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I would like to open a custodial minor account for my kid. Ideally it should earn $900 in taxable income rather then defer gains to a latter date. Are there mutual funds that will do this or ETFs?
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May 3, 2012 19:38
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Leperflesh posted:Having maxxed out your IRA options, I'd say you should start putting money into your 401(k). Yes, the fund choices may be lovely, but it's tax advantaged investing and that should make up for it. Plus you might get some matching maybe, and that's free money you don't want to pass up on. I'll see what I can dig up. How about savings accounts? Is it even worth opening one up if I can keep myself under control anyway and don't plan to blow it all if its in checking? All the returns are pretty pitiful, like .8% 
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May 3, 2012 21:36
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BotchedLobotomy posted:I'll see what I can dig up. How about savings accounts? Is it even worth opening one up if I can keep myself under control anyway and don't plan to blow it all if its in checking? All the returns are pretty pitiful, like .8% Don't keep all of your money in a checking account. If you loose your wallet, someone could have a lot of fun before they get stopped. Find a savings account with no fees, and park your money there. Sure, the rate is pitiful, but god drat, it's a lot safer.
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May 3, 2012 22:37
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That's a really good point, I didnt think of that. Thanks!
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May 3, 2012 22:50
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BotchedLobotomy posted:I'll see what I can dig up. How about savings accounts? Is it even worth opening one up if I can keep myself under control anyway and don't plan to blow it all if its in checking? All the returns are pretty pitiful, like .8%
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May 4, 2012 01:15
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bam thwok posted:Don't keep all of your money in a checking account. If you loose your wallet, someone could have a lot of fun before they get stopped. Find a savings account with no fees, and park your money there. Sure, the rate is pitiful, but god drat, it's a lot safer. Almost all debit cards have a daily transaction dollar limit on them. Also banks will very often reverse fraudulent transactions that the account holder did not conduct.
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May 5, 2012 03:30
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I've been looking at a life-insurance policy that basically has me paying a $1600 yearly premium. It basically looks something like this: http://imgur.com/v0jwe Is a policy like this a good idea?
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May 6, 2012 03:18
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Phiberoptik posted:I've been looking at a life-insurance policy that basically has me paying a $1600 yearly premium. It basically looks something like this: Also, why are you getting life insurance at the age of 21? Who is trying to sell you this?
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May 6, 2012 18:52
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Nifty posted:Almost all debit cards have a daily transaction dollar limit on them. Also banks will very often reverse fraudulent transactions that the account holder did not conduct. This is something that poster should check into for his/her specific bank. I know a lot of debit cards do not have the same fraud protection that credit cards do (i.e. you don't get your money back if someone steals the card and uses it). And if someone shops at the right places and rings them up as credit (most debit cards can be rung up both ways), you don't need a PIN but it still draws directly from your checking account. And transaction limits are usually still pretty high numbers. I'd recommend having twin checking and savings accounts at the same bank (for ease of transfers), and keeping no more than several hundred in your checking account at any given time. And any time you write a check to someone, of course make sure to go put more than enough for that check in the checking account.
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May 7, 2012 14:28
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I actually never ever use my debit card for that specific reason. I also dont get any reward perks on my debit card vs CC (both are through the same bank.) Best rates I've seen is .8% which is pitiful.
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May 8, 2012 04:51
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alnilam posted:This is something that poster should check into for his/her specific bank. I know a lot of debit cards do not have the same fraud protection that credit cards do (i.e. you don't get your money back if someone steals the card and uses it). Excuse me? Can you name a bank that does not offer debit card fraud protection? Because as far as I'm aware all debit cards have it, especially those with a Visa/MasterCard logo on it. Zero Liability and all that.
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May 9, 2012 16:28
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Gabu posted:Excuse me? Couple of things. The first is that not all cards offer zero liability. Some cap it at $50, $100, etc. The second is that banks get to decide on their own if a charge is fraudulent, which means that they have a bureaucratic process in place that may or may not result in you getting fully compensated. The third is that while most debit cards have a reasonably low daily cash withdrawal limit, they don't necessarily have a reasonably low daily transaction limit. This means a thief who has your debit card can spend down your account on goods/services without anyone stopping it. The fourth is that even though by law banks must offer you a temporary credit for the amounts under dispute within 10 days, 10 days can be a really long time to be without the majority of your savings if you were dumb enough to leave it all in the checking account. Moral of the story; get a savings account and leave your cash savings in that savings account. That's why savings accounts exist. For your savings. To keep your savings safe. Not for writing checks. That's what checking accounts are for. Your checking account should hold money you intend to give to other people in the form of checks.
