|
6 months living expenses, not salary. Put it in an online savings account getting .85% and you're beating inflation.
|
#
?
Jun 20, 2013 20:51
|
|
|
|
| # ? May 23, 2024 18:38 |
|
|
Living with my parents for the time being, my essential living expenses are almost nonexistent. After tuition, it's just insurance, gas, and phone, really. If I lost my job, I'd have to stop taking classes until I got a new one, but I'd likely be able to live on $5,000 for a whole year if I had to. It should be enough to cover my deductibles in the event of a catastrophic accident too. Any thoughts on the retirement fund?
|
|
#
?
Jun 20, 2013 21:04
|
|
|
To everyone saying 'max employer match account -> Open IRA and put the rest there', just be aware that ERISA accounts often allow for loans. This may be a consideration for people that want to have some amount of access to their money without paying the 10% penalty. As an example, a family member took a loan on her 401k to pay for eye surgery, which they would not have been able to do without taking an early withdrawal from their IRA.
|
|
#
?
Jun 20, 2013 21:44
|
|
|
Secret Sweater posted:To everyone saying 'max employer match account -> Open IRA and put the rest there', just be aware that ERISA accounts often allow for loans. This may be a consideration for people that want to have some amount of access to their money without paying the 10% penalty. I think the main problem with that is that if you're young, your fund choice should be an aggressive one, and therefore that money isn't "safe." A market downturn could easily turn 6 months expenses into 2 months expenses. Or even if you had ten times that amount, and only had to take out a portion of it, if you have to take it out when the market's down and pay it back when the market is up, you've completely screwed yourself, and this is likely since you're most likely to be out of a job when the economy is bad.
|
|
#
?
Jun 20, 2013 21:54
|
|
|
You can withdraw your Roth IRA contributions at any time without penalty though?
|
|
#
?
Jun 20, 2013 21:54
|
|
|
Close, there's a few things that I would suggest if you change management to yourself. Just to give you some information, your current allocation given to you is about 90% stock, 10% bonds. You have a 70%/30% domestic stock/international stock split, which seems very reasonable. Make sure that this is the split that you want, however. IE, if you need more of that money in the near future, you will want more in bonds. If you are a really aggressive investor, you may want only stocks (be careful with this second option though). 1) If you decide to manage yourself, don't use the precious metals fund. In general, metals have been risky and seen lots of increases/decreases, and it's likely that the 3% was just an adviser testing out waters or trying to increase diversity a bit. That being said, it's not really necessary and probably more of a hassle to deal with. 2) Is there a total bond fund that isn't Wellesley/Wellington? Like, for example: https://fundresearch.fidelity.com/mutual-funds/summary/316146372 https://personal.vanguard.com/us/funds/snapshot?FundId=0584&FundIntExt=INT If so, what I'd to is to take the money out of Wellesley/Wellington. Put 10% of all of your money (which is like 40% or so of the money you have in Wellesley/Wellington) and put it toward the fund above. Take the rest and put it into Vanguard Institutional Index Fund and Spartan Extended Market Index Fund at the same ratio (should be about a 65%/35% split). Keep it that way for a while and rebalance once a year and you're set. You'll only have to look at the account once per year to rebalance. Kilty Monroe posted:Living with my parents for the time being, my essential living expenses are almost nonexistent. After tuition, it's just insurance, gas, and phone, really. If I lost my job, I'd have to stop taking classes until I got a new one, but I'd likely be able to live on $5,000 for a whole year if I had to. It should be enough to cover my deductibles in the event of a catastrophic accident too. Make sure you have an emergency fund or have parents who are good with their money and not in debt who can save you in case of a large emergency before investing. Otherwise, read the op. ntan1 fucked around with this message at 22:12 on Jun 20, 2013 |
|
#
?
Jun 20, 2013 21:55
|
|
|
GoGoGadgetChris posted:...Put it in an online savings account getting .85% and you're beating inflation. Anyone have recommendations / places to look and compare here? I'm only getting %0.05 on my emergency fund savings account, and if there really is a liquid option that much higher I should be considering it!
|
|
#
?
