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Leperflesh posted:You're getting great answers, but I have a quick question (since you're a grad student): My student loans consist entirely of $18k federal direct loan. I'm pretty sure it's subsidized (This means they pay the interest, right? I'm pretty it is subsidized, because the number hasn't changed in the time it's been deferred, about 2 years), and it's certainly deferred till I finish grad school (3-4 more years). I'm hoping to be able to save up enough to pay those off pretty much as soon as I get out, or at least within a couple years. flowinprose, thanks so much. I really appreciate the advice. My income is, in fact, well below $34000, so now I know what to look into next. I may see some of you in the income taxes thread :P
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Sep 26, 2010 15:33
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Yeah, federal subsidized loans accrue interest while you are in school, which the government pays on your behalf. After you get out, you can delay for like six months or so, but then you have to start paying the interest. The interest rate itself is set at some fairly low value by the government, and it gets adjusted annually (I think in July). Even so, as soon as you start owing interest, you're looking at something like a 5% guaranteed return on your money for paying that debt. So definitely plan to pay it all off rapidly. If you can invest for retirement and still save to pay those debts, then you're in good shape.
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Sep 26, 2010 18:45
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Leperflesh posted:Even so, as soon as you start owing interest, you're looking at something like a 5% guaranteed return on your money for paying that debt. So definitely plan to pay it all off rapidly. If you can invest for retirement and still save to pay those debts, then you're in good shape. My 10% a year saving for retirement number doesn't include the minimum 7% general savings I'm doing as well. I hope to build that up and use it to really aggressively pay off the student loans. As if I'm not loaded enough, apparently I have another trust thing in the UK that I get next year... I'll be back when I hear about that. Anyway, I'm not worried. Another question: So for Vanguard, I'm looking at doing the 2050 Fund for my IRA, and then at flowinprose's suggestion, I will probably also buy an ETF. He suggested VTI, but I already would hold quite a lot of that one as part of the 2050 Fund. Is that still good, or are there others I should consider instead? Or is this a "Keep It Simple, Stupid" moment?
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Sep 26, 2010 19:06
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Eggplant Wizard posted:My 10% a year saving for retirement number doesn't include the minimum 7% general savings I'm doing as well. I hope to build that up and use it to really aggressively pay off the student loans. As if I'm not loaded enough, apparently I have another trust thing in the UK that I get next year... I'll be back when I hear about that. Anyway, I'm not worried. One of the reasons I suggested VTI for purchase outside of a tax-sheltered account is that it is fairly tax-managed since it is a total-market type of fund. This means there will be very little change in its portfolio, leading to fewer/lower capital gains distributions. This means less taxes, but since your tax bracket is so low at the moment it probably won't make that much difference for the immediate future. Until you climb into a higher tax bracket, you could just use the 2050 Fund in your taxable account as well without any major repercussions. So what I would suggest if you want a relatively hands off approach is simply to pour $5,000 into your Roth IRA in the 2050 fund, and then do the same in your taxable account. Then right off the bat in 2011, you can just sell $5,000 worth of the 2050 fund that is in your taxable account and deposit it into the Roth IRA for your max contribution for that year. If you would like a more hands-on approach, I can give you further recommendations to break down your portfolio into several ETF's split between your taxable/non-taxable accounts. In order to really get any benefit out of that, though, you'd have to be willing to learn a bit more about it yourself so that you could figure out when/how to rebalance it accordingly.
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Sep 26, 2010 20:52
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Thanks for the explanation. I think I'll stick with the relatively simple approach. You're heroes in here, seriously. 
