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So I've got a pension (This one to be specific). It's very likely that I will for the rest of my life be in a job where I would be paying into this pension, and by the time I retire I would get 70%-75% of my "high five" annual salary. 5% of my salary is deducted from each paycheck, and my employer matches that. I become fully vested in the plan in about 14 more months. If I leave I can take the money I've put in (plus interest) out and invest it myself, or leave it in there and get benefits (1.7 x years of service x "high five" salary) when I retire. My retirement age is 66. This all seems like a pretty sweet deal to me, and I'm not sure what else if anything I should be doing. I've got an Janus Twenty account with a few grand in it, which put me through college, and my parents told me I shouldn't close the account because the fund is closed to new investors, but performance from 20 years ago doesn't really mean anything, so I'm not dead set on using that. Right now I'm paying off credit card debt, but once that's gone in ~1.5 years I'll start saving up some money on my own for a house and such, but I'm wondering how much if any I should be saving for retirement myself.
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Oct 31, 2011 22:35
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Niwrad posted:The expense ratio on the Allianz Dividend Value fund is fairly high (1.070). Is there a reason you chose it? I mistyped before, this is a new 457 plan I've enrolled in under a new employer. When I was going through the piles of information they gave us at sign-up time I felt like the Allianz fund was fairly well invested with high percentages in sectors I thought would be a fairly stable or good for long term (energy, tech, healthcare, etc.) And in the same vein, while it hasn't performed spectacular lately (like everything else), it seemed consistent. Also, it was during one of those "pick this now" sessions with HR, so there wasn't much time to decide. The VT 2040 was simply because I've read on here about the benefit of those funds if you want more of a "hands off" approach. Expense ratios are pretty high on just about everything I can pick from. The plan is administered by ICMARC in DC, so just about anything they have is on the table. Although now looking through on a quick search, the only fund that is reasonably priced in regards to expense ratio is their house-brand VantageTrust PLUS Fund at .57%. Everything else is in the 1.0%-1.50%+ range.
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Nov 1, 2011 00:42
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So glad that I came across this thread, I think it's what I've been looking for to get some help with my investments. I'm 29 years old and have been at my current job for 4.5 years, currently making about $65k. I worked a previous job for 2 years, this employer didn't have any retirement benefits at all. My current employer matches dollar for dollar up to 6% to my 401k. I've contributed a minimum of 6% to my 401k over the last 4 years and am currently contributing 14% in addition to the 6% company match (the percentage has fluctuated over time). Each year, my company also does a profit sharing distribution that we have the option of taking as cash, 50/50 split between cash/401k, or all to 401k; this is usually about $2000 and I've always put it into my 401k, never taken any cash payout from it. I've also contributed the yearly maximum to a couple different Roth IRAs each of the years I've been employed. I used to do this as a lump sum once a year but have since switched to a monthly contribution of $416.66. I feel like I've done okay thus far, according to Mint, my investments are up a little over 11% and are currently worth about $81k. I've never really paid proper attention to getting well-diversified and making sure things are in order, which is why I'm here. The current picture is: Fidelity 401k: $55,611 (88.25%/$49,078 to Fidelity's Index Equity Fund (S&P 500), 11.75%/$6533 to company stock) Fidelity Roth IRA: $20,008 (100% to Fidelity's Select Consumer Staples, FDFAX) USAA Roth IRA: $5660 (100% to USAA's International Fund, USIFX) It would appear that I've got way too much domestic stock but I'm not really sure what to do about