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turbulents posted:If I'm at the point where I could max my 401k (but no employer match), how do I evaluate whether the 401k investment options are worthwhile or if I'm better off taking my money elsewhere? For what it's worth, I don't mind being risky with my money but I also don't do a whole lot of research and thus far just have money in a Vanguard Target Retirement account and an index fund. Mostly expense ratios. If you've got a vanguard TR fund available in one of them, I'd max that account first. In general I'd max the account that had the least expensive funds available to me first.
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Jun 22, 2012 23:38
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Daremyth posted:My question is, when are we forced to make the switch over to traditional? Our 2013 income will probably be over the limit, so do we have to open a traditional at the end of 2012 and stop contributing to our Roth IRAs? Or can we keep doing a Roth IRA through 2013 until we file with the income that disqualifies Roths? Should we do the backdoor Roth IRA each year starting with 2012? If you're disqualified from the Roth based on income, your Traditional will be non-deductible. Thus, I would recommend doing a backdoor Roth IRA each year. For 2012 I would continue to fund your Roth as you normally do (if that is what you feel is the best investment). Starting in 2013, I would open a Traditional IRA at the same institution. Fund it and then immediately buy shares in your Roth IRA with the contribution in your Traditional. The reason you want to do it immediately is so that you don't get hit with any taxes on gains made with your Traditional. Bogleheads has a simple breakdown of the process. http://www.bogleheads.org/wiki/Backdoor_Roth_IRA
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Jun 23, 2012 00:53
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turbulents posted:If I'm at the point where I could max my 401k (but no employer match), how do I evaluate whether the 401k investment options are worthwhile or if I'm better off taking my money elsewhere? For what it's worth, I don't mind being risky with my money but I also don't do a whole lot of research and thus far just have money in a Vanguard Target Retirement account and an index fund. Even if your expense ratios are truly awful, the advantage of tax free growth is going to be worth much more than the cost of a higher expense ratio. Plus unless you stay with the company for life, when you leave you can roll it into an IRA. 401k contributions are limited by year, so if you skip contributing now, you will never be able to make up those contributions.
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Jun 23, 2012 03:04
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AreWeDrunkYet posted:When looking at fixed income, make sure you are aware of maturities and the implications thereof. I have been thinking vaguely about putting some money in bonds for the past month or so and realized that I don't know what they are. Can you recommend any introduction to bond investing that's a reasonably quick read for a layman? I've got "Intelligent Investor", and much of it was it was a bit above my head (and not relevant to my very middle-class means.)
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Jun 23, 2012 03:05
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Spitball Trough posted:I have been thinking vaguely about putting some money in bonds for the past month or so and realized that I don't know what they are. Can you recommend any introduction to bond investing that's a reasonably quick read for a layman? I've got "Intelligent Investor", and much of it was it was a bit above my head (and not relevant to my very middle-class means.) I would recommend reading the Four Pillars of Investing. As for basic information on bonds, wikipedia serves that purpose fairly well. If you have specific questions after that, people here can likely answer them.
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Jun 23, 2012 03:21
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Shrinkage posted:Ah okay, I assume shorter maturity = less risk = ETF selling at premium? That's part of it, but there's quite a bit more. Don't take this the wrong way, but you're asking questions that are rather simplistic for the degree of micromanagement you want to put into your portfolio. You are likely best off putting your fixed income investments into something like BND until you get a better grasp on the matter. The Four Pillars of Investing book that's been recommended is good, and most beginners' textbooks on portfolio management would cover a lot of the definitions and formulas you should try to understand. In the meantime, go through these articles: http://en.wikipedia.org/wiki/Yield_curve http://en.wikipedia.org/wiki/Bond_duration http://en.wikipedia.org/wiki/Bond_convexity
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Jun 23, 2012 03:48
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It's a bit excessive to say someone needs to understand convexity in order to pick a high-yield ETF
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Jun 23, 2012 04:19
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AreWeDrunkYet posted:That's part of it, but there's quite a bit more. Don't take this the wrong way, but you're asking questions that are rather simplistic for the degree of micromanagement you want to put into your portfolio. You are likely best off putting your fixed income investments into something like BND until you get a better grasp on the matter. The Four Pillars of Investing book that's been recommended is good, and most beginners' textbooks on portfolio management would cover a lot of the definitions and formulas you should try to understand. No don't worry about it, I'm glad you mention these as I'm in this also to learn more.
