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problematique posted:I feel like I'm saving to much for retirement, am I? I'm about on par with you (25, make 65k, 16k saved) and I save even more . In my opinion, if you're not depriving yourself of having fun in order to save, you're doing fine. It certainly can't hurt to save "too much" as you say
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Mar 9, 2011 18:49
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Update from a few pages back. I was talking to my girlfriend about her IRA and showed her the statements demonstrating that the fund manager hadn't touched her account (except to take out his management fees) in over 30 months. He finally called back today. After stumbling through a few minutes of not knowing what was going on (why did you call back without looking it up), she confronted him about the management of the account. He was very accusatory and actually said "Well, YOU get statements too." He then had the balls to ask her if she would like to upgrade her management level (and his fee) to the next level to improve the management of the account. It's true that she is partially, even mostly, to blame for not looking more closely at her statements, but all I can say is huevos grande. After that, she's out. I am currently looking up all the options that I can think of where to roll this account over to. I've checked and am considering:
I'm inclined to go with Vanguard but I'd like to check as many of the reasonable options as there are. Am I missing anyone worth looking at? KennyG fucked around with this message at 04:05 on Mar 10, 2011 |
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Mar 10, 2011 03:13
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alreadybeen posted:I'm curious what everyone saves towards retirement here. I aim to save 16,500 in my 401k (no match) and $5,000 in my Roth IRA - about 20% of my gross salary now. I think I've done a decent job considering I haven't had the best of luck with jobs in the past few years - my first job was September 2008 - March 2009 and paid very well so I managed to save the full $16500 for 2008, about $12,000 for 2009. Got my next job in September 2010 and managed to put in about $12,000 before the end of the year there too. I've managed the full $5k in the Roth every year since 2007. Am putting $1375 in my 401k every month so I should hit the $16500 limit in 12 months if this job works out.
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Mar 10, 2011 05:51
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Chin Strap posted:% is a bit silly of a metric, especially if you plan on living in retirement on much less than your current salary. Can you suggest any better metric? In general people are going to want to continue the same standard of living in retirement as their working lives and if two people have each saved at the same rate, then their post income retirement should be the same fraction of the income. Obviously there are other factors, but percent of gorss is going to give the best sense.
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Mar 10, 2011 06:09
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KennyG posted:I'm inclined to go with Vanguard but I'd like to check as many of the reasonable options as there are. Am I missing anyone worth looking at?
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Mar 10, 2011 06:59
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The only other metric that would make sense would be a straight $ amount. Something like, "I plan to save $16000 this year." I know a couple of people who plan to have a specific dollar amount of investments, so for them it might make sense to look at it this way. Personally though, I tend to pre-budget savings. I can look at my salary and not even consider 50% due to federal taxes, state taxes, social security, and savings. It keeps me honest with saving as well since what I contribute increases along with my salary.
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Mar 10, 2011 14:26
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alreadybeen posted:Can you suggest any better metric? In general people are going to want to continue the same standard of living in retirement as their working lives and if two people have each saved at the same rate, then their post income retirement should be the same fraction of the income. Obviously there are other factors, but percent of gorss is going to give the best sense. Bob is 36 years old. He has no money saved for retirement. He just got a new job and is now making $40k/year. He got married a year ago and has a new baby. His wife works part-time and makes $14k/year. He wants to buy a house in five years. Sarah is 22 years old. She just graduated from MIT with $100k of student loan debt. Her new job pays $90k/year. She lives in a tiny apartment and doesn't own or need a car. She has no retirement savings at all. Dan is 29 years old, married with two kids, and has a solid career job he's held for six years now. He makes $70k/year and his wife makes about $75k a year as a mid-level manager. They have two kids, but because they were frugal and started saving young, they already have $140k saved for retirement. Dan also has a living trust his grandpa set up for him when he was a kid, and his wife expects to inherit $80k from her elderly mother (who has no other heirs and is 90). Each of these scenarios calls for wildly different retirement savings plans. If each of them simply reported what percentage of their current income they were saving for retirement, you'd have three totally different figures and no basis to compare them or extract any sort of meaning from them. Unless you had a sample size of several hundred at least, there is no reasonable conclusion you could draw from this kind of data. I think it's an interesting and useful question to ask people how much they've saved, how much they hope to save, and what their life situation is that informs those decisions. With the full answer, including dollar amounts and what their scenario is and has been, their age, other assets, etc., you can build profiles that help to understand how to plan or arrange your own retirement savings. But simply asking for a set percentage of income, on its own, is just not really useful.
