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I have trouble knowing where to get started with investment. I have about $10,000 in the bank, and that's everything I've got to my name. I have absolutely no debt of any kind. I'm single, but may very well be married in a couple of years. I'm able to save about a quarter of my net pay every month, and I'd like to invest the money now that I'm done rebuilding my emergency fund. I'm a frugal person and saving has always come easily to me, but I have no idea what to do with money aside from sticking it in the bank. As for my goals, in the long term I'd like to save for retirement. I'm a teacher, so I have a retirement plan with my state, but I have no faith that it will continue to be healthy years down the line and I want to plan to take care of myself like everyone else. In the short term, I'm looking to buy a house within the next two years or so. I really need to educate myself on investing. It's not just that I don't know which investment options are right for me, it's that I don't understand how to make those judgments or even how to put my money into any of them. What should I do to get started, and how does my goal of buying a house in a relatively short amount of time affect my larger goal of saving for retirement?
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Sep 23, 2012 19:18
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Giant Squid posted:I have trouble knowing where to get started with investment.
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Sep 23, 2012 23:23
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Giant Squid posted:I have trouble knowing where to get started with investment. There's lots of good books in the OP; I'd start with Four Pillars of Investing. For now, just let it sit in cash while you educate yourself. Savings rate will dwarf investment returns for a good long time in your position, there's nothing really to be lost by just starting to educate yourself, and invest when you know what you want to do.
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Sep 23, 2012 23:42
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I have three separate 401k accounts. Two are from previous companies (same job, long story) and the current one is active. Minimally I'd like to get them all under one roof. However, my current company a) doesn't match and b) I'm a little unsure about the company's future. It seems like given that, it would be best for me to manage this all on my own (e.g., contribute manually every month even though I really like the convenience of having it automatically extracted) through, what...a brokerage service? Does that sound reasonable? If so, what are either company recommendations or pointer for more research?
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Oct 2, 2012 01:30
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You cannot contribute to any 401k other than your current one. I'm not sure if that is what you meant by manual vs automatic. Unless your current 401k is in company stock, the future of the company is no risk to the investments held in your 401k. You basically have two choices to make: 1) Contribute to your current 401k or don't - General consensus is the tax advantage of 401ks outweigh crappy fund options when compared to non tax advantaged accounts. Thus if you have maxxed out your IRA, 401k is the next best bet. Even if it's really crappy, you can roll it over when you leave. 2) Rollover or keep your old 401ks. You have three options, keep the old ones in their own accounts, roll them over into your new 401k, or roll the over into an IRA. You have to weigh the fees and investments available in each account to determine the best one. However in general the best option is typically rolling over into an IRA because you can pick a low cost provider with good options (e.g. Fidelity or Vanguard).
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Oct 2, 2012 03:27
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Daeus posted:You cannot contribute to any 401k other than your current one. I'm not sure if that is what you meant by manual vs automatic. quote:Unless your current 401k is in company stock, the future of the company is no risk to the investments held in your 401k. Given that and that the company doesn't contribute anyway, I don't see the benefit of sticking with them. It seems like it would be smarter to have everything under a single roof that isn't tied to my employer at all. Thanks for the tip about rolling into an IRA. I'll look into that.
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Oct 2, 2012 10:50
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Cheesus posted:I mean having it automatically withdrawn from my paychecks vs. manually writing a check to a (possibly new) 401k brokerage. You can rollover old 401k's into a personal IRA. That's what I did when I left my last job. There are additional fees that they can slap on your 401k account when you are no longer employed, so it's usually best to consolidate them anyway. I rolled my 401k from Fidelity over to Vanguard and it was super easy. A few web-forms, a paper form to sign and mail back, all done. Took about two weeks total because of the snail-mail time. The advantage of contributing to your 401k (even without a match) is the contribution limit. You are limited to $5000 per year for your IRA, but can go up to $14,000 with your 401k. All else being equal, you can stash more money in your 401k, even if your employer doesn't match. So basically, I'd roll your previous two 401ks into a single Rollover IRA at Vanguard, then contribute to your normal IRA and company 401k until such a point that your company folds. Then roll that 401k into your Rollover IRA, open a 401k at your new employer and continue contributing to 401k and personal IRA, etc etc
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Oct 2, 2012 13:14
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Awesome polyfractal! Thanks for the advice!
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Oct 2, 2012 14:39
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And just to be clear: you cannot contribute to a 401(k) by writing a check. It has to be deducted from your paycheck by your employer.
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Oct 2, 2012 18:27
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As a point of anecdotal evidence, if your company is basically inept, they might forget that you're not employed there anymore and dump some cash via ESOP at quarterly end, outstanding bonus-based matching, and other corner-case payouts into your old 401k. I effectively got a random $700 for forgetting to close out that 401k and I haven't been charged an account maintenance fee either (it's with Fidelity).
