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mnd posted:I can't tell if this post should go here, or would be better suited to the stock picking thread, but what the hell. People can tell me to Warren Buffet says that you should invest in index funds. If want to do so, read the op. If you don't agree with buffet, go to the stock market thread.
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Aug 11, 2013 04:11
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if need be.
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keiran_helcyan posted:Student loans or 401k maxing first? 4th'ing student loans. In my case, I had private loans that had an interest rate of PRIME + 1.05%, which I thought was pretty predatory. No way I was going to be able to reliably make anything near that in terms of passive investing. Feels great to be off of those now.
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Aug 12, 2013 15:34
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Our company is going to offer a 401k match of "50% match on the first 6%". Does that mean that they will give me $0.50 for every $1 I contribute, not to exceed 3% of my annual income? Or that they will match 3% of my total contribution?
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Aug 12, 2013 20:12
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It means for every dollar up to 6% of your income, they will contribute $0.50. Beyond 6% there is no more match.
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Aug 12, 2013 20:17
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Dazzo posted:I'm in the same boat. I opted to max out both my Roth IRA and 401k first and am putting leftover money towards my student loans. My reasoning is that my retirement accounts have compounding interest while my student loans do not. Also the lowered tax burden with maxing out my 401k is also nice. I figure those two benefits would outweigh interest accrued on student loans. (I have not crunched numbers on this, so feel free for anyone to correct me if I'm wrong)
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Aug 12, 2013 20:18
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Student loans are horrible. One reason why is because they are non-dischargable in bankruptcy. I'd say pay them off even if you can get a much better return on investing, for that reason alone.
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Aug 12, 2013 20:20
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Guinness posted:It means for every dollar up to 6% of your income, they will contribute $0.50. Beyond 6% there is no more match. So if I made $100,000 a year and maxed out my 401k with $17,500, am I going to receive $3,000 in employer contributions (50% of 6% of annual income) or $525 in employer contributions (50% of 6% of total contribution)?
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Aug 12, 2013 20:22
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GoGoGadgetChris posted:So if I made $100,000 a year and maxed out my 401k with $17,500, am I going to receive $3,000 in employer contributions (50% of 6% of annual income) or $525 in employer contributions (50% of 6% of total contribution)? The way this is typically quoted, it would be $3,000 as long as you put in at least $6,000. (They match 50% of your contribution up to a maximum of 6% of your income).
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Aug 12, 2013 20:24
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I have a 403(b) retirement account through my employer and I just received a notice that the funds in my account were (automatically) rebalanced about a week ago. I am in a target date retirement fund and am somewhat familiar with the concept of rebalancing from reading "The Four Pillars of Investment". I am a little concerned about the frequency of the rebalancing and incurring capital gains taxation if the shares are not held for a long period before selling. I called and spoke to a representative who said that rebalancing can occur anywhere from every 3 months to yearly (depending on what, she wasn't able to say). The rep I spoke to also said there would be no fees charged by the broker (which isn't what I am worried about in this instance - I know the fees inside 401k and 403b plans can be awful but hey, free $ right?). Because I am far from a tax expert, I didn't know how to phrase my question in order to get my the taxation issue answered, so should I be worried about losing return to capital gains taxes inside a retirement account? And if so, how can I tell if it is taking place? The transaction history I received in the mail makes no mention of fees but I am thinking they would probably do everything within their legal powers to hide that fact. If it matters, I contribute 2% post-tax and 6% pre-tax to the account. Thanks in advance for any info.
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Aug 13, 2013 00:10
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Capital gains taxes don't apply to funds inside an IRA or 401k, and I assume the same is true for a 403b.
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Aug 13, 2013 00:41
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The Agent posted:I have a 403(b) retirement account through my employer and I just received a notice that the funds in my account were (automatically) rebalanced about a week ago. I am in a target date retirement fund and am somewhat familiar with the concept of rebalancing from reading "The Four Pillars of Investment". I am a little concerned about the frequency of the rebalancing and incurring capital gains taxation if the shares are not held for a long period before selling. I called and spoke to a representative who said that rebalancing can occur anywhere from every 3 months to yearly (depending on what, she wasn't able to say). The funds themselves do not pay capital gains taxes, because all the gains are passed on to you in the form of distributions (aka dividends). Since you hold these funds in a tax-deferred vechicle, you do not have to pay any taxes on any of this money until you start withdrawing in retirement. It would be very rare and a big technicality, but there is one weird situation you can get into with tax-deferred assets if you also own the same or very similar funds in taxable accounts. If for some reason you sold some out of your taxable account within the same rolling 30-day period as you purchased a fund in your tax-deferred account, this would create a wash-sale which could disallow you from taking the capital loss off your taxes. I'm not sure how the IRS would treat this situation if it was something your fiduciary was doing without your express direction.