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Mar 11, 2011 19:31
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I think you guys are taking it too seriously. He was just asking a simple, "Hey what do you guys save?" question. If he had asked such a detailed question, I bet hardly anyone would go to the trouble of typing their entire financial history/future out on a public forum. Everyone here is different, but you can take a guess that most people that post here are in the late 20s without large inheritances coming and a salary between $40-70k. He was just looking for a ballpark to have a light discussion. Or I could have totally misinterpreted his question.
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Mar 12, 2011 07:21
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Your debts and relative income would influence why you only saved so much a year but which gives more information: Joe saves $15,000 a year for retirement. Joe saves 5% a year for retirement. The first scenario looks like Joe is pouring money into his retirement and working pretty hard to ensure he has a comfortable future. The second figure shows that Joe may have a hard time adjusting to a retirement income. The big problem most people have in saving for retirement is the number of assumptions and projections it takes to look down the road 20, 30, 40 or more years and figure out what they will really need. What if inflation averages 4%, what if it average 2%? This will change the absolute number you need by more than double. What if you die at 70 and only need retirement income for 3 years? What if your partner has a pension that gives you both $50k/yr (inflation adjusted) for life? If you tell a 62 year old and a 22 year old that they will need $2,000,000 for retirement you may be grossly underestimating or overestimating. But 10-15% for 40 years for most people (without inheritances or other incomes) is generally what is required to be able to maintain your standard of living.
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Mar 12, 2011 19:06
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Whole lotta questions here, I apologise. Lots of advice I see uses the principle that equity investments should be roughly split by market cap e.g. weight the US heavily because it has lots of companies. This seems counterintuitive though; assume I'm just investing in a selection of national index funds, then I'm essentially just summing a bunch of random variables each with their own expected value & variance and various degrees of correlation. Presumably then I should be selecting whatever gives me an expected return/volatility combo I'm happy with. Why would market-cap weighting help this goal? Is it being used as a proxy for variance? My gut feeling is that total variance would be lowered by investing in a number of countries with distinct political/cultural/etc effects much more than investing in countries with lots of firms; is this invalid? Is there somewhere I can read about this? Plucking numbers out of my rear end, say the US has 1 million listed companies that a total-market index would track. If you had a half-market index that picked 500k of them at random to track, would there really be any significant difference at all to variance?
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Mar 12, 2011 23:12
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k3nn posted:Whole lotta questions here, I apologise. Most indexes are described by 2 axes: 1) Small, Mid, or Large Cap (the average size of the constituent companies) 2) Growth, Value, or Blend (the type of companies selected for the index). So you can have a Small-Cap Growth, or Large-Cap Value, or Large-Cap Blend, etc. Market weighting has less to do with how MANY companies, and more to do with the average size of companies and their collective capital worth. If you have an index of 100 companies with an average capitalization of 1 billion each, your total market cap is 100 billion. If you have an index of 10 companies with a mean market cap of 10 billion each, the total cap is again 100 billion. The first index would probably be described as a small-cap index, the latter as a large-cap index. As far how to weight different portions of the world in your international investments (or how to weight different sized companies within the same country), many people follow a strategy of weighting the amounts to different countries based on the overall relative market capitalization of those countries in the world market. There are some other strategies such as weighting countries based on GDP, etc. The reason market cap is probably most commonly used weighting system is because it makes indexing very easy.... why you ask? Lets say you start off your index based on world market cap as follows (pulling numbers out of my rear end here, but they're probably fairly close to accurate based on today's world capitalization): 40% USA 25% Europe 10% Japan 15% Emerg Markets 10% Other (Canada, Australia, etc) Lets say 10 years later, the market capitalization has shifted such that now USA is only 30% of the world market weight, and the weight has shifted to other countries accordingly. You might end up with a breakdown something like this: 30% USA 30% Europe 10% Japan 20% Emerg Markets 10% Other The nice thing is (assuming your index itself is the same total size), you didn't have to do any buying and selling to rearrange your portfolio to keep track of the weighting. Why? Because as the underlying asset prices fluctuated, your breakdown of their weightings fluctuated accordingly.
