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evilalien posted:Rolling it to an IRA is usually the best option unless your old 401k has better investment options available than Vanguard for example, but that isn't too likely. You just probably just roll it over to Vanguard.
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Oct 29, 2013 20:35
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It seems a Roth IRA is the way to go over a traditional as you pay the taxes now instead of in the future when (likely) taxes would be higher. Is there something I'm missing or is Roth the way to go?
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Oct 29, 2013 21:55
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Popete posted:It seems a Roth IRA is the way to go over a traditional as you pay the taxes now instead of in the future when (likely) taxes would be higher. Is there something I'm missing or is Roth the way to go? That's true if you're correct that taxes in the future will be higher, but there's really no way to know. I personally like to diversify with a traditional 401k and a Roth IRA.
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Oct 29, 2013 21:58
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Popete posted:It seems a Roth IRA is the way to go over a traditional as you pay the taxes now instead of in the future when (likely) taxes would be higher. Is there something I'm missing or is Roth the way to go?
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Oct 29, 2013 22:16
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Harry posted:I was under the impression it wasn't that great, you have to be really careful what the plan considers disabled, and you tend to lose it as soon as you leave your job. Well, there are certainly some lovely companies, but if you get a "like job" coverage, I think most actuaries seem to think it is a good idea. I think a lot of the problems stemmed from lovely fly-by-night TV insurance companies that were selling plans for $15 a month but only considering you "disabled" by the government definition. I.E. if you could work any job you were not "disabled" even if it meant you could no longer do your previous job which paid significantly more. I am getting my education on this from actuaries and insurance people. They all consider life insurance a scam but LTD a must. However, that is just their opinion. I am certainly willing to learn more, but there doesn't seem to be a lot of general education out there.
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Oct 29, 2013 22:34
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Depends on your needs and specific situation. Term life is good if you don't have many assets or equity and have a young family. If you die you can be assured they wont be on the street and if you don't you get the capital back at the end of the term when you could use it in retirement and no longer have dependents. LTD is good if you have a high income job and in case you become disabled and unable to work. Whole life insurance is garbage and purchasing the above plans when you don't have dependents or have a high income is generally not a great decision.
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Oct 29, 2013 22:39
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Small White Dragon posted:For most people this is true, but it's also hard to speculate what kind of changes there could be to tax law over the next forty years. Changes to the tax law could either work in favor or against a ROTH in the future, and can't really be predicted. But if you believe that your income is going to go up, then a ROTH probably makes more sense. It especially makes sense if you already have a 401k.
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Oct 29, 2013 23:53
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I'm confused on exactly how an IRA works, I see you can contribute a maximum per year (up to your earnings or currently $5500 whichever is lower). But are you contributing to the same IRA each year $5500? I'm understanding correctly that there are no penalties to withdrawing from an IRA? Would that be a viable option for an emergency fund, placing money in an IRA and being able to withdraw from it for free seems like a good way to store money.
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Oct 30, 2013 01:53
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What's the thread's thought on p2p investing like Lending Tree or Prosper? Any personal experiences, hidden pitfalls?
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Oct 30, 2013 01:55
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Extremely risky, due to the fact that people might default. It also does not exceed the stock market's return.
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Oct 30, 2013 03:22
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There's a thread for p2p in BFC if you're interested. I've been putting in money I'd be comfortable losing and have been getting about 13 percent return over the last two and a half years.
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Oct 30, 2013 03:37
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Popete posted:It seems a Roth IRA is the way to go over a traditional as you pay the taxes now instead of in the future when (likely) taxes would be higher. Is there something I'm missing or is Roth the way to go? The real benefit to the Roth IRA over the traditional IRA is flexibility. You can pull out your full principal investment (but not earnings) at any time penalty free from the Roth IRA. You can't do this with a Traditional IRA. You also aren't required to start taking distributions at any point from a Roth IRA, but with the traditional you're required to start taking a certain amount of money out at age 70 or you pay a heavy penalty. For that reason I'd recommend a Roth IRA over a Traditional IRA in the large majority of situations. 401(k)'s are the more variable situation. Here there really isn't much of any difference in the rules between pre-tax (traditional) plans or post-tax (Roth) plans, it just boils down to whether you want to pay your taxes now or when you take the money out of the account later. If you think you'll be taxed more now than the future lean towards a Traditional 401(k), if you think you'll be tax more in the future than now lean towards a Roth and pay the taxes now. You could also just go 50/50 between the two options.
