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OctaviusBeaver posted:This is a really basic investing question but I'm having trouble wrapping my head around the whole "bonds falling price thing". I have some of my long term savings in a Vanguard bond index fund. I get that if interest rates go up then the bonds would be worth less money because people can get a better rate elsewhere. But if I'm not trying to sell the bonds, does that even matter? Say the bond fund has a bunch of bonds at 3%, then the rate goes up to 6%. Why would I lose money? Shouldn't I just keep getting 3%? If you own a 10-year bond at 3% and have no desire to risk earning one penny more or one penny less than your principal plus the stated interest, then the prevailing market rates and the market price of your bond don't matter to you one bit. But if you wanted to sell your bond at some point before maturity, then the rate would make a difference to you, since at that moment your bond might be worth way more or way less than you paid for it. As for the bond fund question, it's important to note that when you buy a share of a bond fund you are not actually investing in bonds; you are investing in the success of fund managers who actively trade bonds on the open market in order to earn a high rate of return (otherwise, why would you pay someone a fee to just buy and hold bonds at the current rates?).
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# ? May 14, 2013 15:34 |
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# ? May 23, 2024 07:12 |
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bam thwok posted:otherwise, why would you pay someone a fee to just buy and hold bonds at the current rates? I bet there'd be demand for something like that. My background is upper-lower / lower-middle class and boy do I know a lot of people who just keep their life savings in savings accounts. Totally allergic to risk.
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# ? May 14, 2013 16:15 |
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|Ziggy| posted:I know for a fact people do outsourced work there for < $4 per hour. So probably not too much. Do these people work 80+ hour weeks just to get by though?
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# ? May 14, 2013 16:46 |
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Accretionist posted:Exposure to better rates or quality corporate bonds? That would just be high-end brokerage services, or you'd need to be a preferred client of an underwriter/syndcate.
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# ? May 14, 2013 16:59 |
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Orange_Lazarus posted:Do these people work 80+ hour weeks just to get by though? I earned $17.50 per DAY (after tax) in my first job as a CPA in the largest audit firm in the Philippines. I lived with my mother so I'm rent free but I got by although I don't have to pay for food. My main expenses are commuting costs and eating out sometimes. To those asking if you can live in the Philippines for $1,000 per month, I believe so if you're single and don't rent or rent a place really cheap. Food is cheap but eating out always is not a good option since costs add up fast. Traffic is loving atrocious in the metropolitan area so if you're driving, it eats up your fuel fast. Commuting is a hassle but it's the cheaper option. It will take you literally 2-3 hours just to reach a destination that you can drive here in the US for 20-30 minutes unless you take a taxi (which will still take you 1 hour). The humidity is off the charts so prepare to perspire a lot during hot days. But if you saved a lot of money and then retire in the Philippines, I believe you can live like a king. You can build a small two storey house for $125,000 that you wouldn't believe costs only that much if you compare it to home prices here in the States especially in California. For all the inconveniences and hassles of everyday life in the Philippines (especially the traffic and political situation), I'd still go back and live there during my retirement years.
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# ? May 14, 2013 18:30 |
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I'm trying to do some planning. I'm 26, healthy, own a house/car, no big purchases coming up so I'm trying to build my retirement savings as much as possible. Current assets are: $11,000 in a Roth IRA (contents: VTSAX) $2,100 in my HSA account (hopefully to be converted to a mix of the funds shown below) $17,000 in a CD that will be popping in about a year and a half. I'll worry about that when it's available. My employer contributes $815 to my HSA every year for me. Now that I've hit a balance of $2,000, I can open an HSA Investment Account, which seems awesome as it grows tax-free and reduces my own tax burden slightly. However, I'm confused by my options: There's no way to avoid the monthly service fee and these funds have very high expense ratios compared to what I'm used to. I'm not a very well informed investor; all I do is buy VTSAX. Can anyone make a recommendation for what fund(s) would be appropriate for me? Do I want... bonds or something? Are any of the funds in my HSA option list similar to or complementary to my current balance of all VTSAX and cash?
