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A a US investor, I am 100% into investments that will benefit from an increasing money supply and loss of confidence in fiat currency. Bernanke's #1 goal is to avoid deflation and is doing everything in his power to inflate asset prices. My investments are about 55% precious metals, 10% agriculture and 35% oil. The ag stocks payout mediocre dividends but the oil stocks are paying about 4% on average.
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# ? Dec 6, 2010 22:28 |
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# ? Jun 13, 2024 07:04 |
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When you say 100%, do you mean in a fun investing account, or retirement savings too? Also you should probably look diversification 101 if that that is truly your total exposure.
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# ? Dec 6, 2010 22:37 |
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poofactory posted:A a US investor, I am 100% into investments that will benefit from an increasing money supply and loss of confidence in fiat currency. Bernanke's #1 goal is to avoid deflation and is doing everything in his power to inflate asset prices. Despite Bernanke's best efforts, inflation (in the U.S.) is currently almost non-existant, so what happens if he fails and we see long-term deflation in the U.S. similar to what Japan has seen over the last 30 years?
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# ? Dec 6, 2010 22:52 |
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flowinprose posted:Despite Bernanke's best efforts, inflation (in the U.S.) is currently almost non-existant, so what happens if he fails and we see long-term deflation in the U.S. similar to what Japan has seen over the last 30 years? How can he fail when he determines the money supply? If he prints less money and the economy recovers then there will be demand for everything I've invested in and the price will go up. If the economy gets worse and he prints more then the value of my investments will be inflated. Have you charted commodities in yen? They have performed quite well.
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# ? Dec 6, 2010 23:03 |
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poofactory posted:How can he fail when he determines the money supply? If he prints less money and the economy recovers then there will be demand for everything I've invested in and the price will go up. If the economy gets worse and he prints more then the value of my investments will be inflated. Most (all?) of the interest rates he controls are already at or near zero, how is he supposed to increase the money supply any more than he already has? Despite this fact, the recovery we have seen so far has been sluggish at best. Inflation is so far nowhere in sight. I'm not saying he's going to fail, but at this point I don't think you could define his policies as a success (other than to say that he perhaps kept us from making GBS threads the bed altogether). quote:Have you charted commodities in yen? They have performed quite well. No, I haven't charted anything. I'm asking you (non-rhetorically) what you think will happen to commodity prices if his attempts to "RE"-inflate the U.S. economy fail and we end up with Japanese like deflation over a period of multiple decades. I'm not professing to be an expert. I'm interested in what you think about these things because if you're pursuing such an unorthodox strategy for the long-term, I would have to assume you must know something I don't, and I'm always eager to learn.
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# ? Dec 6, 2010 23:23 |
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flowinprose posted:Despite Bernanke's best efforts, inflation (in the U.S.) is currently almost non-existant, so what happens if he fails and we see long-term deflation in the U.S. similar to what Japan has seen over the last 30 years?
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# ? Dec 7, 2010 01:24 |
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abagofcheetos posted:have you ever seen this chart No I haven't seen that chart. Do you have something similar to this for long-term (20+ year) periods? That chart makes perfect sense assuming commodity prices fluctuate a lot more than the CPI over short term based on speculation, but since we're in the long-term investing thread...
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# ? Dec 7, 2010 02:08 |
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abagofcheetos posted:have you ever seen this chart Doesn't the CPI by its very nature measure the things which are skyrocketing? Also, for those of you who watch the commodity markets; oats, sugar, wheat and cotton have had major price increases this year due to lovely harvests, drought in eastern Europe, India being cautious with their exports and mis-calculated harvests. In fact, I can explain almost all of those increases through causes not related to inflation.
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# ? Dec 7, 2010 04:34 |
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80k posted:USAA is great for banking and insurance, but there is no reason to use their investment products. Their investing division exists out of necessity to offer something to their members, but if you know enough to be participating on a financial forum, then you might as well go with the best. Vanguard is miles ahead of the competition when it comes to great, low-cost offerings for every asset class that an ordinary investor needs. To be quite honest, I don't know much. I've read a few books, but the extent of my financial education growing up was my parents handing me 'become a millionaire' nonsense books, and only recently have I started reading others. I've just started some of the recommendations from the Newbie thread. I'm reading up on Vanguard now.
