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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? I think google finance shows the % change in value with dividend reinvestment when you ask it to compare symbols (but not when you look at a single symbol). You could set the start/end dates and multiply the initial investment by the reported change.
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Feb 2, 2012 22:44
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How often should I be looking to rebalance my retirement investments? I basically set things up initially and rebalanced once several years ago. Would my current allocation need to be rebalanced or diversified? Here's my allocation right now (initial split was 19/19/19/19/12/12).code:Rockker fucked around with this message at 20:25 on Feb 3, 2012 |
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Feb 3, 2012 20:19
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I don't know if there is research on optimum timing or anything, but I rebalance at the end of the year.
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Feb 3, 2012 20:30
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Rockker posted:How often should I be looking to rebalance my retirement investments? I basically set things up initially and rebalanced once several years ago. Would my current allocation need to be rebalanced or diversified? Here's my allocation right now (initial split was 19/19/19/19/12/12).
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Feb 4, 2012 00:05
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Speaking of Vanguard...I notice that their Target Retirement funds have a $1000 minimum investment, compared to the $3000 norm. Does anyone know if that come with any extra strings attached, like "since you opened the account this way you can't alter the fund balance?" Not that I'd feel comfortable altering or selecting my own allocation yet (still reading!) but if I can open the accounts all the sooner with no downside, that would be nice.
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Feb 5, 2012 18:07
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Torael_7 posted:Speaking of Vanguard...I notice that their Target Retirement funds have a $1000 minimum investment, compared to the $3000 norm. Does anyone know if that come with any extra strings attached, like "since you opened the account this way you can't alter the fund balance?" Not that I'd feel comfortable altering or selecting my own allocation yet (still reading!) but if I can open the accounts all the sooner with no downside, that would be nice.
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Feb 5, 2012 18:11
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Torael_7 posted:Speaking of Vanguard...I notice that their Target Retirement funds have a $1000 minimum investment, compared to the $3000 norm. Does anyone know if that come with any extra strings attached, like "since you opened the account this way you can't alter the fund balance?" Not that I'd feel comfortable altering or selecting my own allocation yet (still reading!) but if I can open the accounts all the sooner with no downside, that would be nice. If I had to guess, it was a marketing ploy to make sure you start your retirement investing with them, thus already making you a customer when you can afford other companies minimums (if the other companies aren't already doing this.) It's a really smart move, actually. edit2: If you don't sign up for e delivery and your fund is under 10k, they'll charge you a 20 dollar annual service fee, but you should be free to move around as you see fit.
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Feb 5, 2012 18:11
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gvibes posted:I don't think so. xaarman posted:If I had to guess, it was a marketing ploy to make sure you start your retirement investing with them, thus already making you a customer when you can afford other companies minimums (if the other companies aren't already doing this.) Well, I'll shoot them an email to double check. Thanks.
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Feb 5, 2012 18:36
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This may be obvious to some people, but I just thought about this the other day. I have 2 retirement accounts -a Roth IRA and a 401k through my work. I have an asset allocation I worked out that is pretty similar to the bernstein/swensen models - about 6 asset classes all through low cost index funds. However, I currently duplicate the asset allocation in each account. Since my 401k only offers 2 low cost funds (A total market index fund & a vanguard total bond fund), wouldn't it make more sense for me to have those classes represented in my 401k only and keep the other 4 assets classes in my vanguard IRA? If my description was bad, I'm suggesting moving to: 401k: 50% total US stock 50% US bond IRA: 25% small cap US 25% europe 25% emerging markets 25% reit The numbers are made up, but I think should exemplify my idea. Each account has roughly the same amount of $ Is this obvious? Does everyone else already do this? If not, is it a good idea?
