the last decade. Like I said when you're paying $1500-2500 a year in interest it doesn't really matter where your $7-12K in invested. Do you want to have access to it? Put it in a Roth and hope you can beat whatever the interest rate on your student loans are - there is some risk there. Do you want a guaranteed return? "Invest" in your students loans - especially if they are at 6+%. Since you are young, and the interest rate is going to drop soon, I'd take the risk and put it into the market. There are some people with student loans at 1.8% fixed and other people with credit card debt at 15%...in those situations it's easy to figure out where to put your money. You are in a bit of a gray area. It sounds like you want to put it into the stock market so go for it.
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Mar 24, 2010 03:53
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I'll stick with the plan of putting $5k in my roth and $5k towards my student loans this year. Do you have any suggestions as to where I should invest my roth? My current retirement fund or an index fund?
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Mar 25, 2010 20:11
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Crazak P posted:I'll stick with the plan of putting $5k in my roth and $5k towards my student loans this year. What's your investment plan (X% equity, Y% bond - equity split into A% domestic and B% international)? Once you figure that out you just have to balance out your contributions against your holdings.
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Mar 25, 2010 20:46
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401k question: I set up my 401k at my job to deduct a certain amount from each paycheck as roth elective deferrals. My HR person made in error in processing it and the amount was deducted as pre-tax, traditional 401k deferral for the first paycheck. Is it possible to move that money from the traditional 401k to the roth 401k? I would assume that all I have to do is pay income tax on it as if it had been deducted after taxes. I'm guessing it's not that simple, though. Has anyone dealt with something like this before?
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Mar 25, 2010 23:56
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var1ety posted:What's your investment plan (X% equity, Y% bond - equity split into A% domestic and B% international)? Once you figure that out you just have to balance out your contributions against your holdings. I don't have an investment plan yet because I haven't learned enough. This is the make up of the vanguard 2050 target retirement fund: 1 Vanguard Total Stock Market Index Fund Investor Shares 71.9% 2 Vanguard Total Bond Market II Index Fund Investor Shares** 10.0% 3 Vanguard European Stock Index Fund Investor Shares 9.0% 4 Vanguard Pacific Stock Index Fund Investor Shares 4.8% 5 Vanguard Emerging Markets Stock Index Fund Investor Shares 4.3% Since I want to make my contribution for 2009 and April 15 is coming up soon, I wanted to know if I would be better off putting my money in an index fund vs the retirement fund.
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Mar 26, 2010 17:59
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Crazak P posted:Since I want to make my contribution for 2009 and April 15 is coming up soon, I wanted to know if I would be better off putting my money in an index fund vs the retirement fund. I would personally keep my money in the retirement fund just to have the diversified bucket of domestic/foreign index funds with bonds mixed in. Otherwise, you could be exposing yourself to more equity risk then you actually mean to take.
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Mar 26, 2010 18:15
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Okay, thanks. I'll do that for now and continue reading more, so I can come up with an investment plan that's right for me.
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Mar 26, 2010 18:22
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Yeah, Target 2050 is a decent place to park it until you're ready to tweak the allocations.
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Mar 26, 2010 18:40
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Be sure to keep in mind that your "investment plan" means all of your investments; not just what happens to be in a given investment vehicle (like an IRA or a 401(k)). E.g., I bought a house. I'm now very heavily invested in real estate, even if I own no real estate stocks in my 401(k), and I should keep that in mind when I balance my 401(k).
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Mar 26, 2010 19:31
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The tax-advantaged funds available through my employer all have pretty silly expense ratios. For this reason, I just ended up maxing out my Roth in the Fidelity Freedom 2040 last year, and plan to do the same again this year. I'm going to have more money to invest this year, though, and I'm not quite sure what to do with it. My employer doesn't do any matching. My main question is: should the tax benefits of investing in a regular 401(k) outweigh the downside of being forced to choose a managed fund with an expense of %0.50-1.00? My alternative would be taxable investment in a standard mix of the Vanguard index funds.
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Mar 28, 2010 02:11
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I just signed up for a High Deductible Health Plan with a linked Health Savings Account. The insurer puts $750/yr into my HSA and I plan on maxing out my individual contribution for a total of around $3k a year. I'm expecting few if any out of pocket health care costs for the forseeable future and would probably take care of any unexpected health expenses by tapping my taxable savings account instead of my tax-advantaged HSA. So the moral of the story is that this money is basically for the long haul. My question is how should I treat the HSA as an investment. Since it's also a long time horizon should I just treat it as another 401(k) or IRA equivalent and use my current asset allocation of 70% equities / 30% fixed income? Or since it is really supposedly money to be set aside for health expenses should I do a more conservative allocation? I'm leaning towards a conservative approach with many 20-30% fixed income and the rest in equities. But I am open to suggestions.
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Mar 28, 2010 06:33
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coco bryce posted:My main question is: should the tax benefits of investing in a regular 401(k) outweigh the downside of being forced to choose a managed fund with an expense of %0.50-1.00? My alternative would be taxable investment in a standard mix of the Vanguard index funds. Normally employer matching makes up for the high expense ratios, but since you aren't receiving any match maxing out the Roth first makes sense. If you want to save more than $5K year for retirement you could use your 401(k). One benefit to using the 401(k) anyway is that it allows you to drop your AGI. If you are near some threshold (like student loan interest deduction or the like) then it could be worth putting some money into the 401(k).