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Jun 23, 2012 05:27
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I have a Roth 401(k) at work, what can I do with it if/when I change companies? Wikipedia says I can roll it into a Roth IRA; can I roll more than $5,000 per year to a Roth IRA plus contribute the normal $5,000 on top of that (or whatever the maximum is at the time)?
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Jun 23, 2012 05:34
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Saint Fu posted:I have a Roth 401(k) at work, what can I do with it if/when I change companies? Wikipedia says I can roll it into a Roth IRA; can I roll more than $5,000 per year to a Roth IRA plus contribute the normal $5,000 on top of that (or whatever the maximum is at the time)? You can roll it into a Roth IRA. Did your company make any matches? Quite often the match portion is actually traditional funds so when you roll it over you will roll the Roth portion into a Roth and the traditional portion into a regular IRA.
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Jun 23, 2012 16:50
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Thanks. Just to be clear, I can roll all of it over at once right? There isn't a limit per year or anything like that
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Jun 23, 2012 18:16
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flowinprose posted:I would recommend reading the Four Pillars of Investing. Yeah, that's on my Amazon wish list. One real basic one that I'm not 100% clear on-- if you buy a bond fund, will you receive a specific dividend payment, or will the interest from the bonds just be reflected in the price of the fund?
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Jun 24, 2012 00:56
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Spitball Trough posted:Yeah, that's on my Amazon wish list. Depends on the fund, but most pay dividends on some basis. (Monthly, Quarterly, etc) Read the prospectus for any particular fund.
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Jun 24, 2012 01:26
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I have about 6 $50 savings bonds, series EE, from 98-2006. Current value is in the $250 range or so. The highest interest rate on any of them is like 1.19%. I opened a ROTH that has nothing in it currently; I was thinking about cashing them in and just sticking them in a mutual fund of some sort. Gotta be better than what they are returning, right?
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Jun 24, 2012 03:18
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Right now I contribute up to my employer match into my 401k (50 cents on the dollar up to 8%...so employer matches 4%). I'm 26 years old and my fiance and I are planning on either getting married next summer, or the summer of 2014. I also am planning on purchasing a house by the end of next summer. Would it be completely unwise of me to stop contributing to my 401k completely for the next 12-14 months to help assist with a short term savings goal (wedding, house down payment)? I know the tax advantages of contributing, and also the fact my employer has a decent match that I would be losing out on, however part of me just wants to stuff as much money into my savings account as I can temporarily. I don't believe in taking on debt for a wedding, and I want to take advantage of the current housing market and interest rates. I've cut discretionary spending as much as I can without completely taxing entertainment, and I have no debt.
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Jun 26, 2012 00:36
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4% of your annual pre-tax income is a pretty huge amount to just turn down. How are you progressing on your retirement savings? If you're significantly ahead that's one thing, but if you still have a ways to go to hit your age 30 goal then I think you would want to keep contributing if at all possible. You might also want to look into a Roth IRA as a long-term savings vehicle, as my understanding is that you are allowed to use the contents of your Roth to make a down payment on a home purchase once in your life without penalty. That doesn't help you with short-term stuff like your wedding and buying a house in a year, but it's something to consider versus just packing money into a savings account. I'm no expert though, so check to see what other people have to say before listening to me.
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Jun 26, 2012 00:51
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Don't get too swept away with the "if you don't have $40,000 in liquid cash you're on the brink of destruction" mindset of BFC. Keep contributing to the 401k, put off the house buying another 6 months or something. No need to have two massive expenditures right at once if you have to sacrifice your match.
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Jun 26, 2012 02:51
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Just wanted to say how much I appreciate this thread! In the last couple weeks, I've finally gotten around to reading some general investing literature, and I wish I'd done so years ago. At least I'm doing it while I'm young, have a fairly significant amount of money I don't mind losing, and the world economies are in the shitter.
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Jun 26, 2012 04:35
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Alereon posted:4% of your annual pre-tax income is a pretty huge amount to just turn down. How are you progressing on your retirement savings? If you're significantly ahead that's one thing, but if you still have a ways to go to hit your age 30 goal then I think you would want to keep contributing if at all possible. You might also want to look into a Roth IRA as a long-term savings vehicle, as my understanding is that you are allowed to use the contents of your Roth to make a down payment on a home purchase once in your life without penalty. That doesn't help you with short-term stuff like your wedding and buying a house in a year, but it's something to consider versus just packing money into a savings account. I'm not ahead by any means. I was planning on investing in a Roth eventually when we are married, have a house, and she gets a job to have two incomes. Thanks for the advice so far, there was just that little guy inside my head telling me to stash as much cash as possible for a down payment/wedding payment. Maybe I'll think about finding a part time job that doesn't take away all my weekends.