Jun 20, 2013 22:53
|
|
|
P0PCULTUREREFERENCE posted:Anyone have recommendations / places to look and compare here? I'm only getting %0.05 on my emergency fund savings account, and if there really is a liquid option that much higher I should be considering it! http://www.bankrate.com/checking.aspx Do a search for MMA/Savings products. Discover is advertising .8% right now, and they're certainly trustworthy.
|
|
#
?
Jun 20, 2013 22:57
|
|
|
I believe Amex and Barclays are the top 2 at the moment.
|
|
#
?
Jun 20, 2013 23:37
|
|
|
GoGoGadgetChris posted:You can withdraw your Roth IRA contributions at any time without penalty though? Generally speaking, earnings can be withdrawn after they remain in the account for 5 years (penalty free). Contributions would be penalty free regardless.
|
|
#
?
Jun 21, 2013 00:41
|
|
|
I could use some help as I'm in limited choice situation with my employer. I need to open up a Roth IRA here soon as I need to stop putting it off as my 'emergency fund' is basically huge at this point and I can easily max a Roth in one go. Basically I'm in a position where I could technically get non-public information (even though this would be very rare) so I have to only have accounts with certain companies and have major restrictions on what I can and cannot trade. So here are my options with brokerage houses: J.P. Morgan Securities, Charles Schwab, E*Trade Financial, Fidelity, Merrill Lynch, and Morgan Stanley/Smith Barney. I get certain perks with each of them, but the discounts are about the same across the board and don't really matter to me honestly. My second restriction is that I can only buy open ended mutual funds or have fully managed accounts. Now before you freak out I CAN buy stocks, ETFs, etc. the problem is that it is a huge process to do so. I need to call a hotline to clear the trade, get verification that I can buy or sell the requested securities, then log a request with my supervisor, who then gets approval from the manager of the department, who then tells compliance its ok to proceed, and then I have 24 hours to make the buy or sell. None of that is private so my direct supervisor (who is barely above me at this point) sees the trades and amounts of each transaction. That is just unacceptable to me and it is a huge hassle so I'm going to avoid it and just do the mutual fund route (at least for now). So with that said which of the listed brokerage houses would be the best if I'm basically going a pure mutual fund route?
|
|
#
?
Jun 21, 2013 03:14
|
|
|
The OP title exists for a reason. Anywho, for retirement, passive index funds are usually the best option anyway, and is what is recommended by everyone. If you had Vanguard, I'd have recommended the 20XX Retirement fund to start. Unfortunately, I believe the brokerages you have there don't offer good Target funds (the ones they offer have really high expense ratios. With fidelity, you could probably do a very basic but good Spartan International Stock/Spartan Total Market/Spartan Bond Market mix, possibly. They have low expense ratios, albeit a .5% redemption fee.
|
|
#
?
Jun 21, 2013 04:20
|
|
|
P0PCULTUREREFERENCE posted:Anyone have recommendations / places to look and compare here? I'm only getting %0.05 on my emergency fund savings account, and if there really is a liquid option that much higher I should be considering it! One thing you might want to think about are I-bonds. You can set up an account at Treasury Direct and buy them directly. They have a fixed coupon (which has been zero for the last few years) plus a cpi based interest rate (which gets changed twice a year). You don't pay taxes until they are redeemed. The bad thing for an emergency fund is that you have to hold them for at least a year before redeeming them and if redeemed before five years you lose three months interest. The good thing is that you can never lose money on them in a deflationary environment, unlike tips. So the bulk of money that I use for an emergency fund I can get at quickly but I'm slowly buying I-bonds each paycheck and hope to eventually have enough that are redeemable to act as the emergency fund.
|
|
#
?
Jun 21, 2013 16:51
|
|
|
Yeah I went with the I-bond route with a bit of my emergency savings. edit: nm I've been down this road. Sephiroth_IRA fucked around with this message at 17:27 on Jun 21, 2013 |
|
#
?