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Aug 13, 2013 00:46
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The Agent posted:I have a 403(b) retirement account through my employer and I just received a notice that the funds in my account were (automatically) rebalanced about a week ago. I am in a target date retirement fund and am somewhat familiar with the concept of rebalancing from reading "The Four Pillars of Investment". I am a little concerned about the frequency of the rebalancing and incurring capital gains taxation if the shares are not held for a long period before selling. I called and spoke to a representative who said that rebalancing can occur anywhere from every 3 months to yearly (depending on what, she wasn't able to say). The Four Pillars is actually in favor of regularly rebalancing your account. It's a natural way of selling stocks that were doing well and buying more of index segments that were doing poorly. Outside of the tax protection of a retirement account this would burn you with fees and taxes, but inside the 403b your money is "protected".
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Aug 13, 2013 01:31
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That's only worrisome if you were investing in assets outside the Target Retirement Fund. Otherwise, what they did was a no-op (they didn't sell or buy anything). The Four Pillars recommends re-balancing every 2 years.
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Aug 13, 2013 01:36
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Briantist posted:How do your student loans not have compounding interest? Student loans typically capitalize once at the start of the repayment period (6 mo after graduation), and then as long as you make regular on-time payments, the interest will not compound. Even if your monthly payments under IBR are less than the monthly interest accrued.
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Aug 13, 2013 02:46
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INTJ Mastermind posted:Student loans typically capitalize once at the start of the repayment period (6 mo after graduation), and then as long as you make regular on-time payments, the interest will not compound. Even if your monthly payments under IBR are less than the monthly interest accrued. Unless I'm missing something, this doesn't matter in terms of comparing paying down debt to investing. If you make extra payments on a debt, it is functionally equivalent to investing that same money over the period of time you would have had interest accruing on that amount of principal. Adding an extra $1,000 principal payment on your 7% student loan would be the same as investing $1,000 at a 7% interest rate over the same period of time. They both "compound" in terms of the money you make or save in the same fashion. With that being said, if you are in IBR you probably wouldn't be investing or making extra payments on your loans. flowinprose fucked around with this message at 03:28 on Aug 13, 2013 |
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Aug 13, 2013 03:23
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I finally started making enough money that I can actually save some of it. Unfortunately, I'm paid in yen, a currency I'm fairly positive I don't want to have I'm not entirely sure this is the right place to be asking, but what are my options for getting my yen turned into USD and then into an IRA (my employer is pretty small and doesn't offer a 401k or any other sort of plan like that)? Or even just a normal savings account?
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Aug 13, 2013 13:21
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z0glin Warchief posted:I finally started making enough money that I can actually save some of it. Unfortunately, I'm paid in yen, a currency I'm fairly positive I don't want to have If you're getting paid in yen, are you even a US resident? The point of an IRA is to get US income tax benefits in exchange for restrictions on cashing it out.
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Aug 13, 2013 14:49
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I'm a US citizen living in Japan for the next 2 years or so, so I'll be back in the US in the relatively near future (I guess I should say I'm a US citizen). I actually don't know what that means for me with regard to an IRA; I figured it'd be good to start on one now even if I'm outside the US, but maybe not? I'd still like to move my yen to USD either way though. Not feeling too good about the future of the Japanese economy.