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Mar 13, 2011 06:11
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On that note, I'm still looking for suggestions for good foreign ETFs to invest in.
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Mar 13, 2011 07:16
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Zero The Hero posted:On that note, I'm still looking for suggestions for good foreign ETFs to invest in. VT or VEU?
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Mar 13, 2011 07:32
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flowinprose posted:*snip* Thank you for your post. I understand the idea of market cap weighting and how to carry it out. What I don't understand is why it's a desirable strategy to use. If I could look at (hypothetical) figures and see that historically the total US market grows at 8% pa with standard deviation 4%, and the total German market grows at 10% pa with sd 2%, why would I care at all about market cap in those countries? I can see that market cap might have an impact on variance, but as I tried to portray in my previous example my gut feeling is that if you made an index of half the companies in the US (so ~50% of the market cap) its growth would be pretty much identical in terms of expected value & variance simply due to the size of the market. However a market-cap weighting system would only weight it half as much even though it's the exact same random variable. What am I not seeing?
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Mar 13, 2011 18:09
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Hi there financial gurus, I apologize if this is not the right place to ask, but I thought you all would have some good ideas. I currently have a checking account that gives me 4% interest on balances up to $35k. So what I have been doing is using that account as both a savings and checking account because the interest rate is so good. (My coworkers and I are using this bank and we have been keeping a close eye on any fees that may pop up, as this rate is almost too good to be true.) However I'm reaching the $35k mark, so could anyone recommend a good high yield savings account? Is there anything generally "wrong" or risky about keeping that much money in a checking account? Another vaguely related question: I have $7k in my Scottrade account which I originally wanted to daytrade with, but my schedule is just not compatible with it, and so the funds are just sitting there doing nothing. Any suggestions what I should do with it? Thanks for your ideas and help, I desperately need it as I suck at finances!
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Mar 13, 2011 22:33
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hootimus posted:Hi there financial gurus, I apologize if this is not the right place to ask, but I thought you all would have some good ideas. The Long Term Investing Thread and Day Trading are not compatible. The shortest long term window would be about 5 years and you are talking about 1hour -1 week trades? Yea, go find the Stock Picking megathread for that. As to your first question... where is you bank and where can I sign up? 4% is about 3x better than about any of the internet rates you'll get right now. Doubly dubious for a checking account. Most places won't even give you half that kind of rate even if you agree to lock up your money for 3 years. I'm not saying it's not true, just that it's not true;-). There are no real no-no's for what to watch out for as long as you make sure that it's at least FDIC insured and that you are putting it into a savings account or money market account with proper liquidity. Most people here would suggest SmartyPig or ING. It all depends on how much as over a certain threshold SmartyPig drops down a lot. Try Ally or ING.
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Mar 13, 2011 22:54
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KennyG posted:I'm not saying it's not true, just that it's not true;-). There are rewards checking accounts out there at local banks that will net you around 3-4% if you use your debit card X amount of times per month and have a direct deposit, and various other hoops. It's not that weird.
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Mar 13, 2011 23:02
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KarmaCandy posted:There are rewards checking accounts out there at local banks that will net you around 3-4% if you use your debit card X amount of times per month and have a direct deposit, and various other hoops. It's not that weird.