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Oct 30, 2013 03:41
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My current thought is lowering my 401k from 10% down to 7-8%, I can then use my yearly tax return and if needed extra cash to make up the difference and put $5500 into a Roth IRA. Past that point I'm interested in doing some personal stock investing for more short term investments. That probably won't happen for some time until I can save up fun investing money and become less of an idiot (as evident by this thread).
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Oct 30, 2013 03:51
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Popete posted:But are you contributing to the same IRA each year $5500? http://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions Popete posted:I'm understanding correctly that there are no penalties to withdrawing from an IRA? edit: upon rereading pub 590, I am incorrect. Huttan fucked around with this message at 04:12 on Oct 31, 2013 |
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Oct 30, 2013 05:52
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I have ~$26.5k in my Arizona State Retirement System account, meaning that if I wait until I'm 65, I'll receive a monthly pension of slightly over $400. I am 28 currently. I have moved on from employment in Arizona, and am working on an employer administered 401k plan. Does it make sense to move the money from the ASRS system into the 401k system? Screwing around with some calculators online it looks like the answer is yes, most likely, even fairly pessimistically. Is that right? I guess, generally, does it make sense to try to consolidate retirement accounts from previous employers, or just let them be?
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Oct 30, 2013 07:48
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Huttan posted:Roth IRAs are only slightly less painful, if and only if you have had the Roth IRA for 5+ years and you are only withdrawing contributions. Otherwise, go back to the previous paragraph, bend over and grab your ankles. 5 year penalty only applies to IRAs that were converted to Roth from Traditional. Contributions to a Roth IRA can be withdrawn at any time with no penalty. Sources: * Roth IRA early withdrawals and penalties - Fool.com * IRS Publication 590 - Individual Retirement Arrangements (IRAs)
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Oct 30, 2013 14:33
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Huttan posted:Roth IRAs are only slightly less painful, if and only if you have had the Roth IRA for 5+ years and you are only withdrawing contributions. Otherwise, go back to the previous paragraph, bend over and grab your ankles. This keeps getting repeated and it is simply not true. Maybe three is right and there is some limit after converting from a traditional IRA, but I have contributed to a Roth and withdrawn from it in much less than 5 years and there was no penalty. It wasn't a 'qualified distribution' for a house or whatever either. Vanguard even sent me a letter that said 'you don't owe poo poo in taxes on this because it is all contributions.'
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Oct 30, 2013 15:38
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So we were presented with details on our company's new 401(k) plan today. Apparently the Index funds they will offer (which remain to be named) have total expense ratios of between 2 and 6 basis points. I can't decide if this is awesome or if they are lying to us.
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Oct 31, 2013 02:40
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PIPBoy 2000 posted:So we were presented with details on our company's new 401(k) plan today. Apparently the Index funds they will offer (which remain to be named) have total expense ratios of between 2 and 6 basis points. I can't decide if this is awesome or if they are lying to us. Our Fidelity rep thought 1 basis point was 1 percent, so hope for the best and prepare for the worst.
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Oct 31, 2013 02:53
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PIPBoy 2000 posted:So we were presented with details on our company's new 401(k) plan today. Apparently the Index funds they will offer (which remain to be named) have total expense ratios of between 2 and 6 basis points. I can't decide if this is awesome or if they are lying to us. Those expense ratios are realistic with Institutional-class shares in Vanguard or Fidelity's Spartan index funds. My 403b has some of each and they let me make Roth contributions, it's pretty awesome.
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Oct 31, 2013 10:51
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Question about my company's employee stock purchase plan: Does it make sense for me to max out my contribution and sell the stocks every month for the guaranteed 15% return? We can buy stock at a 15% discount and set aside 15% of our pay to buy the stock. Or are the tax implications of selling the stocks going to outweigh any of the gains? Although I trust that my company will continue to do well, I don't want to sit on the stock just to save a few bucks in taxes.
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Nov 1, 2013 15:22
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oye como va posted:Question about my company's employee stock purchase plan: I had previously thought that if I was ever in your situation I would do something like this. I think you would pay short term capital gains on the 15% return, which is the same as your highest marginal tax rate. So just think of it as a raise. Perhaps someone else here can give a better answer.
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Nov 1, 2013 15:30
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oye como va posted:Question about my company's employee stock purchase plan: If your company stock offers good dividends, you can consider it a different form of savings account. However, the ROI of selling immediately is tremendous, something like 90%. The tax implications aren't so bad. You get taxed at your income level for the difference between your purchase and sell price. Any money earned from the stock growing can be reduced to capital gains rates if you wait a year, if you're willing to risk it.
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Nov 1, 2013 15:34
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oye como va posted:Question about my company's employee stock purchase plan: Most companies have a required holding period before you're allowed to sell, usually around 6 months.
