|
NJ Deac posted:Words
|
#
?
Jan 27, 2012 21:53
|
|
|
|
| # ? May 16, 2024 16:39 |
|
|
I want to clarify that the reason I said to use your entire 401(k) contributions on the single lowest-cost fund, was because I am assuming you will maximize your 401(k) matching and maximize your Roth IRA annual cap, outside your 401(k). Because you are 40 and have no retirement fund. You are getting started finally, which is great, but you're behind and need to catch up. The more money you can get in now, the more you take advantage of a full ~25 years (assuming age 65 retirement) of potential appreciation of those assets. Every year you fail to take full advantage of your tax-deferred retirement options is a year in which you left money on the table, basically. Of course, it may be that you really cannot afford to max those both out. If that's the case, then yes, do the 401(k) first for the employer matching, because that's free money, and yes, if that's all you're doing at first, you need to diversify (so, not everything in just an S&P 500 fund). But as someone else said, you also need to look at your lifestyle and see if you can maybe cut back on some expenses and focus more money on retirement. It may be that you already live a frugal life, perhaps you are in a low-cost part of the country, and will be able to retire at your current standard of living on a lot less money than I'm planning for for my own retirement in the expensive California Bay Area. So without knowing your personal circumstances, it's tough to tell you exactly how much you need to be socking away. But being 40 without having gotten started is enough of an alarm bell that I'm comfortable suggesting that if at all possible, you should be doing that 6% of your wife's salary for the match, and doing the maximum contributions to a Roth IRA. Incedentally you have until April 15th of each year to make Roth contributions for the prior year, so it's not too late to max your 2011 contribution and still also max your 2012 contribution, if you can possibly afford to. e. Okay, asset allocation. Basically this is how you split up your money into different assets, so that you're not overly exposed to a single kind of asset or part of the market (because that increases your risk). Traditionally people talk about stock and bonds; and within each of these (but mostly stocks), domestic vs. international. Bonds are viewed as conservative (lower risk, lower potential reward) while stocks are higher risk. You can also have money in cash and cash-equivalents, which is the lowest-risk (but may not even keep up with inflation, so you are exchanging very low or negative returns for that safety). Exactly how you split up between these assets depends on how old you are now, when you plan to retire, how tolerant you are of risk, and perhaps also what you think of your country and the rest of the world's prospects over the next few decades. The S&P 500 index is domestic stock. If you put (say) $5000 into that through your wife's 401(k) (including the matching money), and you also open a Roth IRA and put $3000 into an international stock fund and another $2000 into a bond fund, then you will be diversified as 80/20 split stocks and bonds, with a 70/30 split between domestic and international (assuming the bond fund is 100% domestic). Leperflesh fucked around with this message at 00:26 on Jan 28, 2012 |
|
#
?
Jan 28, 2012 00:07
|
|
|
Leperflesh posted:If it's really a 401(k), then you don't get to choose pre-tax or post-tax: you will make your contributions (or rather, your wife will) pre-tax (but when you retire you will pay taxes on it as you withdraw it).
|
|
#
?
Jan 28, 2012 01:09
|
|
|
How good/bad of an investment are TIPS (inflation-protected securities) mutualfunds in a Roth IRA? Fed just locked in 0% til 2014 so I can only assume inflation is going to soar.
|
|
#
?
Jan 29, 2012 14:47
|
|
|
I have an aunt that recently has received some money. She is a little over 70 years old, in good health, and has enough retirement for herself for the next 15-20 years. So with this new money she is interested in saving/investing it and passing it along to relatives. She had spoken to me about it some for any advice I could give her. I'm in a very different situation when it comes to investing, but at the same time her situation could be similar in that she would like for the money to be passed along, hopefully keep up with inflation, and grow if the risk is acceptable to her. So I wanted to know if anyone had any advice concerning inheritance, taxes (I did tell here about the RothIRA contributions since she can still use that for tax deductions I think), or investment strategies. I had told her that fixed income investments are probably one of the best to maintain value. Given the period of time she wants to work with the investment (up to 20 years, possibly more if the inheritors can keep it in the investments, or if there are any useful investment options that keep it tied up for a period of time) I also thought she could consider a slightly more aggressive investment approach with a possible 50/50 split between fixed income/stocks. From my understanding (and anyone that knows better, please correct me) right now is not the best time to be investing in bonds because the market is at what could be a lower ebb and interest rates are low. This would lead me to believe that for longer term investments stocks are the better option to start with and transition into fixed income over the next ten years as interest rates rise. Any advice or suggestions anyone has would be greatly appreciated. I've read some of the material in the OP and plan to read it more and look into some investment guides, but in the meantime if anyone can point out some obvious flaws in my suggestions would be great.
|
|
#
?
