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LurkingAsian posted:Not sure if this is the right thread for this, but what would be a good place to dump ~$50K for a year or 2 and obtain fairly safe returns? I'm looking to avoid stocks and index funds. Nowhere is really good right now. High yield savings or some exceptional CDs will get you 1%, maybe 1.5%? Bond funds are no good right now due to interest rate risk, stocks are too volatile. You might consider directly owning short term bonds to maturity I suppose. If you had millions and millions of dollars, I know some institutional class funds that can get you 1.7-2% more or less safely. If you can move your span out to 3 years you could do p2p loans and migrate returns to high yield savings and probably end up with ~5% returns over the whole period while ending up fully liquid.
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Aug 31, 2013 14:04
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HooKars posted:Someone in the newbie thread suggested I post here. I work for a mutual fund company so I can obviously invest in a lot of our funds and Also our collective investment trusts. I'm not sure i really understand the CITs - they don't list fees on the profile sheets for funds or CITs but there's also no link to a prospectus for these where I could potentially find the fees. for the sake of not posting the whole list, they also have a couple vanguard options whose fees seem way more straightforward:: Ignoring CIT portion of this - does anyone have a good combo of how to allocate among the four of these? Vanguard institutional is at like $150/share so I won't be buying many shares if I go that route
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Aug 31, 2013 14:35
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baquerd posted:Nowhere is really good right now. High yield savings or some exceptional CDs will get you 1%, maybe 1.5%? Bond funds are no good right now due to interest rate risk, stocks are too volatile. You might consider directly owning short term bonds to maturity I suppose. If you had millions and millions of dollars, I know some institutional class funds that can get you 1.7-2% more or less safely. If you can move your span out to 3 years you could do p2p loans and migrate returns to high yield savings and probably end up with ~5% returns over the whole period while ending up fully liquid.
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Aug 31, 2013 14:41
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HooKars posted:Ignoring CIT portion of this - does anyone have a good combo of how to allocate among the four of these? Vanguard institutional is at like $150/share so I won't be buying many shares if I go that route These four funds together approximate the total market, which is exactly what you want to do. VINIX approximates the S&P 500, and VIEIX is a "completion index" of smaller companies that are not in the S&P 500. Together they approximate the total domestic stock market. VTSGX then covers international stocks, and VBTSX covers bonds. The number of shares is essentially irrelevant, it's the percentage of your money that you put into each that matters. 50% VINIX 13% VIEIX 27% VTSGX 10% VBTSX is a diversified, aggressive mix suitable for someone at least 20 years away from retirement. After that, your position in bonds should increase as you approach retirement. Rebalance once a year and you should be pretty much set.
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Aug 31, 2013 20:53
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Madbullogna posted:Been browsing this section for a bit, and it's been extremely useful. However, I'm still a moron at much of this, and at kind of a loss as to what I should focus on right now. I am pleased with my pension program, but would like to increase my safety net. While our pension is in theory secure due to the way it's funded, (unlike some other public employee systems), I think it's better to have some overage just in case. Any guidance, tips, suggestions, etc are much appreciated. Doing the math you will retire in 2039, so perhaps the 2030 fund is too conservative maybe move all of that to a 2040 plan (assuming you like the target date funds) Do you have some non-retirement savings/emergency fund ? debt paid down? You are doing the right things, only thing to do is put more away but that can be understandably difficult given how much it takes for the basic expense of life. Also out of curiosity do you not have to pay into social security since you are in a pension plan?
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Aug 31, 2013 21:05
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J4Gently posted:Doing the math you will retire in 2039, so perhaps the 2030 fund is too conservative maybe move all of that to a 2040 plan (assuming you like the target date funds) I thought about doing just that, (moving out of the 2030 and into the 2040), just because I like the 'set it and forget' nature of target dates. I would still be keeping my 23% going into the International stock though, especially since that little bit is actually what balanced me out/saved me when my 2030 took a pretty nasty dive a couple of years ago. Only debt is my mortgage and car. I'm currently stashing aside money so I can plop a decent chunk down on a refi. Rest is good to go. I'm a County employee, so we still contribute to Social Security. If it is still around with no changes, my early draw at 62 would give me slightly more than 1k/month. I generally don't input potential SS earnings anytime I look at my status though, as I'd rather be surprised and happy I get something, versus burying my head in the sand for the next 25+ years and then wondering why and when SS has disappeared. (I would like to believe that whatever version of SS actually exists when I do go to retire will provide me at least 1/3 of my current estimate though, so a whopping 350/month). Regardless, my pension alone will pay out much more than my working salary ever will, simply from having 40 years of earnings/match going into the system. My 457/SS/any other plans are what I'm using for my 'cushion/omfg what happened' fund. I have no aspirations of retiring and living on a yacht while travelling the world. As long as I can not worry about the day-to-day things and medical expenses that may pop up as I get older, I'll enjoy my retirement just fine.
