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DirtyTalk posted:My dad is 64 years old and has owned his own construction business for 25 years. Having his own business he really never planned any retirement. There have been some pretty rough patches and any savings would have to get used up. Does he like literally have bags of cash in his home? Talk him out of that - one break-in and it's all gone. Is he collecting social security yet? Does he have health insurance between now and when he can enroll in Medicare at 65?
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Jan 30, 2014 20:28
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DirtyTalk posted:My dad is 64 years old and has owned his own construction business for 25 years. Having his own business he really never planned any retirement. There have been some pretty rough patches and any savings would have to get used up. This actually sounds almost exactly like one of the hypothetical scenarios Bernstein lays out in The Four Pillars. I think he advocated a taxable investment account weighted heavily towards bonds(because he needs to gain some interest, but if he stops working in 5 or 6 years he doesn't have time for the market to recover), and specifically suggested using tax-managed index funds to minimize capital gains taxes. Vanguard puts the fact that their tax-managed funds are tax-managed right in the fund name.
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Jan 30, 2014 21:14
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Okay, so it turns out I will have the option to roll my 401k over into an IRA. So I guess I'll call Vanguard and see what I need to do. Please forgive me, these are very stupid questions, but I've never really had to deal with this before. When I invested in my 401k, I just picked 15 different funds that sort of matched my stock/bond ratio. Hence why I want to get my money out of those crap funds. What do you guys think about stuff like Vanguard Target Retirement 2050 Fund (VFIFX) Is it better to invest basically all my rollover into something like that, or try to roll my own? On the other hand you've got stuff like Vanguard LifeStrategy Growth Fund (VASGX) which has my preferred ratio. I'd assume if I invested heavily in that, I'd need to slowly move stuff toward a more bond heavy fund as I got older and more risk averse? My final question is when I see stuff with a minimum investment, how does that work? For example, say I have 10k to rollover all at once, and I have my current 401k send a check to Vanguard. Do I then choose my funds once they get the money, meeting whatever the minimum investment is listed. For example, I could put 3k in Vanguard Precious Metals and Mining Fund (VGPMX), 3k in Vanguard Health Care Fund Investor Shares (VGHCX), and 4k in Vanguard Target Retirement 2050 Fund (VFIFX) EDIT: There's no way in hell I'd actually invest like the above. I was just trying to figure out how it worked. UndyingShadow fucked around with this message at 02:14 on Jan 31, 2014 |
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Jan 30, 2014 23:22
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UndyingShadow posted:What do you guys think about stuff like Vanguard Target Retirement 2050 Fund (VFIFX) Is it better to invest basically all my rollover into something like that, or try to roll my own? On the other hand you've got stuff like Vanguard LifeStrategy Growth Fund (VASGX) which has my preferred ratio. I'd assume if I invested heavily in that, I'd need to slowly move stuff toward a more bond heavy fund as I got older and more risk averse? The minimum investment number is the minimum you can place into a specific fund in a specific account. You basically are correct. It is fine to put all of your money in the Vanguard Target Retirement 2050 fund or the LifeStrategy Growth fund, with the caveat that you should make sure your stock/bond ratio matches. I do not put any money into the Vanguard Target Retirement fund simply because I'm fine with doing the allocations directly myself. Also, if you have enough cash, directly investing into Admiral funds does offer a slightly lower expense ratio.
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Jan 30, 2014 23:48
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UndyingShadow posted:My final question is when I see stuff with a minimum investment, how does that work? For example, say I have 10k to rollover all at once, and I have my current 401k send a check to Vanguard. Do I then choose my funds once they get the money, meeting whatever the minimum investment is listed. For example, I could put 3k in Vanguard Precious Metals and Mining Fund (VGPMX), 3k in Vanguard Health Care Fund Investor Shares (VGHCX), and 4k in Vanguard Target Retirement 2050 Fund (VFIFX) I mean no offence, but if you have $10k and are thinking about investing roughly a third of it in each a precious metals and health care fund without some *really* strong and well researched reasoning to do so, you are almost certainly better off just throwing it all in a target fund... Perhaps consider 3k if you have $100k, but even then...