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# ? May 15, 2013 18:51 |
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GoGoGadgetChris posted:There's no way to avoid the monthly service fee and these funds have very high expense ratios compared to what I'm used to. I'm not a very well informed investor; all I do is buy VTSAX. Can anyone make a recommendation for what fund(s) would be appropriate for me? Do I want... bonds or something? Are any of the funds in my HSA option list similar to or complementary to my current balance of all VTSAX and cash? Basically, the short story is that your investment options in your HSA are not as good, as you seem to have found out. There's an equivalent to the VTSAX fund (I think it's OGEAX 65%, VSEAX 35%), but you're likely paying more money just because it's JP Morgan and not Vanguard. By the way, You mentioned that you're putting all of your other money in only VTSAX and cash. This seems close, but a little bit off. Have you considered splitting your stock so that it is 70% VTSAX and 30% VGTSX? The reason I say this is that you're currently left completely exposed to the United States economy as a whole, and if the global economy does well but the US doesn't, then your portfolio may not do so well. The 70/30 split is the one that's usually recommended for longer term investing. Also, be warned that keeping all of your investment money in stocks is not advised unless you are an extremely aggressive investor and in your 20s. In response, people put some money into bonds to even out their risk.
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# ? May 16, 2013 05:16 |
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ntan1 posted:
I'm holding off on any international funds because, unless I'm mistaken, the main holdings of VTSAX are companies that do a huge portion of their business internationally (although the top 10 holdings are only 15% of the fund...) I have more learning to do on the matter though. ntan1 posted:
I am in my 20s and consider myself extremely aggressive! Like I said before, I've got a CD worth about $17,000 that will mature in less than two years, so I'm not worried about being all-stock at the moment. I really appreciate your insight on the HSA as well. It doesn't seem to be too great a selection, but with $815 a year in free money, I may as well put it to use.
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# ? May 16, 2013 17:25 |
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I'm starting to rethink my retirement strategy, and while I had initially intended to retire at around age 70, I've decided to shoot for 60 instead, or even earlier if possible. Are there any particular considerations to take into account? I'm 34 now, so I've got plenty of time, but want to start looking into some of the considerations. Obviously the Social Security payout will either be reduced, or I could just take out extra from other areas and not start collecting that until 67.
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# ? May 16, 2013 19:20 |
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I think it's pretty straightforward. To retire earlier, you need to save a lot more (combination of fewer years working plus more years drawing on your retirement savings plus fewer years of higher-rates-of-return) plus more conservative balance of investments (since you will have less time to recover from big losses). These two things feed into each other. To save a lot more, you need to put a higher percentage of your annual income into retirement savings. Exactly how much more is a complex calculation. Obviously you can get into the fine details of how to allocate your money differently, but I think those details are much less important than the basic fact of: earlier retirement = save a lot more money now. I do think a lot of people who plan to work till they're 70 and only save based on that plan are taking a large risk. At the age of 38, I have some significant health problems already which make me question whether I'll be able to keep working even to the age of 60. You just can't count on being healthy enough to work well into your old age. You can hope for it, and as medical science advances your odds might be getting better, but the flip side of that coin is the spiraling cost of those same medical advances. So I think it's a very good idea to plan for retirement in your sixties at the latest. If you decide when you're 65 that you want to keep working, then that's fine and dandy and you'll have extra money to spend, no problem with that. If you get seriously sick at 58, you'll be in a much less dire situation.
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# ? May 16, 2013 20:06 |
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The company I work for was sold a few months ago so I'm looking to roll my old 401(k) into a vanguard IRA. I'm 36 and also have a Roth and brokerage account totaling about $165K. This new IRA will have about $45K, hoping to retire in my later 60s. As far as fund allocation for the new vanguard IRA I was planning on splitting it between the target 2040 retirement fund and the recommendations from the vanguard allocation tool. This would look something like this: 50% VFORX Vanguard Target Retirement 2040 Fund (VFORX) 28% VTSMX Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) 12% VGTSX Vanguard Total International Stock Index Fund Investor Shares (VGTSX) 10% VBMFX Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) I figured I would take on a little more risk by not going all in on the target retirement fund and scale that back as time goes on. Does this make sense?
