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ntan1 posted:Yes, but with after tax investment accounts, you're still paying the taxes, just up front. It appears you missed my edit on my previous post, but no, it isn't that simple. In a taxable account, you will only pay marginal tax rates on your income when you make it, and then likely long-term capital gains on your investment earnings. If you pull money out of a 401k, the entire distribution will be taxed at full marginal tax rates, meaning you are paying a higher tax that you otherwise would have, along with a 10% penalty. This is not good any way you look at it. Obiviously if you are in a situation where you have very little choice, it might be a benefit to pull money out of your 401k early, but this is a very poor plan if you are making the contributions with the full intention of pulling the money out as unqualified distributions in order to retire early.
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May 30, 2013 21:52
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flowinprose posted:That is correct, however, that would still be a pretty bad idea as long as you had any other option... since you would not be able to recontribute those amounts, effectively negating some portion of your past contributions permanently. Yeah, I already have an emergency fund, so I'd hit that first. Though it sounds like, if somebody hadn't yet maxed out their roth IRA, they would want to put money there first instead of an emergency fund? Obviously the best option would be to have both and pull from the emergency fund first though. I guess the real reason I ask is that my emergency fund isn't quite at 100% of where I'd like it to be yet (only 2-3 months expenses), so this vindicates my idea that I should prioritize maxing out my Roth IRA before adding to it.
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May 30, 2013 21:53
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flowinprose posted:It appears you missed my edit on my previous post, but no, it isn't that simple. Correct, it isn't that simple, but note that with after tax accounts, again, you are paying the taxes up front. Normally when you put money into a 401k, You haven't paid the taxes yet, and only pay all of the money + penalty when you take it out.
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May 30, 2013 21:54
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ntan1 posted:Correct, it isn't that simple, but note that with after tax accounts, again, you are paying the taxes up front. Normally when you put money into a 401k, You haven't paid the taxes yet, and only pay all of the money + penalty when you take it out. If the tax rates are the same when you make the contribution and when you take the distribution, it won't make any difference when you pay the taxes. This is the same concept behind why a Roth vs. conventional account is effectively the same from that point of view. Most people also take the point of view that tax rates in the future will likely be higher than they are now due to the relatively current environment of high federal deficits. But lets assume all things are equal, that tax rates won't change, (check my math, please): Example 1: You contribute $15,000 into a 401k in 2013, with a marginal tax rate of 25%, this effectively saves you $3750 in taxes that year (but this is not important to the calculation really). Twenty years from now, that $15,000 has turned into $60,000 and you pull it out as an unqualified distribution. This means you will pay $6,000 in penalties, and $15,000 in taxes (25% once again), leaving you with $39,000. Example 2: If instead you paid 25% in taxes on that $15,000 in income in 2013, you would pay $3750 in taxes and invest $11,250 (your basis), and that would grow to $45,000 in the same period of time if in were in the exact same investment as in example #1. You sell that investment and will owe $5062.50 in capital gains taxes [ 0.15 * (45,000 - 11,250) ], leaving you with $39937.50 or $937.50 more than in example 1. Now if the capital gains tax rate goes back up to the marginal rate (which it has been before in the past) then the 401k would win out. However, the marginal rates could very well also increase while the cap gains stayed the same, in which case pulling the money out of the 401k could also end up being more costly. It's a complex situation, but the penalty pretty much makes it not worth doing assuming things stay the same over the time period you compare.
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May 30, 2013 22:20
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flowinprose posted:It's a complex situation, but the penalty pretty much makes it not worth doing assuming things stay the same over the time period you compare. But you also forgot costs for re-balancing, investment choices/expense ratios, and other factors.
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May 30, 2013 22:53
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ntan1 posted:But you also forgot costs for re-balancing, investment choices/expense ratios, and other factors. For simplicity's sake for the comparison, I assumed you had access to the same broad market fund(s) and would've made the decision to invest the money the same way in either example with minimal rebalancing. Generally speaking, the investment choices you would have in a 401k would have higher expense ratios and fewer investment choices. If you had the money in a taxable account, you could easily find a very broad-market fund (such as VTWSX) that would not require frequent rebalancing, and wouldn't have any additional costs for reinvestment other than requiring taxes on dividends to be paid in the year you received them. This would create a bit of a drag (maybe a few tenths of a percent of average return), but might actually be worth it considering that many 401k's only have investment choices with expense ratios more than that much higher than VTWSX's measly 0.35% So this is probably kind of a wash, but would depend on the quality of your company's 401k (with I think most cases ending up favoring the taxable account once again). The ONE definite advantage a 401k would have is offering a match. You would likely be foolish to not contribute up to at least the maximum available matching your company provided, no matter what your future plans were to pull out the funds early. But I think once you hit the match percentage you would be better off on average investing in taxable accounts if you really plan on retiring early.