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Feb 5, 2012 20:04
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bacon! posted:This may be obvious to some people, but I just thought about this the other day. I have 2 retirement accounts -a Roth IRA and a 401k through my work. I have an asset allocation I worked out that is pretty similar to the bernstein/swensen models - about 6 asset classes all through low cost index funds. However, I currently duplicate the asset allocation in each account. Since my 401k only offers 2 low cost funds (A total market index fund & a vanguard total bond fund), wouldn't it make more sense for me to have those classes represented in my 401k only and keep the other 4 assets classes in my vanguard IRA? Yes that is the way to go. Concentrate as much as you can in the least bad 401k funds and balance with other funds (IRA and taxable account).
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Feb 5, 2012 20:13
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80k posted:Yes that is the way to go. Concentrate as much as you can in the least bad 401k funds and balance with other funds (IRA and taxable account). Great, thanks! I'll change it up during my annual rebalance.
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Feb 5, 2012 22:29
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Hope this is the best place to ask this, as it covers a few different financial areas of my budget. I have $5,000 in savings right now. Debt I have is $15,000 auto loan @ 11%, and about $15,000 in student loans around 6%. I'm considering putting that $5,000 on the auto loan, or using it to open a Roth IRA for 2011. I currently don't have a Roth. I'm planning on paying $1,000 a month starting next month to pay the car loan off as fast as I can, regarless of if I put the $5,000 on it or not. Even with opening a Roth IRA for 2011, and paying the $1,000 a month on the car, I should still be able to do another $5,000 for a 2012 Roth contribution. I'm looking at the long term as I just started saving for retirement this year (I'm 27). The other issue is the $5,000 is all I have in savings right now. While I would normally consider this as an emergency fund, I'm considering using it for the above reasons because 1. I live at home 2. I have a 2nd car I own outright so not worried about being screwed if one breaks and I don't have money to fix it right away. My job is fairly secure; they under pay me, I do a great job, and the position is absolutely necessary for them. I'll still be putting about $400 a month into savings while paying the car off, and then I'll have around $1400 a month to save. I'm thinking that putting the $5,000 into the Roth now would have the most benefit for me in the long run than paying down the car, but wanted to get some of your opinions on my plans. More info in case you want it - I'm contributing to my 401(k) up to my employer's match. I'm living comfortably and not strapped for money, I've just been bad at saving previously, but feel I have it under control now. I have no revolving debt and have a single credit card that can be used in emergencies. I'll be looking to buy a house in 5 years or so. I want to do max Roth IRA contributions every year from now until I retire.
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Feb 6, 2012 19:47
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How's your credit? 11% seems kind of high, though it's been a while since I had an auto loan. I would try to get the auto loan paid off earlier in the year and try to squeeze in the roth contribution near the end if you can.
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Feb 6, 2012 20:58
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I would pay off my car loan before you even start to save. Because you're paying $1,650 yearly on that $15,000 loan right? From my target Roth IRA from Vanguard, I'm not making anything close to that per year. I read a few pages back someone suggested you do the math for the projected rate of growth from your Roth IRA and how much interest you're going to be paying.
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Feb 6, 2012 21:14
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Yeah I like thinking of loans as the opposite of guaranteed investments -- if you had a guaranteed 11% apy equity that would be pretty awesome. Roths have limits though and are also going to exist for far longer than the lifetime of your auto loan (hopefully).
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Feb 6, 2012 21:54
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The interest rate is so high because of the age of the car, so not going to be able to get it much lower. While yes, the interest rate on the vehicle is higher than I would likely make in any investment, the idea is that the $5,000 will have over 20 years of accumulating interest, compared to a single year of paying interest on the car loan, which will be paid off in about a year. The interest paid on the car loan would be closer to $1,200, due to paying the principal down each month, but the idea is that compound interest over 28 or so years will be greater than the $1,200. It depends on inflation and how the investment performs, but I would expect it to easily out perform the savings of interest on the car. The interest on the car loan I would save by putting the $5,000 down now, would be about $700. Wouldn't $5,000 invested today, beat out that $700 I save, in 28 years from now? The biggest issue is that I'm trying to sneak in a 2011 Roth contribution. I plan on maxing out 2012 regardless of this decision, so it's not like I can apply any interest savings towards 2012 contributions because it will already be maxed.