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Aug 13, 2013 15:19
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flowinprose posted:Unless I'm missing something, this doesn't matter in terms of comparing paying down debt to investing. If you make extra payments on a debt, it is functionally equivalent to investing that same money over the period of time you would have had interest accruing on that amount of principal. Yea you're right. I did not account for the effect of paying off the loan that much sooner. But how would you calculate that "return"? I'm thinking that unless the $2000 lump sum is a significant proportion of the loan balance, it won't affect the duration too much? I'm assuming 6.8% x lump sum / regular annual payment? Like if you usually pay $500/mo or $6000 a year, a $2000 payment would mean you pay off the loan 4 months sooner. So 1/3 x 6.8% = 2.3%? INTJ Mastermind fucked around with this message at 15:43 on Aug 13, 2013 |
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Aug 13, 2013 15:39
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z0glin Warchief posted:I'm a US citizen living in Japan for the next 2 years or so, so I'll be back in the US in the relatively near future (I guess I should say I'm a US citizen). I actually don't know what that means for me with regard to an IRA; I figured it'd be good to start on one now even if I'm outside the US, but maybe not? Unless you have US-sourced income, you can't contribute to a 401k or an IRA. Well, maybe you could not claim the Foreign Earned Income Exclusion, but that seems like a whole lot of hassle. I just invest in taxable funds in a mix that mirrors the Vanguard Retirement 2050 fund, which is not a great solution, but AFAIK, the only one expats have (unless there are tax-friendly investment accounts available to you in your country of residence, which it doesn't seem like you would want to use, even if they existed).
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Aug 13, 2013 16:16
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z0glin Warchief posted:I'm a US citizen living in Japan for the next 2 years or so, so I'll be back in the US in the relatively near future (I guess I should say I'm a US citizen). I actually don't know what that means for me with regard to an IRA; I figured it'd be good to start on one now even if I'm outside the US, but maybe not?
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Aug 14, 2013 00:47
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Gold and a Pager posted:Unless you have US-sourced income, you can't contribute to a 401k or an IRA. Well, maybe you could not claim the Foreign Earned Income Exclusion, but that seems like a whole lot of hassle. Oooh, okay, thanks for the info. I'm obviously still in the dark about a lot of this. No Wave posted:What are you asking for? Are you looking for a website that does low-margin currency conversion for large quantities? That would be pretty great I think. I've got some savings in yen now, and I'd like to convert them along with future savings to USD in bulk (then put them in some investment vehicle). I'm worried about getting boned by converting in a way that gets me stuck with a bad exchange rate or high fees.
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Aug 14, 2013 00:54
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It sounds silly but I found that physical currency exchanges gave you the best rates. I always got the best rates by buying dollars in the foreign country (so sell your yen in Japan for dollars). Does your bank have a branch near you in Japan? Maybe you could deposit your dollars there and keep them in dollars? Failing that you could carry the cash with you when you come back to the US but keep in mind there is a limit of $10,000 maximum you can carry with you at any one time. This is to prevent drug laundering activities.
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Aug 14, 2013 01:30
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Gold and a Pager posted:Unless you have US-sourced income, you can't contribute to a 401k or an IRA. Well, maybe you could not claim the Foreign Earned Income Exclusion, but that seems like a whole lot of hassle. Nitpick: you can contribute to an IRA/RothIRA if your income exceeds the FEIE, up to lesser of the normal limit or the amount your income exceeds the Exclusion. I'm not sure what the 401k rules are, but I'm told there used to be certain conditions where you could contribute, provided you worked for a US-based company that provided one.
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Aug 14, 2013 01:38
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Can anyone recommend me some good books for someone wanting to learn the basics of making wise choices with their money? I'm wanting to become an entrepreneur, am just starting out, and would like to really take control of my own choices so I make good ones. As such, I am wanting to expand my knowledge base. I'm looking for books that will give me the basics, for example why it is generally a poor choice to invest in a restaurant, an overview of the different financial instruments, or some knowledge about real estate investing. Books to help me nail down the essential ingredients. I'm sorry if that sounds vague, or even broad, but other than being an entrepreneur my focus at the moment is pretty vague and broad, as well. I guess another way of asking this would be: If you were in my shoes, which books do you wish someone would suggest to you? Thank you! PoorUser fucked around with this message at 02:39 on Aug 14, 2013 |
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Aug 14, 2013 01:58
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Read the op
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Aug 14, 2013 03:25
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PoorUser posted:Can anyone recommend me some good books for someone wanting to learn the basics of making wise choices with their money? I'm wanting to become an entrepreneur, am just starting out, and would like to really take control of my own choices so I make good ones. As such, I am wanting to expand my knowledge base. I'm looking for books that will give me the basics, for example why it is generally a poor choice to invest in a restaurant, an overview of the different financial instruments, or some knowledge about real estate investing. Books to help me nail down the essential ingredients. I'm sorry if that sounds vague, or even broad, but other than being an entrepreneur my focus at the moment is pretty vague and broad, as well. I guess another way of asking this would be: If you were in my shoes, which books do you wish someone would suggest to you? You might have better luck in the stock picking thread, or an entrepreneurship thread (is there one?). Generally, this thread is focused on passive, long-term investments with next to zero risk of loss of principal before needing to cash them out. The types of investments you're talking about ("entrepreneurial") are active, high-risk/high-reward. Most restaurants, to use your example, fail within the first two years, so even if you were blind money investing in someone else's company there's an immediate risk of being wiped out, or at any other time thereafter. If you're talking about starting a restaurant yourself, well then that's a whole different ballgame as well, and is a full-time job, not just an investment.