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May 30, 2013 23:37
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30 years old. I have $130,000 in cash that needs to be invested. Another $200,000 is in a low risk portfolio which I'm content with and not going to touch. I'd like to invest the $130,000 in medium risk investments for the next year or two then move it to lower risk things and at some point make a down payment on a house.
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May 31, 2013 03:18
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Mouse Cadet posted:30 years old. Anything but very low-risk investments aren't appropriate for a one-to-two year horizon. If you need the money in a year or two, just stick it in a CD or equivalent. If you want more risk, I'd suggest investing your long-term portfolio in a slightly more aggressive fashion, not risking the money you know you need in one or two years.
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May 31, 2013 03:29
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flowinprose posted:
Using the laws as they stand today you can easily roll the 401k over to an IRA and then take "substantially equal periodic payments" of whatever amount you want for 5+ years in order to pull money out penalty free during early retirement, so your comparison that docks the 401k $6k in penalties is not really applicable to a planned early retirement situation.
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May 31, 2013 04:32
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Unormal posted:Anything but very low-risk investments aren't appropriate for a one-to-two year horizon. If you need the money in a year or two, just stick it in a CD or equivalent. If you want more risk, I'd suggest investing your long-term portfolio in a slightly more aggressive fashion, not risking the money you know you need in one or two years. Let's take 50,000 out and save that for the downpayment. So for the remaining $80,000 I want to roll the dice a bit with that.
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May 31, 2013 04:57
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flowinprose posted:That is correct, however, that would still be a pretty bad idea as long as you had any other option... since you would not be able to recontribute those amounts, effectively negating some portion of your past contributions permanently.
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May 31, 2013 05:09
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Mouse Cadet posted:30 years old. Unless you just came upon this money and didn't earn it, you really need to be more aggressive with your savings unless you have a specific reasons not to.
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May 31, 2013 05:23
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I'm starting to become really concerned about the money that I've been saving up. I'm going to turn 28 this year and I realized that I don't have much. About 72K between my Roth, 401k and savings. I don't really have any long term goals as far as buying a house or anything. I do not have any debt aside from a rolling monthly credit card. I don't make much yearly, only about 50K not including potential bonuses. What should I be doing aside from the 401k and Roth to ensure I have enough money when I'm old?
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May 31, 2013 05:53
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Droo posted:Using the laws as they stand today you can easily roll the 401k over to an IRA and then take "substantially equal periodic payments" of whatever amount you want for 5+ years in order to pull money out penalty free during early retirement, so your comparison that docks the 401k $6k in penalties is not really applicable to a planned early retirement situation. Well, that is one way out, but it is also pretty damned convoluted to figure out how to do it properly without screwing up and ending up paying the penalties anyway. Then again, if you really have enough assets stashed away to retire early without running out during your lifetime, you likely will have taxable assets that you can draw from before tapping your tax-deferred accounts. So it is all probably a moot point for most people who really are planning to do this, unless you're willing to live a pretty meager lifestyle in retirement or move to a low cost-of-living area.
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May 31, 2013 06:09
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obi_ant posted:I'm starting to become really concerned about the money that I've been saving up. I'm going to turn 28 this year and I realized that I don't have much. About 72K between my Roth, 401k and savings. I don't really have any long term goals as far as buying a house or anything. I do not have any debt aside from a rolling monthly credit card. I don't make much yearly, only about 50K not including potential bonuses. What should I be doing aside from the 401k and Roth to ensure I have enough money when I'm old? I think you're doing pretty good for someone who's 28 years old. I just turned 29 and my wife and I only have a net worth of 60k and about 40k between our Roths/401k/Emergency fund. I guess the real question is how long have you been working and how much are you able to save per year?