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Sep 26, 2010 21:46
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Just got an email from Vanguard, I remember posting about the Target retirement funds being far too US heavy on here a while back and have been holding Total International as well to make up for it. It's nice to see them correcting the problem, although 30% still seems low. "International stock allocation increasing For the STAR, Target Retirement, and LifeStrategy Funds, the amount of the funds' stock holdings being allocated to international stocks is increasing from approximately 20% to about 30%. The amount allocated to domestic stocks will be reduced so that the overall allocation of stocks and bonds remains the same. This change will improve diversification and may reduce long-term volatility. The funds' allocations will also now be more representative of the overall global market. "
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Sep 27, 2010 19:40
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flowinprose posted:fully fund a Roth IRA from Vanguard and then stick the rest of it in a taxable brokerage account (also at Vanguard) and purchase a Vanguard ETF like VTI. You can then sell shares of VTI in the future if you need to in order to fund your Roth IRA again, or just keep the money in VTI and fund the Roth from your own income. edit: Nevermind, sorted it out with one of their chat representatives. Now I'm properly set to go on with my plans, thanks to you guys. Eggplant Wizard fucked around with this message at 15:03 on Oct 6, 2010 |
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Oct 6, 2010 02:29
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Alright, I am an age 25 male (b. 6/85) looking to get into some long-term retirement savings. My employer puts the equivalent of 5% of my salary (this is given to me, not withdrawn from my salary) into a TIAA-CREF. There is the additional option of having direct deposit put into a Vanguard Roth IRA. Also, at age 30, the employer contribution rises to 10% for the TIAA-CREF (again, I pay nothing for this contribution). I have been working here for 2.5 years. My annual salary is now $24,000 a year and my fiancée makes about $13,000 annually. Essentially, I was wondering if I should get a Roth IRA at this point or contribute everything into the TIAA-CREF since I'm already getting $1240 into it annually? I expect to be able to put in at least $150-$300 a month. My only major expense in the near future is $18,000 in grad school tuition. I was "advised" by someone to get a tuition loan and then "write it off" on my taxes. The degree is an MLS and I am a library staff worker. How much am I looking to lose via interest on the loan? This would certainly affect how much money I have for investments. However, I do not know if I will be with this employer for life, although I hope to be here permanently. quote:For staff members, participation in the plan begins on the first of the month following the first work day for staff members over the age of 35. For those under age 35, participation begins the first of the month following the employee's 35th birthday or after reaching 21 and completing two years of service, whichever is earlier. quote:The VRSP is a valuable savings tool because the money contributed to the plan from the individual’s paycheck, as well as the interest or dividends earned, is tax-deferred. No income tax is paid until the funds are withdrawn during retirement. Insane Totoro fucked around with this message at 16:00 on Oct 6, 2010 |
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Oct 6, 2010 15:54
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I started my career as a federal employee two years ago (I'm 27 now) and I've been contributing 5% to my TSP since the FAA matches that dollar for dollar. However, once 2012 starts I'll be above the income limits to contribute to a roth IRA, so I'm considering just maxing out my TSP contribution (which I believe is 16,500 right now). Is that a good way to go for the long term?
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Oct 6, 2010 16:34
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Just received some news. It looks like the minimums of admiral funds at vanguard were decreased substantially from $100,000 to $10,000. That's a pretty drat good deal.
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Oct 6, 2010 19:14
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Medikit posted:Just received some news. It looks like the minimums of admiral funds at vanguard were decreased substantially from $100,000 to $10,000. That's a pretty drat good deal. I assume there is no reason at all I shouldn't transfer everything from my investor shares to admiral shares, correct?
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Oct 6, 2010 21:04
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Mind_Taker posted:I assume there is no reason at all I shouldn't transfer everything from my investor shares to admiral shares, correct? Minimum balances might keep you from re-balancing your accounts if you would dip below the minimum. Once you're in the fund, however, market fluctuations won't kick you out. In any case, Vanguard is going to automatically upgrade all your Investor shares to the Admiral equivalent in the coming months. You can have the process done in five minutes if you call and speak to a representative. Per Vanguard, switching from Investor to Admiral is a nontaxable event.
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Oct 6, 2010 21:17
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Medikit posted:Just received some news. It looks like the minimums of admiral funds at vanguard were decreased substantially from $100,000 to $10,000. That's a pretty drat good deal. If you told me 15 years ago that I'd be excited about something like this, I'd have laughed. But now, reading this, I immediately went and told 3 of my friends and they all went "ooh!!". Oh growing up... 