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Nov 1, 2013 15:55
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bam thwok posted:Most companies have a required holding period before you're allowed to sell, usually around 6 months. Mine offers a "quick sell" option with the 15% discount. It sounds like his is very similar.
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Nov 1, 2013 16:03
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Edit: nevermind, more information is needed - are the stock shares pre-tax?
baquerd fucked around with this message at 17:49 on Nov 1, 2013 |
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Nov 1, 2013 17:35
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baquerd posted:Edit: nevermind, more information is needed - are the stock shares pre-tax? I think most SPP work post-tax, unless it's tied to retirement somehow?
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Nov 1, 2013 18:22
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It matters, but not that much. Basically, there's no way the tax that you pay on the the profit you make from selling the shares, will exceed the profit you make from selling the shares. So you will benefit from the ESPP. The only real question is whether you can afford to set aside that portion of your paycheck every pay period and have it tied up in the ESPP until the distribution date, and also, whether you will have the discipline to immediately sell the stock once it's distributed. If you can deal with both of those things, it's free money from your employer. My own employer offers an ESPP, but the terms are much less generous. I have to tie up money for 6 months, and the purchase price is 95% of the trading price on the day of distribution. Irrespective of the tax, it's not worth it to me to tie up cash for six months for such a small gain.
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Nov 1, 2013 18:48
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Hello people that have some idea of what to do with money, besides cheeseburgers and sweet gaming PCs. I'm in a pretty drat good situation and I really want to work out the best thing to do. I'm Australian, but I'm currently in Europe and am probably going to work in the UK next year.. but with my dual citizenship and my skills, working in the US isn't out of the picture either. Quick summary of who you're dealing with: - I'm in my early 30s - IT professional; that means degree, vendor certs, previous position as Technology Lead for Hewlett Packard in Australia. Any neckbeard likes to use the term IT pro, but I'm at the stage of six figure roles for the major players. I'm telling you this so you have an idea of my income, not to jerk off. - Dual Australian and EU citizen. - Dad died recently and left me a few hundred thousand dollars (thanks mate  )- So far I've had it in savings accounts earning me around 4%, which is actually pretty drat decent and will equal or trump most term deposits - Currently on extended holiday, another 4 months of skiing and working out what my next move is I'm interested in trading and have started the ball rolling, getting educated and moving slowly. Buying property back in Australia would probably be smart, but as I have no intention of being there anytime soon I would have to have a property manager rent the thing for me. That's not a crazy idea, but the property market in Melbourne is a bit weird at the moment, so I've been told. I'd love to engage in a conversation about what you'd do in my position. Give a fair wad to a fund manager? Keep bouncing it between high interest savings accounts and making at least 4%? Buy property now, just get the gently caress in there (this one is popular with old people, then again old people are wise)? If you're American and that's what you've got knowledge in, by all means tell me what you'd do with in the US. Many of the options and ideas are almost global now.
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Nov 1, 2013 20:40
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Tony Montana posted:Hello people that have some idea of what to do with money, besides cheeseburgers and sweet gaming PCs.
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Nov 1, 2013 20:48
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cowofwar posted:Invest it in a diversified portfolio over time and don't buy real estate. Then stay mobile and retire on the interest. With a fund manager. As in like the nice guy in the suit from the bank I met with?
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Nov 1, 2013 20:49
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Tony Montana posted:With a fund manager. As in like the nice guy in the suit from the bank I met with? With a little research, you can do it yourself and not pay their fees, which are significant.
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Nov 1, 2013 21:05
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ETB posted:With a little research, you can do it yourself and not pay their fees, which are significant. Yeah I met with the NAB (National Australia Bank, one of Aus's big four) and it was all very slick. Took me to the top of a high-rise and while looking out over the city and drinking nice coffee an attractive secretary brought us, we discussed their credibility, basically. The location and setting was obviously to facilitate this as well - we're not messing around and we play with big bucks. At the end of it there was an awkward shift; the nice and seemingly very knowledgeable guy took on a more nervous and pushy persona. Then the crunch came, to action the portfolio we'd discussed he would have to 'draw up an investment plan' and this thing would cost me a couple of grand. I left and later thought, so I'll pay a couple of thousand dollars for a report, but there is no liability on the bank's side if it doesn't go as they recommend. Hrm. Any resources you can point me toward to start learning about how to do this myself? Wouldn't a diversified portfolio include a real estate element? The books in the OP of this thread sound like a good place to start..