Jan 30, 2012 02:17
|
|
|
How much are we talking about exactly? If it's not in the millions, why not just pass it out now?
|
|
#
?
Jan 30, 2012 03:33
|
|
|
You have $3000 and can invest in one of the following for your roth, what do you choose? Aiming for low-moderate risk. Vanguard Inflation-Protected Securities Fund The investment seeks to provide inflation protection and income consistent with investment in inflation-indexed securities. The fund invests at least 80% of assets in inflation-indexed bonds issued by the U.S. government, its agencies and instrumentalities, and corporations. It may invest in bonds of any maturity; however, its dollar-weighted average maturity is expected to be in the range of 7 to 20 years. At a minimum, all bonds purchased by the fund will be rated “investment-grade.” http://www.google.com/finance?q=VIPSX Vanguard Wellesley Income Fund The investment seeks to provide long-term growth of income and a high and sustainable level of current income, along with moderate long-term capital appreciation. The fund invests approximately 60% to 65% of assets in investment-grade corporate, U.S. Treasury, and government agency bonds, as well as mortgage-backed securities. The remaining 35% to 40% of fund assets are invested in common stocks of companies that have a history of above-average dividends or expectations of increasing dividends. http://www.google.com/finance?q=VWINX GNMA Fund The investment seeks to provide a moderate level of current income. The fund normally invests at least 80% of its assets in GNMA pass-through certificates, which are fixed income securities representing part ownership in a pool of mortgage loans supported by the full faith and credit of the U.S. government. It may invest in other types of securities such as U.S. Treasury or other U.S. government agency securities, as well as in repurchase agreements collateralized by such securities. The fund’s dollar-weighted average maturity depends on homeowner prepayments of the underlying mortgages which normally fall within an intermediate-term range (3 to 10 years). http://www.google.com/finance?q=MUTF%3AVFIIX Interm-Term Bond Index The investment seeks to track the performance of a market-weighted bond index with an intermediate-term dollar-weighted average maturity. The fund employs a “passive management”—or indexing—investment approach to track the performance of the Barclays Capital U.S. 5–10 Year Government/ Credit Bond Index. It invests by sampling the index, meaning that it holds a range of securities that approximate the full index in terms of key risk factors and other characteristics. The fund invests at least 80% of assets in bonds held in the index. It maintains a dollar-weighted average maturity consistent with that of the index, ranging between 5 and 10 years. http://www.google.com/finance?q=MUTF%3AVBILX
|
|
#
?
Jan 30, 2012 05:08
|
|
|
Harry posted:How much are we talking about exactly? If it's not in the millions, why not just pass it out now? It's hard to say because it's royalties that haven't begun yet. I think she is planning on doing as much gifting as possible, but there is a chance it will be more than can be handled that way.
|
|
#
?
Jan 30, 2012 05:42
|
|
|
downout posted:It's hard to say because it's royalties that haven't begun yet. I think she is planning on doing as much gifting as possible, but there is a chance it will be more than can be handled that way. You should probably talk to a CPA about what kind of tax planning needs to be done. There are various trusts and corporations that can be setup for royalties to reduce the tax burdens, which would probably net a greater return for everyone involved.
|
|
#
?
Jan 30, 2012 06:11
|
|
|
Harry posted:You should probably talk to a CPA about what kind of tax planning needs to be done. There are various trusts and corporations that can be setup for royalties to reduce the tax burdens, which would probably net a greater return for everyone involved. Thanks, that is good to know. I think she had planned to talk to a CPA, but it might have been just whoever does her taxes.
|
|
#
?