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Aug 31, 2013 21:26
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Kilty Monroe posted:These four funds together approximate the total market, which is exactly what you want to do. VINIX approximates the S&P 500, and VIEIX is a "completion index" of smaller companies that are not in the S&P 500. Together they approximate the total domestic stock market. VTSGX then covers international stocks, and VBTSX covers bonds. Does it matter at all that VINIX is trading at such a high cost ($150/share)? I put in about $700 per paycheck so it just seems like I wouldn't be buying much and perhaps it'd be better to keep the basic S&P tracker in my IRA in a slightly more affordable option? My 401k is also not with vangaurd so there will prob be some fees in buying my 2 shares or whatever each paycheck I'm also 31 by the way, if that changes your initial bond suggestion HooKars fucked around with this message at 12:08 on Sep 1, 2013 |
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Sep 1, 2013 12:06
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HooKars posted:Does it matter at all that VINIX is trading at such a high cost ($150/share)? I put in about $700 per paycheck so it just seems like I wouldn't be buying much and perhaps it'd be better to keep the basic S&P tracker in my IRA in a slightly more affordable option? My 401k is also not with vangaurd so there will prob be some fees in buying my 2 shares or whatever each paycheck No, it doesn't matter, no more than it matters whether you have a hundred dollar bill or five twenties. No matter which S&P fund you go with, they'll all grow at roughly the same rate percentage-wise (minus expenses). Keep in mind you don't have to buy shares in whole numbers. You'll set a percentage of your contributions to go to each fund and for each paycheck they'll automatically buy whatever fraction that happens to work out to on that particular day. Do check for additional fees, but the expense ratios on your Vanguard funds are so good that they might be worth it regardless depending on what your other options are. Also if it wasn't clear my percentages were for your stake in dollars in each fund, not the ratio of shares you should hold. At 31 I don't think you need to start going over 10% bonds yet, unless you're planning an early retirement. The purpose of increasing bonds is to mitigate the risk a market crash poses to your savings as you approach the day you retire and have limited time to recover from such a crash. That said, opinions do vary and I consider myself an aggressive investor, if you are more risk-averse and don't mind sacrificing some long-term gains, you can certainly increase your bond holdings a little bit, but keep the stock funds in the same proportion to one another. Kilty Monroe fucked around with this message at 12:43 on Sep 1, 2013 |
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Sep 1, 2013 12:41
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I have to choose a pension plan in the next two weeks. This is in Ontario. Choice 1: I pay 1.5% of salary into a defined benefits plan, to receive 1% of best average salary x # of years worked /year payout upon retirement. In addition, I can contribute 3% into a defined contributions plan that is matched 100%. Choice 2: I contribute 3% of salary into a defined contributions plan that is matched 100%. In addition, I can contribute a further 4% that is matched at 50%. The contribution amount goes up on a points system based on age and years worked. After about a year, it would be 4.5% matched 100%, then in 10 years it's 5% matched at 120%. In 20 years, it's 5% matched 150%. I can choose a number of funds for the contributions. The funds look okay as far as I can tell. I'll contribute the max that is matched whichever choice I make. It's hard enough to just describe the options available to other people so that they understand, let alone actually receive some useful advice. I don't think I've received a single piece of useful advice about any of the options. The people that I work with just either don't understand their own pension, or just say what they've chosen without being able to add any reasoning to help with my choice. With my previous job, I've maxed my rrsp contributions without being forced to, so saving and investing money isn't an issue. Both choices leave about 3% of my salary in contribution room in my rrsp, at least at the start. I'm thinking that my taxes will become more complicated either way, because most of the remaining money I save and invest will be outside of tax advantaged accounts. Is there any good way at comparing the defined benefits plan vs the increased matched funds in the defined contributions plan? I know the pension plan in under funded in a big way, but how much of that is due to low interest rates? Any information would be helpful. I'm 32, no kids, no house, no real plan for either unless it makes financial sense. I'd like to retire as early as possibly, but that really depends on how much I enjoy whatever my job is in 20 or 30 years. If I had a workable plan, I would retire tomorrow. jayd42 fucked around with this message at 23:23 on Sep 2, 2013 |
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Sep 2, 2013 23:16
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Really depends on how long you plan to spend in this job. If you're thinking "lifer" then go for the defined benefits plan as the number of years worked is quite substantial in terms of determining payout. If you don't think you're going to be there for the long term go for the contributions plan and max the matching amount. That plan would likely maximize benefits in the short term that you could roll in to a LIRA if/when you leave. After that, max out your RRSP contribution room, then your TFSA room (it's $5,500 now). Make sure you take advantage of the $2000 lifetime RRSP overcontribution limit allowance as soon as you can afford to do so. After that I'd say see if you can talk to a tax planner as what makes sense for investment beyond the point really depends on your tax bracket. With Business Class funds going the way of the dodo due to the most recent budget the options for legally minimizing your tax burden have decreased substantially. Also, re: taxes it's not that big of a deal. You'll get a T4 from work with your pension adjustment amount, you just decrease your RRSP contribution room for the tax year by that amount.
