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CarterUSM posted:Given that we're now back to a bifurcated long-term/short-term capital gains tax rate, does it make sense to sell each quarter? Wouldn't it be better to build the holdings into your overall portfolio risk profile and sell it just after the one-year anniversary of its purchase? If you hold it you are now opening yourself up to the risk of your company stock, so you have no guaranteed return. I played this exact same game myself and decided I needed to make the "must sell" rule. If it goes down 20% do you hold it so you can make your money back, meanwhile you have more and more money buying the stock? Pretty soon you have a big chunk of company stock that you want to hold onto to make that 15% gain back on.. before you know it the plan has been blown. Yes you are going pay double the tax rate with STCG, but you are guaranteeing a positive return by forcing yourself to sell. 15% - (40% tax STCG) = 9% in this environment that is an drat good return for a quarter really an amazing return. If you hold it and the stock stays flat for the year 15% -(20% tax LTCG) you get 12% return, a bit more return for a lot more risk. That is something you need to be comfortable with, it brought out the gambler in me when the stock declined so I had to just sell. Also there is nothing wrong with keeping a small % if you want to have that exposure to the stock as well.
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Sep 18, 2013 15:24
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I just started contributing to my 401k this January. At age 30. Dumb as poo poo, I know. Really wish I'd gotten my financial poo poo together and learned to budget and save eight years ago. But I am contributing 11% right now, and have a 4-year general financial plan. Part of that plan includes using part of my year-end bonus this year to start a Roth IRA(based on my projections, I'd be maxing out both the 401k and Roth IRA by age 33). At that point in time, I'll only be able to contribute enough in a lump sum to start up one Vanguard fund. My current plan is drop 3k into VGTSX(my 401k is in various domestic funds) for tax year 2013, then throughout 2014 I'll be contributing 8% to that(nearly maxing the contribution; this will be about 4800 for the year) and dropping my 401k back to about 8% as well(employer match ends at 4%). Then if I get a bonus in 2014, I'll open up a bond fund in the Roth IRA for tax year 2015, and going forward contribute to the two funds in a way that will keep them at the percentages I want between international stocks and bonds. I'll add more funds in the future as my balance and knowledge grow. Does this sound like a good plan with the IRA? Having a 5.5k limit per year and a 3k minimum fund balance for Vanguard(who, based on a few weeks of research, are the company I want to go with) kind of makes getting one off the ground seem tricky  . I definitely can't have 3-4 funds off the bat to diversify holdings.
Nail Rat fucked around with this message at 19:41 on Sep 18, 2013 |
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Sep 18, 2013 19:34
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That doesn't sound right, I'm fairly certain I opened my Vanguard Roth IRA with around $1,000. Are you maybe looking at a specific fund that has a high minimum?
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Sep 18, 2013 19:48
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The Target Retirement funds and the STAR fund all have a $1,000 minimum.
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Sep 18, 2013 19:53
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SlightlyMadman posted:That doesn't sound right, I'm fairly certain I opened my Vanguard Roth IRA with around $1,000. Are you maybe looking at a specific fund that has a high minimum? This needs to be in the title or red letters in the OP somewhere.  Vanguard has only a $1k minimum requirement for their Target index funds.efb
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Sep 18, 2013 19:54
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I should clarify: I was more interested in the VGTSX as my primary (initial) stock fund and supplementing that with one of their bond funds, which all also seem to be around 3k. The target index funds seem to be more familiar in nature/composition to the balanced funds I already have in my 401k. Or is that just a bad idea in general, and I should either start with a few target index funds or start with VGTSX and then add a couple of target index funds during 2014 instead of contributing more eggs to one basket? edit: nevermind, question already answered. Nail Rat fucked around with this message at 21:28 on Sep 18, 2013 |
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Sep 18, 2013 21:21
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You can also do ETFs which don't have the high mins
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Sep 18, 2013 21:25
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So diversify your holdings with the target fund until you have enough money in the account to split it among the funds you prefer. You're certainly better off holding onto the target fund temporarily than having the money sit in a checking account until you have $3k or something.
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Sep 18, 2013 21:26
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I also mistakenly assumed Vanguard had an overall minimum to start a count of 3k. That part I feel especially dumb about. Well hot drat, I can start an account this weekend with a target fund and begin contributing to it right away.
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Sep 18, 2013 21:54
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My wife has to make a choice for retirement: 1. her employer will provide her with supplemental health insurance in retirement or 2. Her employer will match her deferred comp contributions (457) up to 6% At the moment I'm leaning towards the second option, because the money gained by maxing the employer match would probably be far more than enough to cover medical costs in her retirement, if/when they arise. She is 27, so she's got at least 40 years to build that 457. I guess the first option would make more sense if she were starting this job closer to retirement age. Anyways, thought I would check here to see if I am ignoring something obvious.