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# ? May 16, 2013 20:13 |
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SlightlyMadman posted:I'm starting to rethink my retirement strategy, and while I had initially intended to retire at around age 70, I've decided to shoot for 60 instead, or even earlier if possible. Are there any particular considerations to take into account? I'm 34 now, so I've got plenty of time, but want to start looking into some of the considerations. Obviously the Social Security payout will either be reduced, or I could just take out extra from other areas and not start collecting that until 67. It's as Leperflesh said above. That being said, since you still have 25 years to go before retirement, there is still a lot of time before you retire. What that means is that you can still afford to go for an aggressive strategy, but you must be very aware of the risks. For example, take a look at the Vanguard Target 2035 retirement fund. You'll see that it actually only puts 14-15% of its money into the bond market, with all of the rest in stocks. The real main difference between the 2035 fund and and the 2045 fund is that the former puts an additional 4% of money from stocks into bonds. Besides the above, it's mostly determining how much you want to save per year and estimating the amount you will have during retirement. ManDingo posted:I figured I would take on a little more risk by not going all in on the target retirement fund and scale that back as time goes on. Does this make sense? It doesn't exactly make sense. Let me help clarify. The target retirement fund is actually a combination of the three funds which Vanguard has recommended. If you look at the bottom of https://personal.vanguard.com/us/funds/snapshot?FundId=0696&FundIntExt=INT , you'll see a listing of the three funds that make the entirety of the Target Retirement 2040 Fund: 1 Vanguard Total Stock Market Index Fund Investor Shares 62.7% 2 Vanguard Total International Stock Index Fund Investor Shares 27.3% 3 Vanguard Total Bond Market II Index Fund Investor Shares† 10.0% It looks like the allocation that Vanguard's retirement calculator gave you was 56% Stock Market, 24% International Stock Market, 20% Bond Market. This is more conservative and thus has less risk than the Retirement 2040 fund because an additional 10% of money is placed into bonds instead of stock. It sounds like for one reason or another, based on the retirement calculator, you might not be willing to take as much risk as the Target 2040 Fund. If that's the case, I recommend simply using the split that the calculator gave you and putting no money into the Target retirement funds. If you don't like rebalancing once every year (it's not actually that hard) and are even lazier, then another strategy is to look into putting all of the money into the earlier Target retirement funds... Perhaps 2030 or 2035. ntan1 fucked around with this message at 20:29 on May 16, 2013 |
# ? May 16, 2013 20:19 |
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Yeah, I actually started thinking about it because I was planning my age 70 retirement on retiring with basically full income. Then I was looking at the numbers and realized if I could cut my expenses enough, I could actually retire with the same contributions and just adjust to a lower-income lifestyle. I've tried out a few retirement calculators and it seems like I can retire at about 50% of my current income at age 62 with no problems at my current rates. My house will be paid off in 13 years, so I can either hold onto that or sell it and buy one around the same price, and I think I'd adjust to the lower income just fine. If I feel different in 25 years, I can always push it back too, much easier than moving it forward.
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# ? May 16, 2013 20:48 |
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Why don't you adjust to a lower-income lifestyle now so you can save more and retire earlier if you want?
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# ? May 16, 2013 21:50 |
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Droo posted:Why don't you adjust to a lower-income lifestyle now so you can save more and retire earlier if you want? (edited to not be a dick) It's not actually much of a change. When you account for taxes, social security, mortgage, and the fact that I won't be setting aside almost 20% of my income in savings anymore, 50% of income is pretty much the same spending power as I have now. Once the mortgage payment goes away though, I might reallocate that portion of my paycheck for savings as well. Really though, I don't think it's unreasonable to spend money when you're younger, working hard, and need to blow off some steam every once in a while. While there's something to be said for austerity, I refuse to make myself miserable now with the hopes that it will pay off in 30 years. SlightlyMadman fucked around with this message at 22:25 on May 16, 2013 |
# ? May 16, 2013 22:16 |
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SlightlyMadman posted:It's not actually much of a change. When you account for taxes, social security, mortgage, and the fact that I won't be setting aside almost 20% of my income in savings anymore, 50% of income is pretty much the same spending power as I have now. Once the mortgage payment goes away though, I might reallocate that portion of my paycheck for savings as well. Yeah, this isn't unreasonable at all if you're putting a good portion of money into long term savings and house payments at the same time.