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Sep 3, 2013 00:59
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So, something crossed my mind today: I see the Vanguard target date funds touted as solid, single-fund retirement options (i.e. acceptable, but not perfect). Doesn't investing in a single fund kind of go against the concept of diversifying, at least to a certain extent (however diversified the actual holdings within the fund may be)? What are the risks of owning a single fund through a single brokerage? What could go wrong? (Assume for now you're ok with the diversification provided within the fund.)
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Sep 3, 2013 07:44
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Cranbe posted:So, something crossed my mind today: I see the Vanguard target date funds touted as solid, single-fund retirement options (i.e. acceptable, but not perfect). Vanguard target date funds are really a "fund of funds" designed to give you total market exposure in a single package. If you go to the fund's page on vanguard.com you can see that it actually only holds four of their own index funds, and there's really no difference in buying those funds seperately in the same ratio aside from being able to get Admiral shares. They even set the expense ratio of the target fund to the weighted average of those funds. To actually give answer the question of what the risks of holding just a single fund are aside from diversity, though: the biggest risk I suppose is that the fund management turns to poo poo and the fund significantly underperforms the index(es) that it's supposed to track. Minimizing management risk is one of the reasons to invest in index funds since simply mimicking an index is stupid easy compared to active management trying to beat it. With index funds from a firm with a reputation as solid as Vanguard's, you don't really need to worry about it. Their target date funds aren't a risk either since you can't really gently caress up "hold our own funds in a pre-set ratio".
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Sep 3, 2013 10:56
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Madbullogna posted:I thought about doing just that, (moving out of the 2030 and into the 2040), just because I like the 'set it and forget' nature of target dates. I would still be keeping my 23% going into the International stock though, especially since that little bit is actually what balanced me out/saved me when my 2030 took a pretty nasty dive a couple of years ago. 457 plan is pretty tremendous as an emergency cushion as well since you can withdraw before retirement age without the 10% penalty IRAs or 401ks incur. (Income tax still applies of course) http://money.cnn.com/retirement/guide/401k_457plans.moneymag/index4.htm quote:No. Unlike with 401(k)s and 403(b)s, the IRS won't slap you with a penalty on withdrawals you make before age 59 �. You will, however, owe income tax on all withdrawals, regardless of your age. So busting into a 457 plan early still isn't a good idea. Leaving the money to compound until you're ready to retire will leave you with a much bigger nest egg.
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Sep 3, 2013 13:34
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LurkingAsian posted:Not sure if this is the right thread for this, but what would be a good place to dump ~$50K for a year or 2 and obtain fairly safe returns? I'm looking to avoid stocks and index funds. Right now? Year or two? Extremely risk averse? Look into high-yield savings accounts, expect to see ~1% at best.
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Sep 4, 2013 20:52
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I am eligible for a 403(b) at my current employer (without matching funds), though all the fund options are limited to various TIAA-CREF options. Does anyone have experience with them? The expense ratios are much higher than I would pay at Vanguard, for example 0.42% for a fund that tracks the total market, or 0.74-0.92% (Im unsure what, or how a "fee waiver" would work) for a lifecycle fund. There are also other options such as guaranteed annuities or bonds, but I feel I'm young enough (30) to take on the risk/reward of equity based investments. I'm assuming the tax advantages to putting money in a 403(b) outweigh the lower expense ratios I would pay by investing somewhere better in a taxable account. My IRA contribution is maxed for this year (at Vanguard), and I already have plenty of money saved for an emergency fund. Thoughts?