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Oct 6, 2010 21:38
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Insane Totoro posted:My annual salary is now $24,000 a year and my fiancée makes about $13,000 annually. With your income being that low currently, I think you'd be better served by contributing to a Roth IRA than the employer plan. The reason being is that your income is most likely lower currently than it will be later. This is assuming you already have enough emergency savings and other personal finance issues out of the way first. Not sure about "writing off" the loan on your taxes.... for one thing, you won't be able to get any deductions for it until you start making payments on it. The interest rate will depend on whether or not you can get a federally subsidized loan, but it will probably be around 6-8%. Also keep in mind that you're only able to deduct interest, and that the total deduction you can take has a maximum. Since we routinely recommend in this thread that people consider paying off debt (even at that low of an interest rate) as an investment strategy, it might be wiser to just pay the tuition out of pocket instead of incurring that debt/interest in the first place. This decision will have a lot to do with how much cash you have on hand, how it will effect your quality of life, and how quickly you can repay the debt after you finish your degree. You might be worse off by not getting a loan if it means you don't have adequate emergency savings, etc. This is more of a question for the Student Loan Thread in the Ask/Tell forum.
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Oct 7, 2010 05:31
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JohnClark posted:I started my career as a federal employee two years ago (I'm 27 now) and I've been contributing 5% to my TSP since the FAA matches that dollar for dollar. However, once 2012 starts I'll be above the income limits to contribute to a roth IRA, so I'm considering just maxing out my TSP contribution (which I believe is 16,500 right now). Is that a good way to go for the long term? There's a possiblity that the Roth limits might be raised next year (we may not find out until late October / early November). Another possibility is that your contributions to the TSP may put you back under the limit for Roth IRA contributions. So you might be able to do a mixture of the two. Here's a rough calculation showing how this might be possible: Let's say your Gross Income for 2011 is going to be $130,000. You're contributing 5% ($6500) to the TSP already, so this means your modified adjusted gross income comes down to $123,500. At this point you're still above the $120,000 threshold to make any contribution to a Roth. However, if you increase your TSP contribution to 10% ($13,000), you're now in the phase-out window with a MAGI of $117,000. So if the rules stay the same next year, you could contribute 5000 * [(120-117)/15] = $1000 to your Roth IRA. This would be even larger if you went up to the full $16,500 TSP contribution. Of course none of this will apply if your income is greater than $136,500. If that's the case, then contributing more to your TSP is probably still a good idea. The good news is that the TSP has really really low expenses, and a exceptionally good cash equivalent type investment with the G-fund. So putting your money into the TSP is probably as good if not better than any investment vehicle you could find otherwise.
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Oct 7, 2010 05:53
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flowinprose posted:With your income being that low currently, I think you'd be better served by contributing to a Roth IRA than the employer plan. The reason being is that your income is most likely lower currently than it will be later. This is assuming you already have enough emergency savings and other personal finance issues out of the way first. I see your point on the Roth. Even if I'm essentially getting a huge return on the employer investment already?
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Oct 7, 2010 14:40
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Insane Totoro posted:I see your point on the Roth. Even if I'm essentially getting a huge return on the employer investment already? Is the 5% employer investment guaranteed, even if you put $0 additional money into the account?
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Oct 7, 2010 15:36
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Fuschia tude posted:Is the 5% employer investment guaranteed, even if you put $0 additional money into the account? Yes, it is guaranteed until age 30. And then at age 30, there is a guaranteed 10% employer investment. The actual dollar amount obviously increases with salary increases. This is separate from anything that I might put in myself. The employer contribution is completely not dependent on me putting in any money. It's not "matching funds" but literally a "giveaway." I currently make $24,800 before taxes.
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Oct 7, 2010 15:50
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My employer does just about the same thing, but you lose it all if you work less than five years.