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# ? May 16, 2013 22:58 |
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In my opinion, will be legalized within the next 10-15 years. Are there any long-term investments to capitalize on this? What about tobacco affiliated equities, pharma funds, or chain restaurants funds (do those exist)? What other inevitable changes in social policy could affect the market over the next 20-30 years? Will the impact on the markets not be great enough to make money on? This is a serious post.
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# ? May 17, 2013 21:27 |
MJNA would be one. Get ready to ride a rollercoaster.
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# ? May 17, 2013 21:40 |
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bathhouse posted:In my opinion, will be legalized within the next 10-15 years. Are there any long-term investments to capitalize on this? What about tobacco affiliated equities, pharma funds, or chain restaurants funds (do those exist)? I was reading an article that Pot-Shops are having a tough time securing proper banking channels. The banks are still held to Federal RICO standards and don't want to chance seizure of assets and aiding of criminal activities. Some Pot-Shops are forced to go cash only because of credit restrictions, and being high-dollar cash only operations is relatively unsafe. Taking 25k+ to the bank in cash, or even holding on site, could be disastrous. The more savvy owners have figured out how to do these holdings-proxy companies to handle transactions indirectly. Creating some sort of turn key DIY proxy franchise would be a great way to get involved in the legal drug cash flows and buffer yourself from direct federal action if done right. Sorry I can't find the article, I think it was on CNN even. \/\/\/\/\/ Yeah, the "if done right" hinged on possible loopholes I wouldn't claim to understand. root of all eval fucked around with this message at 23:51 on May 17, 2013 |
# ? May 17, 2013 22:00 |
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I'm pretty sure that's a surefire way to get yourself nailed to the wall, unless you're already a large bank. http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213 AreWeDrunkYet fucked around with this message at 23:40 on May 17, 2013 |
# ? May 17, 2013 23:31 |
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bathhouse posted:In my opinion, will be legalized within the next 10-15 years. Are there any long-term investments to capitalize on this? What about tobacco affiliated equities, pharma funds, or chain restaurants funds (do those exist)? Just remember the market typically includes this sort of knowledge. I'd say the trend is fairly obvious that is becoming more and more legal so any pricing most likely includes that knowledge. Also just because it is becoming legal doesn't mean the business will take off and become super profitable.
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# ? May 18, 2013 02:28 |
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kansas posted:Just remember the market typically includes this sort of knowledge. I'd say the trend is fairly obvious that is becoming more and more legal so any pricing most likely includes that knowledge. Also just because it is becoming legal doesn't mean the business will take off and become super profitable. It's not a good play.
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# ? May 18, 2013 04:26 |
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bam thwok posted:If you own a 10-year bond at 3% and have no desire to risk earning one penny more or one penny less than your principal plus the stated interest, then the prevailing market rates and the market price of your bond don't matter to you one bit. But if you wanted to sell your bond at some point before maturity, then the rate would make a difference to you, since at that moment your bond might be worth way more or way less than you paid for it. Thanks to everyone who answered, this stuck with me since I started The Four Pillars of Investing. I bought the bond fund to spread my risk out basically, I'm just putting $5k in so I didn't want to buy just one bond and have all my eggs in one basket. It's a Vanguard index fund though so the management fees are really low. Is there a better way to do this?
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# ? May 18, 2013 15:48 |
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Harry posted:MJNA would be one. Get ready to ride a rollercoaster. I wouldn't go anywhere near that http://seekingalpha.com/article/1412901-medical-marijuana-s-journey-to-0-cannavest-payment-was-worthless?source=yahoo
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# ? May 18, 2013 16:34 |
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I have $50k in an inherited IRA account. I am planning on using the money for pharmacy school tuition (if I get in... finding out in 3 weeks or so). I will probably deplete the account within five years. I know this is the long-term investing thread but I thought you guys would have the best ideas. Two questions- I inherited this money from my grandmother and she had her IRA at Merrill Lynch. I opened my inherited IRA account at Merrill Edge in hopes that it would make the transfer go smoothly. On the whole, it did, but I am really starting to hate Merrill Edge. For example, last week I called to request a transfer of some of the funds to a checking account, and nothing happened. When I called yesterday they said that the transfer didn't happen because "for some reason it wasn't actually entered." I know mistakes happen and things get overlooked, but this just felt negligent, and combined number of other things I want to switch with a different institution. Is it more trouble than it is worth to switch to a different company? If not, who would you recommend? Currently the money is sitting in my account as cash and I want to invest it in something. I was looking into index funds and think that they might be a good idea for me - I basically just want a low-maintenance place to stick the money until I need it. Does this sound like a good idea? Should I put some of the money in an index fund and some somewhere else? Can you recommend different index funds / other funds for me to read about? I am trying to learn as much as I can and make the right choices. It is difficult to do when I get the impression that the financial advisers at Merrill Edge (and probably everywhere else) are trying to steer me in directions that will line their pockets the most.