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Sep 19, 2013 00:23
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Grand Theft Autobot posted:At the moment I'm leaning towards the second option, because the money gained by maxing the employer match would probably be far more than enough to cover medical costs in her retirement, if/when they arise. She is 27, so she's got at least 40 years to build that 457. I guess the first option would make more sense if she were starting this job closer to retirement age. One thought is that the supplemental health insurance benefits may go away at some point, if for example, the company fails? I would lean the same way though regardless.
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Sep 19, 2013 01:12
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Grand Theft Autobot posted:My wife has to make a choice for retirement: That is a crazy Sophie's choice. Hard to pick what will be better with so much time and uncertainty. In my view insurance is something that can be altered or canceled more readily than cash in your account so I would go for 457. But again that is a very hard choice.
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Sep 19, 2013 02:59
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I'm also somewhat sure that in 40 years the health insurance environment will be much different, and possibly better for retirees. But compound interest will always be compound interest.
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Sep 19, 2013 03:12
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The matching is pretty good. If it grows enough, she can buy her own insurance as needed.
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Sep 19, 2013 03:37
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ETB posted:The matching is pretty good. If it grows enough, she can buy her own insurance as needed. That's exactly what I'm thinking
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Sep 19, 2013 03:50
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So right now I'm making a lot of money as a freelancer. I'm maxing out my Vanguard IRA, but I was wondering if I should be setting myself up as a business and creating an independent 401(k). Right now I'm making about twice as much as I actually need to survive, so is there anything stopping me from just funneling all my money into an independent 401(k)? Or would I be better off in other investments? If I should open an independent 401(k), is vanguard the place to do it?
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Sep 19, 2013 07:05
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Grand Theft Autobot posted:I'm also somewhat sure that in 40 years the health insurance environment will be much different, and possibly better for retirees. But compound interest will always be compound interest. And assuming everything stays basically the same as it is now, supplemental health insurance isn't even that expensive, since medicare and medicaid cover all the big stuff. I'd never bet money on what's going to happen with healthcare though; that's probably the single most uncertain thing in this country right now.
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Sep 19, 2013 14:21
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Kilo India posted:So right now I'm making a lot of money as a freelancer. I'm maxing out my Vanguard IRA, but I was wondering if I should be setting myself up as a business and creating an independent 401(k). Right now I'm making about twice as much as I actually need to survive, so is there anything stopping me from just funneling all my money into an independent 401(k)? Or would I be better off in other investments? If I should open an independent 401(k), is vanguard the place to do it? You can put more away in the 401k so if you can afford to put more away yes. (though look into the fees of the solo 401k). Vanguard is the crowd favorite here due to their consistent push to lower fees across the industry.
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Sep 19, 2013 14:30
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Nail Rat posted:I also mistakenly assumed Vanguard had an overall minimum to start a count of 3k. That part I feel especially dumb about. Went ahead and signed up for one with VFIFX. Glad I can split the way my money is taxed now. Nail Rat fucked around with this message at 14:43 on Sep 19, 2013 |
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Sep 19, 2013 14:30
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Jesus I just finished the zaurg thread. That couldn't be more america.txt. Actual content: My employer is no longer going to match my 401k but they are increasing base pay by the amount they were contributing. I'm not sure if I should be upset about this?
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Sep 19, 2013 16:11
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Kilo India posted:Right now I'm making about twice as much as I actually need to survive, so is there anything stopping me from just funneling all my money into an independent 401(k)? Or would I be better off in other investments? If I should open an independent 401(k), is vanguard the place to do it? Unless you will need access to the money before retirement (and even then there's a Roth IRA rollover loophole), you're not going to beat a Vanguard 401k. Your regular IRA is a Roth IRA right? Since you have no employer match, you should be maxing Roth IRA first, then putting everything else into your 401k. Because the contribution limits for independent 401k's are so much higher than a regular business one, you almost certainly won't max them out, so just make sure to keep enough cash around.
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Sep 19, 2013 16:11
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wukkar posted:Actual content: Well, if you are maxing out your 401k, you should be upset about this. Even if you aren't, you shouldn't be too happy because you may want to max out your 401k in the future and now your total contributions will be limited to the IRS individual contributions (currently $17.5k) instead of being able to exceed that with the employer match up to roughly $55k. If you weren't contributing that much to the 401k, increase your contributions by the amount they are no longer matching and you'll come out the same in the end.