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Sep 5, 2013 01:01
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I've got a hopefully easy question here, so please offer advice! -I live in Canada, and have enough in my RSP to cover the amount you can withdraw for the first time home buyers plan (25k), which I imagine I will take advantage of -I have $0 in my TFSA -I am 28 years old and pay into a DB Pension - $265 biweekly, and I've been paying into it for a year. -I am currently paying $150 biweekly into an RSP, and paying debt (about 10k) off $700/month. Should I continue to put more into my RSP for the tax benefit/chance that the First Time Home Buyers Plan increases the amount I can withdraw, or should I start contributing to my TFSA? Should I split the amount between my TFSA/RSP? Do I pay my debt off at the same rate until it's at 0, then start contributing elsewhere? If it matters, I don't see myself buying a home within the next 5 years.
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Sep 5, 2013 02:11
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drk posted:Thoughts? Does your employer have access to advantaged/institutional shares in their 403b? If so, the expense ratios will drop significantly, to ~.07% Otherwise, it's standard stuff. Maximize your Roth IRA first with Vanguard, then your 403b. Determine your asset allocation and invest in the index fund selection that you have (as the expense ratios are the same across the index funds with TIAA-CREF). Your expense ratios aren't high enough that I'd recommend something drastically different.
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Sep 5, 2013 02:16
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Shazbot v2.0 posted:I've got a hopefully easy question here, so please offer advice! Debt: Pay off debt. Your payment plan is good. RRSP/Pension: Keep paying in to pension, switch RRSP payments to your TFSA. Your pension contributions are treated exactly the same as RRSP contributions for taxation purposes, so you're still getting tax-deferred investment gains. TFSA: Switch your current RRSP payments to a TFSA. TFSAs are good for emergency funds, and is a better choice than an RRSP for a house down payment. Once the debt is history, you can split the money between the TFSA and RRSP. I would suggest doing $400/month TFSA and $600/month RRSP, assuming you have the RRSP contribution room after your pension adjustment. If you don't max, out your TFSA. As for New Home Buyer's plan... I really don't like it, not at all. $25,000 is a massive amount to take out of your RRSP at this stage, and a difficult number to re-invest given compound interest. TFSAs are a better option as there are no issues with penalties. To be perfectly honest, in 9+ years I can count on both hands the number of clients I've had that have repaid their Home Buyer's loan and the interest they missed from withdrawing the money within the grace period.
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Sep 5, 2013 02:47
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Posted this in the Newbie Personal Finance Thread a couple days ago but haven't had any reply yet, so I'm trying in this thread which may actually be more appropriate: I am currently contributing to a 403(b) plan through my employer, however I will not start receiving a match on my contributions until January 2015 (i.e. it's not a issue of being partially vs fully vested - I get zero contributions from my employer until that point). This got me thinking of suspending my contributions to the 403(b) and instead contributing to an IRA through Vanguard (at least until the match kicks in) which I have set up with a simple mix of bond and stock index funds that is currently solely funded by a rollover from a previous employer. I have read that actively managed funds such as those in my 403(b) are notoriously bad with regard to management fees and without the benefit of a company match, I didn't see much benefit to contributing to the 403(b) over an IRA right now. However, it seems my income is above the phase-out for the IRA contribution deduction. If I contribute to an IRA in this scenario, wouldn't I potentially be taxed twice (once since I am contributing after-tax income, and a second time when I withdraw at retirement)? Or is there a way to have pre-tax money deposited into the IRA with Vanguard? I guess I am just trying to find the best option in light of the lack of company match and my ineligibility for income tax deduction for IRA contributions. Thanks in advance for any advice.