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Jun 26, 2012 12:38
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Auron posted:Would it be completely unwise of me to stop contributing to my 401k completely for the next 12-14 months to help assist with a short term savings goal (wedding, house down payment)?
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Jun 26, 2012 16:10
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Auron posted:ead telling me to stash as much cash as possible for a down payment/wedding payment. Maybe I'll think about finding a part time job that doesn't take away all my weekends. You can take out a loan from your 401k as a first-time homebuyer when you're ready. Depending on your plan, you'd have at least 5 years to pay it back.
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Jun 26, 2012 16:22
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Auron posted:
I have 2 thoughts 1) You're not contributing that much to the 401k, stopping that won't make a huge impact on your savings in the short term. 2) There are always going to be events like these (house purchase, wedding) that come up. After those two it'll be work on your home, kids, stuff like that. I think your 401k should exist outside those goals completely.
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Jun 26, 2012 16:25
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Auron posted:I don't believe in taking on debt for a wedding, and I want to take advantage of the current housing market and interest rates. I've cut discretionary spending as much as I can without completely taxing entertainment, and I have no debt.
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Jun 26, 2012 18:30
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10-8 posted:If you stop your contributions to your 401(k), you're borrowing from yourself at 4% of your income. The effect is no different than taking on debt.
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Jun 26, 2012 18:31
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bam thwok posted:You can take out a loan from your 401k as a first-time homebuyer when you're ready. Depending on your plan, you'd have at least 5 years to pay it back. This is only if your employer's plan allows for this. Not every plan allows for loans. Also, if your employment ends for any reason, you have to pay everything back immediately or it counts as an early withdrawal, and you get assessed penalties.
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Jun 26, 2012 18:35
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I guess one of the reasons for possibly stopping contributions is the fact that, if I wait another year, home prices will likely rise between 3-6%. This means that I would be pretty much at a wash or most likely a loss if I decided to keep contributing/receiving match instead of saving for a year. Especially with how flat the economy has been. I'm not worried about interest rates, as I'm sure those will stay low for awhile.
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Jun 26, 2012 19:44
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Auron posted:I guess one of the reasons for possibly stopping contributions is the fact that, if I wait another year, home prices will likely rise between 3-6%. This means that I would be pretty much at a wash or most likely a loss if I decided to keep contributing/receiving match instead of saving for a year. Especially with how flat the economy has been. I'm not worried about interest rates, as I'm sure those will stay low for awhile. House prices MIGHT go up. They MIGHT go down. You DEFINITELY lose the employer match. You see the point? 50% return on 8% of your income risk free is pretty tough to beat...
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Jun 26, 2012 19:49
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I made the same decision as you during the housing bubble. Real estate seemed like a sure thing, so I dumped all my money into it instead of worrying about retirement or anything like that. Now I'm underwater on my house and way behind trying to catch up on my retirement fund. Don't be me.
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Jun 26, 2012 19:59
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SlightlyMadman posted:I made the same decision as you during the housing bubble. Real estate seemed like a sure thing, so I dumped all my money into it instead of worrying about retirement or anything like that. Now I'm underwater on my house and way behind trying to catch up on my retirement fund. Don't be me. Well I'm not buying a house to be primarily an investment, its a place to live to call my own and yada yada yada.
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Jun 26, 2012 20:07
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Auron posted:I guess one of the reasons for possibly stopping contributions is the fact that, if I wait another year, home prices will likely rise between 3-6%. This means that I would be pretty much at a wash or most likely a loss if I decided to keep contributing/receiving match instead of saving for a year. Especially with how flat the economy has been. I'm not worried about interest rates, as I'm sure those will stay low for awhile. How much is 4% of your salary really? Even if you make six figures it's only a few thousand dollars. That amount shouldn't be enough to make/break your home purchase.
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Jun 26, 2012 20:27
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The advice is not "don't buy a house," it's "don't gently caress up your retirement just to buy a house." If you can't afford to both keep up your 401k and buy the house, you can't afford the house.