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# ? Dec 7, 2010 05:43 |
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Cheesemaster200 posted:Doesn't the CPI by its very nature measure the things which are skyrocketing? It would seem that no, it doesn't. It uses some goofy basket of goods formula that is dominated by housing (medical care only counts 6%). Besides, according to the CPI figures, in the 12 months ending October food has only increased 1.4% Cheesemaster200 posted:In fact, I can explain almost all of those increases through causes not related to inflation. If something costs more now than it did before that literally the definition of inflation. That is like saying the cause of inflation is not related to inflation. Whats better about that graph, if rare earth elements were included their percentage increases would be in the 100s.
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# ? Dec 7, 2010 06:06 |
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abagofcheetos posted:It would seem that no, it doesn't. It uses some goofy basket of goods formula that is dominated by housing (medical care only counts 6%). Besides, according to the CPI figures, in the 12 months ending October food has only increased 1.4% I think there's an argument to be made that certain demographics (old people, young people, poor people) have been hit harder by commodity price swings and changes in medical/education costs because of their spending patterns, but that's not enough reason to dismiss the overall CPI. For example, consider the fact that wages, which are a larger input than commodities in most US businesses, have been largely stagnant. Capital costs are also relatively low and rent has stagnated or dropped in the last few years. Changes in commodity prices or specific sectors like education or healthcare only tell part of the story and don't necessarily imply inflation in the context of the economy as a whole.
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# ? Dec 7, 2010 06:37 |
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AreWeDrunkYet posted:I think there's an argument to be made that certain demographics (old people, young people, poor people) have been hit harder by commodity price swings and changes in medical/education costs because of their spending patterns, but that's not enough reason to dismiss the overall CPI. For example, consider the fact that wages, which are a larger input than commodities in most US businesses, have been largely stagnant. Capital costs are also relatively low and rent has stagnated or dropped in the last few years. Changes in commodity prices or specific sectors like education or healthcare only tell part of the story and don't necessarily imply inflation in the context of the economy as a whole. Well I wouldn't say I am totally trashing the CPI, I just have issues with a figure that is so readily changed and modified over time. I agree with many of your points. We are in a strange time for pricing. The price to purchase a house is down, but literally everything else you would do to a house, from the energy costs to putting in new plumbing, is up. Prices for big rear end LCDs are way down, but gasoline is significant higher. Wages (other than government) have stagnated, but it costs more to feed your family. I still personally feel inflation is being under reported by a fair margin, but I am definitely aware and sympathetic to the deinflation argument.
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# ? Dec 7, 2010 18:05 |
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If you look at the long term trends, salaries and wages are stagnant and real costs are rising. I expect this to continue. Perhaps in 10 years people will still think $50k is a good salary as many did 10 years ago but food, housing, energy, health care and education costs will all be significantly higher. Government spending and private sector bailouts will likely continue for the foreseeable future. This will be paid for by deficit spending and our new primary government lender is, surprise, the Fed. I really do not see a good argument against commodities.
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# ? Dec 7, 2010 18:26 |
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I hold a small amount of commodities and a tiny position in TIPS (sold nearly all of them this year) to hedge my bets, but my belief is that high inflation in the near future is a low probability event. Inflation like we had in the 70's hardly worth worrying about in the foreseeable future... the conditions are just not here this time. I'm firmly in the deflationary camp, but remaining diversified. Poofactory's firmly in the inflationary camp and putting all his eggs in one basket... and based on an assumption that money supply increase will lead to high inflation, a theory at best. And if right, it can take an extraordinarily long time for his winnings to materialize given the deflationary forces that are out there. I hope he has a lot of patience and/or is young enough that his financial assets right now are a pittance compared to his human capital. Few investors trusted the government less than Harry Browne and even he only advocated 25% of an investor's portfolio to benefit from inflation and loss of confidence in fiat currency. And he offsetted that with 25% in longterm treasuries in case he was completely wrong. Harry Browne was much smarter than poofactory. Regardless of whether poofactory's beliefs are well-founded, he is an example of horrible financial planning. 80k fucked around with this message at 19:59 on Dec 7, 2010 |
# ? Dec 7, 2010 19:56 |
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80k posted:Putting money into the S&P500 is neither good nor bad. It's just a good vehicle for exposure to US stocks. You have plenty of US stocks through your target retirement fund. If anything, Vanguard target retirement funds are overweight US stocks. The last thing you need is to add an S&P500 fund. Get rid of it. Get rid of it because it's domestic? Or get rid of it because they're stocks? And then where do I put the new contributions? I simply don't know that much about foreign markets. If I decide to ramp up my foreign investment, should I be looking at large cap European and Pacific funds? Should I bias towards Europe or the Pacific? Or is there another market worth looking into? I come across articles about spelling doom and gloom with European countries having to get bailed out and passing austerity measures. On the other hand, is this a sign that they're smart enough (way smarter than the U.S.) to fix their economic problems, and it's a good time to buy now?