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Oct 3, 2012 01:16
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I own 2 condo units which I rent out and I'm an absentee landlord since I live abroad so I have a relative taking care of the property. The condos are each valued around 300k and I currently make 5% off rent on each after maintenance, fees, and other expenses. Both units are completely paid off. I've been thinking about selling one of the units and reinvesting the money into various long term investments that will give me some liquidity and at least 5% or better return. I'd ideally like to use any interest I earn on living expenses abroad but I am pretty clueless when it comes to investing cash. So long story short 300k that gives 5% or better. What should I do?
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Oct 4, 2012 07:41
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Vanguard changing some of the indices they track https://personal.vanguard.com/us/insights/article/fund-announcement-10022012
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Oct 4, 2012 16:36
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Modus Operandi posted:I own 2 condo units which I rent out and I'm an absentee landlord since I live abroad so I have a relative taking care of the property. The condos are each valued around 300k and I currently make 5% off rent on each after maintenance, fees, and other expenses. Both units are completely paid off. 5% is pretty good. Its hard to point at a decent investment yielding that much w/o significant risk. And housing is starting to rebound. I'd only sell if you really need diversification, but it feels like you would be selling near the bottom of the cycle, and incurring significant realtor costs as well.
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Oct 4, 2012 20:35
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Looking for some help in planning my portfolio across taxable and tax-advantaged accounts. Right now, here's how things look (ROTH account holds a target date fund, so underlying funds listed instead): code:Fixed Income 10% S&P Index 60% Large Cap Int'l 30% The split between tax status of accounts is sort of haphazard, and yearly contributions are lopsided, which is making it challenging to figure out how to properly set this all up. Any thoughts on how I should consolidate or re-arrange would be helpful.
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Oct 5, 2012 17:53
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Asked this in the other thread but didn't have any answers... Is there a way to rollover a standard mutual fund account without incurring any taxes? I've got a non-retirement investment fund account with Janus I'd like to move to Vanguard because of $fees/costs$ but I can't find anything about direct transfers... like you can with Retirement accounts. Don't want to sell it and have to pay taxes on it just to drop it right back in to another account.
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Oct 8, 2012 00:21
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Looks like you should be able to transfer it. Just go to the vanguard site, they make it pretty easy.
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Oct 8, 2012 00:32
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Untagged posted:Asked this in the other thread but didn't have any answers... if you move the fund shares "in kind", it would be the same fund with the same fees and costs, just at a different custodian. The only way to rid yourself of the high fees is to sell it and pay taxes on any capital gains, then buy a different fund. Has nothing to do with transferring to a different custodian and everything to do with changing funds.
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Oct 8, 2012 05:44
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80k posted:if you move the fund shares "in kind", it would be the same fund with the same fees and costs, just at a different custodian. The only way to rid yourself of the high fees is to sell it and pay taxes on any capital gains, then buy a different fund. Has nothing to do with transferring to a different custodian and everything to do with changing funds. Ok, thanks.
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Oct 8, 2012 06:27
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sapmagic fucked around with this message at 09:59 on Feb 4, 2022 |
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Oct 12, 2012 06:52
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Even if you don't qualify for a Roth IRA, you can do a backdoor Roth IRA. If your income is that high, you don't qualify for a deduction on contributions to a traditional IRA, so when you contribute, your tax basis is the amount of the contribution instead of $0. When you convert it to a Roth, which you can regardless of income right now, you have a taxable event, but because the difference between the market value of your account and the basis is zero, or close to it, there is no gain to recognize. I set up a solo 401k last year for my spouse for her Schedule C business, and it was a little bit of paperwork that saved us a couple grand on taxes. I don't remember all the details of that research for which type of account to use, but as I recall, the solo 401k is the best option for pairing with IRA contributions to maximize tax benefits. At least it was in our situation. Since you have a partner, there may be issues where the employer contribution would need to be made to both your account and your partner's account, and this could lead to fights with your partner. 401ks generally have non-discrimination rules for employers, I don't know enough about partners in solo 401ks to talk more about it. Finally, while your money will be tied up until 59.5, you can, depending on your plan documents, take out a loan from your account. It also has the great benefit of keeping your money there for you for retirement and safe from claims of creditors you could end up with if, for example, your business were to fail. There are exceptions to that rule however that require speaking with qualified people in your state.
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Oct 12, 2012 13:32
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You probably want to look into a SEP-IRA.
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Oct 12, 2012 13:55
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What's the current goon-approved broker for doing automatic investments with no/minimal cost into index funds either through etfs or funds? I see Schwab waives the minimum if you set up a $100/mo transfer in, but I'd like to also not get hit with a monthly commission also. At $240/mo that I intend to start with, the $8.95 would be significant enough to give me pause on the automatic investment. Thanks!
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Oct 12, 2012 16:35
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Harry posted:You probably want to look into a SEP-IRA.
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Oct 12, 2012 16:48
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TraderStav posted:What's the current goon-approved broker for doing automatic investments with no/minimal cost into index funds either through etfs or funds? I see Schwab waives the minimum if you set up a $100/mo transfer in, but I'd like to also not get hit with a monthly commission also. At $240/mo that I intend to start with, the $8.95 would be significant enough to give me pause on the automatic investment.