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May 9, 2012 17:24
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And don't link your checking and savings. Wells Fargo was "kind" enough to link them to provide what they call Overdraft Protection, so when my debit card got swiped, my checking was drained and each transaction after that pulled directly from my savings with a $10 *PROTECTION* charge on top of it.
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May 9, 2012 18:10
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Or you could just opt out of Overdraft Protection. It's odd they charged per transaction though, usually it's free to lure the sucker to drain his checking, savings, and then overdraft charges.
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May 9, 2012 18:13
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So I just posted over in the stock trading thread but it was suggested this is a better thread to ask for advice. I haven't really put any thought into long term savings other than when I first started as a fulltime employee at my job 4 years ago I elected to put 10% into 401k (5% match) and 10% into the employee stock purchase plan and then just sit on those. I sold a small amount of stock early on but other than that I've just been accruing this whole time. My only real mid-term goal was to use my stock to put a downpayment on a house in a year or two but I know I need to get my money out and diversify sooner rather than later. I work for Nike so my stock (thankfully) has been doing pretty well, I've got around a 95% gain at the moment according to Google Finance which I've been manually updating with my semi-annual purchases. What I'd like to do (and let me know if this is the total wrong idea) is transfer everything I can out of the BNY Mellon account it's sitting in and over to something like ETrade or a service where I can start putting it in mutual funds etc. I'd like to treat ~80-90% of it as medium-long term savings, sell some to fund a few photography purchases (moonlighting gig, need a new lens or two), and treat the remainder as short term savings that I can trade to learn a thing or two about the stock market. I'm guessing I'll probably want to talk to a financial advisor/planner (not sure the difference) at some point to get some more indepth advice but I'm hoping you guys can get me pointed in the right direction to start off with. My only real outstanding debt at this point in my life is ~$15k in student loans which are consolidated at ~4% interest so I haven't felt a real urgency to pay them off in full and am not sure if I should prioritize paying them off before looking into purchasing a home or not. Thanks in advance for any advice you may have, let me know if there is any other important information I'm forgetting to mention here. edit: I also wanted to ask if it would be a good idea to drop my 401k contribution down to 5% from 10% and put that other 5% in some other form of savings instead. since only the first 5% of it is matched by my company maybe it's not wise to have all of my retirement funds tied up in a 401k backed (largely) by Nike stock. MMD3 fucked around with this message at 18:48 on May 9, 2012 |
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May 9, 2012 18:37
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gvibes posted:Do you understand that this policy does? What all these numbers mean? If the answer is no, you shouldn't buy it. I'm not sure I'm reading it right, but it looks like some sort of cash-value/whole-life insurance, which is usually terrible and designed to generate big commissions for the seller. Financial situations where whole-life insurance is the best option are pretty rare. Do you actually have dependants that will need financial support if you die?
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May 9, 2012 20:11
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Gangsta Lean fucked around with this message at 04:33 on Oct 2, 2012 |
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May 10, 2012 02:26
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Even with your crappy expense ratios (and those do look terrible) I'd say the tax benefits outweighs the cost. You can never go back and contribute more to a 401k in previous years, but when/if you leave Nike you can roll all of your 401k money into your Vanguard IRA. So you're basically putting up with crappy expense ratios for a while to gain the benefit of saving more tax-deferred.
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May 10, 2012 06:47
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Gangsta, I will take a shot: 1. Those are pretty bad, but I agree with Daeus that I think it is still worth investing. Maybe a mix of the Blackrock Global Allocation and some bond funds in whatever your mixture is (80/20 or whatever) would be OK. 2. Your plan sounds like a good idea. 3. I would probably still max, unless you want to continue to save for a house. 4. Not sure exactly what you are asking here, but just save save save. Sounds like you are living plenty frugally.
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May 10, 2012 16:46
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Gangsta Lean fucked around with this message at 04:33 on Oct 2, 2012 |
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May 13, 2012 03:08
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Gangsta Lean, you and I are basically in the same situation. I'm about to jump back in after many, many moons of ignoring everything related to investments (beyond savings accounts). Except when I say "about to", I'm still trying to sort out what I think about Europe and how much that can poo poo the bed. But even so, I'm looking to max out the 401k and IRA accounts (most likely a combination of low-cost mutual funds and ETFs) and then move some savings into a combination of ETFs and stocks. Timing of it all, now that's a different story. For what it's worth, I got an MBA couple years back and still don't trust the markets. Or maybe it's precisely because I went to business school that I don't trust them...