Jan 30, 2012 07:34
|
|
|
Metajo Cum Dumpster posted:You have $3000 and can invest in one of the following for your roth, what do you choose? Aiming for low-moderate risk. VWINX is the riskiest of the funds. The rest are similar in their risks. The Roth is typically the investment vehicle you'd want to seek your biggest returns in because of its tax status. But if you're looking for a low-moderate risk, I'd personally go with the VIPSX. Something you can put in and not have to worry about for a long time if that's your plan. I do like Ginnie Mae funds personally and have some older relatives who swear by them in their retirement portfolios though too. But I'd say that you should just look at which one each contains and see what you feel most comfortable with holding.
|
|
#
?
Jan 30, 2012 09:39
|
|
|
Metajo Cum Dumpster posted:You have $3000 and can invest in one of the following for your roth, what do you choose? Aiming for low-moderate risk. I don't think an answer to that question can be very useful without knowing your other assets' allocation.
|
|
#
?
Jan 30, 2012 11:37
|
|
|
Fuschia tude posted:I don't think an answer to that question can be very useful without knowing your other assets' allocation. Don't have much invested yet, but I have about 75% bonds, 25% stocks through two mutual funds. $3000 in Vanguard Long-Term Bond Index (MUTF:VBLTX) $2000 in Vanguard STAR (MUTF:VGSTX) <-- this one is just an agglomeration of many Vanguard funds.
|
|
#
?
Jan 30, 2012 14:24
|
|
|
I took a look at the 401k options my wife has through her employer and at the moment she has everything invested in the 2040 T.Rowe Price plan which has a 0.75% fee. However, a couple vanguard funds are available that I'm considering with much lower fees. My question is, through an employer are the fees the same as the fees that are listed online? Or could it be possible that the same fund will have different or additional fees through an employer?
|
|
#
?
Jan 30, 2012 15:11
|
|
|
Niwrad posted:VWINX is the riskiest of the funds. The rest are similar in their risks. The Roth is typically the investment vehicle you'd want to seek your biggest returns in because of its tax status. Depends on your view of expected return: but bond coupons are taxed at your marginal tax rate which make up the majority of the returns for bonds. Stock dividends are taxed at your marginal tax rate, but the majority of the return typically comes from long term gains which is taxed at a lower rate.
|
|
#
?
Jan 30, 2012 15:28
|
|
|
80k posted:-- Hi 80k, I was wondering if you (or anyone else) had input on my asset allocation (taxable account): 30% BND 30% VT 20% DJP 10% GLD 10% VNQ
|
|
#
?
Jan 30, 2012 16:24
|
|
|
Orange_Lazarus posted:My question is, through an employer are the fees the same as the fees that are listed online? Or could it be possible that the same fund will have different or additional fees through an employer? If it's a special class of share for the employer, there should be a separate prospectus available to you that will tell you what the fees are. The Noble Nobbler posted:I was wondering if you (or anyone else) had input on my asset allocation (taxable account): 40% in alts is pretty aggressive, but if you're already set on your tax-advantaged accounts retirement and this is just for play, then it looks as good as any other speculative portfolio, I guess. The important thing to remember is that asset allocation is all about maximizing your risk-adjusted return. It's a negligibly difficult math puzzle where you mix and match investments for their historic returns and standard deviations in different combinations to ensure that, for a given target rate of return, the volatility is as low as possible, increasing the likelihood that you can accurately predict the value of your investments on some future date. If that's not the rationale behind your selection of investments here, then your question really isn't about whether it's a good asset allocation, but whether you've made sound speculative investment choices. If you think there's going to be a commodities boom some time soon and you think you can sell before it becomes a commodities bust, then sure, this is a fine portfolio. In my opinion, because historically precious metals like gold have returned about 6% annually on a stddev over 20, it's tough to justify them as a long-term investment that has some advantage over bonds or stocks in my portfolio. bam thwok fucked around with this message at 22:08 on Jan 30, 2012 |
|
#
?