it. My 401k is basically all domestic stock and the larger of my Roth IRAs is almost 75% domestic stock. Overall, I don't really have anything that's not stock. I've included the investment options for my 401k, these are in addition to my company stock: Large Cap Blend * INDEX EQUITY FUND Inception Date 01/01/1990 1.16 1.14 -1.35 2.77 8.03 09/30/2011 Mid-Cap Blend WILSHIRE 4500 INDEX Inception Date 03/31/2001 -2.01 2.95 0.82 7.09 5.04 09/30/2011 Small Cap Growth RUSSELL 2000 GTH IDX Inception Date 03/31/2001 2.24 2.08 0.94 5.11 2.20 09/30/2011 Small Cap Blend SMALL CAP VALUE Inception Date 01/31/2006 -3.83 2.09 0.27 N/A -0.47 09/30/2011 Foreign INTERNATIONAL FUND Inception Date 04/01/1998 -6.72 2.16 -0.80 6.88 3.34 09/30/2011 Specialty RCM GLOBAL TECH I Inception Date 03/31/2001 -1.76 10.59 5.68 8.25 3.14 09/30/2011 Other GROWTH FUND Inception Date 06/30/1992 4.96 9.68 3.32 2.94 5.96 09/30/2011 EQUITY INCOME FUND Inception Date 06/30/1989 -1.22 0.15 -1.41 4.09 8.45 09/30/2011 Blended Fund Investments* Balanced BALANCED FUND Inception Date 01/31/1975 2.38 4.91 2.55 5.17 9.84 09/30/2011 Bond/Managed Income Intermediate-Term PASSIVE AGGREGATE Inception Date 03/31/2001 5.24 8.01 6.30 5.56 5.82 09/30/2011 Stable Value STABLE VALUE FUND Inception Date 06/30/1989 2.68 2.89 3.67 3.94 5.62 09/30/2011 Short-Term Investments MONEY MARKET FUND Inception Date 06/30/1989 -0.01 0.18 1.62 1.92 3.81 09/30/2011 LIFECYCLE FUNDS Blended Fund Investments* Asset Allocation LIFECYCLE FUND 2015 Inception Date 11/05/2009 1.74 N/A N/A N/A 4.92 09/30/2011 LIFECYCLE FUND 2020 Inception Date 11/05/2009 0.75 N/A N/A N/A 4.48 09/30/2011 LIFECYCLE FUND 2025 Inception Date 11/05/2009 -0.05 N/A N/A N/A 4.08 09/30/2011 LIFECYCLE FUND 2030 Inception Date 11/05/2009 -0.81 N/A N/A N/A 3.69 09/30/2011 LIFECYCLE FUND 2035 Inception Date 11/05/2009 -1.48 N/A N/A N/A 3.32 09/30/2011 LIFECYCLE FUND 2040 Inception Date 11/05/2009 -2.19 N/A N/A N/A 2.95 09/30/2011 LIFECYCLE FUND 2045 Inception Date 11/05/2009 -2.62 N/A N/A N/A 2.71 09/30/2011 LIFECYCLE FUND 2050 Inception Date 11/05/2009 -3.17 N/A N/A N/A 2.51 09/30/2011 LIFECYCLE RETIREMENT Inception Date 11/05/2009 2.36 N/A N/A N/A 5.12 09/30/2011 LIFECYCLE FUND 2055 Inception Date 12/03/2010 N/A N/A N/A N/A -12.31 09/30/2011 I'm not tied down to any of the companies involved outside of Fidelity for my 401k. I'm mostly just trying to figure out not necessarily how to right the ship but how to get it pointed in a better direction, I guess. Apologies for the long post, and many thanks.
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Nov 1, 2011 01:23
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Supermercado posted:So glad that I came across this thread, I think it's what I've been looking for to get some help with my investments. First off, you're doing a great job saving so far, keep that up! I think you could work a lot on your selection of funds. It is frequently recommended here to not be invested at all if possible into company stock. Some of the purchase plans give a discount to the purchase of company stock with restrictions, which can be very nice, but for retirement funds this is generally something you want to avoid for a couple of reasons. 1) If the company you work started having problems, the stock is likely to go down in addition to you possibly losing your job. 2) owning a significant amount of any individual stock reduces your diversification, which is an independent risk you should probably try to avoid for your retirement savings. It would be useful if you could explain what the numbers posted after your fundnames represent. My best guess is that they're return %'s for 3mo, 6mo, 1yr, 5yr, and since inception or something similar. If that's what they are, those figures are pretty much useless for making recommendations on your portfolio. What would be useful would be some expense ratios. Without knowing the expense ratios, I would generally recommend something like the 2040 or 2045 lifecycle funds for your 401k. For the Roth IRA, I would get far away from that USAA fund, as it has an expense ratio of 1.21% which is atrocious. That Fidelity fund is ~0.85%, which is also pretty bad. In general I would recommend to transfer and combine those Roth IRA's into an account at Vanguard and then put them in a Vanguard lifecycle fund.