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May 31, 2013 07:39
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Mouse Cadet posted:Let's take 50,000 out and save that for the downpayment. So for the remaining $80,000 I want to roll the dice a bit with that. If you want to roll the dice, put the 50k in money market funds or a savings with high interest (which is low these days). That solidifies the 50k hard with low risk. Take 70% of the 80k and put it inthe vanguard admiral total stock fund. The other goes in the vanguard admiral total international stock fund. This has a long term track record of doing well. The short term is a bit more random.
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May 31, 2013 08:43
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ntan1 posted:If you want to roll the dice, put the 50k in money market funds or a savings with high interest (which is low these days). That solidifies the 50k hard with low risk. Take 70% of the 80k and put it inthe vanguard admiral total stock fund. The other goes in the vanguard admiral total international stock fund. This has a long term track record of doing well. The short term is a bit more random. Personally, I'd put 50k for the house payment in a money market fund, then I'd take $79,980 of the remaining 80k and put it in a money market fund; and then $20 and buy a copy of four-pillars, read it, and figure out a long term asset allocation that meets my risk profile. (optional: buy and read even more books) Then I'd take the $279980 I have outside of my house down-payment, take out an amount that would cover 3-12 months of expenses, put that in a very liquid form as an emergency fund, and then invest the remaining money based on my newly formed asset allocation. Unormal fucked around with this message at 17:30 on May 31, 2013 |
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May 31, 2013 17:27
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Unormal posted:Personally, I'd put 50k for the house payment in a money market fund, then I'd take $79,980 of the remaining 80k and put it in a money market fund; and then $20 and buy a copy of four-pillars, read it, and figure out a long term asset allocation that meets my risk profile. (optional: buy and read even more books) Then I'd take the $279980 I have outside of my house down-payment, take out an amount that would cover 3-12 months of expenses, put that in a very liquid form as an emergency fund, and then invest the remaining money based on my newly formed asset allocation. Wait there's an additional 200k involved? Welp, missed that.
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May 31, 2013 17:51
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I've got a couple questions and figure this is probably the right thread to post it in, but if it's not let me know. I'm currently 26 years old, live fairly cheaply (around $900/mo for rent/utilities/internet/food, with about $1500-2000 or so every year in travel/vacation expenses, another $800-1000/yr on car insurance + repairs, and an estimated ~$2000/yr or so on toys/luxuries/emergencies). My income fluctuates wildly every year depending on what I'm doing but it's generally anywhere from $8000-20,000. I was lucky enough to have a trust fund set up for college that I got full access to when I turned 21. I unfortunately never finished college (though I still plan to, only 30 hours left, but it's a complicated situation that's suited better for another thread than this one) but due to frugal living for years and years and inheriting mineral rights on some property when my dad died that earned me an income of ~$500-1000/mo, along with the various odd jobs I work, I have never been hard for money. There's some other details I don't feel comfortable going into but at the moment my net worth is about $185,000. I recently (February) hired Windhaven to manage $100,000 of my money with an aggressive growth portfolio. They've done kind of mediocre, around a 6% growth since I've started with them, though that is probably affected by the S&P500 not being so hot lately. The other 80k I have split evenly between my two savings accounts. I know that's dumb. The reason I took so long to put my money into investment was that I was thinking of purchasing a house in Austin. I spent many months, nearly a year, looking for a house that I truly loved, would want to live in, and could rent out rooms. However, the more time I spent reading into it and researching it the more jaded I got. The market in Austin is a terrible place to buy at this point in time, the legalities/insurance/repairs behind being a landlord are a bit intimidating, and honestly I don't know that I want to live in Austin. I've been here my entire life and feel the urge to travel. So I got a job in Belgium. It doesn't pay much but it's something I find really interesting, I have dual citizenship with them, and my grandparents live there so even if I can't find a place of my own there immediately I can just live with them 'til I do. I'm moving in August and am wondering exactly what I should be doing with my money. From what I've been reading, some analysts seem to think that we're hitting another peak soon and we'll be going into another recession in the nearish future. Would it be unwise to cash out right now and just sit on my money until the market bottoms out then buy back in? Should I just keep it invested and ride out any turbulence there may be? I'm still sitting on 80k in cash right now so I've got a very nice cushion considering how cheaply I live and am not too worried about riding out any possible recession but it just seems kind of dumb to not plan ahead and make the best choice I can. My only problem is I know so little about economics (1 course in high school, 1 course in college, and many hours of reading stuff on the internet) that I don't feel confident in any decision I would make, so I turn to you. Jesus Christ fucked around with this message at 22:31 on Jun 1, 2013 |
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Jun 1, 2013 22:25
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Jesus Christ posted:There's some other details I don't feel comfortable going into but at the moment my net worth is about $185,000. I recently (February) hired Windhaven to manage $100,000 of my money with an aggressive growth portfolio. They've done kind of mediocre, around a 6% growth since I've started with them, though that is probably affected by the S&P500 not being so hot lately. The other 80k I have split evenly between my two savings accounts. I know that's dumb. Wha? The S&P500 has been on fire since November of last year, gaining about 20% in that timeframe. It's up about 9% since the beginning of February. This is a good example of why it isn't helpful to pay extra to have people actively manage your funds... because they so consistently fail to even beat the market (and they almost NEVER do after taking out the fees you pay them). Take the recommendation given a few posts up by Unormal: read the Four Pillars of Investing (and potentially several more books recommended in the first post of this thread) and learn how to develop an asset allocation. This way you can stop paying hefty fees to have others manage your money.