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# ? Dec 7, 2010 21:47 |
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Rekinom posted:Get rid of it because it's domestic? Or get rid of it because they're stocks? And then where do I put the new contributions? you don't need to add the S&P500 fund because you have US broad market exposure in the target. Just spread it across the rest of your investments if you want or add to your international. Total International Index fund is the best way to get international exposure. Add FTSE Small Cap ex-US for small cap international if you want.
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# ? Dec 7, 2010 21:52 |
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80k posted:you don't need to add the S&P500 fund because you have US broad market exposure in the target. Just spread it across the rest of your investments if you want or add to your international. Total International Index fund is the best way to get international exposure. Add FTSE Small Cap ex-US for small cap international if you want. I'm thinking of the FTSE Small Cap, but what are your thoughts on the Emerging Markets Stock Index Fund (VEIEX) instead? A lot of it depends on China, I suppose, but if that's where the money's at...
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# ? Dec 7, 2010 22:07 |
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Rekinom posted:I'm thinking of the FTSE Small Cap, but what are your thoughts on the Emerging Markets Stock Index Fund (VEIEX) instead? A lot of it depends on China, I suppose, but if that's where the money's at... Total International has 25% in Emerging Markets. If you want more, then add VEIEX. If anything, there is an inverse relationship between economic growth and investor returns. See Bernstein. I made a decision awhile ago to add an emerging market component and I am sticking to it, but not because "china's where the money is".
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# ? Dec 7, 2010 22:20 |
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poofactory posted:A a US investor, I am 100% into investments that will benefit from an increasing money supply and loss of confidence in fiat currency. Bernanke's #1 goal is to avoid deflation and is doing everything in his power to inflate asset prices. Will your 100% commodities portfolio strategy change prior to or after possible regulation? http://online.wsj.com/article/SB10001424052748703963704576005933072423242.html?mod=WSJ_hps_sections_business quote:
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# ? Dec 8, 2010 19:39 |
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Orgasmo posted:Will your 100% commodities portfolio strategy change prior to or after possible regulation? Position limits would also limit the short sellers as well, wouldn't they? I think the short interest is more concentrated than the long interest.
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# ? Dec 8, 2010 20:10 |
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I don't know, I'm only barely familiar with limit and short orders. Never utilized them, but I got a few books from the OP on my wishlist which which hopefully will show me how to use them in trading. I can't really get into how limits/shorts would affect each other in the commodities industry with any shred of authority. I was just curious if regulation on these types of orders would have a negative or positive impact. Either way, your exposure is huge.
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# ? Dec 8, 2010 20:48 |
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poofactory posted:A a US investor, I am 100% into investments that will benefit from an increasing money supply and loss of confidence in fiat currency. Bernanke's #1 goal is to avoid deflation and is doing everything in his power to inflate asset prices. I hope you aren't in USO or another rolling-futures type fund because if you are boy are you in for a surprise.
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# ? Dec 9, 2010 03:29 |
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poofactory posted:Position limits would also limit the short sellers as well, wouldn't they? I think the short interest is more concentrated than the long interest. or "you are not allowed to buy unless you own a warehouse to store this". heh
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# ? Dec 9, 2010 05:23 |
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DuckConference posted:I hope you aren't in USO or another rolling-futures type fund because if you are boy are you in for a surprise.