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Jan 31, 2014 00:43
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Fancy_Lad posted:I mean no offence, but if you have $10k and are thinking about investing roughly a third of it in each a precious metals and health care fund without some *really* strong and well researched reasoning to do so, you are almost certainly better off just throwing it all in a target fund... Hahahha, sorry, I thought about adding a disclaimer. No, I'm not that stupid. Those were literally just random Vanguard funds I clicked on to see their minimums.
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Jan 31, 2014 02:12
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So with the myra, is that an effective increase of the roth ira max from 5500 to around 10,000 assuming you roll over every three years, or can you only max it out at 15 once then you're done? At this point I think I'm weighted way too heavily in tax free investment accounts as I'm guessing they'll just pass a VAT one of these days to collect on them.
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Jan 31, 2014 03:43
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Nilisco posted:So with the myra, is that an effective increase of the roth ira max from 5500 to around 10,000 assuming you roll over every three years, or can you only max it out at 15 once then you're done? As far as I can tell, they haven't really explained how the contribution limits (yearly limits?) and rollovers (rollover and you're done?) will work.
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Jan 31, 2014 05:08
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Nilisco posted:So with the myra, is that an effective increase of the roth ira max from 5500 to around 10,000 assuming you roll over every three years, or can you only max it out at 15 once then you're done? I think it's too early to tell. I doubt they would be set up with such a loophole. I know we talk a lot about future issues for Roth IRAs and the like, but is there the possibility of these accounts being grandfathered in?
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Jan 31, 2014 05:22
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Pirate Ken posted:
If the U.S. goes to a VAT (value-added tax) system, which is basically a large sales-tax with little/no income tax, then I am not sure that there would be any way to avoid the detrimental effect on Roth investment vehicles. At this point that kind of system is a pretty unlikely scenario, however.
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Jan 31, 2014 06:37
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I'm not going to worry about the future possibility of a VAT. If congress ever implements one, I assume it would be in addition to, not in place of, income taxes. So I'm going to keep putting money into a Roth with the assumption that it will still reduce the taxation of my future retirement income.
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Jan 31, 2014 13:09
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EugeneJ posted:Does he like literally have bags of cash in his home? Talk him out of that - one break-in and it's all gone. I have been trying and he's open. I just don't know where he should put it, and neither does he. He is not collecting social security, and he currently does have health insurance. Not sure about the medicare though. I guess the idea of putting all of your cold hard cash into someone else's hands is scary. I could imagine it would scare me as well. It's going to be hard pressed, but maybe I can be more clear on the benefits as to pitch it to him so he likes it.
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Jan 31, 2014 14:14
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Anyone else pleasantly surprised to see Vanguard ads for IRAs on the forums lately?
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Jan 31, 2014 14:24
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I have $20k to put in an IRA (SEP, if that makes a difference). I'm 25 and am down with risk. This is my first contribution to a retirement fund. I'm thinking: 50% VTI 25% VXUS 25% GLD or TIP? Any recommendations here? I realize this might be pretty standard/safe, I'm decently knowledgeable about retail finance stuff, just want to double check if there's anything I'm missing since I haven't really looked at stuff from a really long term standpoint.
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Jan 31, 2014 16:50
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GLD or TIP are both kind of unusual choices, BND would be more of a "standard" choice if that's what you're looking for. I follow the "own your age in bonds" rule (which seems to be more or less what you're going for) but a lot of people in this thread find that to be pretty conservative, and might put less than 25% in bonds.