Jun 21, 2013 17:11
|
|
|
ntan1 posted:2) Is there a total bond fund that isn't Wellesley/Wellington? Like, for example: There's four bond funds available that look worthwhile: VBLTX which you linked, FXSTX which has a really low expense ratio, and then TPINX and MWTIX which have absurdly good ROR history compared to all the other bond funds. Are those last two riskier than they're letting on to get such good returns, or are they just really good funds? Anyways, I think I'll take control, dump the precious metals, and follow your suggestions. My planned mix is then: 40% VIIIX 30% FSPSX 20% FSEVX 10% one of the above bond funds I'm also considering moving 5% from one of my stock funds to VEXRX, a small cap growth fund. It seems attractive on principle because it makes for a little more diverse and aggressive mix, but I'm definitely a novice so I'm not sure this isn't a dumb idea, or which fund to take 5% from to do this. That should be the last of the questions I have, thanks for your help.
|
|
#
?
Jun 21, 2013 18:18
|
|
|
GoGoGadgetChris posted:http://www.bankrate.com/checking.aspx Perfect. Thank you! Enigmatic Troll posted:One thing you might want to think about are I-bonds. ... That's an interesting idea - I'll look into that too.
|
|
#
?
Jun 21, 2013 19:06
|
|
|
Kilty Monroe posted:There's four bond funds available that look worthwhile: VBLTX which you linked, FXSTX which has a really low expense ratio, and then TPINX and MWTIX which have absurdly good ROR history compared to all the other bond funds. Are those last two riskier than they're letting on to get such good returns, or are they just really good funds? TPINX is not worth it because of the .90% expense ratio. MWTIX 'might' be worth it, but has a lot more risk because it's actively managed. Here is where I would typically go into the discussion about "past returns do not guarantee future performance" analogy, and tell you that active management funds that have done really well for the past 10 years actually have a high chance of doing poorly in a future year. Unfortunately, the subject isn't as easy to describe, and reading one of the books in the OP would be the best option to understand this. quote:I'm also considering moving 5% from one of my stock funds to VEXRX, a small cap growth fund. It seems attractive on principle because it makes for a little more diverse and aggressive mix, but I'm definitely a novice so I'm not sure this isn't a dumb idea, or which fund to take 5% from to do this. To be fair, this isn't that significant if you keep it at a very low percent. Just keep in mind that the Fidelity Extended Market fund also invests a bit in small cap growth funds too (or tries to represent it as much as possible). Be really careful with small cap growth funds, because they've been historically shown to be subpar while being extremely volatile.
|
|
#
?
Jun 21, 2013 21:57
|
|
|
ntan1 posted:TPINX is not worth it because of the .90% expense ratio. MWTIX 'might' be worth it, but has a lot more risk because it's actively managed. Here is where I would typically go into the discussion about "past returns do not guarantee future performance" analogy, and tell you that active management funds that have done really well for the past 10 years actually have a high chance of doing poorly in a future year. Unfortunately, the subject isn't as easy to describe, and reading one of the books in the OP would be the best option to understand this. Right, I know past history isn't a guarantee or a complete picture of anything. The little (grossly oversimplified, I'm sure) infographics on the Fidelity Netbenefits site didn't suggest there was a significant difference in risk between those two bond funds and the other funds, though, so I wasn't sure why they had such historically better performance. I guess I know not to put any faith into those little scales and color codes now. Still, if VEXRX is a meh pick, then I think I'll move 5% to bonds instead and split it between FXSTX and MWTIX so I can give the managed bond fund a shot without giving up the low risk bond fund. So my mix will be: 35% VIIIX 30% FSPSX 20% FSEVX 7.5% MWTIX 7.5% FXSTX unless this allocation is cockeyed somehow. Thanks for all the feedback, guys. I know I'm still a novice but I feel like I have a much better understanding than I did a couple days ago. I plan to read some of the books from the OP before I meddle any further beyond annual rebalancing, but you guys given me a better starting point than I would have had otherwise.
|
|
#
?