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Mar 13, 2011 23:38
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k3nn posted:Thank you for your post. I understand the idea of market cap weighting and how to carry it out. What I don't understand is why it's a desirable strategy to use. If I could look at (hypothetical) figures and see that historically the total US market grows at 8% pa with standard deviation 4%, and the total German market grows at 10% pa with sd 2%, why would I care at all about market cap in those countries? I can see that market cap might have an impact on variance, but as I tried to portray in my previous example my gut feeling is that if you made an index of half the companies in the US (so ~50% of the market cap) its growth would be pretty much identical in terms of expected value & variance simply due to the size of the market. However a market-cap weighting system would only weight it half as much even though it's the exact same random variable. What am I not seeing? Okay I see now that you're asking a different question. One reason that cap weighting is used is as I mentioned in my previous post: it's easier to implement, since there are a lot lower expenses involved. Another reason its done is to avoid "overbetting" on small companies vs. large companies (or larger countries vs. smaller countries). As far as your suggestion of picking a sample of half of the companies in one country, yes, as long as you had a pretty representative sample it will track the index almost the same. One problem with that is you have to be very careful with the way you pick your sample. If your ratio of large companies to small companies is skewed, that will alter the way your index will track. If your ratio of one industry to another is off, once again your index will track differently than the overall country itself. Why go through all the trouble of bothering to pick carefully, when you can just invest in essentially everything available and do it on a market-weighted basis so that you're certain you're not overbetting on one particular industry/country/size of company? I don't really know if it's using market cap as a proxy for variance as much as it is just a logical way to place your bets in order to avoid overbetting on a particular sector/country/etc. flowinprose fucked around with this message at 01:52 on Mar 14, 2011 |
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Mar 14, 2011 01:49
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KennyG posted:The Long Term Investing Thread and Day Trading are not compatible. The shortest long term window would be about 5 years and you are talking about 1hour -1 week trades? Yea, go find the Stock Picking megathread for that. Sorry I was not completely clear about my scottrade account, I don't want to do short term trading with it, I would like something long term such as an IRA or mutual fund, it's just sort of overwhelming looking at all of the options and I'm having a hard time getting a bead on things.
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Mar 14, 2011 03:25
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hootimus posted:Thanks for the info. The bank is Allegiance Credit Union by the way. Who the hell are these banks and how do they stay in business with "requirements" like that to earn 4% interest. Holy poo poo. Granted, its only paid on $20k but still!
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Mar 14, 2011 04:04
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Nifty posted:Who the hell are these banks and how do they stay in business with "requirements" like that to earn 4% interest. Holy poo poo. Granted, its only paid on $20k but still!
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Mar 14, 2011 05:08
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cowofwar posted:Well technically they're credit unions and not banks. Credit unions always offer better packages at the price of convenience. It's not just credit unions. Check around at your local banks, at least here in the Boston area it's reasonably common (Cambridge Savings Bank and Leader Bank are two that I know of) for local banks to offer 3% or so on checking accounts with a requirement that you sign up for direct deposit, use your debit card at least some number of times per month, and get e-statements instead of snail-mail ones. I'm pretty sure this sort of checking account is a loss-leader for smaller local banks. I'm curious what will happen if the new debit card fee restriction is passed.
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Mar 14, 2011 08:02
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This is all kind of overwhelming. I started a job today where I make 33k a year and I'm 26. My company offers a 403b plan and will match up to 3%, I initially was going to put 5% into it but I'm thinking 10% will be better? I have a very large amount of student loans, it would be in my best interest to put money towards paying them off before saving more for retirement, right? The investment fund company is Fidelity so going forward with the mix of investment options the balance listed by alreadybeen for revengeanceful on the last page would be good if I want to have an aggressive mix. The list was: 15% Bond Index 50% SP500 Index 35% Intl Index If I wanted to go less risky moving some of the percentage towards bonds would be better?