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Jan 31, 2014 16:54
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I'm reading Four Pillars and I have a small question. Bernstein makes a point of showing how nobody can time the market by showing us several times that active managers or market timing newsletters (I'm guessing these are like magazines?) rarely if ever consistently beat the market and when they do it is not due to skill but rather the randomness of the market. However, he also makes a point that some managers or newsletters are so bad that they consistently do much worse than the index and indicates that they must be skillfully bad. Has anybody done a reverse analysis to see whether following the opposite advice of a consistently bad manager would give consistently good performance? It seems like something that wouldn't be terribly hard to do especially with the market timing newsletters. Edit: Ha, he makes a joke about doing this in the next few pages, maybe he does go into it? so sorry if I've asked a needless question. Joiny fucked around with this message at 18:56 on Jan 31, 2014 |
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Jan 31, 2014 18:52
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Joiny posted:I'm reading Four Pillars and I have a small question. Bernstein makes a point of showing how nobody can time the market by showing us several times that active managers or market timing newsletters (I'm guessing these are like magazines?) rarely if ever consistently beat the market and when they do it is not due to skill but rather the randomness of the market. However, he also makes a point that some managers or newsletters are so bad that they consistently do much worse than the index and indicates that they must be skillfully bad. That presumes that investing is a binary thing—do x or do y. If it were that simple, yeah, you probably could just do the opposite.
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Jan 31, 2014 19:05
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The point of Bernstein really is that it's not that managers can be shown to consistently underperform the market, but rather that they don't consistently outperform the market and then transaction costs and the managers' fees eat up 2 or 3 percent of your money each year. If somebody really was consistently making predictions so bad that they consistently underperformed the market even before taking transaction costs and fees into account, then yes, you could just buy an S&P 500 index fund and short all the stocks they own, and make a little extra money. However there is no manager where you would really have such a strong conviction as to do this, and even if you were totally convinced, the risk wouldn't be worth it. Edit: Also, shorting is more expensive than being long because you have to borrow stock and that isn't free... you'd be shorting these things for a long time too, because mutual fund managers tend to hold the same stocks for years... it's not feasible really. Echo 3 fucked around with this message at 19:20 on Jan 31, 2014 |
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Jan 31, 2014 19:17
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I have a 401k in Vangaurd target date funds. I am about to open a Roth IRA. Is it silly to open it with Vangaurd and put the money in the same target date fund? I am 28 and the total sum would be under $25k currently.
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Jan 31, 2014 19:48
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Jahoodie posted:I am about to open a Roth IRA. Is it silly to open it with Vangaurd and put the money in the same target dat Nope. Quite Reasonable.
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Jan 31, 2014 19:49
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Shyfted One posted:So I currently already max out my Roth IRA, but I still have more money I could be putting towards retirement. My company doesn't have a 401k plan that I could contribute to and I take it I can't just start one as it has to be through my employer, correct? Should I just tell the owner to start a drat 401k even if he's not going to match? And from what I've read there are good and bad 401ks where some places actually invest and others just take about everything you contribute in fees? Any recommendations I could pass along for who to use for a tiny (<12 full time employees) business? I'm in a similar situation and would love to know more about this, 401k without matching or whatever else i should suggest to my employer.
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Jan 31, 2014 20:05
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Echo 3 posted:The point of Bernstein really is that it's not that managers can be shown to consistently underperform the market, but rather that they don't consistently outperform the market and then transaction costs and the managers' fees eat up 2 or 3 percent of your money each year. If somebody really was consistently making predictions so bad that they consistently underperformed the market even before taking transaction costs and fees into account, then yes, you could just buy an S&P 500 index fund and short all the stocks they own, and make a little extra money. However there is no manager where you would really have such a strong conviction as to do this, and even if you were totally convinced, the risk wouldn't be worth it. I think it was more the newsletter guys that he pointed to as frequently being much worse than the market on a consistent basis. This would not involve transaction costs, since they're just publishing their "picks" and not actually managing anything.