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Nov 1, 2011 02:03
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flowinprose posted:First off, you're doing a great job saving so far, keep that up! I think you could work a lot on your selection of funds. Thanks for your quick reply! quote:Company stock advice That all makes sense. Would it be your advice to get rid of the company stock and just get all of my 401k into one of the lifecycle funds? quote:Expense ratio advice Sorry, didn't realize there were no column headers on those values. Those numbers are 1 year, 3 years, 5 years, 10 years, lifetime, and "As of date." As for expense ratios, sure thing. The ratio on the Index Equity Fund is .01%. I don't see any information regarding ratios on the company stock (is that just because it's pure stock and not a mutual fund?). The Lifecycle 2045 has a ratio of .16%. So the overall recommendation would be to consolidate my 401k into most likely the 2045 lifecycle fund and change the Roth IRAs to a similar Vanguard lifecycle fund? Is there a reason why the IRAs should be split to Vanguard and not all just at Fidelity? Is it an "eggs in one basket" kind of thing? Thanks again for your help!
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Nov 1, 2011 03:28
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Supermercado posted:That all makes sense. Would it be your advice to get rid of the company stock and just get all of my 401k into one of the lifecycle funds? Yes, unless you have some kind of discount program with the company stock that requires you hold it for a certain period of time, I would sell it and consolidate it into the lifecycle funds. quote:Sorry, didn't realize there were no column headers on those values. Those numbers are 1 year, 3 years, 5 years, 10 years, lifetime, and "As of date." As for expense ratios, sure thing. The ratio on the Index Equity Fund is .01%. I don't see any information regarding ratios on the company stock (is that just because it's pure stock and not a mutual fund?). The Lifecycle 2045 has a ratio of .16%. That is a very good expense ratio on the lifecycle funds, vanguard's 2045 fund is 0.19%, so you'd be good to go there. quote:So the overall recommendation would be to consolidate my 401k into most likely the 2045 lifecycle fund and change the Roth IRAs to a similar Vanguard lifecycle fund? Yes, this is the easiest recommendation I can make for you at the moment. This will end up diversifying you much better between international/domestic, as well as adding some bonds (probably around 10%), but I don't know the exact percentages as it appears that the Fidelity products offerred in your 401k are some type of proprietary corporate fund that isn't publically offered. You can look at a prospectus and it will probably tell you the breakdown of the bond/equity and domestic/international percentages. quote:Is there a reason why the IRAs should be split to Vanguard and not all just at Fidelity? Is it an "eggs in one basket" kind of thing? I'm betting the offerings in your 401k are not available to purchase in your Roth IRA. Those lifecycle funds in your 401k (if they are even administered by Fidelity) are probably only offered to large 401k clients like the company for which you work. As far as I can tell, Fidelity does not have any lifecycle/target retirement products of their own. You could potentially purchase Vanguard funds through your current Fidelity Roth account, but it will cost you $75 per purchase. If you had the accounts transferred to Vanguard, there would be no transaction fee to purchase any of Vanguard's funds/ETFs. Vanguard is highly recommended as an IRA fiduciary because they offer a wide selection of very low-cost index funds and ETFs. Generally these are the lowest cost funds available outside of certain advisor-sold products such as DFA funds. In my opinion, there is little reason to use anyone other than Vanguard if you plan on using a low-cost indexing strategy for your retirement portfolio. As far as why to combine them, having your Roth IRA assets combined into a single account makes it a lot easier to rebalance if you want to do that later. If you want to go about transferring the accounts over to Vanguard, it should be pretty easy. You can just sign up for a new account on Vanguard, stating that you want to transfer from an existing Roth IRA. Then state you want to "Buy new investments" rather than leaving them in-kind. You'll then be able to pick the Vanguard funds you want to transfer into, and then submit the request. Vanguard will pretty much take care of the rest, and it should only take a few days for the process to complete. Just repeat this process with the second IRA account and you can choose to invest it into the existing account you created the first time around. If you really want to learn more about long-term investing and portfolio theory, you can read this thread as well as a few books frequently recommended here and you might decide you want to tinker with things a little bit rather than just the set it and forget approach to the Target Retirement/Lifecycle funds. However, it would be perfectly reasonably to spend your life without worrying about much of that and you'll probably do about as well as any of the rest of us investment eggheads who get off on learning as much as we can about portfolio theory and other such mundane topics. In either case, you'll be much better off than having a huge chunk of your retirement savings stuck in your company stock plus high-expense funds like that USAA one.