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Jun 1, 2013 22:56
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Jesus Christ posted:I've got a couple questions and figure this is probably the right thread to post it in, but if it's not let me know. As flowinprose mentioned above, it sounds like Windhaven is sucking you dry with fees. Get a copy of the Four Pillars and read it. If you want to keep the money invested I would personally move my money into Vanguard Target Retirement funds or Vanguard Total Stock Market (directly through Vanguard, not through a third party brokerage). Regarding pulling your $100k out: If you want to get out of the stock market, get out. If you want to stay in, stay in. You can't time the market, so don't try. Again, read the Four Pillars. Take anything that a market analyst says with a huge grain of salt. Marble fucked around with this message at 05:23 on Jun 2, 2013 |
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Jun 2, 2013 05:15
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I'm trying to build a portfolio based on the suggestions from the Four Pillars' "Young Yvonne" scenario, adapting it to the reality that there isn't a good tax-sheltered way to invest here in Germany and that I will most likely go not so heavy on US-based stock. In any case, I was wondering why Bernstein suggests holding both a Pacific Index fund and an Emerging markets index fund, knowing that China will be heavily represented in both funds. The only reason I can see to hold both funds would be that you can't really get an Emerging Markets index fund without any Asian/Chinese companies in it. Does anyone have any insights on this?
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Jun 2, 2013 10:28
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rookieone posted:I'm trying to build a portfolio based on the suggestions from the Four Pillars' "Young Yvonne" scenario, adapting it to the reality that there isn't a good tax-sheltered way to invest here in Germany and that I will most likely go not so heavy on US-based stock. Pacific index is all developed markets so there is no China. When Korea became "developed", it dropped from the emerging index and went into Pacific. That said, Bernstein is only really going for the rebalancing bonus by splitting up the developed markets into Pacific and Europe. For most people, it's good enough to have a total international fund. Or, a developed market (Europe and Pacific and Canada) and emerging markets. Splitting into emerging, Pacific, and Europe is just slicing the same pie into three funds but is not really necessary.
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Jun 2, 2013 16:46
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I'm looking to diversify my portfolio a bit more, in particular to get out of cash and gain more exposure to international markets, so I'm looking for some opinions. Here is what I am planning:pre:Allocation % Cash 16 Australian Bonds 3 International Bonds 3 Australian Shares 19 International Shares 19 Real Estate 34 Private Capital 3 Commodities 2 Other 1 I'm planning to break the international equities component in to 35/35/30 US/world ex-US/emerging markets though that's not really based on anything so I'd be interested to get people's thoughts.
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Jun 2, 2013 17:55
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So my wife and I have a new goal of early retirement, specifically in the next 10-15 years. We currently have no savings, but we recently setup YNAB for our computers to try to rectify that. I understand we need to save something like 50-75% of our income to meet this goal. Should we do that, would it be completely dumb to invest 100% of this (minus emergency funds) savings to the Vanguard total stock index? We've been using this site for our planning: http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/ but it doesn't really say any ratios. Would we diversify a bit into bonds? Should we do 10-20% in foreign complete stocks? MMM has some sort of formula that says save 25*(monthly expenses) and you can retire. I assume this is living off of interest and dividends. Would we rely on the market to beat inflation? Would our dividends increase at least equally with inflation? Also if anyone is familiar with the above system, would dividend reinvestments while we're still working count towards our ultimate savings goal (25*monthly), or are we aiming for a total amount here? What if the markets crash ala 2008 on our way to our goal? Do we have to increase the amount we need to save again? Thanks for the help.
