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SuzieMcAwesome posted:I have gotten my first real job! With benefits and everything! My company matches 50% of my contribution up to 3%. If I contribute my 6% with the company matching that would make for a 9% contribution. My question is should I go with my employer retirement plan or should I keep this money and invest it independently? For reference, I am a 27 year old single female, with no children and I own my home. My average starting yearly salary will be $45,000. I have enclosed the few documents that I have received about this plan. I have no experience with investing and presently have no retirement or savings. Disclaimer: I'm also pretty new to this, so you may want a second goonpinion. Your company plan's fund choices look extremely limited. Still, that employee match is an immediate 50% return on your investment, which is worth it regardless of what you're given as choices to invest in. You should contribute enough to get the full match, but then also open a Roth IRA at Vanguard for any further investing. As for which funds to pick, VIFSX is great, but everything else on that list looks mediocre to bad to me. I'm guessing your best option is to go 100% VIFSX in your plan, and then put 1/4th as much money towards Vanguard's Extended Market Index in your IRA to balance it out. For any more domestic stock you want after that, you can get more 500 Index and Extended Market Index in the same ratio, or buy Vanguard Total Stock Market Index. Then get Vanguard Total International Stock Market Index for international stock, and Vanguard Total Bond Market Index for bonds. After that, it's just a matter of picking a ratio of domestic stock, international stock, and bonds. The way your literature lumps everyone more than 15 years away from retirement together is silly, so I wouldn't hold close to it. I'm also 27 and 62% domestic stock, 30% international stock, 8% bonds is the mix I use. edit: Missed that you have no savings yet, insider below is right about getting an emergency fund together taking priority. Do start getting your match now, but the IRA can wait. Kilty Monroe fucked around with this message at 08:49 on Jun 30, 2013 |
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Jun 30, 2013 06:16
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SuzieMcAwesome posted:I have gotten my first real job! With benefits and everything! My company matches 50% of my contribution up to 3%. If I contribute my 6% with the company matching that would make for a 9% contribution. My question is should I go with my employer retirement plan or should I keep this money and invest it independently? For reference, I am a 27 year old single female, with no children and I own my home. My average starting yearly salary will be $45,000. I have enclosed the few documents that I have received about this plan. I have no experience with investing and presently have no retirement or savings. Your 401k is probably not the best in the world. You have the Vanguard 500 Index fund, which is great, but you're missing the complementary Mid/Small Cap stocks (Small Cap Growth Index is a bad idea), and your other choices in Mid/Small Cap and International Stock have high expense ratios. What's the expense ratio on the Retirement 20XX fund? Either way, I'd suggest you follow Xenoborg's advice and contribute up to your match, then Roth IRA, then maximize your 401k. *EDIT* Crap, beaten by Kitty Munroe, who is correct on everything. Yes, as another thing to point out, the questionnaire on asset allocation isn't exactly right on the recommended allocations. Generally, if you do invest in stocks, most of the top finance books you want International to be 30%, Large Cap to be 46%, and small cap to be 24% (or within about a 3-5% margin of this). It's recommended advice that you spend 20$ and 1 hour of time reading "Four Pillars" in the op (or any of the other books listed there). ntan1 fucked around with this message at 06:38 on Jun 30, 2013 |
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Jun 30, 2013 06:31
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SuzieMcAwesome posted:I have gotten my first real job! With benefits and everything! My company matches 50% of my contribution up to 3%. If I contribute my 6% with the company matching that would make for a 9% contribution. My question is should I go with my employer retirement plan or should I keep this money and invest it independently? For reference, I am a 27 year old single female, with no children and I own my home. My average starting yearly salary will be $45,000. I have enclosed the few documents that I have received about this plan. I have no experience with investing and presently have no retirement or savings. You own your own home but have no savings? Oh boy. Sure set yourself up for the 6% so you get the maximum match, but you should be saving every other penny for a emergency fund before even thinking of other accounts. You want liquid assets of 6-12 months of your living expenses before you even begin to jump into individual accounts.
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Jun 30, 2013 07:55
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ntan1 posted:Your 401k is probably not the best in the world. You have the Vanguard 500 Index fund, which is great, but you're missing the complementary Mid/Small Cap stocks (Small Cap Growth Index is a bad idea), and your other choices in Mid/Small Cap and International Stock have high expense ratios. It was something in the .7 to .8 range.