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Nov 1, 2011 06:13
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invision posted:How do you guys feel about numismatics vs. bullion as a mid-to-long term investment? This kind of got glossed over so I want to take a crack at this... I take 'numismatic coins' to mean coins valued for their rarity as well as precious metal (gold) content. If this is your statement, then I'm going to have to lean heavily towards the retarded comment. You are essentially paying a premium for the "it's old and rare" when you say you are investing in Gold because "Gold is inherently worth something." Even if you take the second statement at face value (which is actually a bit of a leap of faith, Ron Paul) the first one directly contradicts the first. Many people invest in gold for the "When the apocolypse comes, I'm going to have my value in metal and not worthless Fiat Dollars." aspect. However, if you are investing in rare coins you are bearing double risk. Risk that the rare coin market will hold up and that the rare metals market will hold up. If either of these faulters, your investment goes down. If you want to invest in gold as some sort of hedge against inflation or even bubble speculation, fine. If you want to invest in art, invest in art. But don't do both with the same vehicle. That's double risk, with virtually no premium. If you must buy gold, try to pay as little over the spot price as possible.
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Nov 1, 2011 15:57
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I'm looking to save up about 150,000 in 5-6 years for possibly going to tier 1 MBA program. Should I bother with a 529 education plan? Or just stick to CDs or Money Market funds?
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Nov 1, 2011 16:25
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Really new to this whole thing, so please bear with me: I've been looking into doing something more with my savings (me and my wife, actually). We are both 24 years old and are working full time. We both contribute to the maximum match of our employers, and are sitting on approximately 18k in our savings account. We are looking to do something with it looking long term. We both also have personal Roth IRA accounts through Chase (she works there so the fee for contributing to it is waived). We are thinking about maxing our Roth IRA accounts for this year. My biggest question is: Does it make sense to just max out our Roth IRAs, or should I be looking at picking my own Index funds? Does it matter? Are there other vehicles that may be a better choice?
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Nov 1, 2011 17:56
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skystream92 posted:Really new to this whole thing, so please bear with me: I think contributing to your Roth, particularly at a young age is a great deal. You can pick index funds in them or whatever other investment vehicle you like. If you're not looking to tie up the money for that long though, you can just open a regular investment account and purchase funds that you like. My concern would be whether this $18k is all of your savings. The rule of thumb is to have 6 months put away in something safe and easily accessible (an online savings account for instance). I would suggest making your Roth IRA contributions for the year since it's a "use it or lose it" proposition. The one nice thing about a Roth is you can remove the principle tax/penalty free in case you really need it someday.
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Nov 1, 2011 22:48
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flowinprose posted:Yes, unless you have some kind of discount program with the company stock that requires you hold it for a certain period of time, I would sell it and consolidate it into the lifecycle funds. I'm not aware of any discount program or anything. Today I set my 401k contributions to go 100% into the Fidelity 2045 lifecycle fund and put in the orders to move my existing 401k assets into the same 2045 fund. I did look to see if I could switch my Fidelity Roth IRA over to a lifecycle fund as well and you're right, it doesn't appear to be an option. I set up the asset transfer at Vanguard for both IRAs and apparently have to mail forms to Vanguard, who will mail them to Fidelity and USAA and handle everything from there, and put all those assets into Vanguard's 2045 target fund. So once all that process completes, I should be good to go, I think. I guess my follow-on questions are, am I doing this right? Or, what else can/should I be doing? Following the advice in this thread, it appears like I'm on the right track by first making sure I'm getting my full company 401k match, then maxing out a Roth IRA, and then putting what more I can into my 401k. I don't want to get too much into the personal finance side of things since that's not the purpose of this thread but I'm trying to do a complete financial check-up so to speak. As for the other aspects of my financial life, I don't have any credit card debt beyond what I charge and pay off each month. I have a student loan of about $8000 and I own my house (I put 20% down and pay what equates to 2 additional monthly payments over the course of a year). My main concern is over the cash I have on hand, I've got about $30,000 right now. This is currently split across several institutions, about $15,000 at ING, $11,000 at USAA, and $3300 at Wells Fargo (an account which I'm actually looking to close as soon as I buy a safe for my house; the only reason I have the Wells Fargo account in the first place is because I was eligible for a free safety deposit box for 18 months through my employer and needed a place for the deed to my house, title to my car, etc.) This cash is both what I pay bills out of and my emergency fund. I'm disciplined enough to not need to keep things separate but I've been trying to figure out the best thing to do with the money that's for emergencies. ING used to be great for this but since the interest rate has gotten so low, I began looking for other options. One that seems like a good idea is a Kasasa Cash checking account through a local bank. It pays 2.51% on balances up to $25,000 so long as I make a certain number of debit transactions and use direct deposit, stuff like that. 2.51% is a whole lot more than what I'm getting at ING these days, and it keeps my assets liquid in case I need them. Is this a good plan, or is there a better alternative for emergency funds? Again, thanks for all the help, I'm very grateful to be getting things in order and taking the proper steps to get things set up right.