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Oct 12, 2012 16:50
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Saint Fu posted:Is this for an IRA or taxable account? Pretty sure Vanguard doesn't charge me anything for automatic bi-weekly contributions to my Roth IRA.
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Oct 12, 2012 17:15
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Most brokers won't charge a fee to buy their own funds. I can confirm that this is true for Schwabs index funds as that's what I use. (http://www.schwab.com/public/schwab...asp%3Fsymbol%3D).
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Oct 12, 2012 17:17
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gvibes posted:Yeah, I think that Vanguard does not charge any broker fees for purchases of Vanguard funds (maybe ETFs too, though not sure). There are no fees to buy most of their ETFs either as long as you are purchasing them from a Vanguard account of course.
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Oct 12, 2012 17:37
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It's for a taxable account, sorry for not specifying. I think I'll check out the vanguard offerings since ill be buying vanguard funds mostly anyway. Thanks!
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Oct 12, 2012 18:08
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I want to open a Roth IRA, but only have $1,000 to start with. Would it be best to open with a Vanguard target-date fund and then once I've reached $3,000 move it all to a better performing index fund or just hang on to my money until I have $3,000 saved up? Will it hurt me at all to only have the target-date fund for such a short amount of time?
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Oct 12, 2012 19:16
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Blakles posted:I want to open a Roth IRA, but only have $1,000 to start with. Would it be best to open with a Vanguard target-date fund and then once I've reached $3,000 move it all to a better performing index fund or just hang on to my money until I have $3,000 saved up? The target is fine. In fact, they are comprised of those "better performing index funds".
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Oct 12, 2012 19:18
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Blakles posted:I want to open a Roth IRA, but only have $1,000 to start with. Would it be best to open with a Vanguard target-date fund and then once I've reached $3,000 move it all to a better performing index fund or just hang on to my money until I have $3,000 saved up?
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Oct 12, 2012 19:52
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sapmagic fucked around with this message at 20:02 on Feb 9, 2022 |
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Oct 13, 2012 05:18
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sapmagic posted:Can you explain why I would want a SEP-IRA over a solo-401k? It sounds like since the maximum SEP-IRA contribution limit is 25% of wages, I would have to pay myself a salary of $200,000 in order to max it out. This seems less advantageous (from a tax perspective) compared to paying myself a normal salary and taking the remainder as distributions (e.g. the normal S-corp tax strategy). Honestly, I have never heard of a solo-401k.
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Oct 13, 2012 07:15
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sapmagic posted:
Well, mainly I don't think an S-Corp with two owners can do solo-401ks.
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Oct 13, 2012 16:43
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sapmagic fucked around with this message at 20:02 on Feb 9, 2022 |
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Oct 13, 2012 17:02
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Try asking the US Income tax thread, but I'm pretty sure you're ineligible just from the glancing around that I've done.
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Oct 13, 2012 19:28
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Can Index Funds "complement" one another, and is a good idea to invest in more than one? I've been deployed overseas a majority of my last 2+ years which didn't lend itself to a lot of opportunity and convenience to manage my money outside of what automatic investments I could set up when I got the time. In the meantime, I've had a good chunk of money going into 4 mutual funds (USAA, I hear a lot of talk about Vanguard being a great idea but haven't decided if I feel like moving yet) per month, two of which are their S&P 500 and their NASDAQ. The fact page for the NASDAQ mutual funds mentions it as a good complement for the S&P, but now that I actually have the time I want to sit down, do some reading, and put a little more thought into my allocations and didn't know how accurate that statement may or may not have been.
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Oct 16, 2012 05:02
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sapmagic fucked around with this message at 20:02 on Feb 9, 2022 |
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Oct 16, 2012 15:19
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Mutual funds definitely can complement each other, giving you a broader exposure to the market. For example if the only thing I owned was VTSMX (tracks all US stocks), I could complement the fund with VFWIX (tracks non-US stocks). That said in order for the funds to be complementary they should be tracking fundamentally different things. if you already own something that tracks the S&P500 (US Stocks in large companies) and on top of that you add the USAA Nasdaq-100 Index (more US stocks in large companies), you are not diversifying at all. In this case you would be increasing your exposure in that single asset class.
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Oct 16, 2012 16:57
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Initio posted:That said in order for the funds to be complementary they should be tracking fundamentally different things. if you already own something that tracks the S&P500 (US Stocks in large companies) and on top of that you add the USAA Nasdaq-100 Index (more US stocks in large companies), you are not diversifying at all. In this case you would be increasing your exposure in that single asset class. This is not entirely true, if the two funds track similar asset classes but use a different index as a reference, there is some diversification from using two different ones. There's also diversification of the risk that one of the fund managers makes a stupid mistake, goes out of business, whatever. That said, there is rarely much reason for most people in most circumstances to, for example, buy S&P 500 index funds from two different reputable companies.
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Oct 16, 2012 17:40
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