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# ? Dec 9, 2010 07:53 |
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spf3million posted:Could you elaborate? It is due to an occurrence in futures contracts called contango. http://seekingalpha.com/article/208718-watch-out-for-contango-in-commodity-etfs There might be articles that are more clear in explaining it but this is the one I could find. Contango can take a huge hit on ETF's returns because of the way commodity ETFs are designed
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# ? Dec 9, 2010 09:03 |
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Interesting, thanks
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# ? Dec 9, 2010 09:07 |
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I found out over Thanksgiving family visits that my brother has his entire retirement savings in a single fund via Primerica, the fund being European vice goods futures. I didn't know whether to cringe at Primerica, single fund, futures or the expense ratio first.
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# ? Dec 9, 2010 15:26 |
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Yeah, the USO and UNG type funds are scams and are only useful for very short term trades. I've never owned either. The PM funds hold the actual commodity, not a futures contract. My PM investments are a mix of physical metals, metal etfs and miners. My ag holdings are limited to MOO as of now though I will diversify in that area as I increase my ag weighting. My oil investments are limited to big oil companies like bp, cop, cvx, ptr and the like.
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# ? Dec 9, 2010 16:50 |
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Contango is neither a surprise nor a scam. Abnormally large contango above and beyond interest and cost of arbitrage is due to storage limitations. Avoid that by underweighting the energy sector right now if you want, but it does not make commodity futures a scam. Neither contango nor backwardation going forward predicts which side (seller vs buyer) the risk premium is on. This can only be explained in hindsight. If you want to track commodity spot prices, then commodity futures is not going to cut it. Articles showing up complaining about the evils of contango and commodity futures is sensationalizing a simple situation of naive investors not knowing what they are buying.
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# ? Dec 9, 2010 19:23 |
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80k posted:Contango is neither a surprise nor a scam. Abnormally large contango above and beyond interest and cost of arbitrage is due to storage limitations. Avoid that by underweighting the energy sector right now if you want, but it does not make commodity futures a scam. Given that they are generally marketed as a way to simply go long (or short) on a commodity when they don't perform that function at all, I think they're a bit misleading. Not to mention that from what I understand, a lot of the funds suffer from front-running when they roll over their futures contracts.
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# ? Dec 10, 2010 04:25 |
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DuckConference posted:Given that they are generally marketed as a way to simply go long (or short) on a commodity when they don't perform that function at all, I think they're a bit misleading. Yeah, front-running the GSCI used to be a huge alpha generator: http://www.google.com/url?sa=t&sour...sj03KuQ&cad=rja This is the number-one reason not to own a GSCI-tracking index fund of any kind. Basically, you're telling the whole world "hey guys, I'm going to sell this contract and buy this other contract between the 5th and the 9th of the month, just letting you know, please don't screw me over, k thanks." Personally I don't have any allocation to commodities, but if you do, definitely use something like DBC, which picks the optimum contract to roll into each time. (Disclaimer: I haven't really looked into DBC that much, just did a google search for "commodities fund optimized roll" or something).
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# ? Dec 10, 2010 05:05 |
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DuckConference posted:Given that they are generally marketed as a way to simply go long (or short) on a commodity when they don't perform that function at all, I think they're a bit misleading. Yes i agree with this. Echo 3 posted:Yeah, front-running the GSCI used to be a huge alpha generator: http://www.google.com/url?sa=t&sour...sj03KuQ&cad=rja Front running, I believe, still costs major stock indices like the S&P500 or the Russell indices 25-35 basis points per year (one reason I like VTSMX over the S&P500 index), so front-running is not a unique negative to commodity futures. Just a consideration when determining the optimum passive strategy. I have used DBC. I use Pimco's Commodity Real Return fund (PCRIX). Pimco definitely manages the rolls better than an index.
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# ? Dec 10, 2010 08:32 |
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DuckConference posted:Given that they are generally marketed as a way to simply go long (or short) on a commodity when they don't perform that function at all, I think they're a bit misleading. I was under the impression that they were typically marketed as a very short-term way to go long or short on commodities.
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# ? Dec 10, 2010 13:28 |
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I'm considering converting a Traditional IRA I have into a Roth IRA. I have lower than normal income this year, which would likely put me in the 15% bracket. I'm very close to the 25% bracket, however. Would the conversion be considered income, and possibly put me into the next bracket?