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Jun 30, 2013 08:02
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I got my first paycheck today! Looks like it's time to start putting away for retirement. I am 25 and my plan is 60% domestic equity, 30% intl equity, 5% bonds, and 5% TIPS. I have a mandatory 7.5% defined contribution plan via my employer, which I'm putting in a mix of intl equities idx funds, bond index funds, and TIPs funds. For domestic equities, I'm going to open a Roth IRA through Vanguard and I'm looking at the Total Stock Market Indx Fund. Right now I don't have the $3000 minimum investment to buy that fund. Is there any disadvantage to buying the ETF instead? It also has a lower ER. I was thinking of buying ETF until I reach $10,000 then putting it into Admiral Shares for a 0.03% ER. Anything wrong with my plan?
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Jun 30, 2013 14:43
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No. As always, emergency fund first before you invest.
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Jun 30, 2013 15:24
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Kilty Monroe posted:Disclaimer: I'm also pretty new to this, so you may want a second goonpinion.
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Jun 30, 2013 17:30
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Do some of you guys have pensions (or will after X years)? I teach and will theoretically have one, assuming they don't gut it decades from now. For those of you that do, does it affect your investment strategy at all? I'm trying to view it like social security: it'll be nice if it's there, but I'm not planning on it existing.
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Jun 30, 2013 17:31
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Pirate Ken posted:Do some of you guys have pensions (or will after X years)? I teach and will theoretically have one, assuming they don't gut it decades from now. For those of you that do, does it affect your investment strategy at all? My take on this - having a pension, even if it is reduced due to crippling deficits, provides an income stream which enables you to take a greater degree of risk with the remainder of your assets.
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Jun 30, 2013 18:18
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Our 401k is moving to a new provider. One of the Vanguard funds offered is VEMSX - "Extended Market Idx Signal" I can't find any evidence of this fund existing on Vanguard's website. What's up with that?
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Jun 30, 2013 20:31
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ntan1 posted:No. As always, emergency fund first before you invest. I already have an emergency fund in place. And a $10,000 limit credit card linked to my parent's bank account.
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Jun 30, 2013 20:53
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GoGoGadgetChris posted:Our 401k is moving to a new provider. One of the Vanguard funds offered is VEMSX - "Extended Market Idx Signal" Signal is a share class. A list of their share classes says that Signal shares are "accessible to advisors, financial intermediaries, and select institutions" and doesn't give a minimum investment to otherwise get access to them. So it looks to me like you can't buy Signal shares outside of a 401k that has access to them, so they didn't bother to list it on their site for individual investors. The only difference from their other Extended Market Index funds should be the expense ratio, though.
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Jun 30, 2013 21:17
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Kilty Monroe posted:Signal is a share class. A list of their share classes says that Signal shares are "accessible to advisors, financial intermediaries, and select institutions" and doesn't give a minimum investment to otherwise get access to them. So it looks to me like you can't buy Signal shares outside of a 401k that has access to them, so they didn't bother to list it on their site for individual investors. Which means it probably or should have a lower expense ratio compared to "normal" class accounts, just like Admiral shares.
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Jul 1, 2013 03:23
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edit: dbl post.
Sephiroth_IRA fucked around with this message at 16:35 on Jul 1, 2013 |
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Jul 1, 2013 16:31
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edit: nm.
Sephiroth_IRA fucked around with this message at 16:03 on Jul 2, 2013 |
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Jul 1, 2013 16:35
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GWPAX has been at $12.44 since late Friday and hasn't changed. Is this just a technical glitch? Really need to drop this fund. Sorry for the  question.
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Jul 1, 2013 22:36
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bathhouse posted:GWPAX has been at $12.44 since late Friday and hasn't changed. Is this just a technical glitch? Non-etf mutual fund prices typically update only at some point after the end of each trading day, so you're just still seeing Friday's closing price.
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Jul 1, 2013 22:49
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Alright so I'd like some advice as to how I should be handling my retirement. I'm currently enrolled in 403b through my employer, my previous employer was a 401k so I did a rollover from that. To my knowledge, my employer currently does not match the contribution so I'm on my own with that. I'm 29 years old and my contribution amount is currently at 8%, current amount in 403b is around $23,300. In addition to this, my employer also has a pension plan which I will be fully vested in after five years. I'm enrolled in the Fidelity FID Freedom 2040. Should I be contributing a higher percentage to 403b? Should I bother looking at alternatives like a Roth IRA?