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Nov 2, 2011 01:13
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Supermercado posted:I'm not aware of any discount program or anything. Today I set my 401k contributions to go 100% into the Fidelity 2045 lifecycle fund and put in the orders to move my existing 401k assets into the same 2045 fund. What good timing! I'm actually about to launch a service on SA-Mart for something just like this. I'm planning to give away five packages when I do, and if you are interested you can claim one right now. I don't have the whole write-up ready at this moment, but it'll be a modified version of this service I offer to my brick-and-mortar clients (http://www.ewafinancialplanning.com/financial-checkup/). I'll check back in and let you know when it's all ready, I am anticipating in the next week or so, but it's being delayed as my Wife who is pregnant with twins may be hospitalized tomorrow until they're born (they're only 26 weeks) so needless to say I'm a bit distracted!
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Nov 2, 2011 01:32
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I'm not to this point yet as right now my only retirement saving is maxing a Roth every year, but what does BFC suggest if you wanted to make long term non-retirement investments to generate passive income? Is this something that is even worth doing if you're not mega rich? What are the options? Obviously you'd want to try to make it as tax-advantaged as possible but there has to be a trade off at some point. I'm talking long term investments where there is no plan to sell off the investments for years. The dividends/bond payments/interest would initially be reinvested back into the investment itself but ultimately would become cash income. Are there any books/websites/whatever that go into this topic? Lyon fucked around with this message at 04:46 on Nov 2, 2011 |
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Nov 2, 2011 04:22
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Sounds like you're looking at something like fixed income investing. Keeping your principle in place and bringing in a relatively consistent return. Bogleheads forum has a lot of good info on this stuff, but not sure where else to look. You'd likely be looking at a mix of bonds, TIPS, etc.
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Nov 2, 2011 04:37
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TraderStav posted:What good timing! I'm actually about to launch a service on SA-Mart for something just like this. I'm planning to give away five packages when I do, and if you are interested you can claim one right now. I don't have the whole write-up ready at this moment, but it'll be a modified version of this service I offer to my brick-and-mortar clients (http://www.ewafinancialplanning.com/financial-checkup/). Good luck with your twins!
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Nov 2, 2011 05:10
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Ugh, so my sister called me about an investment opportunity from people she works with or something for a company that has not gone public yet, but is supposed to have some fancy tech and going to be a big deal. She apparently has the opportunity to buy a bunch of shares right now, and wants to pull $50k from her RRSP to do it as she can't get it any other way. She's all worried about missing this chance and how she has to do it RIGHT NOW and it just screams bad idea to me. Unfortunately I really don't know how to convince her otherwise or tell if this is at all legit or not. Should I just leave it be and let her do whatever she decides to do?
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Nov 3, 2011 19:31
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asmallrabbit posted:Ugh, so my sister called me about an investment opportunity from people she works with or something for a company that has not gone public yet, but is supposed to have some fancy tech and going to be a big deal. She apparently has the opportunity to buy a bunch of shares right now, and wants to pull $50k from her RRSP to do it as she can't get it any other way. She's all worried about missing this chance and how she has to do it RIGHT NOW and it just screams bad idea to me. Unfortunately I really don't know how to convince her otherwise or tell if this is at all legit or not. Should I just leave it be and let her do whatever she decides to do? If you tell her not to, and it ends up being an amazing investment, she will hate you for it. Nearly everyone confuses outcome with strategy so there is no win here for you. Some lessons need to be learned the hard way. Just tell her to be cautious but there is little else you can do.