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# ? Dec 12, 2010 19:59 |
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BnT posted:I'm considering converting a Traditional IRA I have into a Roth IRA. I have lower than normal income this year, which would likely put me in the 15% bracket. I'm very close to the 25% bracket, however. Would the conversion be considered income, and possibly put me into the next bracket? While it is not added to your gross income "above the line", it is added to your income before calculation of tax owed. So, yes, for purposes of figuring how much tax you owe it is included into income. You'll pay 15% income tax on the portion you convert that falls between your current income and the top of the 15% bracket, then you'll pay 25% tax on the portion above that amount (and 28% on the portion above that threshold if you convert a large enough sum, etc). Keep in mind that you don't have to convert ALL of an IRA at one time. You could convert just a portion of the traditional in order to "fill up" your income to near the top of the 15% bracket. It would probably be wise to do at least this if your income is atypically lower this year than you expect it to be in the future.
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# ? Dec 12, 2010 20:41 |
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Im thinking about moving some money around in my RothIRA. I have a little more than 3500 in cash and I was thinking of spending it on this: http://caps.fool.com/Ticker/IDV.aspx Its a good looking ETF that pays out decent dividends. I have looked into some other ETFs and I was also thinking of going with Vanguard's Emerging Markets with some more cash. Does anyone have any opinions on this plan? or could you offer some advice as to how much of each I should get? Thanks!
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# ? Dec 13, 2010 22:00 |
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IRA and income questions ahead: I'm 25, have no income for 2010 (was studying abroad and backpacking) and may not have much of even in the future if I get accepted to a masters program I just applied for. I received around 25,000 dollars (after taxes and all that jazz) after my father passed away and I'm looking to do something other than letting the money rot away in a standard Checking/Savings account. Because of the possibility of having to pay for school in the future, I'm only willing to use about 3,000 for investments right now until I know what the future holds. A while back, I started a mutual fund IRA that is ultra low risk and pretty much isn't really making any sort of gains (wasn't expecting much). After talking with someone at my bank (USAA) I decided on converting my mutual fund IRA into a CD that will have slightly better rates while still being safe and then using 2,000 to set up a target retirement fund that would be mid-low risk. I got disconnected in the middle of the call and when I called back other people are telling me that since I have no income for 2010, I cannot contribute to the CD or the target retirement fund. Why is this? I'm still trying to get back to the original guy to see what he was thinking, but could it have to do with differences between traditional IRAs and Roth IRAs? We agreed on a roth IRA over the phone, but when I look at his recommendations online in my account, the brokerage application only mentions a trad. IRA. I haven't changed anything, but just wondering why this income thing never came up before. I mean, he asked me, but I told him I had no income and he seemed fine with suggesting roth IRAs. I'm starting to read up more on this stuff, but for now I'm pretty with it all. Income issue aside, any recommendations for someone in my position willing to spend around 3,000 and just interested in slow gains for now?
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# ? Dec 14, 2010 01:45 |
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moflika posted:I'm 25, have no income for 2010 (was studying abroad and backpacking) You must have taxable compensation to contribute to an IRA. http://www.irs.gov/publications/p590/ch01.html#en_US_publink1000230352
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# ? Dec 14, 2010 02:00 |
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Uhg, so am I basically poo poo out of luck when it comes to putting money away for retirement if I don't have a Edit: Hmmm, looks like I should really look into this whole USAA vs. Vanguard deal... Edit vol 2: Well, grad school/my future in general may lead to me living long term (as in forever) in Europe. I guess this should be obvious, but does that mean that the whole tax-free retirement (IRAs and so on) stuff will be off limits to me? I should probably wait and see where I end up long-term, before I make long term money moves. I just want to do something with this drat money! Maybe a 3 year CD here in the US would be a good idea even if I'm in the EU... Definitely got to hit some books :/ moflika fucked around with this message at 03:38 on Dec 14, 2010 |
# ? Dec 14, 2010 02:41 |
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# ? Jun 13, 2024 07:04 |
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Tax cuts will lead to the US losing its AAA bond rating. http://www.cnbc.com/id/40641123 Good time to invest in commodities if you are a US person.
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# ? Dec 14, 2010 02:47 |