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The Agent posted:I'm not sure how a career financial adviser is going to take to someone who just married into the family questioning his past financial decisions.  It sounds like your fiancee may be of the mindset "I don't need/want to learn about investment management because Expert handles it". I have this attitude toward a number of things, like car repairs - just not towards money! The issue of fees vs. index/active management is not completely simple for a novice to grasp and is still a topic of discussion among knowledgeable people around here anyway. It really does take a little study to understand the underlying concepts.Pick your battles, I guess is what I'm saying. If the adviser is doing a bad job - funds with high load, churning, whatever - you should maybe try to fire him. But 1% isn't completely onerous if his strategy makes sense and he can explain it to you. Although it is 10-20 times what you could (probably) pay for a similar portfolio in Vanguard funds, maybe you should take that tack when you explain it.
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Mar 17, 2014 04:52
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It might also make sense to hire an independent financial adviser. That way it becomes "expert with no financial interest vs. expert with a financial interest". This probably isn't a BFC thing, but just as a piece of relationship advice, you probably should learn how to talk to your spouse about money sooner rather than later.
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Mar 17, 2014 06:23
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My gut tells me that your fiancee's mother's cousin is charging 1% fees as trustee, not as financial manager. Once your fiancee turns 30 and the trust dissolves, the 1% fee disappears as there is no trustee. Your fiancee should clarify the nature of the 1% fee before you make decisions on it.
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Mar 17, 2014 07:56
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I'm not an expert but I think exclusively index funds isn't sufficient diversity for $500k. I'd want to take at least 10% outside the stock and bond markets. Also, this is unpleasant to discuss, but you and your fiancee should consider a prenuptial agreement.
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Mar 17, 2014 18:20
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Are prenuptials a personal decision or are they just a good idea when disparate-valued couples marry? My sister's net worth is $400,000 but her boyfriend is -$100,000 thanks to student loans and the choice to own a bicycle shop.
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Mar 17, 2014 18:42
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GoGoGadgetChris posted:Are prenuptials a personal decision or are they just a good idea when disparate-valued couples marry? My sister's net worth is $400,000 but her boyfriend is -$100,000 thanks to student loans and the choice to own a bicycle shop. Its never not a good idea to have a prenupt.
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Mar 17, 2014 19:30
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Leperflesh posted:I'm not an expert but I think exclusively index funds isn't sufficient diversity for $500k. I'd want to take at least 10% outside the stock and bond markets. So you're advising OP to bring up the topic of a prenup so that in the event the relationship ends, more of his fiancee's assets would revert to his fiancee and he would be left with less? Cause that's how prenups are usually drafted when one party brings more assets into the relationship. Aside from being bad legal advice, this prenup talk has nothing to do with investing and retirement savings.
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Mar 17, 2014 19:33
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Mantle posted:So you're advising OP to bring up the topic of a prenup so that in the event the relationship ends, more of his fiancee's assets would revert to his fiancee and he would be left with less? Cause that's how prenups are usually drafted when one party brings more assets into the relationship. Yes; or alternatively, to specifically state what would happen to that money in the event of a breakup, rather than leaving its disposition up to a divorce court. I think it is relevant because what exactly is in the prenup could affect decisions about where and how to invest the money. I am not giving legal advice of any kind, good or bad; I'm advising someone to consider discussing the option of seeking legal advice with his fiancee.
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Mar 17, 2014 19:51
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Leperflesh posted:I am not giving legal advice of any kind, good or bad; I'm advising someone to consider discussing the option of seeking legal advice with his fiancee. Well, that would be nice advice for her, pretty terrible advice for him though.
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Mar 17, 2014 21:30
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baquerd posted:Well, that would be nice advice for her, pretty terrible advice for him though. I disagree. I think you are looking at this very narrowly (how much money he could get if they divorced) on the premise that without a prenup, the money would be split. But that is not necessarily the case. Nor is it necessarily the case that a prenuptial agreement would specify she'd keep all the money if they split; it could explicitly state that the money will be split evenly in a divorce, which might be a protection for him, if the laws in their state treat accounts held prior to the marriage differently than joint accounts and assets acquired post-marriage. Leperflesh fucked around with this message at 21:59 on Mar 17, 2014 |
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Mar 17, 2014 21:56
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Leperflesh posted:you and your fiancee should consider a prenuptial agreement. Leperflesh posted:I am not giving legal advice of any kind GEORGE COSTANZA I put a lot of thought into this, and I think I would like you to sign a prenuptial agreement. SUSAN A pre-nup? GEORGE COSTANZA Yeah. [Susan laughs] What's so funny? SUSAN Hahahaha... You don't have any money. I make more money than you do. Haha. Yeah, give me the papers. I'll sign 'em.
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Mar 17, 2014 22:17
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OTOH, some people are okay with not taking their partner's inheritance should the marriage turn sour and may even prefer it that way.