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Aug 14, 2013 14:51
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If I'm married, can I have a Roth in my name and a Roth in my wife's name?
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Aug 14, 2013 15:34
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I'm hoping this is the right thread for this - it's about retirement, but for someone who's already retired. If not, help please? Anyway, my father passed away six months ago and my mom is trying to deal with his assets. She has the house paid for, has his pension plus social security, so is financially stable, pulling in about 60-70k a year. On top of this, he left her about 260k in "blue chip" stocks - things like Ford. She says the 260k is spread around to about 10-12 stocks, so approximately 25k each. She also has about 50k in cash (basic savings account that pays virtually nothing) and 70k in an Edward Jones account that is half bonds, half something else (?) which she intends to leave alone. The EdJones thing pays regular dividends and she is happy with it. She also likes having all the cash because it makes her feel safe to have it. I know she could get more if she invested it, but honestly given her age and situation it's not like she's losing a TON by letting her have that safety net. Her goals are she wants to leave something for us, so spending all the money (like an annuity) is not on the table. We have discussed this with her several times - both me and my sister are completely financially independent, so as far as both of us are concerned if she dies with $0 we won't mind. But that is what she wants. SOOOOO - the rub is what to do with the 260k in stocks. One option is that the guy at the financial place (bank broker) will manage that account for 1.1% of the value annually. She is uncomfortable managing it herself. I don't know much of anything about stocks and honestly would have no business managing it for her. I have a feeling that if this guy does nothing, she will still be paying $2800 a year. Another option is to just leave it alone. It currently pays about $5700 in dividends (2%?) besides any growth in the value of the stocks. I suggested a third option which was to sell it all and just buy treasury bonds that currently pay about 3% (I think) so she gets more annual income from the money, but it doesn't grow (but it doesn't fall in value either). Actually, after writing it all out, I'm leaning toward suggesting she just leave it alone and not pay the 1.1% for some guy to try and play around with it to make it grow. Suggestions?
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Aug 14, 2013 15:49
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Duckman2008 posted:If I'm married, can I have a Roth in my name and a Roth in my wife's name? It will technically be hers and she will have to open it, but she can name you a custodian and you can run it for practical purposes.
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Aug 14, 2013 16:26
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JDM3 posted:Suggestions? Have you read the OP? You're entirely right that it would be a terrible deal to pay someone 1.1% of a portfolio to manage it. Holy poo poo that is a rip off. Anyway, if you are able to sell all the stock easily and cheaply the safest answer would be to sell it all and put it in some sort of extremely low cost fund. The mix of stocks and bonds depends on if she is planning to spend the money or not. Things change in retirement and it might be worth paying a one time fee to a fee based financial planner. $260k is not a lot of money for retirement at all, but it sounds like she isn't spending any of that nest egg. If the $60-70k pension and social security meets her retirement income goals, then all of the nest egg should be passed onto you and your sister, correct? If this is the case then go ahead and allocate as if it were for your retirement, because it effectively is. If she does need to spend some of that money on top of the pension income, then it needs to be somewhere less volatile. This is the case where you would really want to find a credible fee-based financial planner. I know that Vanguard is popular around here, but it's for a reason. If you are looking for a new fund company to keep the money with, they are highly recommended and have fee-based financial planners available who can give you good personalized advice.
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Aug 14, 2013 16:26
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Duckman2008 posted:If I'm married, can I have a Roth in my name and a Roth in my wife's name? Yes, this is what my wife and I are currently doing.