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Sep 5, 2013 04:46
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The Agent posted:Posted this in the Newbie Personal Finance Thread a couple days ago but haven't had any reply yet, so I'm trying in this thread which may actually be more appropriate: Short answer: You're out of luck. Contribute to your 403b and put the money in Index Funds with low expense ratios if at all possible Long answer: Generally no. However, there is a certain exception that a few 401ks and 403b plans fall into which allow you to do an after tax conversion into a Roth IRA or a Roth 401k. For this to work, your 401k/403b plan needs to specifically have an After Tax 401k/403b option (which is different from Standard/Pretax and Roth 40* option), with the numbers and amounts contributed to be tracked separately. The After Tax option is extremely rare and only in a small number of company retirement plans, unfortunately. If you do manage to fall in to this exception, you can contribute a total 51,000 total into retirement accounts, with the majority going into a Roth.
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Sep 5, 2013 05:28
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Hi, I'm a little stuck as to what to do next. I have a Roth IRA (and rollover) at Vanguard, and went with a target date fund (2050, I think?). I'm maxing it out, and chugging along. But - I also have an opportunity to invest in a 401k through work. It's not matched, but I figured with the max-out on the Roth, that this is a good way to have some diversity. But, I'm not sure what I should really be doing. I should be okay with a decent amount of risk, given that I'm only 31 and feel pretty good about the Vanguard fund. Any suggestions? Here's whats available to me. I currently contribute to the Freedom 2050, but something is telling me that's the wrong thing (not enough diversity in overall portfolio, high expenses?). Is anything here good, or should I be doing something else with my money? Name/Inception Date Gross Expense Ratio** Shareholder Fees FID BLUE CHIP GR (FBGRX) Large Cap 0.90% No additional fees apply. FID CONTRAFUND (FCNTX) Large Cap 0.74% No additional fees apply. FID DIVIDEND GR (FDGFX) Large Cap 0.93% No additional fees apply. FID EQ DIV INCOME (FEQTX) Large Cap 0.67% No additional fees apply. FID EQUITY INC (FEQIX) Large Cap 0.68% No additional fees apply. FID EXPORT & MULTI (FEXPX) Large Cap 0.82% Short term trading fees of .75% for shares held < 30 days. FID FIDELITY FUND (FFIDX) Large Cap 0.56% No additional fees apply. FID FIFTY (FFTYX) Large Cap 0.83% No additional fees apply. FID GROWTH COMPANY (FDGRX) Large Cap 0.90% No additional fees apply. FID LARGE CAP STOCK (FLCSX) Large Cap 0.85% No additional fees apply. FID OTC PORTFOLIO (FOCPX) Large Cap 0.91% No additional fees apply. SPTN TOT MKT IDX ADV (FSTVX) Large Cap 0.07% Short term trading fees of .5% for shares held < 90 days. FID GROWTH STRAT (FDEGX) Mid-Cap 0.73% Short term trading fees of 1.5% for shares held less than 90 days. FID LOW PRICED STK (FLPSX) Mid-Cap 0.88% Short term trading fees of 1.5% for shares held less than 90 days. FID MID CAP STOCK (FMCSX) Mid-Cap 0.66% Short term trading fees of .75% for shares held less than 30 days. FID VALUE (FDVLX) Mid-Cap 0.68% No additional fees apply. FID VALUE STRAT (FSLSX) Mid-Cap 0.89% No additional fees apply. SPTN EXT MKT IDX ADV (FSEVX) Mid-Cap 0.07% Short term trading fees of .75% for shares held < 90 days. FID SM CAP DISCOVERY (FSCRX) Small Cap 1.06% Short term trading fees of 1.5% for shares held < 90 days. FID SMALL CAP VALUE (FCPVX) Small Cap 1.13% Short term trading fees of 1.5% for shares held less than 90 days. FID DIVERSIFD INTL (FDIVX) International 1.01% Short term trading fees of 1% for shares held less than 30 days. FID OVERSEAS (FOSFX) International 0.69% Short term trading fees of 1% for shares held less than 30 days. FID REAL ESTATE INVS (FRESX) Specialty 0.84% Short term trading fees of .75% for shares held less than 90 days. FID FREEDOM 2000 (FFFBX) 10/17/1996 Blended Investment* N/A 0.45% No additional fees apply. FID FREEDOM 2005 (FFFVX) 11/06/2003 Blended Investment* N/A 0.53% No additional fees apply. FID FREEDOM 2010 (FFFCX) 10/17/1996 Blended Investment* N/A 0.61% No additional fees apply. FID FREEDOM 2015 (FFVFX) 11/06/2003 Blended Investment* N/A 0.62% No additional fees apply. FID FREEDOM 2020 (FFFDX) 10/17/1996 Blended Investment* N/A 0.65% No additional fees apply. FID FREEDOM 2025 (FFTWX) 11/06/2003 Blended Investment* N/A 0.72% No additional