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Mar 17, 2014 22:23
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totalnewbie posted:OTOH, some people are okay with not taking their partner's inheritance should the marriage turn sour and may even prefer it that way. I would hate to get wrapped up in my husband's inheritance which is family-owned land/business that is co-owned by around 50 people (many of which live across the country) and everyone thinks they are the sole owner and give you their opinions as such. I would never "take" that away from him. Deal with it while we're together, yeah I'll do that. But be linked to that unnecessarily dramatic mess forever if we got divorced? No way.
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Mar 17, 2014 22:47
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razz posted:I would hate to get wrapped up in my husband's inheritance which is family-owned land/business that is co-owned by around 50 people (many of which live across the country) and everyone thinks they are the sole owner and give you their opinions as such. I would never "take" that away from him. Deal with it while we're together, yeah I'll do that. But be linked to that unnecessarily dramatic mess forever if we got divorced? No way. This varies state by state, but in general inheritance is considered separate, not community property (thus not normally divided among spouses in a split)
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Mar 17, 2014 22:57
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evensevenone posted:It might also make sense to hire an independent financial adviser. That way it becomes "expert with no financial interest vs. expert with a financial interest". We talk about money (a lot), which is why I learned what I did this weekend and posted this. I actually talk about money with her enough that I know I get on her nerves from how much I talk about it. The advice about an independent adviser is good, but not something I knew existed. Are you talking about a fee-for-service adviser? If not, how would I find an independent one? many people posted:pre-nup I'm not averse to this, but not sold on it either. To me, it makes it a little easier to end the marriage to give in if times get tough - if we know that is one less hurdle to overcome in a potential divorce proceeding, it gives us one less reason to try to work it out. I also think it's a little fatalistic to think about the end of a relationship before it begins. While I get that a pre-nup is sound financial advice, I don't look at marriage as a financial decision, but rather an emotional one. I know BFC doesn't have a lot of room for feelings, but I hope this is one area where you all can understand (although I think that people need to take emotion out of their decisions all the time when I read threads here FWIW). I am aware that 50% of marriages end in divorce but we are both older (will both be 28 at the ceremony) and have stable jobs and careers, have both dated and slept with multiple people and have had long-term relationships before this one. I know it is still a possibility that it could end in divorce but I wouldn't be getting into this if I only thought I had a coin flip's chance in this being successful. OTOH, it would make things easier should things become truly irreconcilable. Maybe I am a little afraid of being left with nothing should we divorce... I guess it is something to bring up with her. I came here for the advice of BFC so I need to take it because I'd probably be thinking the same thing if posted by someone else. The Agent fucked around with this message at 00:09 on Mar 18, 2014 |
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Mar 18, 2014 00:06
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My Roth IRA is fully funded for the year and I have a quick question about what is the better option for additional savings dollars. Scenario: I have paid $0 net taxes for the previous two years, and I expect to pay $0 for 2014 as well (military, lot of tax exempt income, child on the way, etc). Would it be better to put money in my non-matched 401k (TSP), or some other taxable investment account? Assume for the sake of argument that the taxable account has a percentage return => the 401k. Or would it ultimately be a wash assuming equal percentage yields, as my hasty mental math leads me to believe? Gray Matter fucked around with this message at 04:03 on Mar 18, 2014 |
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Mar 18, 2014 03:59
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Taxable account. The tax
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Mar 18, 2014 04:03
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nelson posted:Taxable account. The tax
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Mar 18, 2014 05:24
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That is true. But ltcg is lower than (non-roth) 401k at withdrawal. Also dividends get a lower rate as well.
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Mar 18, 2014 05:39
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nelson posted:That is true. But ltcg is lower than (non-roth) 401k at withdrawal. Also dividends get a lower rate as well.
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Mar 18, 2014 06:16
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SiGmA_X posted:Correct me if I'm wrong here, but LTCG means a timeframe of over one year, and there are no tax benefits of depositing the money, but rather withdrawing? You don't realize gains until you actually have gains, eg on withdraw. Only the interest accrued & dividends are subject to LTCG (or any) tax when withdrawn and not the originally invested principle, correct?
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Mar 18, 2014 06:16
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The Agent posted:We talk about money (a lot), which is why I learned what I did this weekend and posted this. I actually talk about money with her enough that I know I get on her nerves from how much I talk about it. Well for me (and hopefully I can find someone who feels the same way) marriage is just a title to simplify taxes and other bureaucratic bullshit and no more permanet than a live-in significant other, so pre-nups are totally fine with me.
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Mar 18, 2014 12:57
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Gray Matter posted:It's my understanding that when I'm already paying zero tax for the year there is no tax benefit to depositing in a tax-deferred account either. So if I've got this right, depositing money (on which I owe zero tax) in a taxable account and paying the LTCG taxes on its eventual withdrawal will result in less tax paid overall than depositing that same money in a 401k which will be taxed at the effective rate at time of withdrawal. Correct.