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Feb 6, 2012 22:05
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Hashal posted:The interest paid on the car loan would be closer to $1,200, due to paying the principal down each month, but the idea is that compound interest over 28 or so years will be greater than the $1,200. It depends on inflation and how the investment performs, but I would expect it to easily out perform the savings of interest on the car. Time value of money, man. In 28 years, assuming a rate of return of about 5% annually on the Roth, the difference in value if you contribute for 2011 versus if you don't is about $19,000. The present value of that amount, assuming about 3% annual inflation, is only like $6,000. So $5,000 contributed to a Roth IRA today gives you an extra ~$1000 in present day value. Compare that to paying down your debt, which in one year will give you about an extra $700 in value, your savings on interest. So one use of that $5,000 is worth $1,000, and another is worth $700. Is the extra $300 worth the risk of holding debt for longer? I would say no. Yeah, you could change up the inflation rate and rate of return a bit to make the difference more stark, but not so compelling that you shouldn't still prefer debt reduction first.
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Feb 6, 2012 23:31
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To get a good apples to apples comparison you also need to consider that paying off your car loan earlier will also free up your budget to save more each month sooner. If this were any other type of savings I'd say no contest, pay off the 11% debt first. The only reason to consider a roth imo is that you have a 5k yearly limit, which, given 28 years of tax free distributions, might be a sizable amount to miss out on. If this were some other savings account though, simply thinking in terms of long term yield would favor paying off the debt first.
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Feb 6, 2012 23:40
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Yeah, the contribution limit of an IRA is the only reason I'm considering this. Any other situation and I'd be paying off the debt. The issue with time value, is that I can't use the $700 to invest in the Roth IRA. Time value really only applies when you have the same opportunity costs available to you, correct? In other words, $700 I have after April is worth less to me than $700 I have before April, because of the opportunity cost to invest in a higher yield vehicle (assuming from tax savings in the Roth). In the end, it may just be better to pay off the debt for psychological reasons alone that may make it easier for me to save more in the future. I think doing the Roth now and paying the debt off a little later is the best choice in the long run when trying to maximize my wealth. It also forces me to invest $5,000 now than try and attempt to re-save $5,000 after I pay the car off to make up for the same investment, which then would have to go into a taxable investment, on top of saving $5,000 for the next IRA contribution. Can you guys tell me if the tax sheltered IRA for first time home buyers shares the same contribution limit? Edit: Looks like that is just a standard IRA, but doesn't inflict early withdraw fees for first time buyers. So, looks like that would share the $5k limit. Loan Dusty Road fucked around with this message at 00:18 on Feb 7, 2012 |
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Feb 7, 2012 00:01
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I'm just starting to look into opening a Roth IRA for myself. I'm trying to understand some aspects of this and was wondering if you guys could help. I'm 23 by the way, no major debt, and I'm currently just using a savings account to hold my savings. The first big question is where I should open this. I can open an IRA through my credit union, BECU, but they only offer CDs, not a mutual fund. The return on them is 0.60 on a 12 month, 1.55 on a 60 month, with options in between. I understand that the return over time will be lower then if I invested in a Vanguard IRA or something, but since CDs are FDIC insured wouldn't it be the safer option over the lifetime of the account? Also, if I did invest in CDs, would 60 months be the way to go? I would have a higher rate but it's locked in for 5 years, would changing interest rates make a difference? Or am I being silly and should I just jump on a Vanguard IRA? Everyone seems to be raving about them here. I see that they have targeted mutual funds for when you plan to retire. If I planned to retire in 2055, but wanted to reduce my exposure to the stock market would it be a good idea to get a plan targeted to an earlier year?