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# ? May 18, 2013 18:48 |
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who cares posted:Is it more trouble than it is worth to switch to a different company? If not, who would you recommend? It seems you've learned exactly how most financial advisers actually work . In any case, let me address the two issues individually. The first one - it's probably less of a hassle than you think, except for that fact that you cannot access the money for the period of 3 days while the transfer is occurring. Unfortunately, I'm not that familiar with the tax implications of switching inherited IRAs. That is the main thing that you should look for 'hassle'. Whether or not you should switch ultimately depends on the following: 1) What are the fees with Merrill Lynch. Are there yearly fees that you would have to pay? What are the expense ratios (ie, how much percent per year do you have to pay the company to invest in a mutual fund) of your investment options with them. 2) Service, as you've mentioned. The recommended company by pretty much everyone is Vanguard. They have very low expense ratios, and the only fee they have is generally a $20 yearly fee for accounts of less than 50,000 which goes if you use electronic statements. The second question is what you should invest in. Unfortunately, this is money that you currently need to stay extremely stable. In response, I would suggest that you do not put the money into a stock based mutual fund, and likely put most, if not all, of that money into a money market fund. Money market funds don't really make a lot of money, especially right now with the interest rates so low, and are very similar to savings accounts. This is sort of what's meant by "low-maintenance place to stick money until you need it" for the short term.
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# ? May 18, 2013 19:37 |
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I came across this link in one of Barry Ritholtz's blog entries and immediately thought of this thread. It displays the cheapest ETF in any given investment category. I looked back a ways and didn't see it posted already, but I do apologize if this is a repeat. http://www.etfdb.com/cheapest-etf-for-every-investment-objectives I knew that there's a good bit of competition for the title of cheapest ETF in any given category these days but I was still surprised that Vanguard's name wasn't more dominant.
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# ? May 20, 2013 19:12 |
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Damnskippy posted:I knew that there's a good bit of competition for the title of cheapest ETF in any given category these days but I was still surprised that Vanguard's name wasn't more dominant. To be fair, outside of equities, Vanguard doesn't seem to have a lot of ETF's that fit the database's categories in the Bonds/Other section.
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# ? May 21, 2013 05:37 |
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I was planning on doing all of my investment stuff through Vanguard until I noticed that their transaction fee for an ETF was $7 bucks per trade. I'm guessing I should use a separate brokerage for Non Vanguard ETFs? Unless there's a huge difference I'd rather just stick with Vanguard.
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# ? May 22, 2013 14:00 |
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Orange_Lazarus posted:I was planning on doing all of my investment stuff through Vanguard until I noticed that their transaction fee for an ETF was $7 bucks per trade. I'm guessing I should use a separate brokerage for Non Vanguard ETFs? Unless there's a huge difference I'd rather just stick with Vanguard. Most brokerages aren't very far off $7 per trade: http://online-stock-trading-review.toptenreviews.com/ A lot of places offer no commissions on their own ETFs, so if you find another brokerage that has several ETFs you want to use, it might be worth it to open an account there if they offer that.