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Mar 28, 2010 14:21
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Greetings BFF goons! It's been quite some time since I've poked my head in here. I'm looking to get a pulse on the best high-yield savings accounts these days. I am amassing a 'GET THE gently caress OUT OF MY CITY THAT JUST OPENED A GOLDEN CORRAL' fund and am thinking I need a 2-3 year time horizon. I'm furiously putting cash away into this fund but wish to earn more than .4%. I'm hesitant to drop on some CDs as I like liquidity in times of need. Are there any solid G-bond funds I could consider as well? Appreciate the insight, please let me know if you need more information.
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Mar 29, 2010 16:10
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Do you know about bankrate.com? 1.4% is about the best you're going to do right now, though.
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Mar 29, 2010 16:19
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I'm 23 years old. Just started a new job. No debt (well, some but it's 0% to my Dad). I contribute 5% to my 401K but the employer match (100% of first 5%) doesn't start until next year. Currently I have about $250 in it invested with a JPMorgan Aggressive portfolio. I'm fine with being aggressive and I think I would be better off being as or more aggressive with my IRA as my 401K. I also have about $9700 in a Roth IRA. I'm looking at different mutual fund options. The big two I am considering between are SWERX and VFIFX. The Vanguard fund obviously has lower expense ratio, but I could get the Schwab fund with no sales load so over the first year the difference would be negligible. The portfolios are similar but I think I like Schwab's better. A third option would be to skip the target funds and just get right into creating my own portfolio. Schwab has some good starting suggestions. Expense ratios would be higher on average, but better returns might be possible.   I'm just wondering people's opinions of these choices and what kind of portfolio allocations would be better.
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Mar 30, 2010 03:55
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Do you think the Schwab fund's performance will be enough better than VFIFX to justify being over 4x the price? (calculator) VFIFX and SWERX aren't quite similar though: VFIFX is 68% stocks in 2040, whereas SWERX is 40% stocks in 2040. Vanguard has VTTHX and VFORX that are more similar to SWERX. For what it's worth, I'm using a Vanguard target fund right now, but will gradually switch over to three index funds: US stock, non-US stock, and bond. Expense ratios at Vanguard are low for these, 0.18% to 0.40%. I kind of doubt anybody is good enough to outperform those over the long term, not enough to justify extra expense. And Vanguard has VIVAX and VIGRX at 0.27% for the next most obvious allocation adjustment. Fidelity has a pretty similar set of stuff as well, say FLGEX at half the price of SWLSX for example. Overall, though, good for you for shoving some money in there in the first place.
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Mar 30, 2010 05:05
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What is the general opinion on how aggressive to be in a 401K plan? For example, I work for Boeing and have over the past couple years followed Paul Merriman's recommendations for allocating my funds. I am 37 years old and have been using their aggressive allocation suggestions (which has recently changed to only 3 funds). Now I understand the risks but always felt I was young enough to absorb the highs and lows that came with being 100% in equities. I got a late start in investing for retirement having started this 401K 7 years ago. It is currently valued at just under $70K, I invest 10% and the company puts in another 7%. I know I am not getting any younger and wonder when is the sensible time to really start scaling back a little and start moving some of my money into say bonds or something more stable. I also have a Roth IRA with T.Rowe Price I started about a year ago, investing in this 2040 LifeCycle Fund.
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Mar 31, 2010 13:56
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I work for ADM. They match 4% if you put 6% or more of your paycheck into your 401k/or Roth.(Free money!). I don't make very much compared to most I see on here but I have a few things on my side: I am still somewhat young (almost 27), no wife or kids, and even though I couldn't afford it anyways I have no desire for real nice things at this point. I am currently investing in a roth. The elections I can choose vary from a variety of Vangaurd Funds, other funds (T.Rowe mid-Cap Growth, Frontegra IronBridge Small-Cap, Black Rock International Value, etc), and finally ADM Common Stock. I believe the % they match goes into ADM stock. I am planning to put the vast majority into ADM stock. I don't plan on touching it for any reason in the near future and even though the price will fluctuate I know in the long run it should work out (unless someone knows something about ADM stock I missed, I am very new to investing in general). Finally, there is no expense ratio at all to investing into ADM stock. Yes, that is right FREE. Yes I know, single stocks are free but it still! What is left ratio wise isn't much but I am still putting some in a Vangaurd Target Retirement fund (I believe 2045/50) that it was on default and has accrued 5k in there and Dodge & Cox Stock Fund. I am definitely on the aggressive end here but I don't make much and am young is my reasoning. Is company stock the way to go? Switching my elections is free, would it be worth switching my ratios anytime ADM stock is high and putting money back into it when it returns to normal or bottoms out? There is not Cap to my Roth is that the way to go? I can add more info on request like ALL of my elections options and I plan on using an online broker to invest whatever else I can spare too. Thank you for any info and I am just looking for input don't be afraid to pitch what you are thinking. Edit: To the poster above me, if we were smart we would have taken a 401k seriously in our early 20s. However judging from most average joes around me, we aren't exactly late to the party either. Favorabilis Solitud fucked around with this message at 14:17 on Mar 31, 2010 |
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Mar 31, 2010 13:58
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Favorabilis Solitud posted:Is company stock the way to go? The general opinion is that very little of your retirement plan savings should be put into company stock. The reason is diversification as job security, salary increases, benefit levels, and advancement opportunities are all tied to your company's success. Therefore you shouldn't need to add long-term retirement savings to that list.
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Mar 31, 2010 14:07
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