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Mar 15, 2011 00:35
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Quid posted:This is all kind of overwhelming. I started a job today where I make 33k a year and I'm 26. My company offers a 403b plan and will match up to 3%, I initially was going to put 5% into it but I'm thinking 10% will be better? I have a very large amount of student loans, it would be in my best interest to put money towards paying them off before saving more for retirement, right? The general consensus is to pay off student loans first, especially if the interest is high (~6.8% or so), since you get "guaranteed" return on your money, vs trying to get 6.8% in today's market maybe. If your loans are really old and low interest (e.g., 1.5% of something) than obviously that would change the calculation. I keep thinking about this, since I'm in the same boat, and I have to say I'm more confused than I was before. I don't think it is as simple as return on investment in that way. Two considerations are trying to lock in your $5K payment to a Roth IRA while you can. The younger you are, the (in general) more attractive Roth IRAs are. You are limited to $5/year, and so if you miss a year, you can't really "go back" and back fill. So that is one consideration. But the second consideration is that if I put money in the student loans, than yes I do get a "guaranteed" return of what the interest rate is. But putting money in the market will payoff over time, since I would expect that money to grow over time. So it seems to me at least that comparing the interest of the student loans with the yearly return on the market is misleading. What I need to do is compare the interest on the student loans over their lifetime (which is probably 10 years), with the expected return from the market over my entire working life. So if you're 25, and you retire at 65, then you'd want to compare the savings in interest over 10 years with the expected return on that same money over 40 years. If you assume 6.8% student loan, and 6.8% return in the market (not unreasonable over the long term I would say), than over 10 years the student loan interest+principal would be $19,700, whereas the value of that same $10K in the market would be $150,642. So instead of paying off your student loans, it would be better to buy into the market, since the stocks you buy now will be kept for 40 years, whereas the loan will be over in 10 even if you make the minimum payment. What am I missing here? I think I'm missing something here.
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Mar 15, 2011 00:47
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My significant other recently quit her job and moved to another job... she's 28 and she built up a bit of money in her 401k. She has an existing IRA account with Scott Trade. Rather than doing a 401k rollover to her new 401k, she should roll it over to her IRA account, right? Also, she has about 40K in her account, if she rolls all of it over to an IRA, she can still make a contribution for 2010 into her IRA and get a tax deduction, right? Mister Fister fucked around with this message at 03:23 on Mar 15, 2011 |
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Mar 15, 2011 03:00
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gp2k posted:What am I missing here? I think I'm missing something here. You're looking at it incorrectly with your timeframes, mostly. Here's the two possible situations that are going to occur: You'll pay whatever you can on the loan in an effort to get rid of it as fast as possible, or you pay the minimum on the loan (since you have to) and invest the rest in the market. Therefore, the only considerations you care about are what your money in the market does for the life of the min-pay loans. Because of this, you really can look at it directly. If the money in the market is making more than the cost of keeping the loan, you should min pay the loan and put as much money as you can in the market. The question is how reasonably you can be assured that you'll beat the market, and that's where the consideration comes in for the loans. 