fees apply. FID FREEDOM 2030 (FFFEX) 10/17/1996 Blended Investment* N/A 0.74% No additional fees apply. FID FREEDOM 2035 (FFTHX) 11/06/2003 Blended Investment* N/A 0.79% No additional fees apply. FID FREEDOM 2040 (FFFFX) 09/06/2000 Blended Investment* N/A 0.79% No additional fees apply. FID FREEDOM 2045 (FFFGX) 06/01/2006 Blended Investment* N/A 0.80% No additional fees apply. FID FREEDOM 2050 (FFFHX) 06/01/2006 Blended Investment* N/A 0.81% No additional fees apply. FID FREEDOM 2055 (FDEEX) 06/01/2011 Blended Investment* N/A 0.82% No additional fees apply. FID FREEDOM INCOME (FFFAX) 10/17/1996 Blended Investment* N/A 0.45% No additional fees apply. FID PURITAN (FPURX) 04/16/1947 Blended Investment* N/A 0.59% No additional fees apply. FID INTERMED BOND (FTHRX) 05/23/1975 Bond Investments Income 0.45% No additional fees apply. FID INVST GR BD (FBNDX) 08/06/1971 Bond Investments Income 0.45% No additional fees apply. FID SHORT TERM BOND (FSHBX) 09/15/1986 Bond Investments Income 0.45% No additional fees apply. FID RETIRE MMKT (FRTXX) 12/02/1988 7 day yield as of 08/31/2013 0.01% Short-Term Investments N/A 0.42%
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Sep 5, 2013 13:40
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So yeah, I'd go with the two spartan funds and diversify elsewhere if you can. Fidelity expense ratios are kinda lovely (I've got a similar 401k except I've got a couple of other low cost funds available, so I can diversify in-house).
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Sep 5, 2013 13:45
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silvergoose posted:So yeah, I'd go with the two spartan funds and diversify elsewhere if you can. Fidelity expense ratios are kinda lovely (I've got a similar 401k except I've got a couple of other low cost funds available, so I can diversify in-house). That's what my gut was saying too! Whew. So, that just means 50% in each Spartan fund, set it, forget it (relatively)? When you say diversify elsewhere, you mean additional investments like my Roth and whatever else I do in the future, right? Not diversify elsewhere within this 401k?
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Sep 5, 2013 13:56
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Eris posted:That's what my gut was saying too! Whew. That's what I mean, yes; obviously others are welcome to chime in, but yeah, figure out how much you want in large and mid caps overall (i.e. including all of your investments, retirement, etc), figure that it probably ends up being about 50 50, and then make sure you have money elsewhere in bonds, international, that sort of thing. And then convince your workplace to add vanguard bond and the spartan international to your set of available funds.
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Sep 5, 2013 14:09
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grack posted:Debt: Pay off debt. Your payment plan is good. Thanks very much! I appreciate your advice. I'm going to switch my rrsp contributions to my TFSA - should I just choose a medium term option with RBC or do my research and put it in something else outside of RBC? I also suppose that relying solely on a potential pension/staying with my employer until I retire is a bad idea, hence the continued rrsp contributions after my debt is paid?
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Sep 5, 2013 14:55
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silvergoose posted:That's what I mean, yes; obviously others are welcome to chime in, but yeah, figure out how much you want in large and mid caps overall (i.e. including all of your investments, retirement, etc), figure that it probably ends up being about 50 50, and then make sure you have money elsewhere in bonds, international, that sort of thing. And then convince your workplace to add vanguard bond and the spartan international to your set of available funds. Agreed here the Spartan index funds are the way to go though a bit (10-20%) of international exposure wouldn't hurt as those spartan's are just US equities.
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Sep 5, 2013 15:24
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J4Gently posted:Agreed here the Spartan index funds are the way to go though a bit (10-20%) of international exposure wouldn't hurt as those spartan's are just US equities. Well, again: given the expense ratios, it probably makes more sense to do the internationals elsewhere, i.e. on Vanguard for lower cost. And convince work to get the spartan international fund too.