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Sep 19, 2013 16:15
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That seems like a strange decision. Is there an advantage for a company to do that for its own tax purposes? If the motivation is to reset the compensation of new hires to a lower level, couldn't they just stop offering the match and grandfather in existing contributors? Another option, if your company's 401k provider allows it, might be to contribute some of the money to your 401k as Roth contributions. It shares the 17,500 annual limit with traditional 401k, but if you're maxed, you might be able to get some more benefit out of doing that if you're trying to fit the advantage of that extra match money in. Nail Rat fucked around with this message at 16:30 on Sep 19, 2013 |
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Sep 19, 2013 16:26
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wukkar posted:
Yes that is strange and it reduces you retirement savings. You are capped at $17500 on employee contributions, however the total max is $51,000 including company match, so if they were matching say 20% of contributions that is $3,500 less in the 401k This is not good at all for employees in the long term, and since it is $ neutral for them it is kind of a strange thing to do. Is this a large or small company?
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Sep 19, 2013 16:37
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Nail Rat posted:That seems like a strange decision. Is there an advantage for a company to do that for its own tax purposes? If the motivation is to reset the compensation of new hires to a lower level, couldn't they just stop offering the match and grandfather in existing contributors? Unfortunately a lot of companies do this, especially in IT. The basic idea is that when you have very young employees, average age maybe 25 or less, the majority of them either don't contribute to their 401k, or they contribute some minimal amount but don't really care or think about it. By increasing salaries instead of a 401k match, they can appear more competitive with compensation compared to other employers.
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Sep 19, 2013 16:39
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J4Gently posted:Yes that is strange and it reduces you retirement savings. You are capped at $17500 on employee contributions, however the total max is $51,000 including company match, so if they were matching say 20% of contributions that is $3,500 less in the 401k
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Sep 19, 2013 17:37
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baquerd posted:Unless you will need access to the money before retirement (and even then there's a Roth IRA rollover loophole), you're not going to beat a Vanguard 401k. Your regular IRA is a Roth IRA right? Since you have no employer match, you should be maxing Roth IRA first, then putting everything else into your 401k. Because the contribution limits for independent 401k's are so much higher than a regular business one, you almost certainly won't max them out, so just make sure to keep enough cash around. What is the Roth IRA rollover loophole and how does one use it?
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Sep 19, 2013 18:56
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LurkingAsian posted:What is the Roth IRA rollover loophole and how does one use it? http://www.investopedia.com/articles/retirement/08/convert-401k-roth.asp
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Sep 19, 2013 19:09
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Kilo India posted:So right now I'm making a lot of money as a freelancer. I'm maxing out my Vanguard IRA, but I was wondering if I should be setting myself up as a business and creating an independent 401(k). Right now I'm making about twice as much as I actually need to survive, so is there anything stopping me from just funneling all my money into an independent 401(k)? Or would I be better off in other investments? If I should open an independent 401(k), is vanguard the place to do it?
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Sep 19, 2013 20:13
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I was leaning towards a 401(k) because I could potentially borrow against it if something unexpected happens. I'm fairly young right now which means I'm not really sure what could occur in the future. I have a fairly stable financial plan so I don't think anything would happen, I'm just considering if I get cancer or something. Also, if I have another 401(k) from a previous employer, should I leave it where it is or roll it into the retirement plan I open now? It's performing fine but it's just weird having it floating out there with no way to contribute to it.
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Sep 19, 2013 22:05
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Kilo India posted:Also, if I have another 401(k) from a previous employer, should I leave it where it is or roll it into the retirement plan I open now? It's performing fine but it's just weird having it floating out there with no way to contribute to it. Usually roll over to an IRA. Check Vanguard's funds. If your 401k is actually better than Vanguard's standard set of index funds, then you can keep money in your 401k. Otherwise, go to Vanguard.
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Sep 19, 2013 22:36
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ntan1 posted:Usually roll over to an IRA. Check Vanguard's funds. If your 401k is actually better than Vanguard's standard set of index funds, then you can keep money in your 401k. Otherwise, go to Vanguard. I believe Kilo mentioned that the 401k is one they're opening themselves with Vanguard, so that's obviously the best choice. Definitely don't leave it in the old 401k under any circumstances.