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Jun 2, 2013 20:53
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First, have you guys worked out a livable budget saving 70% of your income? We did and for us to live decently, still have a social life with the occasional traveling and eating healthy/well, 60% was the highest we could go with no kids.
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Jun 2, 2013 21:13
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You need at a minimum 25 times YEARLY expenses, and a lot of people would argue that that number is optimistically low. If you spend $4k a month, you need $48k*25 or $1.2 million. Remember to include taxes on the investment income when you consider this - they are much lower than earned income taxes and can be managed pretty well, but that makes your $1.2mm target even higher. Using those numbers invested in a balanced portfolio, then yes inflation adjustments are accounted for, so your spending will be able to increase a bit each year. You should invest no less than 50% (if you can stand the risk at this amount) in the total stocks and no more than 75%. Invest the rest in a total bond fund. Rebalance the two funds at least yearly and not more than quarterly. Do not try and time these investments or rebalances. If the money is in a tax haven (e.g. 401k or IRA), or in any mutual funds, go ahead and automatically reinvest the dividends. If the money is in a regular taxable brokerage account with ETFs, have the dividends and gains go into a cash account so that you can manually use them to add to positions. Technically, using ETFs this way will give you the most flexibility in the future to minimize your tax burden in retirement. The fact that you have no savings and are talking about saving 50+% of your income seems like quite a shift. If you post more details about your age and incomes and kid status and house status I can offer more specific advice.
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Jun 2, 2013 21:14
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Droo posted:You need at a minimum 25 times YEARLY expenses, and a lot of people would argue that that number is optimistically low. If you spend $4k a month, you need $48k*25 or $1.2 million. Remember to include taxes on the investment income when you consider this - they are much lower than earned income taxes and can be managed pretty well, but that makes your $1.2mm target even higher. Hey Droo, Thanks for the info. You too Rurutia; we would need to own a house/be rent free to get that high, too. We did manage somewhere in the 50-60% range though. It's all hypothetical at this point though. Droo we recently went from a gross income of $21,120 to a gross income of $81,440 in the course of the last 3 weeks. Luckily we're not in a position of insurmountable debt simply because we couldn't really afford anything before, and we were able to pretty much break even on that income (while making minimum monthlys on our debts). So basically that's why we can save now. Our priorities right now are to employ even greater austerity measures by cutting our eating out budget nearly completely, and make the only new luxury in our life a better house to rent in the near future (my sister lives with us and our place is way too small for 3). My wife is 25 and I'm 26 (27 in August), so we're hoping that we could manage something like this at 41/42 at the latest. We don't have kids at the moment, but we've been thinking 30 would be a good age to have 1 or maybe 2. Thanks again.  E: also yea meant yearly not monthly. Knyteguy fucked around with this message at 21:50 on Jun 2, 2013 |
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Jun 2, 2013 21:44
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Alright, at that income you are not paying a 25% federal tax rate. The 2013 cutoff for a couple is AGI of 73k, and you automatically get to deduct close to $20k in standard deductions and exemptions. For your investments then, I think your priorities are: 1. Health Savings Account if you have high deductible insurance and are eligible for one. 2. Roth IRA for both you and your wife 3. Employer 401k (or 403b or whatever) for both you and your wife up to employer match. If you have self-employment (tax form 1099) income, then look into a SEP IRA or a Solo 401k (I think a solo 401k lets you put more in until you have income over 100k or so). 4. If you were in the 25% tax bracket I think it would be a pretty easy no-brainer to fund your 401k up to the federal limit of $17,500 each. However, since you are in the 15% bracket I think you could easily decide to fund a taxable brokerage account as your next step instead. If you don't have a 401k, or if the investment choices in the 401k are relatively high-fee or have purchase feeds (called "loads") then I would probably fund a taxable brokerage account next. If you have an excellent 401k option I would max that out instead. If you live in a state with a high state tax percent, and you would be able to deduct the 401k contribution from the state tax, that would probably make the 401k the better choice. 