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Oct 7, 2010 18:22
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Insane Totoro posted:This is separate from anything that I might put in myself. The employer contribution is completely not dependent on me putting in any money. It's not "matching funds" but literally a "giveaway." This is why it doesn't make any sense to contribute anything to it unless you've already maxed out your Roth contribution. You're not getting matched either place you invest it, but the money you put in the employer plan will be taxed when you take distributions of it later on. Assuming that your income will be higher later in life than it is now (I certainly hope it will be), then logically you would want to pay the taxes on it now while they are low and invest within a Roth IRA, which will not be taxed when you withdraw it. That is unless they change the rules and start taxing Roth IRA's, but I think that legislation would have a very tough time getting passed.
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Oct 7, 2010 19:22
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Is it possible to rollover a (Roth) 401k to a (Roth) IRA without changing employment? I've been spoiled by Vanguard, and my employer has an absolutely terrible 401k program with 5% front end loads and high fees. What I would like to do is max out my contributions before the end of the year into the moneymarket option, then do the same for the first few months of 2011, and roll it all into a Roth IRA, then repeat as needed. Please tell me I'm not stuck with a crappy 401k.
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Oct 11, 2010 18:21
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NM: Called my 401k holder and asked.
Chessna fucked around with this message at 20:01 on Oct 11, 2010 |
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Oct 11, 2010 19:10
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Tewdrig posted:Is it possible to rollover a (Roth) 401k to a (Roth) IRA without changing employment? I've been spoiled by Vanguard, and my employer has an absolutely terrible 401k program with 5% front end loads and high fees. Generally no you can't rollover funds from a 401k you got where you currently work, but to know for sure you'd have to ask your employer. Some allow it.
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Oct 11, 2010 19:20
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I'm a 25 year old male looking to finally start a Roth IRA. I've read a lot of the OP along with the Motley Fool article on retirement, all of which was really helpful and sold me on the idea of the Roth. I'm coming into an 8-10k commission check through a big order I was able to get for my company and I'm going to allocate some of that toward starting a Roth IRA. I'm aiming to save up the full 5k to contribute for this tax year and I've been looking into Vanguard and it seems like a lot of their options have minimums around 3k. What is a good way to diversify a starting investment of 5k for someone just getting into retirement savings?
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Oct 13, 2010 14:51
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rockcity posted:I'm a 25 year old male looking to finally start a Roth IRA. I've read a lot of the OP along with the Motley Fool article on retirement, all of which was really helpful and sold me on the idea of the Roth. I'm coming into an 8-10k commission check through a big order I was able to get for my company and I'm going to allocate some of that toward starting a Roth IRA. I'm aiming to save up the full 5k to contribute for this tax year and I've been looking into Vanguard and it seems like a lot of their options have minimums around 3k. What is a good way to diversify a starting investment of 5k for someone just getting into retirement savings?
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Oct 13, 2010 16:01
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rockcity posted:I'm a 25 year old male looking to finally start a Roth IRA. I've read a lot of the OP along with the Motley Fool article on retirement, all of which was really helpful and sold me on the idea of the Roth. I'm coming into an 8-10k commission check through a big order I was able to get for my company and I'm going to allocate some of that toward starting a Roth IRA. I'm aiming to save up the full 5k to contribute for this tax year and I've been looking into Vanguard and it seems like a lot of their options have minimums around 3k. What is a good way to diversify a starting investment of 5k for someone just getting into retirement savings? I just did this! Take a look at the page before this & the top of this one; I got some really helpful, thorough answers. Eggplant Wizard fucked around with this message at 17:35 on Oct 13, 2010 |
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Oct 13, 2010 17:33
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This was posted in another thread:MrBigglesworth posted:Id find some nice stable dividend investments to generate quarterly income to supplement your IRA/401k stuff, roll some of it forward to reinvest into itself and let it ride a while. I was planning on opening a Roth IRA soon. Will probably go through Vanguard thanks to this thread. Any money invest would mostly go toward retirement, but some may eventually go toward a house. I had a couple questions about their IRA's. I would be in the 2050 retirement bracket. So taken from Vanguard's website: quote:SEC yield as of 10/12/2010 2.15% B —
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Oct 14, 2010 00:25
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|Ziggy| posted:Does the YTD of 8.58% mean that it has gained 8.58% since Jan 1st? 10.26% since October '09? What is the SEC yield? If I have extra money should I just open a mutual fund with the same 2050 bracket? Would this be something I could contribute to monthly? Taken out of a paycheck with billpay or something similar? If Vanguard has something similar to the first quote, I would very much like to know about it as I haven't found it. Yes, "year to date" always means since Jan 1. "1 year" would be since October 09. http://www.investopedia.com/terms/s/secyield.asp is bond yield over the past 30 days, after expenses. Vanguard definitely allows monthly or more often deposits, which you can automatically debit from your account.