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Feb 7, 2012 02:50
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So I was thinking of re-allocating money in my 401k, but seems like my work has really limited choice of funds. Right now all of my money is in Principal LifeTime 2050 Instl PPLIX (Yield 1.93% / Expenses 0.80% ) Breakdown of holdings: Principal Large Cap Growth I Inst 13.10 Principal Large Cap Value I Inst 13.03 Principal Large Cap S&P 500 Index Inst 7.88 Principal International Value I Instl 7.62 Principal Large Cap Value Inst 6.66 Principal Diversified Intl Inst 6.64 Principal Large Cap Growth Inst 6.61 Principal High Yield I Inst 5.21 Principal Intl Emerging Markets Inst 4.71 Principal International I Inst 4.32 Principal doesn't have a single good choice for bonds it seems, and here are the most decent funds they have, period. LargeCap S&P 500 Index Inst Fund (PLFIX) Yield 1.89% Expenses 0.17% SmallCap S&P 600 Index Inst Fund (PSSIX) Yield 0.74% Expenses 0.20% MidCap S&P 400 Index Inst Fund (MPSIX) Yield 0.91% Expenses 0.20% Vanguard REIT Index Inv VGSIX Yield 3.19% Expenses 0.26% Principal International Eq Index Instl PIDIX Yield 2.50% Expenses 0.37% Is there any point for me to even bother with this? Should I keep it as it is, you think? I am also opening ROTH IRA with Vanguard in a week, so I will have much more flexibility there.
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Feb 7, 2012 03:13
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Squarb posted:I see that they have targeted mutual funds for when you plan to retire. If I planned to retire in 2055, but wanted to reduce my exposure to the stock market would it be a good idea to get a plan targeted to an earlier year? This is good place to start. First figure out what you want your asset mix to be, say 70/30 Stocks / Bonds. Then pick the target fund that matches that (I think 2025 but not sure). FYI Vangaurds TR funds are supper aggressive in equity allocation for the later years, so don't pay any attention to the year just the asset mix that you want. It's one thing to say you have risk tolerances, another thing entirely to watch your portfolio drop by 50% in a year and still be able to stay the course. Don't feel bad if you do not want to much exposure to the whims of the market, but realize you may (will) see lower returns in the long run.
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Feb 7, 2012 04:06
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Deadreak posted:Is there any point for me to even bother with this? Should I keep it as it is, you think?
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Feb 7, 2012 07:51
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Hashal posted:In the end, it may just be better to pay off the debt for psychological reasons alone that may make it easier for me to save more in the future. I think doing the Roth now and paying the debt off a little later is the best choice in the long run when trying to maximize my wealth. It also forces me to invest $5,000 now than try and attempt to re-save $5,000 after I pay the car off to make up for the same investment, which then would have to go into a taxable investment, on top of saving $5,000 for the next IRA contribution. Just pay off the car. The entire point of a Roth is to save taxes. But paying off debt is also a tax free investment. Plus, a guaranteed 11% is better than anything guaranteed you can get in a Roth. I wouldn't worry too much about the $5000/year limit because capital gains and dividends are already taxed at a reduced rate outside of an IRA. Also, don't use your entire savings of $5000. Keep at least a $1000 for emergencies. P.S. For others reading this, don't get a $15,000 car loan. Get a cheaper car or save up and use cash.
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Feb 7, 2012 15:58
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sorry misread.
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Feb 7, 2012 17:34
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So, I've read through parts of the thread and understand why it's a good idea for most people to do: 1) Up to Employer match 2) Roth IRA 3) Max 401k 4) other However, I'm a bit curious as to what you would do in this situation. My employer recently redid the whole pay and benefits including the 401k. Now we pay a flat fee per year (~$50) to Fidelity per year (regardless of number of funds invested in) but have pretty low expense ratios on some funds like Vanguard Target retirement funds (.08%), some S&P 500 fund (.02%), Large Cap (.28%), and Small Cap (.73) being the most noticeable compared to what was offered before. Right now I'm doing enough to get the employer match and that's really all I want to put in. But if I decide to invest more in the future, would it be smart to take advantage of these low ratios or would it be better to open the Roth IRA if only so I have both pre and post tax investment?