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May 14, 2012 01:11
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 I'm a mid-20's Canadian who started saving for retirement earlier this year and I've got a question about the tradeoff between compounding interest and diversifying my savings. All the savings examples and advice I read are all about the benefits of compound interest, but it seems to me that because I need to be diversifying at the same time I won't be able to take advantage of that. For example, instead of putting away $10,000 a year for 5 years until I'm 30 and having $50,000 in one kind of fund, if I diversify my savings to 3 different funds (say a North America stock index, a World stock index, and a North America bond index) I'll actually have 3 different accounts of $16,600, and then in my later years when the effects of compound interest really start to work for me I'll be missing out on lots of money. But I never read anything addressing this and the potential tradeoff, am I missing something here?
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May 14, 2012 03:31
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freehotel posted:
I don't follow your argument. Are you saying that $50,000 in one account will compound differently than $50,000 in 3 accounts?
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May 14, 2012 04:04
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freehotel posted:
code:
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May 14, 2012 04:21
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Gangsta Lean posted:Should I be investing what's currently in the "savings account" long-term as if it's for retirement (even though I've already payed income tax on it and would also have to pay yearly taxes on any profit I make, two of the advantages of normal retirement accounts) or should I do some short-term higher risk investment in hopes of a bigger payout? Basically, come up with an asset allocation that you want to work with long term, and adjust your accounts so that your investments, combined across all accounts, hit those allocations. The one thing to be aware of is tax treatment. Check out http://www.bogleheads.org/wiki/Principles_of_Tax-Efficient_Fund_Placement You really want to keep bonds out of a taxable account.
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May 14, 2012 15:47
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For anyone who makes lump-sum contributions to their ROTH/IRA annually; what do you do with the cash as it accumulates across the year? Right now I just direct deposit an equal amount of cash from each paycheck into a savings account where it waits, but I wonder if there's a more efficient way to use those funds in the meantime? Does it make sense to route that money into a taxable brokerage account and buy ETFs instead, then sell at the end of the year before throwing it into the ROTH? The way I see it, one of two things will happen: either I'll have a net gain after short-term capital gains taxes, or I'll have a net loss and have to dip into my savings to make the full contribution, but I get to write those losses off on my tax return, so it balances out. Am I missing something?
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May 15, 2012 15:29
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I just save throughout the year for short-term emergency funds (in my bank savings account) and then have enough for a Roth contribution at the start of the new year.
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May 15, 2012 15:37
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MMD3 posted:So I just posted over in the stock trading thread but it was suggested this is a better thread to ask for advice. Can anyone comment on this, still trying to figure out WTF I should be doing. I just started reading a book called "I Will Teach You To Be Rich" and so far it has some really great advice about credit score and getting the lowest APR or loans based on your credit. Plenty of stuff I wish I'd learned like 10 years ago.
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May 15, 2012 16:36
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MMD3 posted:So I just posted over in the stock trading thread but it was suggested this is a better thread to ask for advice. Stocks and funds are not shot term vehicles. They are medium to long term. If you treat them as short term or day trade you will likely lose money on fees. The decision whether to pay off your student debt is whether you can get a better than 4% return elsewhere - which might not be likely. And finally, yes, only contribute enough to maximize your employee match. No more. Wait - is your entire 401k in Nike stock? Is that your only option? Don't do that. You want your money going in to a diversified target retirement fund or something to that effect - not individual stocks and definitely not in to your employer's stocks. If I understand your situation I would do the following first: Short term emergency savings (max up to 6-12 months of expenses then discontinue and focus on student debt) 401k - target retirement fund 2050 or something - maximize employer match - contribute excess to personal long term savings registered account instead. Employee stock purchase plan - continue if you're getting a match, liquify periodically as soon as possible, otherwise discontinue Long term savings - registered fund of some sort going in to a target retirement fund or diverse portfolio of <5 funds with an acceptable risk spread. Then: Student debt payments (prioritize once your short term emergency savings are maxed at 6-12 months expenses, I would prioritize over medium term savings) Medium term savings (you could put it in to some guaranteed, defined term deposit or something - I use laddered 5yr GICs) cowofwar fucked around with this message at 17:16 on May 15, 2012 |
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May 15, 2012 17:08
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ESPPs typically allow you to buy company stock at a small discount. You have to withhold money from your paycheck and it accumulates and then on a regular basis (three or six months is typical) it buys shares at a small discount to the market price. This is a great deal if you were going to buy lots of company stock anyway (such as if you're an executive maintaining a controlling stake in the company or something) and it's a reasonable deal if you don't need the cash for your regular daily living costs and you have a reasonable cash reserve to cover emergencies. But unless you're a major stakeholder trying to run the company, you should almost always be selling your stock immediately after it gets purchased. Why? Because you are already exposed to a lot of risk based on your employer's fortunes. If your employer does well, you have a good chance of doing well in your job (getting raises, etc.) but if your employer tanks for some reason (could be due to no fault of its own) you could wind up unemployed. Losing your job is a big financial risk! For exactly the same reason that we advocate diversifying your retirement porfolio by purchasing mutual funds and bond funds, across both domestic and international, and covering the whole breadth of the market, we advise against putting too many eggs in the single basket of your employer's performance. Take advantage of the ESPP discount to get a little extra money (whatever that discount is) but don't leave it there any longer than you have to. Keep in mind you'll pay taxes on the capital gain, too; in my case the ESPP offered by my employer is such a small discount, that coupled with the tax on the gain, I don't feel it's worth it to me to tie up a portion of my income for six months at a stretch. So I don't bother with it. I'm better off putting that cash directly into my debt (particularly my mortgage).