5. The only thing left is a taxable brokerage account. I use Fidelity for a brokerage account but I really just buy Vanguard ETF's anyway. Fidelity has a very nice checking account setup that can pretty much replace a bank account, and Vanguard doesn't really do that well, which is why I like Fidelity better even though I end up paying ~$100 a year in trade fees. I think Schwab is similar to Fidelity but I haven't used them. You should create a target asset allocation. It can be as simple as 70%Stocks/30%Bonds, but it should probably be split up into a few more categories for tax efficiency. My personal asset allocation just as an example of a pretty simple but still more split up one: 15% High Grade Bonds 15% Junk Bonds 15% US Large Cap Stocks 15% US Small Cap Stocks 10% International Large Cap 15% International Small Cap (inludes emerging markets) 15% Real Estate Investment Trusts Foreign stocks should all go into a taxable brokerage account so you can take advantage of the foreign tax credit. There is some weird tax thing where you can't get a foreign tax credit unless the fund is entirely foreign, so I don't buy stock funds that are mixed foreign/domestic. Bonds and REITs should go into a tax sheltered account since the tax rates on dividends are higher (I put REITs in a roth and bonds in a 401k, since the REITs should grow more in theory over my lifetime than the bonds). The specific funds I use just in case anyone is curious: VBR - Vanguard US Small Cap ETF VEU - Vanguard International Large Cap ETF VSS - Vanguard International Small Cap ETF VYM - Vanguard US Large Cap (technically a dividend income fund) VBMFX - Vanguard total bond market (I think BND is the etf version of this) VWEHX - Vanguard high yield corporate index fund VGSIX - Vanguard REIT index (I think VNQI is the etf not sure though)
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Jun 2, 2013 22:26
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Knyteguy posted:We did manage somewhere in the 50-60% range though. It's all hypothetical at this point though. Droo's covering all the actual logistics so I'm just here for more E/N advice. I have no doubt that you can force 70% savings. What I meant when I asked about a livable budget was really about quality of life. Sure, you can manage to live with your girlfriend while rooming with 3 other people, only eating beans and rice and having the internet as your only entertainment expenditure. But how miserable is that? Obviously, I don't know where you are so you might be afford much more. Having lived on very little you know what it's like and if you're happy with that, then all the more power to you. Just be mindful that you don't sacrifice too much happiness now for too little gain later on. Hoarding money only gets you so far and active hobbies can be both surprisingly expensive and incredibly rewarding. I would very much make a spreadsheet and budget. Give yourselves enough leeway that you'd be happy, enough play money that you don't feel completely tied down and see how that works for you. It'll give you some better perspective.  With that said, on top of what Droo had said (which is very good advice), make sure you pay off all your debts first. I noticed that you said you've been making minimum monthlies, and unless this is a loan with <4% APY, paying it off is usually the best way to go. Rurutia fucked around with this message at 22:41 on Jun 2, 2013 |
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Jun 2, 2013 22:39
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Droo posted:Foreign stocks should all go into a taxable brokerage account so you can take advantage of the foreign tax credit. There is some weird tax thing where you can't get a foreign tax credit unless the fund is entirely foreign, so I don't buy stock funds that are mixed foreign/domestic. You're okay holding funds that have both domestic and foreign assets as long as it is a self-contained single fund, like Vanguard Total World Stock Index Fund (VTWSX). You will get a report on your 1099(DIV) that shows the percentage of the dividends that were from foreign sources and are applicable to the tax credit. The problem arises if you are holding a "Fund of funds" that is organized as a single fund that holds multiple underlying funds. Examples of this include the Target Retirement funds, LifeStrategy funds, and STAR fund.
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Jun 2, 2013 22:48
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Knyteguy posted:4. If you were in the 25% tax bracket I think it would be a pretty easy no-brainer to fund your 401k up to the federal limit of $17,500 each. However, since you are in the 15% bracket I think you could easily decide to fund a taxable brokerage account as your next step instead. If you don't have a 401k, or if the investment choices in the 401k are relatively high-fee or have purchase feeds (called "loads") then I would probably fund a taxable brokerage account next. If you have an excellent 401k option I would max that out instead. If you live in a state with a high state tax percent, and you would be able to deduct the 401k contribution from the state tax, that would probably make the 401k the better choice. He also might have access to a Roth 401k, and if you're able to max out a Roth 401k while in the 15% bracket it's basically a home run right now. I'm at a pretty small company (under 100 employees) and we have a not-awesome 401k match but I'm still maxing it because we have Roth 401k access to Vanguard TR funds.