Jan 30, 2012 17:02
|
|
|
Niwrad posted:VWINX is the riskiest of the funds. The rest are similar in their risks. The Roth is typically the investment vehicle you'd want to seek your biggest returns in because of its tax status. Cum Dumpster's question is sort of pointless without an asset allocation. Looking at any of those funds in isolation is not the way to go. As for VIPSX, most people will probably have the misconception that it is a fund you do not need to worry about. However, it is poised to lose an easy 20% when real rates start approaching historical norms, given its duration and how far real rates can reasonably move from here (I think most people piling into that fund now probably do not know this). I'd only recommend TIPS to people as part of a broad asset allocation plan. And I'd never recommend TIPS as a standalone fund to someone like Cum Dumpster (given the fact that his question indicated he had no sophisticated knowledge of investments) since the volatility of TIPS will be shocking and uncomfortable to someone who goes into it expecting a stable ride. In some sense, TIPS are unrisky in theory, because real rates have a limited expected range, which cannot be said about stocks or nominal bonds. But the volatility is quite high for someone that is just looking at price movements. I see alot of older investors swear by GNNMA's, but I believe that is because GNMA's have had a streak of good luck with a long period declining rates and shorter periods of rising rates where the yield compensated for sudden and dramatic NAV-loss. Today's starting point is vastly different. See my post several pages back regarding the problematic features of GNMA's. GNMA's are poised to be more sensitive to rising rates than we have seen in a very very long time. Just in the past quarter, GNMA's duration has increased substantially (remember duration is only estimated with GNMA's and can change dramatically, unlike other bonds that have a reasonably accurate duration), which means GNMA's are more sensitive today than they were a few months ago. I wonder how many GNMA holders know that their interest rate risk exposure has increased. Last year, average duration was 2 years due to rapid refinancings among homeowners. As refinancings have slowed down, duration calculation has changed to approximately 4 years. What happens when rates start to rise? Refinancings will dry up, extension risk makes duration extend into double-digits, rising rates and extension of duration is a terrible combination.
|
|
#
?
Jan 30, 2012 19:30
|
|
|
I'm 26 and just now looking into saving for retirement. I make about $23,000 a year with some options for overtime for more money. The company I work for has a 401(k) plan, but they have no employer matching contribution for anything we put into it unless you're a supervisor, which I am not. Seeing as I would not be getting any match to anything I'd invest in the 401(k), would it be better for me to simply open my own Roth IRA as there'd probably be less fees and more control? I'd probably have about $3000-5000 a year to contribute toward retirement.
|
|
#
?
Jan 30, 2012 20:20
|
|
|
80k posted:Cum Dumpster's question is sort of pointless without an asset allocation. Looking at any of those funds in isolation is not the way to go. As for VIPSX, most people will probably have the misconception that it is a fund you do not need to worry about. However, it is poised to lose an easy 20% when real rates start approaching historical norms, given its duration and how far real rates can reasonably move from here (I think most people piling into that fund now probably do not know this). Would it be reasonable if that's, oh, 10% of a portfolio including other types of funds (large cap, emerging markets, some other stocks)? Or would you just suggest getting out of all bonds right now?
|
|
#
?
Jan 30, 2012 20:38
|
|
|
Avellon posted:I'm 26 and just now looking into saving for retirement. I make about $23,000 a year with some options for overtime for more money. Not to mention that based on how much you're earning you won't really benefit from the pre-tax benefits of a 401k.
|
|
#
?
Jan 30, 2012 20:40
|
|
|
silvergoose posted:Would it be reasonable if that's, oh, 10% of a portfolio including other types of funds (large cap, emerging markets, some other stocks)? Or would you just suggest getting out of all bonds right now? I did not imply TIPS or Bonds are bad, just that people getting into TIPS now need to understand what risks they are opposed to, especially in regards to "what fund should I buy for low risk" questions. I have a very substantial amount of my funds in short-term, intermediate-term bonds, and TIPS.
|
|
#
?
Jan 30, 2012 20:41
|
|
|
Wouldn't it be more to get out of bond funds rather than bonds? I understand that rising interest rates would make bonds worth less comparatively but assuming you're holding them to maturity they still have a "guaranteed" return.
|
|
#
?