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Nov 3, 2011 20:00
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80k posted:If you tell her not to, and it ends up being an amazing investment, she will hate you for it. Nearly everyone confuses outcome with strategy so there is no win here for you. Some lessons need to be learned the hard way. Just tell her to be cautious but there is little else you can do.
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Nov 3, 2011 21:16
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Briantist posted:This is true, but honestly what are the chances that this is really some amazing investment? asmallrabbit, if it had that much going for it then it seems likely that they would have had no trouble finding real investors instead of what sounds essentially like a human chain letter. 50k is a hell of a lesson. I really couldn't say one way or the other, and by the sounds of it, shes already done it so I can't talk her out of it anyways. I guess I will see how it turns out.
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Nov 3, 2011 21:57
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Question about my retirement. For the year, I've maxed out my Roth IRA contributions. Is there anything else I can do retirement wise that would be beneficial? It appears that since I have put in $5000 into a Roth, I can't put money into a Traditional IRA this year (well at least in the sense of it saving me tax money). My other issue is that I don't seem to qualify for the traditional IRA deduction (single and make more than $66k). Is there anything else I could do besides a Roth that would offer me any long-term advantages? I don't want to just put money in a retirement account if I'm not gaining some advantage from it, I'd just keep it in my individual investment account.
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Nov 3, 2011 22:58
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Employer 401k for the tax benefits? If that isn't an option well then you might as well just keep it in your investment account.
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Nov 3, 2011 23:07
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Lyon posted:Employer 401k for the tax benefits? If that isn't an option well then you might as well just keep it in your investment account. I own my own company so I would have to set it up through that. Guess I should get around to that anyway.
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Nov 3, 2011 23:15
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Niwrad posted:I own my own company so I would have to set it up through that. Guess I should get around to that anyway. If you own your business, you probably want to look into this: http://en.wikipedia.org/wiki/SEP-IRA Since you can do your own "matching" on your contributions with company profits up to something like 18.6% of net profit, you can end up funding this with up to $49,000/year depending on how much profit your company makes and what you pay yourself as a salary. Edit: Oh, and I might add, you can do this IN ADDITION to fully funding a Roth flowinprose fucked around with this message at 23:34 on Nov 3, 2011 |
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Nov 3, 2011 23:30
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Tai-Pan posted:I just asked two otherwise intelligent analysts exactly this question and one assumed the 1.5 million was the "final" target and the other didn't understand why the value didn't account for inflation. Where do you work because I would love to easily get a job as a superior "math dude" by proving I had basic arithmetic skills??
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Nov 4, 2011 07:15
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Niwrad posted:I own my own company so I would have to set it up through that. Guess I should get around to that anyway.
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Nov 4, 2011 16:01
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Mongolian Squid posted:I'm looking to save up about 150,000 in 5-6 years for possibly going to tier 1 MBA program. Should I bother with a 529 education plan? Or just stick to CDs or Money Market funds? Quoting this because I was going to ask something similar and it looked like this got glossed over.
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Nov 6, 2011 18:23
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Rurutia posted:Quoting this because I was going to ask something similar and it looked like this got glossed over. (1) You need to find a 529 that allows for self-beneficiaries. Not all 529s do. (2) Your allocations in the 529 should be extremely conservative, with most or all of the investment in cash-equivalent holdings. The sole purpose of using the 529 is to get the tax benefits. With a 5-6 year time horizon you can't be messing around with investment risk.
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Nov 6, 2011 18:50
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I just recently moved to a new city and sold my home for a short-term (1–2 years) relocation for my job. I am renting in the new location because it is a short move, so I'm sitting on a fairly sizable chunk of cash that was previously wrapped up in home equity. I'm planning on buying another home in 1-2 years, once I move again. Is there anything I can really do with this money that's better than letting it sit in a savings account? I don't want to do anything that has more than very minimal risk since I will be using the money again shortly.
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Nov 6, 2011 23:09
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"[panic posted:"] If it's a decent chunk you could try just walking in to different banks and asking them what the best rate they could give you on it is.