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Jun 3, 2013 17:52
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Thanks for all the replies everyone. I need to learn some of the nomenclature to better understand everything, so that's my goal for this week.Weinertron posted:He also might have access to a Roth 401k, and if you're able to max out a Roth 401k while in the 15% bracket it's basically a home run right now. I'm at a pretty small company (under 100 employees) and we have a not-awesome 401k match but I'm still maxing it because we have Roth 401k access to Vanguard TR funds. Unfortunately my company only has 3 people in it, so we don't have any sort of 401k at the moment. RE: self-income I'm thinking of taking advantage of opening a corporation so I may just siphon my income into assets in there (or something, I just learned about this yesterday) so a solo 401k or something might work (just heard about this as well from Droo) from asset income. If we end up retiring early would the penalties from early withdrawal make it a worse investment than a taxable brokerage? Also if we each open a Roth 401k and neither of us are able to pre-tax deposit into them, would we be double taxed, or would we get a tax refund? I also really like the idea of REITs especially where seniors are involved so I need to look more into this. I wish the 'shares' were as inexpensive as they were a couple years ago. Anyway there are still some books and stuff I need to read to find out more; MMM, you guys, and "Rich Dad Poor Dad" have all pointed me to some things I definitely want to learn more about. What's everyone's thoughts on P2P lending (Prosper and that other one that Google bought up)? I had invested like $900 on Prosper like 6 years ago and it did pretty good, but I don't know how it would be for a more significant amount of money. Is it a bit more of a pain because of the non-liquid nature? Thanks again for the help. e: I might be confusing Roth IRA with Roth 401k, but I'll leave my reference there so I can research further.
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Jun 3, 2013 19:19
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P2P lending is over here. I've had a small amount there and have been very slowly increasing my account size over the last 2 years. Pretty happy with the returns so far but it is definitely a very time intensive investment, at least at first.
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Jun 3, 2013 23:42
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80k posted:Pacific index is all developed markets so there is no China. When Korea became "developed", it dropped from the emerging index and went into Pacific. Just a very minor correction. You're spot on about China. Korea, however, is something I have to explain on a weekly basis due to the fact that it is still included (along with Taiwan) in most emerging market indices even though it really hasn't belonged there for quite some time.
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Jun 5, 2013 00:36
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Damnskippy posted:Just a very minor correction. You're spot on about China. Korea, however, is something I have to explain on a weekly basis due to the fact that it is still included (along with Taiwan) in most emerging market indices even though it really hasn't belonged there for quite some time. Good point. In the case of Vanguard's Pacific and emerging indices, Korea is in the Pacific/developed market and absent from Emerging. However, your point is a good warning on people mixing and matching different indices (i.e. MSCI, FTSE, etc). Slicing and dicing is best done with the same index family so that migrations do not result in temporary overlaps.
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Jun 5, 2013 00:55
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How often do you guys actually check on your investments? I think what I'm going to do is remove my investment profiles from Mint and just put in a cash account that represents the principal of my contributions. That way I won't constantly be bombarded with whether or not they've improved or dropped on a daily basis. edit: Done now I don't have to see it in Mint everyday. Sephiroth_IRA fucked around with this message at 16:55 on Jun 5, 2013 |
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Jun 5, 2013 16:48
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Xandu fucked around with this message at 07:05 on Aug 29, 2013 |
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Jun 5, 2013 17:22
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Generally whatever the market return is. 10% this year sounds about right, if a little low. 5% sounds really low though.
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Jun 5, 2013 17:31
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Orange_Lazarus posted:How often do you guys actually check on your investments? I think what I'm going to do is remove my investment profiles from Mint and just put in a cash account that represents the principal of my contributions. That way I won't constantly be bombarded with whether or not they've improved or dropped on a daily basis. I check on my investments about once a year. This is when I make my Roth contribution. If I have any regular contributions (401k, etc), I will reevaluate it at the same time during my once a year review. My parents are in the withdrawal phase so they are not making contributions, so I review it with them only about once every couple of years, since their asset allocation is so conservative to begin with. I do not see a big reason to do it more often, but I think something like quarterly or every half year would be okay.
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Jun 5, 2013 17:39
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