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Jul 1, 2013 23:32
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Yes, Roth IRAs in most cases typically have better investment options than 401ks/403bs. This is one of the reason why people tend to prioritize putting money into the Roth IRA over their 401ks/403bs. Furthermore, I'd take a look at your Fidelity FID Freedom 2040. The expense ratio is approximately .80, which is incredibly high. If you have any other options with lower expense ratios, one or a combination of those would make a lot more sense. In terms of contribution percentage, it's all about when you want to retire. 8% may be considered rather low, but you also have a pension which may justify a lower percentage.
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Jul 2, 2013 01:35
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I'm not sure if you guys may know much about this subject, but I'm on both disability from the VA and Social Security. As was pointed out to me before, I can't get a Roth IRA because I have no earned income. If I were able to somehow get and hold a job (making under $750 a month to keep my benefits), would I then be able to get a Roth IRA since now I have earned income? Related, could I still contribute the max amount ($5,500 a year I think), or could I only use my earned income for contribution?
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Jul 2, 2013 01:47
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Pennywise the Frown posted:I'm not sure if you guys may know much about this subject, but I'm on both disability from the VA and Social Security. As was pointed out to me before, I can't get a Roth IRA because I have no earned income. If I were able to somehow get and hold a job (making under $750 a month to keep my benefits), would I then be able to get a Roth IRA since now I have earned income? If you get a job, then yes you can open a Roth IRA because you will have earned income. You can only contribute up to what you've earned so you'll have to make at least $5500 to max out your Roth IRA.
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Jul 2, 2013 01:57
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Pennywise the Frown posted:I'm not sure if you guys may know much about this subject, but I'm on both disability from the VA and Social Security. As was pointed out to me before, I can't get a Roth IRA because I have no earned income. If I were able to somehow get and hold a job (making under $750 a month to keep my benefits), would I then be able to get a Roth IRA since now I have earned income? You could only contribute as much as you have in earned income. So if you made at least $458.33 per month ($5500/12), you could contribute the maximum amount per year.
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Jul 2, 2013 02:02
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Ok that makes sense. Thanks.
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Jul 2, 2013 02:08
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You can only use your after tax income for a Roth IRA. Normally this isn't a big deal since an income of $5500 before taxes is $5500 after taxes since the standard deduction is more than that but maybe your benefits complicate that? (I have no idea how disability or VA pay work)
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Jul 2, 2013 02:33
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Unormal posted:Non-etf mutual fund prices typically update only at some point after the end of each trading day, so you're just still seeing Friday's closing price. Thanks, that's probably what's happening, but i haven't seen it with this fund before (and it's still at that price today). I'm just realizing how expensive this fund is. I'm an idiot for letting my Edward Jones guy buy it for my Roth.
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Jul 2, 2013 14:45
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Pennywise the Frown posted:Ok that makes sense. Thanks. You could always contribute to a taxable account. Sephiroth_IRA fucked around with this message at 16:13 on Jul 2, 2013 |
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Jul 2, 2013 16:09
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I thought someone here said that I can't even do a traditional IRA since it requires earned income as well. Right now I have my money in a money market with Vanguard and put some in the VASGX fund.
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Jul 2, 2013 16:19
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Pennywise the Frown posted:I thought someone here said that I can't even do a traditional IRA since it requires earned income as well. Right now I have my money in a money market with Vanguard and put some in the VASGX fund. All tax-advantaged retirement programs can only be contributed to with earned income. If you have no earned income, your only options (in the US) are taxable accounts.
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Jul 2, 2013 18:05
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Since you guys mentioned rebalancing few times on last pages - what is the good rule of thumb (if any) for a frequency of rebalancing as well as for additional investments? I deposit to RRSP usually only one or two times per year - do I need to do it at the same time or completely randomly? Same thing for rebalancing - what is the good frequency (two times per year or each quarter) and should it be scheduled or random?
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Jul 4, 2013 18:27
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Generally, rebalance once per year. It's best to make contributions to your plan throughout the year to take advantage of dollar cost averaging, but it's not a big deal if you do not. Just don't try to play the game of choosing when to put money in.