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Feb 8, 2012 02:24
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somedude posted:So, I've read through parts of the thread and understand why it's a good idea for most people to do: As you know, a company 401k plan can change. In this case, it seems the change was a good one. If it changes for the worse, your money is still stuck there. The nice thing about an IRA is that it is all under your control. So I would still err on prioritizing your IRA after the match.
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Feb 8, 2012 02:29
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80k posted:As you know, a company 401k plan can change. In this case, it seems the change was a good one. If it changes for the worse, your money is still stuck there. The nice thing about an IRA is that it is all under your control. So I would still err on prioritizing your IRA after the match. You should hit the match no matter what, since it's "free" money now.
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Feb 8, 2012 05:03
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Harry posted:You should hit the match no matter what, since it's "free" money now. Yea he knows that. He is talking about money beyond the match.
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Feb 8, 2012 09:18
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Yeah, I'm apparently blind.
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Feb 8, 2012 14:47
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Has anyone looked at / used https://www.wealthfront.com It doesn't seem like they do more than come up with an asset allocation after sending you through a big old survey and then set you up with a variety of ETFs and charge a flat 0.25%. It seems like they're trying to take on the financial advisor for the Silicon Valley nouveau riche but at way less load than traditional advisors.
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Feb 8, 2012 15:12
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nelson posted:Just pay off the car. The entire point of a Roth is to save taxes. But paying off debt is also a tax free investment. Plus, a guaranteed 11% is better than anything guaranteed you can get in a Roth. I wouldn't worry too much about the $5000/year limit because capital gains and dividends are already taxed at a reduced rate outside of an IRA. I agree with the person paying off the car loan, but I do wonder if there is a statistical breakdown of doing so over funding a Roth. Essentially asking at what interest rate and what age should you consider one over the other since the Roth is a "use it or lose it" proposition. I'll give an example. When I was straight out of college I did everything I could to pay off my student loans right away. Some were at just over 6% interest. I avoided putting any money into a Roth for those first few years. Now if I had put in the max and not put the extra money toward the principal of my student loan, I could have theoretically had $15,000 in my Roth by 25. Now at a 7% return, that would be $225k by 65. Tax free growth of $210k, plus whatever I can keep in there through the retirement years. Now wouldn't it have been more beneficial to fund the Roth from a long term perspective? I don't really have an opinion on it, just sort of curious if I'm crazy to think that I would have been better off utilizing it.
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Feb 8, 2012 15:46
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Niwrad posted:Now wouldn't it have been more beneficial to fund the Roth from a long term perspective? I don't really have an opinion on it, just sort of curious if I'm crazy to think that I would have been better off utilizing it. Well, it's also complicated by the inflation rate, because if you have an 5% debt with 7% inflation, I wouldn't pay off the debt because you're essentially getting a 2% return for just holding it. Sometimes it has to be done on a case-by-case basis, because you can have debts like student loans and mortgages which can be deducted from taxes (so that brings into the equation what tax bracket you're in). If you've got anything where the interest could never be deducted, like credit cards or car loans, I'd say anything above 8% would pretty much have to take priority over investing unless you're in some really bizarre high-inflation period. Remember that paying down debt is a gauranteed return on your money, whereas investing is all based on expected return, and you never really know what you're going to get.
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Feb 8, 2012 23:27
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flowinprose posted:Well, it's also complicated by the inflation rate, because if you have an 5% debt with 7% inflation, I wouldn't pay off the debt because you're essentially getting a 2% return for just holding it. You might want to think about this one a little more.