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Oct 14, 2010 01:42
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Bizarre question; is there any means by which I can contribute a portion of a yearly bonus to my company's 401k for the tax advantage?
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Oct 15, 2010 17:55
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bam thwok posted:Bizarre question; is there any means by which I can contribute a portion of a yearly bonus to my company's 401k for the tax advantage? Ours has always gone in at the 401k election rate, so if yours doesn't it must be up to the company / plan administrator / payroll.
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Oct 15, 2010 18:13
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I work for a small corporation with 10 employees. For years I have been trying to get the owner to implement a 401k, or sep. She promised that she would years ago, but nothing has ever happened. I've had my Roth Ira for over four years, and I max it out every year. I would like to contribute a lot more, but I can't due to the 5000 dollar limits. Are there any other ways I can put money into an account that behaves like a Roth?
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Oct 15, 2010 22:25
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I am getting very antsy with this upward drive on the indexes. I have 17% gain on my 401(k) overall and I am thinking of moving it into some money market/fixed income funds to keep it until the inevitable blows over some. Good idea? I know you shouldn't play the peaks and troughs, but I watch the market fairly regularly and still putting new investments into riskier funds.
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Oct 18, 2010 20:47
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Cheesemaster200 posted:I am getting very antsy with this upward drive on the indexes. I have 17% gain on my 401(k) overall and I am thinking of moving it into some money market/fixed income funds to keep it until the inevitable blows over some. Do not watch the market fairly regularly if you expect to keep any sanity with regard to your retirement savings. You should occasionally rebalance, but not any more often than about 4 times a year (and that is probably too often unless the markets are really volitile). Even when you do decide to rebalance, you don't need to micromanage it that much. Just take a look at your allocations, and don't touch them unless they are out of whack. Like if you were 30% large-cap stock, leave that alone unless its percentage has up'd to 33% or more. If you were 75% stocks and 25% bonds, leave that alone unless it has shifted on its own to like 80/20. But do not just move stuff around simply because you are anxious about where you think the market is going, because you don't (no one does).
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Oct 18, 2010 21:05
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Cheesemaster200 posted:I am getting very antsy with this upward drive on the indexes. I have 17% gain on my 401(k) overall and I am thinking of moving it into some money market/fixed income funds to keep it until the inevitable blows over some. Unless you have a market timing system that you feel you can rely on, it's really risky to put or take money out of the market just because it feels like the market is due for a correction.
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Oct 19, 2010 15:06
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Strict 9 posted:Unless you have a market timing system that you feel you can rely on, it's really risky to put or take money out of the market just because it feels like the market is due for a correction. In other words, it's always a risky idea. Reliable will never happen with timing the market. If you want high returns, stay where you are. Those long run high returns include all of the busts and booms.
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Oct 21, 2010 07:31
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Nysven posted:In other words, it's always a risky idea. Reliable will never happen with timing the market. I use a three pretty simple indicators for a portion of my retirement portfolio (the "risky" portion) that have worked for the past 40 years or so. Who knows maybe one day it will stop working but for several years now it's been outperforming my target retirement fund accounts.
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Oct 21, 2010 13:45
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Strict 9 posted:I use a three pretty simple indicators for a portion of my retirement portfolio (the "risky" portion) that have worked for the past 40 years or so. Who knows maybe one day it will stop working but for several years now it's been outperforming my target retirement fund accounts. What indicators?