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Jun 26, 2012 20:40
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sanchez posted:How much is 4% of your salary really? Even if you make six figures it's only a few thousand dollars. That amount shouldn't be enough to make/break your home purchase. It won't make or break by any means. I'm going to bash my illogical side over the head and keep the contributions going. Free money is free money. Thanks for steering me on course everyone, I really appreciate it.
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Jun 26, 2012 21:00
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Hi, I recently got enrolled in my company's 401k program and while the amount of money thats going into it probably isn't going to be that much (3% of income, 100% match, 5% match on anything higher). I wanted to get people's opinions on the funds I have available: INAXX, RGVCX, CIGAX, FASTX, FADVX, RAFCX, RNGCX, BMCAX, ACDRX, OPMSX, ALSRX, RERCX. I currently have it set up to 3% and am saving up to start up a Roth IRA. I know the general line of thinking is just plan for growth and ignore the money market and bond funds until later. I researched a little last night and started out with 10% FASTX, 15% RERCX, 25% RAFCX, 25% OPMSX and 25% ALSRX. I think I rushed it a little bit and looked at past data too much perhaps. Does anyone have any advice?
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Jun 27, 2012 18:11
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Ryven posted:Hi, I recently got enrolled in my company's 401k program and while the amount of money thats going into it probably isn't going to be that much (3% of income, 100% match, 5% match on anything higher). Not sure about your salary or living situation, but I would contribute a lot more than 3%. The 5% match for contributions above 3% of your salary is going to be a better return than most people will get in their ROTH this year. Why leave that money on the table?
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Jun 27, 2012 18:23
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bam thwok posted:Not sure about your salary or living situation, but I would contribute a lot more than 3%. The 5% match for contributions above 3% of your salary is going to be a better return than most people will get in their ROTH this year. Why leave that money on the table? Fair enough, I'm not sure exactly where that 5% caps out, so I guess I should call up the manager. My rent is pretty cheap, and I don't have that many bills or obligations other than buying shiny new toys. I recently moved so new apartment stuff has been eating up most of my paychecks lately, but that's slowing down and I'm starting to get serious about starting up savings. Edit: I just talked to payroll and its a little bit lower than I thought 3% of pre-tax paycheck - 100% match 4% "" - 3.5% match 5% or more "" - 4% match Ryven fucked around with this message at 22:08 on Jun 27, 2012 |
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Jun 27, 2012 18:27
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That sounds like a 50% match and you should max that sucker till it won't max no mo'.
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Jun 28, 2012 04:28
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For reference, I'm 30, single, and don't own a home. I contribute 15% to my 401k (company matches 50% up to 6% of income, IIRC). I thought that number was obscenely high until I chatted around and found a few other people doing similar contributions. When I buy a house or have a kid I'll bring it down to 6-9%. But for now? I'd just be wasting that extra money on soda pop and baseball cards or some poo poo like that.
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Jun 28, 2012 06:10
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Sooo, I've contributed $4000 to my Roth IRA since May (after the 2011 contribution deadline). If I remember correctly, my contribution limit has been steadily going down each month. Except now Vanguard is saying I've only contributed $1000 for 2012, and have another $4000 I can add? Any one know what's up? Should I trust this?
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Jun 29, 2012 23:59
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polyfractal posted:Sooo, I've contributed $4000 to my Roth IRA since May (after the 2011 contribution deadline). If I remember correctly, my contribution limit has been steadily going down each month. If you're on the Vanguard site and you hover over "My Accounts" and click on "Taxes & Income", then click on the "Contributions to retirement accounts »" link, you can see exactly what transactions were made against each tax year and figure out how much money you've put towards your Roth IRA this year. If it doesn't match with what you think it should be, you should check if the funds were going into a taxable account.
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Jul 2, 2012 14:39
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ObsidianBeast posted:If you're on the Vanguard site and you hover over "My Accounts" and click on "Taxes & Income", then click on the "Contributions to retirement accounts »" link, you can see exactly what transactions were made against each tax year and figure out how much money you've put towards your Roth IRA this year. If it doesn't match with what you think it should be, you should check if the funds were going into a taxable account. Ahh, this helped, thanks. There was a big contribution that I thought cleared after the 2011 deadline, but apparently it just barely snuck into 2011 which is where my confusion was coming from.
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Jul 2, 2012 17:21
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