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May 15, 2012 17:59
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cowofwar posted:Is your employer giving you any matching for that stock purchasing plan? If not - stop, if you are getting an employer match you want to sell those shares periodically as soon as possible (might be a vesting period). You don't want to own stock in the company at which you're employed unless it's a start up and it cost you nothing. so the ESPP is a 6 month purchasing period and they buy at 15% below the lower of the two prices (beginning or ending of the offering period)... as far as I can tell it's free money and wouldn't make sense to opt out of it so I contribute the maximum allowed which is 10% of my salary. Initially I had planned to sit on it until it qualified for long term cap gains and then start transferring it into something else but it's been about 3.5 years since I've sold any of it. My intention was to use it as medium term savings for a downpayment on a house when I was ready to buy. I guess daytrading isn't really what I was thinking of... I wanted to move it over to ETrade because I thought they offered mutual funds and long term investment options. When I made that first post I was thinking maybe it'd be good to take a small chunk of it to trade with to learn the market but I'm starting to reevaluate that now that I've been reading this book. I guess since I hadn't really been good about putting anything away into short term savings I was thinking I'd use a small portion of my stock to transfer into a short term savings account to prime the pump so to speak. My 401k isn't all in Nike stock, just the 5% match portion (as far as I understand it) which I'm about 80% vested in so far. The rest is in a pre-mixed moderate fund managed by Hewitt. I just pulled up the numbers to confirm... Currently I'm at 56% of it in the premixed moderate fund with a return of 3.84%, 28% in Nike stock with an 11.86% return, and 16% in a profit sharing fund with 4.4% return. I'm attaching a screenshot of the average annual returns for the funds that are offered, I still don't fully understand what I'm looking at... trying to figure out if I should be going more aggressive considering how long of term my money will be in this. I'm 31 so I've got a while before retirement. Thanks for the info... I think my immediate need is to figure out an auto-deduction to put into short term savings to start building a buffer there and stop treating my stock as my safety net. Then I'll have to figure out if the additional 5% 401k money should be reallocated (I'm contributing 10% and the match is only 5%). Are there any good resources to learn about medium-term savings options for transferring my stock into after holding long enough to hit the long term cap gains rate? I'm hoping Mellon will let me transfer straight into some kind of fund where I can get better analytic tools for monitoring my return (this is why I was asking about ETrade). Great info, thanks again!
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May 15, 2012 18:48
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whoops, here's the screenshot of my fund performance. I have another screenshot of the YTD performance if that'd help as well.
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May 15, 2012 18:49
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Leperflesh posted:Take advantage of the ESPP discount to get a little extra money (whatever that discount is) but don't leave it there any longer than you have to. Keep in mind you'll pay taxes on the capital gain, too; in my case the ESPP offered by my employer is such a small discount, that coupled with the tax on the gain, I don't feel it's worth it to me to tie up a portion of my income for six months at a stretch. So I don't bother with it. I'm better off putting that cash directly into my debt (particularly my mortgage). so given my previous post... 15% discount should make it worth it correct? what's the logic of selling before long term cap gains kicks in? just safety? My company is Nike so we've been performing well recently which makes it a harder decision to unload it but I understand what you're saying here. I was hoping to hold out until a stock split which most of my coworkers I've talked to about it recently have been anticipating. We've also got some big events on the horizon like the Olympics and the NFL sponsorship which makes me think we're on track for a good year but obviously I'm no expert on this stuff or I wouldn't be in here asking for advice  Really appreciate all the advice, you guys are an amazing resource 
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May 15, 2012 18:54
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Wait, so your employer match is only in Nike stock? Edit: At this moment, what percentage of your total net worth is in Nike stock?