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Jan 31, 2014 20:05
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Cranbe posted:That presumes that investing is a binary thing—do x or do y. If it were that simple, yeah, you probably could just do the opposite. I was thinking that if you shorted whatever a market timing magazine told you to buy and bought whatever they told you to sell, it would be a winning proposition, similar to some of the articles that went around a year ago or so about shorting stocks that Jim Cramer picks to buy, because after 2-3 weeks of being at an inflated price (due to popularity) they invariably went back down. Echo 3 posted:The point of Bernstein really is that it's not that managers can be shown to consistently underperform the market, but rather that they don't consistently outperform the market and then transaction costs and the managers' fees eat up 2 or 3 percent of your money each year. If somebody really was consistently making predictions so bad that they consistently underperformed the market even before taking transaction costs and fees into account, then yes, you could just buy an S&P 500 index fund and short all the stocks they own, and make a little extra money. However there is no manager where you would really have such a strong conviction as to do this, and even if you were totally convinced, the risk wouldn't be worth it. Fair point. For the record, Bernstein later goes on to say in the book that "...the work of Graham, Harvey, Cowles, and others does suggest one promising strategy: pick the very worst newsletter you can find. Then do the opposite of what it recommends." So I guess if you're making shorter term decisions (like yearly instead of multi-year) then it might be a viable strategy for someone who felt like they could carry the high risk of 'betting on idiots'.
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Jan 31, 2014 20:06
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I think that suggestion is somewhat tongue-in-cheek though rather than an actual strategy. I think Bernstein would be quick to add, if pressed, "I wouldn't do that with my money."
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Jan 31, 2014 20:32
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Just like you can't predict the market, you can't predict if an investor will be good or bad at any given time. Just because they did everything wrong last year doesn't mean they will this year, just like somebody who ouperformed the market last year may underperform it this year. Imagine if you had 50 people all guessing coin flips. Inevitably one person would get almost every flip right in a given series of a few flips, and one person would get almost every flip wrong. Of course it's obvious in retrospect that person A is a "good guesser" and person B is a "bad guesser" but there was no way to determine that ahead of time, and it has no bearing on their future guesses.
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Jan 31, 2014 20:41
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Nail Rat posted:I think that suggestion is somewhat tongue-in-cheek though rather than an actual strategy. I think Bernstein would be quick to add, if pressed, "I wouldn't do that with my money." You're probably right. I just thought it was interesting and I am way too risk averse to try doing anything like this with my money anyway. SlightlyMadman posted:Just like you can't predict the market, you can't predict if an investor will be good or bad at any given time. Just because they did everything wrong last year doesn't mean they will this year, just like somebody who ouperformed the market last year may underperform it this year. Imagine if you had 50 people all guessing coin flips. Inevitably one person would get almost every flip right in a given series of a few flips, and one person would get almost every flip wrong. Of course it's obvious in retrospect that person A is a "good guesser" and person B is a "bad guesser" but there was no way to determine that ahead of time, and it has no bearing on their future guesses. That's actually not quite what he states in the book. He states that you won't be able to find someone that consistently outperforms the market, but you can find plenty that consistently underperform. "...there were no advisors whose calls were consistently correct. Once again, the only consistency was found at the bottom of the pile; there were several newsletters that were wrong with amazing regularity. They cited one very well-known advisor whose strategy produced an astounding 5.4% loss during a 13-year period when the s&p 500 produced an annualized 15.9% gain." For anybody that thinks I'm advocating doing anything based on these few sentences or market timing in general, please understand that I'm not. I just thought it was an interesting anecdote that might warrant some conversation.
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Jan 31, 2014 21:50
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Joiny posted:That's actually not quite what he states in the book. He states that you won't be able to find someone that consistently outperforms the market, but you can find plenty that consistently underperform. "...there were no advisors whose calls were consistently correct. Once again, the only consistency was found at the bottom of the pile; there were several newsletters that were wrong with amazing regularity. They cited one very well-known advisor whose strategy produced an astounding 5.4% loss during a 13-year period when the s&p 500 produced an annualized 15.9% gain." I get that, and of course it's not exactly the same as a coin flip, but my point was that there's a huge difference between consistency in past data and consistency in the future. The bottom line is that past performance can never be relied on to predict future returns, good or bad.