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Jul 4, 2013 23:43
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Is an online savings bank like Ally or Capital One 360 my best bet for storing my emergency savings? They are currently at Bank of America and making basically 0% interest, and I'd like to preserve the capital as much as I can against inflation. Ally looks like it is the most reputable bank in the top 5 spots by interest rate (0.84%).
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Jul 7, 2013 04:19
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To piggyback on bumnuts question, what about using I Savings bonds for an emergency fund? I'm aware of the 1 year holding period and 3 month interest forfeiture. Ideally I'd use extra cash I have at the end of the month to buy I bonds, hold them for a year, then redirect my savings account emergency fund to other investments while holding on to the I bonds for an emergency. Is there anything terribly wrong with this idea?
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Jul 8, 2013 14:09
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bumnuts posted:Is an online savings bank like Ally or Capital One 360 my best bet for storing my emergency savings? They are currently at Bank of America and making basically 0% interest, and I'd like to preserve the capital as much as I can against inflation. Ally looks like it is the most reputable bank in the top 5 spots by interest rate (0.84%). Check the last 2 pages of the basic finance thread, I literally am in the same scenario and asked the same question. Basically though, it seems online savings will have the best rates.
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Jul 8, 2013 14:53
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Melting Eggs posted:To piggyback on bumnuts question, what about using I Savings bonds for an emergency fund? I'm aware of the 1 year holding period and 3 month interest forfeiture. Ideally I'd use extra cash I have at the end of the month to buy I bonds, hold them for a year, then redirect my savings account emergency fund to other investments while holding on to the I bonds for an emergency. Is there anything terribly wrong with this idea? The only caveat is Money Market Accounts (which is the Ally .85 rate) is not FDIC insured. However, no bank has ever defaulted on MMA savings. That said, it's what I use.
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Jul 8, 2013 17:54
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Pirate Ken posted:The only caveat is Money Market Accounts (which is the Ally .85 rate) is not FDIC insured. However, no bank has ever defaulted on MMA savings. That said, it's what I use. This is from their FAQs (http://www.ally.com/money-market-accounts/are-money-market-accounts-fdic-insured/): quote:Money market deposit accounts are often confused with money market mutual funds, as their rates both tend to be tied to short-term, fixed income investments like U.S. Treasuries. The two types of accounts are also similar in that they offer relative liquidity and flexibility — subject to the standard limit for money market deposit accounts of no more than six withdrawal or transfer transactions per statement period (ATM withdrawals are unlimited). You can usually write checks and make withdrawals from both money market accounts and money market funds. This is especially helpful if you need to use your money for living expenses during retirement. Is the 0.85% account a MMA or MMMF?
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Jul 9, 2013 04:46
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bumnuts posted:This is from their FAQs (http://www.ally.com/money-market-accounts/are-money-market-accounts-fdic-insured/): Well hell, I was just straight wrong. Thanks for the clarification. MMA is .84%.
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Jul 9, 2013 16:03
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Smartypig is 1%, and is FDIC through BBVA Compass. Any reason not to use it?
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Jul 9, 2013 16:08
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So I'm working for a company that has offered me the rights to a certain number of "Non-Qualified Stock Options" when I was hired (vested 25% after my first year there, and then regularly at a rate of 25% per year each year thereafter until four years have passed when I would be fully vested). Very recently, they've offered new employees "Restricted Stock Units" instead, and because I was hired during the changeover, I get the option of switching to the new RSUs but I'd only get 50% of the total shares in RSUs that I was originally offered in NQSOs. I'm not required to make the switch to RSUs. Should I? What are the practical things to consider here?
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Jul 9, 2013 16:13
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three posted:Smartypig is 1%, and is FDIC through BBVA Compass. Any reason not to use it? Supposedly you have to tell them why you're withdrawing it. I believe Barclays and Amex have a straight 1% account.
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Jul 9, 2013 16:56
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Harry posted:Supposedly you have to tell them why you're withdrawing it. I believe Barclays and Amex have a straight 1% account. I don't think I've ever had to tell them why I withdrew (you do have to withdraw the entire goal at once), although they do ask what it's for so they can better advertise to you by offering redemption in gift cards, etc.
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Jul 9, 2013 17:19
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