Jun 22, 2013 09:23
|
|
|
P0PCULTUREREFERENCE posted:Perfect. Thank you! Here's the article that got me interested in them (I'm sure there are other articles that disparage them): http://seekingalpha.com/article/886631-incredible-inflation-bond-bargain
|
|
#
?
Jun 22, 2013 21:57
|
|
|
So here's my dilemma, I decided to go mostly into Bonds when I first started my Roth three years ago( ugh ) because I was starting out and wanted to save for a down payment on a house. So here's how our (wife, and I) Roth's are currently balanced. ME: VFINX: 5,500 VBIRX: 10,000 Wife: VFINX: 5,500 VBIRX: 10,000 Also the wife's 401k was invested entire in stocks thank god: Vanguard Institutional Index: 65% Vanguard International Index: 35% We also have an emergency fund split 50/50 into cash and bonds. $5,000: Cash $5,000: I-bonds So, here's the thing. My goal/dream is to own a home outright pretty early in life. I understand that mathematically the potential for long term returns on the market is worth more than loss on mortgage interest. However, I also realize that I'm only young once (I could die tomorrow, when I'm 30, 35, 50, the day before I retire or I could just be a broken man by the time I do retire) and the sense of freedom I would have living rent free is just something I really really want, it's something my wife wants to. However, I'm not sure if I should just leave that 20k in the short term index, spread it into other bond funds or what. My plan next year was to start focusing on getting diversified into other funds (stocks, international stocks, reits, etc) but I'm thinking that maybe I could just go ahead and diversify out of those bond funds now and refund my downpayment some other way. TLDR: So basically should I diversify now and if I want to save for a down-payment on a home where should I put that money? How much should someone set aside for a down-payment? Sephiroth_IRA fucked around with this message at 13:45 on Jun 25, 2013 |
|
#
?
Jun 24, 2013 17:25
|
|
|
kansas posted:A fee only CFP (certified financial planner) can provide expert, customized advice around ideal asset allocation, tax efficient strategies, time horizon/liquidity planning as well as estate planning. They have a legal fiduciary responsibility to their clients that is enforceable in court. Note that only the CFP designation comes with this protection and any other "advisor" does not have this obligation. They aren't free and typically charge a percent of total assets under management typically around maybe .75% but for someone who doesn't want to deal with figuring this all out it can be a valuable service and you won't get taken to the cleaners by some sleazy "investment advisor". Where did you get the .75% from. I'm looking at financial planners, and I'm not finding a lot on what a fair fee would be.
|
|
#
?
Jun 25, 2013 01:06
|
|
|
Usually when people say fee only CFP, they mean someone that charges like $100 an hour to setup your retirement plan. The ones you want to avoid are the ones that charge you .75% of your assets they manage.
|
|
#
?
Jun 25, 2013 02:12
|
|
|
I met with one recently that charges .9%. They only take clients with over $1,000,000 but due to a connection I could use them. .9% sounds too high.
|
|
#
?
Jun 25, 2013 02:40
|
|
|
Mouse Cadet posted:I met with one recently that charges .9%. They only take clients with over $1,000,000 but due to a connection I could use them. .9% sounds too high. You don't have the kind of money that would make it worth it. Since you haven't mentioned it yet, look at the three fund portfolio that Bogleheads endorse. They're more on your level of financial standing and advocate this. The main benefit from financial planners is avoiding taxes or reducing money that would be at a 35% rate to something like a 15% or 20% rate.
|
|
#
?
Jun 25, 2013 02:44
|
|
|
I've been using PersonalCapital.com for a while now as a much nicer alternative to mint.com for tracking my retirement accounts. Lately they've started bugging me about setting up a free consultation with one of their reps. I'm 34 and have about a year's salary in 401k and Roth IRA, all assigned to 2040 index funds with low expense ratios (Vanguard and Fidelity). From everything I've read, it seems like I'm right on track and there's not much else to do, so my gut is that there's very little to be gained from a consultation, at the risk of possibly getting swindled into something. Am I just being paranoid, or am I right to ignore it? On the other hand, if they are being shady I really want to know since they have all my financial information.
|
|
#
?