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Sep 20, 2013 01:48
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Depending on the circumstance it may be easier to contribute more money to a solo 401(k) compared to the SEP-IRA. (Of course this is only relevant if he's going to be close to the maximum contribution limits.) If you go through Schwab there are no fees.Kilo India posted:I was leaning towards a 401(k) because I could potentially borrow against it if something unexpected happens. I'm fairly young right now which means I'm not really sure what could occur in the future. I have a fairly stable financial plan so I don't think anything would happen, I'm just considering if I get cancer or something. quote:Also, if I have another 401(k) from a previous employer, should I leave it where it is or roll it into the retirement plan I open now? It's performing fine but it's just weird having it floating out there with no way to contribute to it. One thing to note about Vanguard's plan is that you're limited to their mutual fund selection, whereas with Schwab's plan you can basically invest in whatever you want like a normal brokerage account. This might not be a huge problem cause Vanguard's funds are pretty good though.
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Sep 20, 2013 10:14
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After tax IRA to Roth Ira is an interesting move as well, though that doesn't work if you have a regular IRA. It works if you only have a 401k and Roth.
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Sep 20, 2013 14:12
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I have a 401a & a 403b with TIAA-CREF from my previous job. I was not with the employer long enough to be "vested," but as of now the employer contributions to my accounts seem to still be there, 3 months after the job ended. The expense ratios for the funds I chose are low at .17%, so holding them isn't really a problem, but I'm confused about how much of that money is really mine. The actual question: Do I get to keep the returns for the whole, or just a percentage based on my contributions? For a fuller picture, I DO have another retirement account- a Vanguard Roth IRA that I max out every year, and another Vanguard brokerage account that I use to grow (or lose!  ) money that will eventually go into the Roth. If I moved the TIAA-CREF money it would probably go to that brokerage account. I do not have any other employer-sponsored plans. I don't think it actually makes sense to move the money since presumably I'd take a tax hit and it's better to have more retirement vehicles than fewer, but I'd like to understand the contributions thing better. Thank you!
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Sep 20, 2013 14:43
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pants on head posted:I have a 401a & a 403b with TIAA-CREF from my previous job. I was not with the employer long enough to be "vested," but as of now the employer contributions to my accounts seem to still be there, 3 months after the job ended. The expense ratios for the funds I chose are low at .17%, so holding them isn't really a problem, but I'm confused about how much of that money is really mine. The actual question: Do I get to keep the returns for the whole, or just a percentage based on my contributions? You only keep the percentage based on your contributions. You can rollover the money into an IRA if you want, the normal reason being potentially better investing options, or into your Roth IRA though in that case you would have to pay the income tax on the amount. Also a note since what you wrote seemed a little unclear, taking either of these options does not impact how much you can contribute for the year (i.e. you have 50k in a 401a, you can roll that entire amount over into an IRA and still contribute up to the maximum ($5500 iirc) to either a IRA or a Roth IRA in that year). One thing I'm not quite certain on is that when I had a 401k with unvested contributions they stayed in the account until I rolled it over presumably because if I ever went back to the company I could vest those funds, but they seem to have disappeared when I did the rollover so there might be an advantage to not rolling the account over if you ever plan on going back to the company.
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Sep 21, 2013 16:42
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J4Gently posted:After tax IRA to Roth Ira is an interesting move as well, though that doesn't work if you have a regular IRA. It works if you only have a 401k and Roth. The topic was pretty interesting and it turns out you can in fact do it with a regular IRA. http://www.nerdwallet.com/blog/investing/2013/backdoor-roth-ira-high-income-how-to-guide/
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Sep 21, 2013 19:50
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LurkingAsian posted:The topic was pretty interesting and it turns out you can in fact do it with a regular IRA. It mentions the issue I was talking about quote:The Pro-Rata Rule Doe the IRA proportion from the regular IRA would be taxed and incur the 10% early withdrawal penalty? They don't specifically talk about the tax generated from the conversion... J4Gently fucked around with this message at 20:10 on Sep 21, 2013 |
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Sep 21, 2013 20:03
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I transferred my TDAmeritrade accounts to Vanguard (Traditional IRA, Roth IRA, and SEP-IRA), and I'm deciding which funds to purchase. I have $57,000 across the three accounts (all under a single username at Vanguard), as follows:
Do the fund minimum investments apply to each of the individual accounts, or to the overall holdings? In other words, can I buy into the Admiral funds (for example) with $3,000 in the Roth IRA and $7,000+ in the SEP or Traditional IRA? Reason I ask is I haven't contributed for this year yet, and it might influence how I allocate my contributions. Edit: Also, I think I know the answer, but do the target date funds' expense ratios stack on top of the funds held within them? Cranbe fucked around with this message at 07:27 on Sep 22, 2013 |
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Sep 22, 2013 07:05
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Admiral funds: No I don't think so. You have to have 10k in a single account. Target date: The ER is the weighted average of the underlying funds. No additional expense for the target fund itself.
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Sep 22, 2013 12:05
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