Jan 30, 2012 20:42
|
|
|
Orange_Lazarus posted:Not to mention that based on how much you're earning you won't really benefit from the pre-tax benefits of a 401k. Thanks, that's what I suspected. I guess I'll do a Roth IRA and think about a 401(k) or other investment vehicle if I have more than $5000 each year to put away, unless I obtain a new job with a matching 401(k)
|
|
#
?
Jan 30, 2012 20:47
|
|
|
I'm 27 and just starting long term savings. Employer does a 100% match up to 4% for the 401k. I'm doing 6% and planning to start maxing a Roth IRA each year here on out. Question on where I should be putting the money in the 401(k). I'm a novice with this, but reading over posts about fees, I looked into the funds more. The 'retirement' funds (2030, 2040, 2050, etc.) all run at %0.81 fees. The lowest fee account is the S&P 500 Index Objective at %0.28. The rest of the funds run around %0.81 to %1.2. Would it be better for me to put everything in the S&P 500 fund to avoid higher fees, and plan on using the Roth to diversify once I start putting funds in there? Or should I just take one of the target retirement funds, or split it up among the different ones like bonds, domestic, and international? Are these fees typical for most 401(k)s? I ask because I'm wondering if it would be likely for a 401(k) from another employer to have lower fees. I plan on being at my current job for another year or so max, so I'm looking at my current 401(k) in the short term. When I get a new job in the future, assuming that company offers a 401(k), do I merge my previous 401(k) into it or something like that? My idea being that I can ride the S&P500 fund in the short term, and diversify the funds in the future assuming a new 401(k) had lower fees in the other funds. Hope this all made sense.
|
|
#
?
Jan 30, 2012 22:41
|
|
|
Hashal posted:Would it be better for me to put everything in the S&P 500 fund to avoid higher fees, and plan on using the Roth to diversify once I start putting funds in there? Or should I just take one of the target retirement funds, or split it up among the different ones like bonds, domestic, and international? Hashal posted:Are these fees typical for most 401(k)s? Hashal posted:When I get a new job in the future, assuming that company offers a 401(k), do I merge my previous 401(k) into it or something like that? Hashal posted:Hope this all made sense.
|
|
#
?
Jan 30, 2012 23:03
|
|
|
Hashal posted:I'm 27 and just starting long term savings. Employer does a 100% match up to 4% for the 401k. I'm doing 6% and planning to start maxing a Roth IRA each year here on out. Any reason why you're putting 6% in? I thought the only upside of 401(k) are the matching. Harry fucked around with this message at 01:05 on Jan 31, 2012 |
|
#
?
Jan 31, 2012 00:25
|
|
|
bam thwok posted:The important thing to remember is that asset allocation is all about maximizing your risk-adjusted return. It's a negligibly difficult math puzzle where you mix and match investments for their historic returns and standard deviations in different combinations to ensure that, for a given target rate of return, the volatility is as low as possible, increasing the likelihood that you can accurately predict the value of your investments on some future date. I don't really believe in the value of speculation. The impetus behind the choices I made is that the bond/equity situation is such that neither outperforms the other (so I chose equal portions) and the remainder of the portfolio is a value-retaining portion / hedge made up of gold / broad commodities, and REITS.
|
|
#
?
Jan 31, 2012 01:02
|
|
|
Harry posted:Any reason why you're putting 6% in? I thought the only upside of 401(k) are the matching. I plan on maxing my Roth each year. So after maxing my matching, and maxing my Roth, the next thing to do is max out total allowed 401(k) contributions. 401(k)s provide the only form of tax free contributions that I'm aware of. So the reason why, is that I want to save more for retirement.
|
|
#
?
Jan 31, 2012 01:10
|
|
|
Normal IRAs are tax deductible.
|
|
#
?
Jan 31, 2012 01:57
|
|
|
But don't normal IRAs and Roth IRAs share the same annual limit on contributions? So it absolutely makes sense if you're maxing matching, and then also maxing your annual Roth IRA contribution, to put further funds into the 401(k) as the only other tax-advantaged option left?
|
|
#
?