Jun 25, 2013 04:40
|
|
|
According to these comments (press expand comments, the sites format sucks) they will basically just charge you 1% to probably do what you're already doing.
|
|
#
?
Jun 25, 2013 05:27
|
|
|
Harry posted:Usually when people say fee only CFP, they mean someone that charges like $100 an hour to setup your retirement plan. The ones you want to avoid are the ones that charge you .75% of your assets they manage. This isn't entirely entirely true. A fee-only CFP follows one or a combination of the following models. a) Single consultation flat rate - e.g. $1,000 for a current assessment your current situation and recommendation of action. b) Hourly Rate - Ongoing advice charged just at a flat hourly rate. c) Percentage of Assess - Ongoing advice charged as a percentage of assets. The key here there is no incentive trade for the sake of trading. By contrast a non fee-only adviser will earn a commission on every trade you make, thus it is in their interest to trade as much as possible to earn more commissions. This is what you absolutely must avoid. MouseCadet - take a look at the Vanguard CFP program. They will likely be a very cost effective solution for you. Maybe you could find someone better cheaper if you really looked but you'll get a decent adviser and a fair price.
|
|
#
?
Jun 25, 2013 05:48
|
|
|
I'm in a start-up company and I have a Roth 401k offered through ADP, but it is not company matching at this time (not sure if that will change or not). Should I still try and max this out after my Roth IRA or would it be wiser to invest this money elsewhere?
|
|
#
?
Jun 25, 2013 06:42
|
|
|
I have a rollover IRA and a Roth in a Vanguard 2050 fund. I actively contribute the max to the Roth. My company offers a 401k through Fidelity, but doesn't match. I'm contributing to the 401k, but I'm not sure I picked the right thing to do. I also have it in a target fund, but for the sake of diversification, should I be doing something different with this separate bucket?
|
|
#
?
Jun 25, 2013 13:10
|
|
|
Harry posted:According to these comments (press expand comments, the sites format sucks) they will basically just charge you 1% to probably do what you're already doing. Thanks, that's exactly the kind of feedback I was looking for. I'm sure the "free consultation" would end up as just them trying to talk me into their paid service. The free site is still pretty good though, and I'd recommend it as much better than mint for tracking investment performance (although it doesn't do budgeting or anything). Eris, some here may argue, but if you're in target retirement funds, you're as diversified as a hands-off investor should be. The next step of diversification is between regular and roth accounts (since you don't know what taxes will do in the future), and you've done that too. You shouldn't need to worry about anything beyond that until you've maxed out those contributions.
|
|
#
?
Jun 25, 2013 14:13
|
|
|
SlightlyMadman posted:Thanks, that's exactly the kind of feedback I was looking for. I'm sure the "free consultation" would end up as just them trying to talk me into their paid service. The free site is still pretty good though, and I'd recommend it as much better than mint for tracking investment performance (although it doesn't do budgeting or anything). I strongly disagree with percentage fee based CFPs. For the amount of money that you could potentially save up without having a .45% percentage based CFP, it's simply so much better to do a single charge, learn how to invest, and then invest on your own. Eris posted:I have a rollover IRA and a Roth in a Vanguard 2050 fund. I actively contribute the max to the Roth. My company offers a 401k through Fidelity, but doesn't match. You're doing perfectly fine. There are only two potential reasons I could see you switching away: 1) If you ever need to take some money out to buy a house (or short term stuff), then you may want to adjust your asset allocation 2) If you're investing more than 20k in Vanguard, it's possible to switch to admiral shares and save a bit more money. ntan1 fucked around with this message at 18:15 on Jun 25, 2013 |
|
#
?
Jun 25, 2013 18:11
|
|
|
ntan1 posted:I strongly disagree with percentage fee based CFPs. For the amount of money that you could potentially save up without having a .45% percentage based CFP, it's simply so much better to do a single charge, learn how to invest, and then invest on your own. The site is completely free to use. The percentage fee is only if you use their financial advisor service.
|
|
#
?