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Sep 5, 2013 15:25
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silvergoose posted:Well, again: given the expense ratios, it probably makes more sense to do the internationals elsewhere, i.e. on Vanguard for lower cost. And convince work to get the spartan international fund too. Yes good call, get your US exposure in those spartan funds, and grab the international exposure from a vanguard fund Intl index fund (make sure it doesn't include US )
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Sep 5, 2013 15:41
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I'm a little lost on what my next steps should be concerning my 401k. I've maxed my roth for the year, and I'm about 6K into my 401k for the year. I want to max the 401k, but I'm first pretty unimpressed with the fees. I have 100% contributions into the VTIVX (cool) but it appears based on my providers site they are skimming an additional fee on top of that so the total is a .43% expense ratio. No match from exployer either. I'm trying to figure out where to go next. I've been socking away money into my taxable account into spartan funds (fidelity account) instead of the 401k because it kind of pisses me off that they're doing that, but I also don't want to lose the tax advantages. Here are my fund options, do you think maybe I should switch from the vanguard to the "Transamerica Partners Stock Index Ret Acct" for what I DO have in there? Should I accept the ratio and max the 401k? help?   
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Sep 5, 2013 15:55
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J4Gently posted:Yes good call, get your US exposure in those spartan funds, and grab the international exposure from a vanguard fund Intl index fund (make sure it doesn't include US ) Interesting! Thanks so much. So, to confirm -- put 100% of my 401k in these Spartan funds. Then, maybe reduce my Vanguard Roth IRA from 100% into the Target fund to maybe 90% in Target fund and 10% in an international-only fund?
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Sep 5, 2013 16:40
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BotchedLobotomy posted:I'm a little lost on what my next steps should be concerning my 401k. How old are you? (how many years to retirement ? ) Any debt? If you have a long way to go to retirement the initial and ongoing tax deferral may end up giving you a lot more money than the taxable account even with the higher expense ration. You are "losing" .30% in expenses annually over what an index fund would charge but you are gaining a one time 30%-50%+ day 1 with the 401k tax deferal and then more every year as those gains/dividends grow tax deferred. I just did a quick example of $10,000 over 25 years 7% avg return compounded annually(assuming 45% all in tax rate yours could be higher or lower) With the 401k you start with 10k and pay .43% and after 25 yrs end up with $49,200 ($27,000 after tax) With the Taxabe account in an index fund .10) you start with $5,860 after tax, and after 25 years end up with $29,000 So we can conclude that taxes suck in all cases. The after tax investment with lower fees looks better but that doesn't take into account the Dividend and cap-gains you will be generating and paying over the those 25 years in the taxable account which will make an impact and is hard to estimate. If I take a shot in the dark and adjust for cap gains (50% of annual change at long term cap gains rate of 20% ) the after tax drops to $25,200 which is lower than the 401k. Realistically the thing that pushes the scale towards 401k is that you will also not take out all of that retirement money day 1. Some will come out but the majority will stay in and compound throwing off additional future income. Personally I like to push off paying taxes to get as large of a compounding advantage as I can. Edit: As Tax-efficienciness is next to godliness and since you have a taxable account a next step should be thinking about what funds you hold in what accounts. Last page Fancy_lad posted a great article on this. http://www.bogleheads.org/wiki/Prin..._Fund_Placement Though if you are like me and have a long investment horizon until retirement and think the bond market is ready for a meltdown being all equities removes the allocation issue for now. J4Gently fucked around with this message at 17:15 on Sep 5, 2013 |
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Sep 5, 2013 17:01
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Eris posted:Interesting! Thanks so much. So, to confirm -- put 100% of my 401k in these Spartan funds. Then, maybe reduce my Vanguard Roth IRA from 100% into the Target fund to maybe 90% in Target fund and 10% in an international-only fund? Think about it in the context of overall investing. Generally people like to be 10-20% international (your personal view may differ) If you want to be 10% International overall you need to probably be >60% of your vanguard contributions in a vanguard international fund, sine the vanguard target fund is likely increasing your exposure to us equities. An easy way see what you are acutally buying is a free tool from morning star. http://portfolio.morningstar.com/Rtport/Free/InstantXRayDEntry.aspx You put in the funds you own and it shows you the overlap, you want to adjust the allocations to hit your targets
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Sep 5, 2013 17:05
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J4Gently posted:helpful guy I'm 29. No Debt. Does your calculations here: "With the Taxable account in an index fund .10) you start with $5,860 after tax, and after 25 years end up with $29,000" also account for taxes pulled when cashing out on these funds? (capital gains) I work in an industry where I may not be here in 2-3 years from now, so there is always a chance I'll just roll this over sometime to something more efficient. Perhaps loading it so I can roll it over later is also a good plan. Would you argue that the total market index fund is perhaps a better option in this case? I have a rollover IRA and Roth I have in target retirement funds as well, so perhaps it would be good to just go 100% stock index fund at .27% 
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Sep 5, 2013 17:46
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Shazbot v2.0 posted:Thanks very much! I appreciate your advice. Sit down with an RBC investment advisor and do a Investor Profile Questionnaire. You likely won't get full service planning (unless you happen to have $100,000 of investable assets laying around), but it will give you a good idea of what products may be suitable for you. You can look for comparables on Morningstar or Yahoo Finance. quote:I also suppose that relying solely on a potential pension/staying with my employer until I retire is a bad idea, hence the continued rrsp contributions after my debt is paid? Yes. For the short term you're fine, but once you have the cash flow to do so you should go back to investing in your RRSPs. If you do leave your current employer, you can roll your pension contributions in to a Locked-In Retirement Account (LIRA). It grows tax-deferred like an RRSP, but you can't access it for the New Home Buyer's Plan if you still want to do that.