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Nov 7, 2011 00:28
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KennyG posted:This is because an employer match is FREE money. It's an instant 100% return. You contribute $1, you invest $2! I die a little inside when I hear about people not participating in their 401(k) because "The market's down right now" because even when the S&P was down nearly 20% for the year earlier this month, they were still ahead 60% due to the match! Also every Defined contribution plan has some sort of fixed income (I.E. Bonds) option. I was skimming through this thread and wanted to ask a question about this since I'll be starting my first permanent job next week. Regarding 401ks it seems the average rate is 5-6% as far as what the company matches but at my new job it will be only .25% for every 1% I contribute. It's also capped at 1% employer when I contribute 4%. With those rates, should I still invest along the lines of the three steps in the OP (contribute to 401k to company match, then Roth, then back to 401K)?
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Nov 7, 2011 03:09
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Gnaghi posted:I was skimming through this thread and wanted to ask a question about this since I'll be starting my first permanent job next week. Regarding 401ks it seems the average rate is 5-6% as far as what the company matches but at my new job it will be only .25% for every 1% I contribute. It's also capped at 1% employer when I contribute 4%. With those rates, should I still invest along the lines of the three steps in the OP (contribute to 401k to company match, then Roth, then back to 401K)? Yes, because that's still an instant, guaranteed 25% return on your investment. If you find something else to put your money in that gives you that, let me know.
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Nov 7, 2011 04:33
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flowinprose posted:Yes, because that's still an instant, guaranteed 25% return on your investment. If you find something else to put your money in that gives you that, let me know. Yeah, it sounds a lot better when you put it that way. I thought there might be something along the lines of an outside 401k or IRA that might be better.
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Nov 7, 2011 18:31
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Gnaghi posted:Yeah, it sounds a lot better when you put it that way. I thought there might be something along the lines of an outside 401k or IRA that might be better. Nothing says you can't also have a Roth, etc. But yeah, company contributions to your 401k are as close to getting free money as you'll get.
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Nov 7, 2011 18:36
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Gnaghi posted:I was skimming through this thread and wanted to ask a question about this since I'll be starting my first permanent job next week. Regarding 401ks it seems the average rate is 5-6% as far as what the company matches but at my new job it will be only .25% for every 1% I contribute. It's also capped at 1% employer when I contribute 4%. With those rates, should I still invest along the lines of the three steps in the OP (contribute to 401k to company match, then Roth, then back to 401K)? Your personal ROTH or Traditional IRA is separate from your 401K. If you can contribute 4% and then still find $5k to invest, that's what you should do. After that, keep contributing to your 401(k) up to the cap which next year goes up to 17k for those under 50. The biggest reason to contribute to a 401(k) plan, beyond the free money match, is that it allows you to get up to $17k a year into a tax advantaged plan that otherwise would be stuck in taxable accounts. The average 20 something is projected to have 8 employers before they retire. This average out to about 5 years each. This means that by participating, even in a no match situation, you can roll over about $100,000 into your personal IRA everytime you switch jobs. With the exception of all but the shortest and most extreme horizons this benefit will offset almost any crappy fund administration penalties versus a taxable account. There are 3 basic rules of long-term, passive investing: 1) Don't pay taxes (or pay as little as you possibly can) 2) Don't pay fees (or pay as little as you possibly can) 3) Be regular and disciplined. Don't try and time/beat the market.
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Nov 7, 2011 20:14
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I opened a Roth IRA account at Fidelity a couple of months ago. I threw in an initial $300 deposit. However, due to my student loans coming into the repayment period and a new car/insurance payment, I am unable to contribute to the IRA at this point in time. Since my money was never invested into anything, could I withdraw that money from the IRA without penalty? Also, I gained a total of $.06 somehow, not sure if that effects anything. Thanks.
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Nov 7, 2011 23:38
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comper posted:I opened a Roth IRA account at Fidelity a couple of months ago. I threw in an initial $300 deposit. However, due to my student loans coming into the repayment period and a new car/insurance payment, I am unable to contribute to the IRA at this point in time. Since my money was never invested into anything, could I withdraw that money from the IRA without penalty? Also, I gained a total of $.06 somehow, not sure if that effects anything. Thanks. You could withdraw it penalty-free. However, you might want to just leave it in there since Roth is a use-it-or-lose-it proposition. At least you would have used $300 of it this year, even if it can't be invested into anything yet.