Jun 25, 2013 18:25
|
|
|
Harry posted:Usually when people say fee only CFP, they mean someone that charges like $100 an hour to setup your retirement plan. The ones you want to avoid are the ones that charge you .75% of your assets they manage. Hourly or percentage-based are fine depending on what you are looking for.
|
|
#
?
Jun 25, 2013 19:04
|
|
|
SlightlyMadman posted:The site is completely free to use. The percentage fee is only if you use their financial advisor service. Right, this was more in response to kansas.
|
|
#
?
Jun 25, 2013 19:40
|
|
|
ntan1 posted:
1. So, you think that have two (actually, three) different "target" style accounts are all okay? 2. Oh, that's interesting, thanks! The rollover is just a hair over 20k, but won't likely be accumulating more --- still worth switching over to Admiral?
|
|
#
?
Jun 25, 2013 22:10
|
|
|
Eris posted:1. So, you think that have two (actually, three) different "target" style accounts are all okay? The expense ratios are even lower for admiral accounts, which is nice. .1 for some.
|
|
#
?
Jun 25, 2013 22:23
|
|
|
Here is a giant reminder that you should never pull all of your money out of a retirement account, and that you should stick to a good asset allocation and not play risky if you can't wait it out. http://forums.somethingawful.com/showthread.php?noseen=0&threadid=3532008&perpage=40&pagenumber=92#post416827210 With a good rebuttal by Harry. Again, the main reason why investing is so hard for people is because doing the right thing is counter-intuitive to psychology. Eris posted:1. So, you think that have two (actually, three) different "target" style accounts are all okay? 1. Yes, but just a warning that you should check your expense ratios to verify that they are low for all of the different 'target' funds you are investing in. For example, Fidelity's Target * Fund has higher expense ratios (like .4), which would be a downer. 2. Possibly worth it as long as you're willing to rebalance once a year and you qualify for them. This probably doesn't work for 401ks as much because usually there are fewer options to invest in with a 401k. The market will perform similarly whether you're in a retirement fund or one of the admiral funds as long as your asset allocation (cash/bond/stock/international stock) split is the same. Just do the research and see what the expense ratio (the percentage you pay per year) is to decide if it's worth it. ntan1 fucked around with this message at 00:34 on Jun 26, 2013 |
|
#
?
Jun 26, 2013 00:31
|
|
|
It's a shame he took everything I said as a personal attack, but I'm pretty sure his parents cashed out on their current funds towards the end of 2008 and missed out on all of the recovery. A few months ago on Bogleheads there was some guy who had something like $1,000,000 sitting in cash that he pulled out during the crash, just wrap your head around that.
|
|
#
?
Jun 26, 2013 00:43
|
|
|
ntan1 posted:1. Yes, but just a warning that you should check your expense ratios to verify that they are low for all of the different 'target' funds you are investing in. For example, Fidelity's Target * Fund has higher expense ratios (like .4), which would be a downer. Vanguard is lower, but I thought .4 was still considered good? Sure, Fidelity's target funds have a higher expense ratio than their other funds, but for a hands-off investor isn't that still better than having a portfolio which under-performs because you forgot to rebalance it or screwed something up?
|
|
#
?
Jun 26, 2013 01:26
|
|
|
|
| # ? May 23, 2024 18:38 |
|
|
SlightlyMadman posted:Vanguard is lower, but I thought .4 was still considered good? Sure, Fidelity's target funds have a higher expense ratio than their other funds, but for a hands-off investor isn't that still better than having a portfolio which under-performs because you forgot to rebalance it or screwed something up? It used to be considered good. But you can always do better than that. Yes, you're right that investing in underperforming funds, and forgetting to rebalance/change asset allocation are really big mistakes though. That being said, fidelity has a set of 2-3 funds that do the exact same thing as their target retirement fund, except have .1% expense ratios. The disadvantage is that you do need to re-balance. ntan1 fucked around with this message at 01:39 on Jun 26, 2013 |
|
#
?
Jun 26, 2013 01:36
|
|