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May 15, 2012 18:55
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bam thwok posted:Wait, so your employer match is only in Nike stock? Too much? :/ this is what I'm starting to realize... and part of what brought me to this thread  I mean... yeah, 100% of my midterm savings at the moment and 28% of my longterm savings I guess... guessing that profit sharing component is in Nike stock as well eh? MMD3 fucked around with this message at 19:30 on May 15, 2012 |
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May 15, 2012 19:26
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Read the title of the thread and apply that to your "average annual gains" chart. You need to know what the costs are of the funds you're investing in. What is the management fee and cost for the funds you've listed? Also I'm surprised there's no index fund available (that's terrible). e. and yes, the 15% discount makes the ESPP very worthwhile (and extremely generous). I'd sell everything that has a long-term cap gains basis immediately, and consider selling a proportion of the short-term stuff too, depending on how much that is as a percentage of your total portfolio.
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May 15, 2012 19:29
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MMD3 posted:as far as I can tell it's free money No. No. No. No. No. No. No. No. No. No. Even with the discounted purchase, that money is ABSOLUTELY NOT FREE. It costs a lot in terms of very substantial risk of loss. Unless your job title has the word "Chief" or "Chairman" in it, you should not hold onto your own company's stock for any extended amount of time. Let alone the 2.5 years you've held onto it so far. Congratulations on riding their performance for this long, but read the thread title. Read it 1,000 times. If you ever have plans to use that money for something important to you - like a house, education for your kids, a dream vacation, whatever - don't leave it in a single stock that could take a dive on a single bad quarterly earnings statement, an executive getting hit by a car, an accidentally racist ad campaign, or any of the other million risks that apply to Nike and every company which has made diversification the alpha and omega of investing. bam thwok fucked around with this message at 19:44 on May 15, 2012 |
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May 15, 2012 19:41
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bam thwok posted:No. No. No. No. No. No. No. No. No. No. Even with the discounted purchase, that money is ABSOLUTELY NOT FREE. It costs a lot in terms of very substantial risk of loss. Unless your job title has the word "Chief" or "Chairman" in it, you should not hold onto your own company's stock for any extended amount of time. Let alone the 2.5 years you've held onto it so far. sorry, yes... I get this, what I meant was... it'd be free money if I was selling it as soon as the purchase order went through, I understand that holding onto it for any amount of time introduces substantial risk. I'll work on diversifying asap, and again... this is exactly why I came into this thread to ask for advice. I know I haven't been wise about it to-date, hoping to turn a new leaf  I guess when I first went from being a contractor with no benefits to being a full time employee I figured it was enough that I was allocating 10% to 401k and 10% to ESPP and I'd just figure out what to do with it down the road. I really didn't anticipate that I'd find myself 4 years into my career here without having figured out how to be smarter about my savings. MMD3 fucked around with this message at 20:04 on May 15, 2012 |
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May 15, 2012 20:02
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MMD3 posted:My 401k isn't all in Nike stock, just the 5% match portion (as far as I understand it) which I'm about 80% vested in so far. The rest is in a pre-mixed moderate fund managed by Hewitt. I just pulled up the numbers to confirm... Currently I'm at 56% of it in the premixed moderate fund with a return of 3.84%, 28% in Nike stock with an 11.86% return, and 16% in a profit sharing fund with 4.4% return. bam thwok posted:No. No. No. No. No. No. No. No. No. No. Even with the discounted purchase, that money is ABSOLUTELY NOT FREE. It costs a lot in terms of very substantial risk of loss. Unless your job title has the word "Chief" or "Chairman" in it, you should not hold onto your own company's stock for any extended amount of time. Let alone the 2.5 years you've held onto it so far. cowofwar fucked around with this message at 21:38 on May 15, 2012 |
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May 15, 2012 21:28
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cowofwar posted:This is all true but he will incur a fee by selling the stock so he'll want to balance the money gained through employer matching against the money lost through transaction fees. The fees will not be more than 15%, which is the discount, and you usually have to hold for like 6 months, so it won't exactly be a weekly churn.
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May 15, 2012 21:35
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