6.8% is a fantastic 0 risk rate, so the usual recommendation is to pay it off. That said, the market had double digit returns last year, so YMMV. Edit: Two quick points: First, obviously there are other considerations such as IRA investment windows that need to be taken into account. You do need to consider the lifetime growth potential of these vehicles since you can't get the money in later. This applies to a lesser extend to 401(k)/403(b) accounts as well. Second, none of this is an all or nothing proposition - you can obviously split the money and pay slightly into both the loan and the market. One thing I've heard recommended is to split your investing strategy taking the loans into account. Usually it's recommended that you split your money between equities and bonds, but in this case since you're looking at a locked 6.8%, take the money you would put in bonds and pay off the loan. Therefore, if you were going to be 80/20 equities in bonds and had $1000 to invest, put $800 in equities and use the rest to pay down the loan. I'm guessing that most people dealing with student loans wouldn't have an income portion of their investments, but obviously that should go to the loan before the bonds should (to the point that I'd close that position entirely to pay the loan down). The risks on this are if the market swings, you'll swing with it since your hedge won't be in your investment account, so you need to have the stomach to take the hits or the brains to mentally incorporate the 6.8 return into your averages. Emotional/unlucky investors might be better off with all or nothing. T0MSERV0 fucked around with this message at 12:28 on Mar 15, 2011 |
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Mar 15, 2011 03:29
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Mister Fister posted:My significant other recently quit her job and moved to another job... she's 28 and she built up a bit of money in her 401k. She has an existing IRA account with Scott Trade. Rather than doing a 401k rollover to her new 401k, she should roll it over to her IRA account, right? There's nothing that says that she should roll the account over at all, but generally it's recommended that it be rolled over into an IRA because they have the ability to offer better investment options with lower costs (401k plans stick you with what they offer and you'll like it). If she really likes her new 401k and wants to put the money there, there's nothing wrong with that, and if she really likes her old 401k she can leave it alone. I'd just be surprised if either of those options offered lower cost/higher variety investment options than moving the money to her IRA. Rollovers do not count at all towards the yearly maximum investment amounts, so yes, you can still contribute as if there was no rollover and take the deduction as you normally would.
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Mar 15, 2011 12:32
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T0MSERV0 posted:There's nothing that says that she should roll the account over at all, but generally it's recommended that it be rolled over into an IRA because they have the ability to offer better investment options with lower costs (401k plans stick you with what they offer and you'll like it). If she really likes her new 401k and wants to put the money there, there's nothing wrong with that, and if she really likes her old 401k she can leave it alone. I'd just be surprised if either of those options offered lower cost/higher variety investment options than moving the money to her IRA. Thanks a lot!
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Mar 15, 2011 12:56
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i ran the numbers on this and found something shocking. Because of the student loan interest deduction, if you invest your refund of that money from a 25% marginal bracket you are better off in a 30 year plan vs max payoff if you can get .78 of your student loan interest in the market. this means for a 6.8% student loan you only need about 5.3% return. If your bracket is higher this only improves. Someone making 250k in the 33% bracket would need only 4.73% to beat their loan on a 30 year horizon with 6.8%. its a long term bet and it's certainly a high risk for reward scenario but its not as cut and dry as evaluating just the interest rates.
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Mar 15, 2011 15:30
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KennyG posted:i ran the numbers on this and found something shocking. Because of the student loan interest deduction, if you invest your refund of that money from a 25% marginal bracket you are better off in a 30 year plan vs max payoff if you can get .78 of your student loan interest in the market. this means for a 6.8% student loan you only need about 5.3% return. If your bracket is higher this only improves. Someone making 250k in the 33% bracket would need only 4.73% to beat their loan on a 30 year horizon with 6.8%. its a long term bet and it's certainly a high risk for reward scenario but its not as cut and dry as evaluating just the interest rates. Someone making 250K/year can't deduct ANY student loan interest. The deduction phases out for a single tax-filer from 60-75k in income. If you make more than 75k/year you can't take the deduction at all. Also the maximum deduction in any case is 2.5k, so if your student loan interest is over that amount that's still the most you can take.