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Nov 7, 2011 23:57
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My situation is not really typical of this thread, so I'm interested in opinions. I am fortunate enough to be a trust beneficiary. It is managed by my father, so I generally look to him for guidance but I'm curious what the internet has to say as well. The trust is not based on monthly payments however, rather it is 4 lump-sum payouts based on my age, the first of which was 2 years ago. My intention is to use the majority of this 1st installment toward a down-payment on a home at some point in the next 5-10 years. That being the case, when the first payout was made, my dad chose to give me a piece that is in a Vanguard commercial realty fund. The idea is that since we intend to use the money to buy property, it should generally maintain it's value relative to the housing market by being in this fund. But now I'm wondering if there's an argument for diversifying this, and if so what's the best way to do that? Since this is a short to medium-term investment, it'd assume the typical retirement savings arguments don't apply. Maybe this is a better question for the stock picking thread, but as I'm not really looking to actively manage this money I think it fits better here. edit: I guess this is similar to [panic]'s question, with a longer time horizon.
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Nov 8, 2011 03:39
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bawfuls posted:My situation is not really typical of this thread, so I'm interested in opinions. I am fortunate enough to be a trust beneficiary. It is managed by my father, so I generally look to him for guidance but I'm curious what the internet has to say as well. The trust is not based on monthly payments however, rather it is 4 lump-sum payouts based on my age, the first of which was 2 years ago. There's a significant logical flaw to your argument. Real estate is a non-fungible asset. What you have done is the equivalent of saying that you want to buy a Toyota Prius in 5 years and buying 15,000 in MAC Truck stock  . It could work, it could backfire. The two are related as a sector but are by no means linked. Commercial real estate is only vaguely related to residential property. They are both property, but that's about it.Commercial property is a completely different market and will behave and respond to completely different forces. It is more immune to wage changes and long term interest rates but more sensitive to immediate economic conditions (if people aren't opening businesses there will be a glut of commercial space). Also, investing in a real estate fund is difficult as you don't want to buy an average piece of land in fakeplaceistan. You likely want to buy a place in a specific region, state, city or even neighborhood. If those economic conditions out pace the real estate market, generally, then you've lost money. Imagine you wanted to buy a home in the DC Metro area (current prices above 2007 levels) but you had invested in a Real Estate vehicle that was focused on Miami, Las Vegas and Detroit. That would suck! If you want to buy a home in the 5-10 year horizon you should be heavily weighted to shorter term bond funds with perhaps a small exposure to equities (if you were looking at closer to 10 years). Welcome to the world of negligible interest rates. KennyG fucked around with this message at 19:35 on Nov 8, 2011 |
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Nov 8, 2011 19:26
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KennyG posted:There's a significant logical flaw to your argument. Real estate is a non-fungible asset. From what I can tell it does broadly track the real estate market, but I see what you're saying about specific regions outpacing the market. Considering the region I'm likely to want to buy in (California), that kind of outpacing seems likely. Thanks for the info, you agree with my suspicion that the fund is likely higher risk than what I ought to be looking for with this investment. bawfuls fucked around with this message at 20:09 on Nov 8, 2011 |
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Nov 8, 2011 20:07
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I am 23 and an idiot when it comes to savings and retirement. I work at a hospital with a 403b thing through Principal Financial. I can go with their prepicked program that they base on years to retirement and your risk aversion (conservative, moderate, aggressive, yadda yadda) or a JP Morgan thing that is based on retirement year (that sounds lovely so idk). They say we can either contribute to a Roth or a regular 403b up to the max of 17,500 a year (that doesn't sound right at all, don't Roths have limits?) and the employer matching would apply to either (so for a Roth you would pay post-tax, but the employer contribution would be made on the pretaxed amount...). Anyway, I won't be maxing anything out in the near future. They match 50% up to 3% (so a max of 1.5% what a bunch of crap). Is Principal known to be full of lovely decision making as far as the prepicked plans go? Our adviser dude is paid by the hospital and isn't on any sort of commission, but I don't know if I should trust his advice or just do my own thing based on my super duper limited knowledge. Any guidance would be much appreciated!
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Nov 10, 2011 04:01
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