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Oct 21, 2010 20:21
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Nifty posted:What indicators? Long term: As long as both the S&P 500 Index and the Merrill Lynch 100 Technology Index fluctuate above their respective trend lines, the market is bullish. If both indexes are below their trend lines, the market is bearish Intermediate term: S&P 500, NYSE Composite, Nasdaq Composite, S&P 600 Small Cap and the Merrill Lynch Tech Index. The market is considered to be advancing on an intermediate-term basis if at least three of these five indexes are advancing. And contrarily, the market is deemed to be declining if at least three of these five are declining. Short term: When the number of daily new lows on the NYSE is greater than 40 while the major indexes are rising to new peaks, internally, sellers are in control of most stocks, and the indexes are masking this weakness. However, if new lows expand to greater than 40 after the indexes are five days or longer off their peaks, the market is entering a correction. When new lows are less than 40 day after day, the buyers are firmly in control of most stocks. Several of these are lagging indicators, but that doesn't really hurt my investing style (based on finding growth stocks).
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Oct 22, 2010 15:06
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Warning:  +  Okay, am I correct in assuming the fund management rates for my work's RRSP ranging from 0.385% to 1.135% is pretty brutal? They don't do any matching, so really the only benefit would be reduced tax rate on my pay cheque, rather than a refund at the end of the year. I'm thinking it would make more sense for me to set up my own RRSP and set up automatic deductions. I don't know if the reduced fees would offset the fact that I could contribute more every other week, rather than a reduced amount on each cheque, followed by a lump sum when I get my return. I assume it would, but I don't know and I have no idea how to even go about calculating something like that. If I were to put away about $10k annually it appears to entitle me to a $3,200 refund. If I were to roll that back into my RRSP and keep up my contributions, that would net me a $4,145 refund the following year. Getting about half of my imcome tax back is a very appealing idea. I'm also contributing 10% pre-tax (max allowed) to company shares, and the company matches my contribution at 50%. So my contribution is about $5,000, company contributes $2,500. I just cashed out all eligible shares, about $10k, and will probably do so quarterly or bi-annually from now on, since it doesn't seem to be a good idea to have all my investments tied up with the company I work for. I'd hate to see them go belly-up and be out a job and find my savings dried up at the same time. This year I intend to use it to max out my RRSP, since I haven't been contributing all year. The year after that I plan on putting most of it in a TFSA, and the rest in my RRSP. Even assuming I get a 0% return on any of these invesments, I'm still netting about $4,500 in tax savings, and about $2500 in company stock. A quick and dirty calculation (age 28, retire at 65, 5% return assumed) tells me that at this rate of contribution I'd be looking at about $1,534,422 in my RRSP and about $567,000 in my TFSA when I'm ready to retire. Plus, after reading about my company defined benefits package, I'd be looking at about a $20,000 annual pension package for putting in about 4% of my salary for until I turn 65. This is all assuming NO increase in wages, although I am entitled to a 4% increase bi-annually up to about $70,000 in my current position. And frankly, if I haven't moved on to a better position by the time I hit that cap this will all be pretty moot since I'll probably jump off a god drat bridge. Am I totally off the mark here? Is a 5% return too conservative or too optimistic? Is that final total enough? Am I overestimating my ability to save? I'll be doing a lot of research on my own when I get back form vacation, but I'm just wondering if I'm at least on the right track.
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Oct 22, 2010 15:20
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I'm sure there have been similar situations and if I had the time or the patience to read all 36 pages I would stumble across almost an exact match, but I'm feeling lazy and wanted to lay out my current situation and see if I could get some advice. I'm currently 25, I do inside sales for a software company earning a base salary of $40,000 with a goal of $10,000 in bonus. This is a new position so my first two quarters of bonus have been guaranteed, so I will earn a minimum of $45,000 assuming I don't get fired, die, etc. I currently have about $10,000 sitting in a savings account with PNC earning me basically nothing. I have another $700 in my Wachovia account. I pay my monthly bills and keep my savings in my PNC account and use the Wachovia for food, gas, entertainment, clothes, etc. Right now I'm saving ~$900 a month. My company provides no matching on their 401k and I am currently debt free. I have no investments, retirement accounts, etc. What should I do BFC?
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Oct 27, 2010 23:37
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