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Nov 1, 2013 21:12
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Tony Montana posted:Yeah I met with the NAB (National Australia Bank, one of Aus's big four) and it was all very slick. Took me to the top of a high-rise and while looking out over the city and drinking nice coffee an attractive secretary brought us, we discussed their credibility, basically. The location and setting was obviously to facilitate this as well - we're not messing around and we play with big bucks. 20% Australian index 20% international index 20% US index 40% bonds As the portfolio becomes larger it can be cost effective to further diversify the client. 20% Australian equity 15% US equity 15% International equity 10% Real estate investment trusts 10% Real return bonds 30% Australian bonds In this case the bonds have been broken up to diversify the bond types. We've also added some real estate trust exposure. We can further diversify it again. 12% Australian equity 6% Australian small cap 12% US equity 6% US small-cap value 6% International equity 6% International small cap 6% Emerging markets equity 6% Global real estate 20% Government bonds 20% Corporate bonds In this case we've further broken down the equities in to large and small caps. We've also broken our bonds down in to government and corporate bonds. So basically as your portfolio grows in size you further diversify to decrease exposure (risk). With large portfolios fee based advisors can help you set your distributions based on your risk tolerances and find the appropriate instruments for your portfolio. In reality they generally just follow a standard distribution for all their clients. Unless you have 7 digit portfolio I wouldn't bother with a fee based advisor as you can put together a comparable portfolio for cheaper. A lot of the additional instruments don't really increase your returns significantly due to their higher expenses and in some cases decrease your returns compared to a more barebones portfolio. Also if you're starting with a large inheritance in cash you would probably want to invest it in to your distribution over time cowofwar fucked around with this message at 21:28 on Nov 1, 2013 |
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Nov 1, 2013 21:22
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Tony Montana posted:At the end of it there was an awkward shift; the nice and seemingly very knowledgeable guy took on a more nervous and pushy persona. Then the crunch came, to action the portfolio we'd discussed he would have to 'draw up an investment plan' and this thing would cost me a couple of grand. I left and later thought, so I'll pay a couple of thousand dollars for a report, but there is no liability on the bank's side if it doesn't go as they recommend. Hrm. They make money from significant fund fees, not necessarily because they're good at investing. The books in the OP are indeed a good place to start. If you want to invest in real estate, you can invest in REITs, though I would recommend against investing a large portion of your savings there. I wouldn't recommend buying any property if you're not going to be living anywhere near it for a good long while. Generally low expense ratio index funds are where you want to look.
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Nov 1, 2013 21:25
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Right. Perfect, that answers the question of 'won't the professionals make significantly better returns at lower risk, so that it offsets their fees?'. Not for the money I'm talking about. Great responses, thank you. I will get ordering on Amazon.
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Nov 1, 2013 21:32
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Tony Montana posted:Right. Perfect, that answers the question of 'won't the professionals make significantly better returns at lower risk, so that it offsets their fees?'. Not for the money I'm talking about. You're not really talking about all that much money, it sounds like less than a few million. If you break into the tens to hundreds of millions, there are unique partnerships and private equity offerings that open up to you, and because of the increased information and ability to provide input into the running of said companies you can achieve your lower risk, higher benefit. Until you're ready to take that sort of very active approach to investing large amounts of capital, the advice for your $500k-5mm isn't going to be substantially different to someone with $50k or assets.
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Nov 1, 2013 21:49
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Tony Montana posted:Right. Perfect, that answers the question of 'won't the professionals make significantly better returns at lower risk, so that it offsets their fees?'. Not for the money I'm talking about. Cutting out the middle-man always saves money and there's nothing they can do that you cannot if you just spend time reading up on anything in which you invest. Start basic with high volume, index tracking funds or ETFs (like those from vanguard or a low MER provider of choice) and stay away from funds that have low volume, low holding and high MERs. The latter are often specialty funds that are actively managed and focus on niche sectors. The former are generally offered by large banks (middle-ground MERs) or Vanguard et al (low MERs) and track larger sectors. cowofwar fucked around with this message at 22:19 on Nov 1, 2013 |
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Nov 1, 2013 22:15
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Thanks again, I will be back with more intelligent questions after I've read some. To whoever maintains the OP, these three book links all point to the same book. A Random Walk Down Wall Street http://www.amazon.com/Random-Walk-D...ref=pd_sim_b_23 The Intelligent Asset Allocator http://www.amazon.com/Random-Walk-D...ref=pd_sim_b_23 All About Asset Allocation http://www.amazon.com/Random-Walk-D...ref=pd_sim_b_23
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Nov 2, 2013 13:01
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There's no holding period for my employer's ESPP and I have enough liquid cash to do this each month. I appreciate the information!
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Nov 2, 2013 15:25
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