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# ? May 22, 2013 16:19 |
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I posted in here years ago about advice on putting a bit of a money aside since I knew I wasn't going into a normal 9-5 with a retirement plan etc any time soon. I decided on a variety of EFTs that I don't really touch. I haven't been able to put much of anything in, but set all of the EFTs to automatically re-invest the dividends since it was more of a long-term thing. If I remember correctly (it has been years and I have no background in this stuff) reinvesting dividends meant that I won't have to worry about taxes up to a certain point. I've been out of the country for most of the year volunteering for the past 3 years at this point, so taxes in general have slipped my mind, since I was making more or less nothing. Not sure if this can be answered here, but if all dividends are set to automatically be re-invested, and the total amount of ordinary dividends are less than $100 and "qualified" dividends are below $50 (not sure what that is)... do I even need to file any sort of taxes for this specifically? BTW, I'm a US citizen, CA resident. This is through Vanguard all with Vanguard ETFs, if that makes any difference. I feel like a big doofus reading this. I just want to make sure that the IRS won't come hunting me down years down the line when I decide to settle down in the US, but forgot to file year after year. I figured that the amount is small enough for it to be answerable within this thread.
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# ? May 23, 2013 02:14 |
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If you made literally next to nothing then it probably all falls under the standard deductions and exemptions but you should still file the late tax returns.
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# ? May 23, 2013 02:44 |
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Yea, you should file, and whether you reinvest or not has nothing to do with it. You should also declare your foreign earned income, if any. You likely will not pay taxes.
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# ? May 23, 2013 03:38 |
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Alright, I'll look into filing. Overseas "income" is more under the table pocket-money, but yeah, filing for the investments is probably a good idea. I just hate opening unnecessary doors... they tend to be hard to close later and can lead to big headaches. Regardless, thanks for the advice!
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# ? May 23, 2013 04:11 |
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I had a small ($500) Traditional IRA with Sharebuilder, which I don't particularly care for - it was put in there last tax year to save myself from tax liability at that time. Now it is up to about $575. I want to consolidate this money in a (pre-existing, Vanguard) Roth IRA, given my currently very low tax bracket before my wife starts earning money. I started the transition by converting the money within Sharebuilder into a Roth IRA - so that it would be a Roth to Roth conversion. Now that money is chilling out. Is there any advantage/harm in waiting till X or Y happens to liquidate and transfer, or should I just get it done. I know about the 60 day restriction, etc (I'm doing a withdrawal/redeposit because Sharebuilder wants $75 to transfer, but only $21 to sell all the assets and withdrawn).
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# ? May 23, 2013 18:55 |
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kaishek posted:Is there any advantage/harm in waiting till X or Y happens to liquidate and transfer, or should I just get it done. I know about the 60 day restriction, etc (I'm doing a withdrawal/redeposit because Sharebuilder wants $75 to transfer, but only $21 to sell all the assets and withdrawn). There's no real harm unless Sharebuilder charges you for extra bullshit, as long as you do the transfer within 60 days.
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# ? May 23, 2013 22:19 |
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ntan1 posted:There's no real harm unless Sharebuilder charges you for extra bullshit, as long as you do the transfer within 60 days. Cool, thanks - I just couldn't jive with a $75 transfer fee, which essentially wipes out every dollar I'd made since starting the investment. Fees!
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# ? May 24, 2013 16:10 |
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24 years old, 43k gross (teacher). Currently have a Roth IRA at vanguard with VFIFX 1.5k (retirement 2050) VBMFX 3k (Total Bond Market Index Fund Investor Shares) VTSMX 6.5k (Total Stock Market Index Fund Investor Shares) 9k in a MMA at Ally. I maxed out the Roth IRA for 2012 and 2013, and my job offers a 403b, but don't offer Ally as a vendor (they offer ING, Lincoln, Met Life, VALIC, and Security Benefits). Where do you think I should go from here? Should I bother with the 403b (no pricematching)or open a traditional IRA via Vanguard? Ideally I would like to invest more while I'm young and have few expenses. Thanks!
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# ? May 24, 2013 18:20 |
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If you have already maxed out the Roth, you can't open a traditional IRA. The 5,500 limit covers BOTH traditional IRA and Roth IRA. So if you want to have another tax-advantaged account, I suggest you utilize the 403b (17,500 is the limit I think so you can set aside more money)
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# ? May 24, 2013 18:25 |
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# ? May 23, 2024 07:12 |
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Pirate Ken posted:Where do you think I should go from here? Should I bother with the 403b (no pricematching)or open a traditional IRA via Vanguard? Ideally I would like to invest more while I'm young and have few expenses. Thanks! Yes, 403b is your next bet (I assume your place doesn't offer a 401k?)
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# ? May 24, 2013 18:53 |