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Sep 5, 2013 18:10
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BotchedLobotomy posted:I'm 29. No Debt. No it doesn't, so yes you are right there would be some additional cap gains of around $4600 [($29k-$5.8k) *20%] (though some of that you will have already paid for) so that makes it around $21k lower fee taxable vs $27k higher fee 401k As far as the second part the decision becomes even easier when you know you are going to leave a job in a few years since you can roll it over and then invest into whatever low cost option you want. Also I like having money in both Roth and traditional IRA (majority in traditional) as a way to provide some tax diversification, Roth protects against future unknown tax rates, while the traditional lets you keep more now to grow. The goal should be to get a big pile of money in that deferred account to have the compounding go to work.
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Sep 5, 2013 18:20
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Great, thank you. I'm thinking I may (since I wont be in this 401k account forever) drop it all into that total stock market index fund and max it out with the .27 ER. .27 isnt so hot but its certainly better than .43! Time to up my contribution. 
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Sep 5, 2013 18:51
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I contribute 10% of my pre-tax income to a 401(a) each month. I have to contribute a minimum of 5% of my income to this. I'm a teacher, so my retirement plan through my employer is two-pronged: Pension and 401(a). They contribute nothing to my 401(a). Is it more worth my while to pull the extra 5% I'm putting in to my retirement and invest in a Roth IRA? 5% of my income isn't very much... I'm 27, if that makes a difference. Income is ~45k. I have until January to decide, as we are only able to change our contribution rates then.
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Sep 8, 2013 00:11
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It's usually worthwhile to invest in a Roth IRA over company sponsored plans, because Roth IRAs with good companies (like Vanguard) often offer better rates and options for investment. Assuming you do not have a company match in your 401* plan, you are not going to put more than 5500 into the Roth IRA, and your 401* plan doesn't have absolutely amazing selections, then the answer is going to be yes, pretty much from everybody here. That being said, is there any reason you aren't contributing more of your income toward retirement? If you're saving for a house, I can understand why. Otherwise, you may be able to do better  .
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Sep 8, 2013 03:46
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ntan1 posted:It's usually worthwhile to invest in a Roth IRA over company sponsored plans, because Roth IRAs with good companies (like Vanguard) often offer better rates and options for investment. Assuming you do not have a company match in your 401* plan, you are not going to put more than 5500 into the Roth IRA, and your 401* plan doesn't have absolutely amazing selections, then the answer is going to be yes, pretty much from everybody here. No company match on the 401(a). They fund the pension side of it. Cool, in January I will take the 5% I can from the 401 and start putting it in a Roth! I'll go ahead and start putting a little in now monthly. As far as why I'm not contributing more... I'm young and haven't honestly thought about it much. I have been paying off some debts and am now building an emergency fund. I should have a sufficient enough emergency fund in probably January. Then it probably will be time to start saving for a house... it never ends!
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Sep 8, 2013 04:20
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spinst posted:No company match on the 401(a). They fund the pension side of it. Just remember that "I'm young" is the strongest possible reason to save as much as possible! It only gets harder with kids, mortgage, car payment, and not having time (and compounding interest) on your side.
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Sep 8, 2013 19:07
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