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Mar 15, 2011 17:42
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KennyG posted:Someone making 250k in the 33% bracket would need only 4.73% to beat their loan on a 30 year horizon with 6.8%. its a long term bet and it's certainly a high risk for reward scenario but its not as cut and dry as evaluating just the interest rates. The student loan interest deduction starts to cut off at 60K/120K, so no one in the 28%+ bracket is going to be able to take the deduction. Basically DINKs and single people (especially in high cost areas) get shafted. I think the best plan for 6.8% loans is to overpay enough to get the payoff period down to 10-15 years and put the rest in the market. This way you are somewhat hedged. This is for people with a lot of loans. If you're paying less than $100 a month in student loan interest the differences in payoff strategies are really negligible. One HUGE thing in paying off vs investing is that the money you invest is always available, whereas money you pay off towards your loan is gone. Your "beat my student loan interest" funds can double as your emergency fund. Should you ever need to just need or want to pay the loan off (say for getting your DTI down to buy a house), you can pull money out and do it. Realjones fucked around with this message at 18:03 on Mar 15, 2011 |
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Mar 15, 2011 17:43
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Realjones posted:
Point taken. I don't know why I didn't think to mention that technicality, since I actually do it myself in order to be able to contribute fully to a Roth IRA. The personal exemption and standard deduction won't help you with this idea, though, since they are "below the line" deductions and don't affect AGI. The 401(k)/Traditional IRA deductions would work since they're "above the line." Really though I think the only reasonable argument (which you also make in your post) against paying off 5+% interest student loan debt is liquidity. As you stated, making prepayments on the loan locks that money away whereas putting it into a Roth IRA or even 401k would allow you to pull money back out if needed.
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Mar 15, 2011 17:58
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You're right on the AGI thing so I edited that out so as to not confuse people. There are "back doors" to contribute to a Roth IRA regardless of how much you make: http://highearnersclub.com/roth-ira.html It's way simpler to just up your 401(k) to meet the limits if you don't make too much over the limits, but the loopholes are there.
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Mar 15, 2011 18:06
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Is it a good time to pile money into Japan equities/index now or in the next few weeks. Everything looks so incredibly cheap. I was going to invest earthquake but now the prices are even more attractive.
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Mar 15, 2011 20:05
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problematique posted:Is it a good time to pile money into Japan equities/index now or in the next few weeks. Everything looks so incredibly cheap. I was going to invest earthquake but now the prices are even more attractive. Check out http://forums.somethingawful.com/showthread.php?threadid=3259986 instead. Content: I just created a Roth IRA brokerage account at Vanguard. I picked the brokerage since I'm starting with $3K and want to be able to pick a fund mixture based on ideas from the Four Pillars (currently have 3 funds: us index, int'l index, and BND). I was surprised to find how complex it is to make purchases though. I am planning to automatically invest $416/mo, and was hoping it could just come out of my checking on the 1st of the month and auto-buy ETF based on a percentage or something. But it seems that I have to auto-buy the money market fund, then log in and manually make the trades each month. Am I missing something? BTW this thread is extremely helpful.
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Mar 15, 2011 20:29
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gp2k posted:I just created a Roth IRA brokerage account at Vanguard. I picked the brokerage since I'm starting with $3K and want to be able to pick a fund mixture based on ideas from the Four Pillars (currently have 3 funds: us index, int'l index, and BND). That's about all you can do, because buying an ETF is like buying a stock. You have to set up the buy orders yourself, no fractional shares, etc. With only 3k for now I would just stick with a Target Retirement fund for now, which will provide the same sort of slicing, but personally I'm just too lazy to deal with ETFs.
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Mar 15, 2011 20:33
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Chin Strap posted:That's about all you can do, because buying an ETF is like buying a stock. You have to set up the buy orders yourself, no fractional shares, etc. With only 3k for now I would just stick with a Target Retirement fund for now, which will provide the same sort of slicing, but personally I'm just too lazy to deal with ETFs. Something that attracted me to the ETFs was that they had slightly lower expense ratios than the primary funds. But because of the "no fractional shares" thing and having to manually purchase the funds, I'm worried that my money will sit around in the money market account longer than necessary (and some is always there because there isn't enough to buy another share). So many the "savings" of ETFs is a wash?
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Mar 15, 2011 21:34
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It depends on how much money you have invested. If you have a small number of shares and are going to regularly buy more shares, commission will be much more than any expense fees.
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Mar 15, 2011 21:41
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taqueso posted:It depends on how much money you have invested. If you have a small number of shares and are going to regularly buy more shares, commission will be much more than any expense fees. Good point in general. In my case I'm at Vanguard buying Vanguard ETFs, so no commission. But yeah, otherwise that'd kill you.
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Mar 15, 2011 22:19
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