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Feb 9, 2012 01:39
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k3nn posted:You might want to think about this one a little more. Am I misunderstanding something? You owe someone else $1000 at 5% interest per year, yet the buying power of that $1000 is eroding at a rate of 7% per year. So lets say you paid them back in one lump sum after 10 years: You owe that person $1629 (paying $629 in interest). However, that $1629 10 years later will only buy what $828 would've bought when you borrowed the $1000. Therefore you paid him back less buying power than you borrowed. Edit: Think about it, it's the opposite of buying a bond at a negative real interest rate. flowinprose fucked around with this message at 02:31 on Feb 9, 2012 |
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Feb 9, 2012 02:25
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Niwrad posted:When I was straight out of college I did everything I could to pay off my student loans right away. Some were at just over 6% interest. I avoided putting any money into a Roth for those first few years. Now if I had put in the max and not put the extra money toward the principal of my student loan, I could have theoretically had $15,000 in my Roth by 25. Now at a 7% return, that would be $225k by 65. Tax free growth of $210k, plus whatever I can keep in there through the retirement years. You're comparing a 6% tax free interest rate to a 7% tax free interest rate.
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Feb 9, 2012 03:19
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Hashal posted:I have $5,000 in savings right now. Debt I have is $15,000 auto loan @ 11%, and about $15,000 in student loans around 6%. Nobody else has mentioned it, but you said you have a second car, paid for free and clear, already. So, my advice: sell this car. Assuming it's sale value is higher than what you owe. That way you save all of the interest on the loan, can put your money into the Roth, and you'll have $1000 a month going forward in additional positive cash flow. You can save it to buy a car outright in a year if you want, or you can sock it into retirement, and you'll be able to replenish your savings very quickly as well. Unless it's some kind of priceless irreplaceable heirloom car, or your other car isn't actually driveable, this is by far the best option financially.
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Feb 9, 2012 03:54
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Leperflesh posted:Nobody else has mentioned it, but you said you have a second car, paid for free and clear, already. So, my advice: sell this car. Assuming it's sale value is higher than what you owe. Buying a brand new car and doubling his debt load was not a good idea and neither is moving out of the parent's house and immediately buying one. Not very good financial planning - might want to sit down and think about wants vs needs. Trying to plan retirement savings when you're 25k in the hole is a bit premature. cowofwar fucked around with this message at 04:18 on Feb 9, 2012 |
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Feb 9, 2012 04:16
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cowofwar posted:He lives at home, has a decent income and low expenses. He might as well keep the car. But his idea of buying a house in five years is probably unreasonable given his debt load. Getting that high of a loan on a car was a bad idea. I've made plenty of bad financial decisions in the past and trying to fix that now. I actually had the car with the loan first. I later bought a 2nd car for $5000 cash. I'm saving $1,500 a year in insurance and gas by having the 2nd car. Yes, I could save more by selling the car with the loan, but I plan on keeping it for 10 years + and putting about 3,000 miles a year on it. It's a big toy, but I can afford it, and it will be paid off in about 10 months. I'm also planning on getting a new job sometime in the next 18 months, expecting a 50% pay increase at the minimum, and that is on the low end. That is what I am counting on to allow me to start saving properly for a house and being able to afford it once bought. So the house plan is all dependent on that. I don't think it's too early to be looking at retirement in my situation. Given the car loan will be gone soon, I'm matching my employers 4% dollar to dollar match, and putting in an additional 2% on top, and will be maxing a Roth each year herein out I will have even more to save with once I have a new job. For those wondering, I'm putting the $5,000 on the car note. Loan Dusty Road fucked around with this message at 06:03 on Feb 9, 2012 |
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Feb 9, 2012 06:01
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I have a thrift savings plan through work, and in going to their site just now I discovered that they're offering a ROTH option in 2012. There isn't much info about it, but one of the things they tout is that it's not an all or nothing thing. You can apparently designate any percentage of contributions to be ROTH. I've never heard of being able to do that for 401k style accounts. Is there any point to doing fractional contributions like that, if you're not right on the cusp between income limits for ROTH? I'm not even sure if income limits exist for ROTH 401k/TSP contributions like they do for IRAs.
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Feb 9, 2012 18:45
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