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Jan 31, 2014 22:06
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Happy Friday friends and remember that those of us who are young investors will (hopefully/probably) reap good rewards regardless of our portfolio ratios and other small things. As long as we invest early in low cost funds we will have peaceful retirements. Don't stop reading and learning about markets but remember to focus on the important things, friends and family.
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Feb 1, 2014 01:47
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Joiny posted:You're probably right. I just thought it was interesting and I am way too risk averse to try doing anything like this with my money anyway. The people who consistently under perform the market are doing so because of random chance as well. They just haven't been culled by the financial system yet. Lets make a simple model and see what it tells us. Assume a financial year involves guessing the result of 20 coin flips. If a player guesses 8 or more times correctly, they had a winning year and beat the market, otherwise they under performed the market each year. In this case, by pure chance, 97% of players will under perform and 3% will beat the market. Assuming that none of the players are culled after a bad year, after 10 years there is a 74% chance, based on luck alone, that any one player will have under performed every year during that period. I see little reason to think that there is anyway to pick a particular looser over a long enough time frame. However, if you could short the actively traded funds as a whole, then I might be interested. 
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Feb 1, 2014 16:55
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I have a tax bill this year of ~$1500 because I rolled over a 403(b) into a Roth IRA. I was planning on contributing the max to a Roth IRA for both myself and my wife. We should be staying in the 15% tax bracket in 2014, due to some changes to our deductions. Is it crazy/impossible to contribute the max instead to a Traditional IRA, and then convert it to a Roth next year (while also contributing to a Roth next year)? The way I see this is essentially deferring the tax bill to next year. Or I can just suck it up and pay it now.
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Feb 1, 2014 17:28
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If you're married, filing separately and make over $10,000, can you contribute to a traditional IRA (and forgo the deduction) then immediately convert it to a Roth IRA? I know this is the backdoor Roth which single filers making over the Roth IRA contribution limit can do. I don't see any reason someone MFS couldn't do the same thing. Am I missing something?
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Feb 3, 2014 14:56
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Jahoodie posted:I have a 401k in Vangaurd target date funds.
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Feb 3, 2014 17:39
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So are you guys riding this out, switching to bonds?
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Feb 4, 2014 00:18
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Long-term investing and retirement savings: You Can't Time the Market
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Feb 4, 2014 00:22
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Mouse Cadet posted:So are you guys riding this out, switching to bonds? puttin' more money in :3 (as I typically put money in yearly at around this point).
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Feb 4, 2014 02:51
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Mouse Cadet posted:So are you guys riding this out, switching to bonds? Riding what out? 
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Feb 4, 2014 02:54
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We need some kind of bot to reply "Don't time the market!" every time a new person posts in this thread.
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Feb 4, 2014 02:59
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Mouse Cadet posted:So are you guys riding this out, switching to bonds? The classic sell low, buy high strategy.
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Feb 4, 2014 03:55
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Can someone explain the differences between the VTSMX Index Fund and VTI ETF? I was going to toss some dough in the VTSMX but noticed the minimum investment is $3,000 where as the ETF has no minimum but is twice the price. While we're at it what about the admiral shares as well (VTSAX)? From what I can see those have the same expense ratio as the ETF which is lower than the index fund but the same price as the index fund with a 10k minimum required investment. Does it matter which I should put money into or am I better served waiting to build the 3k or 10k minimums? Thanks!
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Feb 4, 2014 07:02
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Mouse Cadet posted:So are you guys riding this out, switching to bonds? Market dropped 2% today. Just dipped into my cash savings and doubled down on my contribution this month. If it's still falling in a couple of days/weeks. I'll plan on putting most of my cash savings into the market and simply pay my savings account back with my tax refund that I was planning on investing originally.
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Feb 4, 2014 07:08
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