Jan 31, 2012 02:33
|
|
|
80k posted:Cum Dumpster's question is sort of pointless without an asset allocation. Looking at any of those funds in isolation is not the way to go. As for VIPSX, most people will probably have the misconception that it is a fund you do not need to worry about. However, it is poised to lose an easy 20% when real rates start approaching historical norms, given its duration and how far real rates can reasonably move from here (I think most people piling into that fund now probably do not know this). Don't have much invested yet, but I have about 75% bonds, 25% stocks through two mutual funds. $3000 in Vanguard Long-Term Bond Index (MUTF:VBLTX) $2000 in Vanguard STAR (MUTF:VGSTX) <-- this one is just an agglomeration of many Vanguard funds. Why are you hinting that bonds are more of a risk than equities now? Short term rates are locked in at near 0% til 2014, economic recovery is stagnant and a backstep into recession-like conditions seems more likely. Wouldn't this all favor bonds and inflation-protected securities over equity?
|
|
#
?
Jan 31, 2012 02:55
|
|
|
Also, does anyone know if you can skirt around Vanguards' fund minimums by buying in over the minimum, then exchanging out to another fund? Ex. buy $4000 in a fund with a $3000 minimum, then exchanging 3/4ths of that to another $3000 minimum fund? I need more diversity but the Roth limits combined with Vanguard minimums are restricting me.
|
|
#
?
Jan 31, 2012 02:58
|
|
|
Leperflesh posted:But don't normal IRAs and Roth IRAs share the same annual limit on contributions? So it absolutely makes sense if you're maxing matching, and then also maxing your annual Roth IRA contribution, to put further funds into the 401(k) as the only other tax-advantaged option left? You're right. For some reason I thought they weren't linked.
|
|
#
?
Jan 31, 2012 03:37
|
|
|
Is it possible to begin contributing to a RothIRA to begin with (for example when making less money) and then switch to a traditional IRA to take advantage of the tax benefits of a traditional IRA? Or is this a dumb idea?
|
|
#
?
Jan 31, 2012 06:01
|
|
|
downout posted:Is it possible to begin contributing to a RothIRA to begin with (for example when making less money) and then switch to a traditional IRA to take advantage of the tax benefits of a traditional IRA? Or is this a dumb idea?
|
|
#
?
Jan 31, 2012 06:57
|
|
|
Metajo Cum Dumpster posted:Don't have much invested yet, but I have about 75% bonds, 25% stocks through two mutual funds. I did not hint that.
|
|
#
?
Jan 31, 2012 07:04
|
|
|
The Noble Nobbler posted:I don't really believe in the value of speculation. The impetus behind the choices I made is that the bond/equity situation is such that neither outperforms the other (so I chose equal portions) and the remainder of the portfolio is a value-retaining portion / hedge made up of gold / broad commodities, and REITS. I would argue with your premise that neither bonds nor stocks outperform each other, since stocks have historically outperformed bonds across nearly all reasonable investment horizons. The only tradeoff one takes by favoring equity over fixed income is that the higher volatility means you may be forced to withdraw in a lossy year if your needs demand it. But aside from that, the key thing to remember about permanent value portfolios (which is what it seems like you're trying to approximate) is that they have to be re-balanced pretty frequently. If you do this in a taxable account, the fees and tax events you'll trigger will eat a very sizable chunk of your gains.
|
|
#
?
Jan 31, 2012 16:51
|
|
|
I've seen enough charts of various mutual funds and how a $10K investment grows over time. But let's say I have an individual stock with automatic dividend reinvestment; stock charts seem to show only historical ticker prices. I want the total value of the investment over time. Are there any tools that can do this for me?
|
|
#
?
Feb 1, 2012 06:34
|
|
|
|
| # ? May 16, 2024 16:39 |
|
|
G-Funk All-Star posted:I've seen enough charts of various mutual funds and how a $10K investment grows over time. But let's say I have an individual stock with automatic dividend reinvestment; stock charts seem to show only historical ticker prices. I want the total value of the investment over time. Are there any tools that can do this for me? Excel XIRR function does this. Google will show some guides on how to use it.
|
|
#
?
Feb 2, 2012 20:11
|
|