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Aug 14, 2013 21:52
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What are everyones thoughts on Vanguard's Wellington and Wellesley funds for someone in their 20's? Currently holding only Target Retirement 2060 for no particular reason and I am starting to think I'm too risk averse to do so.
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Aug 15, 2013 01:04
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IAMKOREA posted:What are everyones thoughts on Vanguard's Wellington and Wellesley funds for someone in their 20's? Currently holding only Target Retirement 2060 for no particular reason and I am starting to think I'm too risk averse to do so. Why would you believe you are too risk averse? Generally sticking to mostly stocks in your 20s is considered the default good idea.
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Aug 15, 2013 01:16
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Duckman2008 posted:If I'm married, can I have a Roth in my name and a Roth in my wife's name? As has been mentioned, yes, you can do this. What has not been mentioned is that you can contribute to your wife's IRA even if she does not work. As long as the joint contribution between your IRA and hers does not exceed your joint adjusted gross income, then you're good to go.
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Aug 15, 2013 02:02
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ntan1 posted:Why would you believe you are too risk averse? Generally sticking to mostly stocks in your 20s is considered the default good idea. Because if the economy crashes and my wife's 401k loses half it's value she will be furious with me.
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Aug 15, 2013 02:05
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That would work in your benefit actually, assuming you keep contributing to the 401k. It will get it's value back, esp if you are in your twenties. (I assume she also is.) People who lost half the value of their 401ks in 2008 got hosed yeah, but they also would have made pretty much all of it back and then some by now, and would have ridden the success of 2009 to today as well with their additional contributions. The people who lost half the value, pulled their money out in fear and never got back in are the ones who got hosed, and by themselves of all people. If you're someone who is very emotional with the investments and think you'd be someone who'd pull money out during a drop you may want to switch to risk averse, but the true right answer is to keep submitting money into the fund without caring about the current value. You need to care about the value in 2060, not now. Just keep conributing and delete it off your mint account. Check on it once per year or so if you really need to. 
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Aug 15, 2013 02:23
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It makes sense to taper down when you are closer to retirement, but when you are in your 20s and just starting to put money into retirement, you want the stocks to be low. For example, I'm in my 20s, and I would be really really happy if the stock market crashed by 50% this year. You need to talk with your wife about the long term investment plan. I guarantee (and evidence since the 1600s-1700s also shows) that in your lifetime, there will be a time when the stock market drops by 50%. However, over the long term, the stock market has had magnificent gains as a whole at 5-6% per year post inflation. There is no excuse for making bad decisions if you didn't spend the two to three hours educating yourself. If you have any degree of assets or are making good income, I strongly suggest both you and your wife read the Four Pillars of Investing as linked in the OP.
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Aug 15, 2013 02:45
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IAMKOREA posted:What are everyones thoughts on Vanguard's Wellington and Wellesley funds for someone in their 20's? Currently holding only Target Retirement 2060 for no particular reason and I am starting to think I'm too risk averse to do so. I'm currently a Vanguard customer and I've had Vanguard Wellesley Income Fund Investor Shares (VWINX) for a while. I've been satisfied with it so far, but you shouldn't expect to see as high of a return as it's two thirds allocated to bonds, and the remaining one third to stocks. That being said, going forward, I may put future allocations directly instead into different Vanguard bond funds, but for now, I think I'll still be contributing in the short-term because it's not a pure bond play, but will have some stocks as well. I used to be an investor in one of Vanguard's retirement funds until I realized that instead of having them automatically allocate things to these funds, I would rather have control over my investments directly and I also wanted the flexibility to invest into specific sectors or funds as well. I made this decision about three years ago, and I'm extremely happy that I did because I don't think I would've made the returns I have over the past years if I had simply stayed with a standard Vanguard Target Retirement fund.
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Aug 15, 2013 03:48
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IAMKOREA posted:Because if the economy crashes and my wife's 401k loses half it's value she will be furious with me. I would say, this would be a correct statement if you and her are in say, your 60s and a 2008 like crash hits. That is basically the worst case scenario (and always possible). Basically, as you get older, move assets into less risky options depending on how much risk you can handle. But of you are no where near retirement you might not need to consider that yet.
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Aug 15, 2013 04:41
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