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Mar 18, 2014 15:33
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What are good choices for medium-term investing? I cashed in an insurance policy and will have around $10,000 with no plans for it. Interest rates for savings accounts, CDs, and savings bonds seem low enough to be pointless, but just in case I need the money over the next few years I don't want to leave it invested in the same kind of funds I use for my retirement savings. I was thinking that something like the Vanguard LifeStrategy Income fund would likely provide returns significantly greater than bank savings/CD/savings bonds, but with much lower volatility than more long-term funds. Thoughts?
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Mar 18, 2014 22:51
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With the caveat that I haven't thought that much about it because I've never had to solve this problem for myself... My first thought is something like 50% cash, 40% bonds, 10% stocks. Which is what you'd get if you put half in a savings account and half in that fund. If I felt like taking more risk, I'd reduce the cash amount and maybe increase the stocks/bonds ratio to 40/60. Well, actually I would just pay down the mortgage
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Mar 18, 2014 23:05
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My company 401k (through Fidelity) offers what I understand is a huge variety of mutual funds, almost 300, including Institutional shares of some Vanguard index funds: Institutional Index Total Stock Market Total Bond Market Index Inflation-Protected Securities Total International Stock Index Explorer Fund (Admiral) Also available are Institutional Fidelity Spartan shares and Investor-class Vanguard target-retirement funds (and a lot of high-fee funds) - enough for me to put together my ideal allocation. I can make lump-sum contributions at year end, and contributions can be either Traditional or Roth. With such a good selection of funds in my 401k, I don't see much benefit in opening an IRA, at least until I change jobs and consider rolling over. The only reason to open an IRA would be to increase my total retirement contributions to beyond $17.5k. Am I reading my situation correctly? Are there any hooks which would make it unwise to put all of my retirement money into this account?
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Mar 19, 2014 01:38
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Sounds right to me, yeah. What happens to the Roth vs. standard 401k contributions if you leave your job? That's the only detail I don't know. (Assuming you have checked all the fees)
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Mar 19, 2014 01:41
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slap me silly posted:Sounds right to me, yeah. What happens to the Roth vs. standard 401k contributions if you leave your job? That's the only detail I don't know. (Assuming you have checked all the fees) OP, why would you not do paycheck deductions? Seems better to me but it's your money. And also you may consider using a Roth IRA too if you can afford to. Otherwise, besides possible fees, you should see the same benefit from Roth IRA vs 401k.
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Mar 19, 2014 01:52
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slap me silly posted:Sounds right to me, yeah. What happens to the Roth vs. standard 401k contributions if you leave your job? That's the only detail I don't know. (Assuming you have checked all the fees) From a plan document: quote:If I choose to remain in the plan, what happens to my account? So... I guess they stay as they are? Is there a danger that some funds might be converted to Roth if the account were kept open, causing a surprise tax bill? It also says that I can close my account "at any time" after termination or retirement. Administrative fees are paid by the company, it looks like they don't come out of my account. SiGmA_X posted:You get 2 1099-R's if your employer matches. Employer contributions are always reg401k. And you'll roll into a traditional and Roth IRA. I do payroll deductions, I just wanted to mention that I can contribute extra cash if I happen to have some on hand. All of my contributions so far have been by payroll deduction. This brings up another question: if I made a lump-sum contribution, would it be reflected on my W-2 or some other tax form?
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Mar 19, 2014 02:01
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Jay B. Bulworth posted:From a plan document: I think what the other guy was asking was about rollovers after you leave. *Most* employer plans, even with good cheap funds, charge a small bit more than direct with the brokerage. Not always, but often. So most people roll it over to their own Roth/Traditional IRA's when they depart. It also makes it loads easier to balance with only logging into your&spouses current employers fund management sites plus Vanguard vs multiple sources. Personally I rolled my 401k because of fees and balancing convenience. YMMV! Sounds like you have a pretty solid offering from the employer. Would you mind posting some funds and associated fees?
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Mar 19, 2014 02:21
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SiGmA_X posted:*Most* employer plans, even with good cheap funds, charge a small bit more than direct with the brokerage.
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Mar 19, 2014 02:34
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SiGmA_X posted:Would you mind posting some funds and associated fees? Sure! This is the first couple pages of funds, sorted by lowest net expense ratio. Again, these are mostly Institutional Shares, Admiral/Advantage shares are marked with a *, and a few Vanguard Institutional Index .04% Vanguard Total Stock Market .04% *Spartan Total Stock Market .06% *Spartan Extended Market Index .07% Spartan International Index .07% *Vanguard Total Bond Market Index .07% *Vanguard Inflation-Protected Securities .1% *Spartan Bond Index .1% Vanguard Total International Stock .12% . . (target retirement and LifeStrategy funds .14% - .18%) . Fidelity Four-in-One Index (investor shares) .22% Fidelity NASDAQ Index (investor shares) .29% American Funds Washington Mutual .3% *Vanguard Explorer Fund .34% . . . (12 more pages of funds) I poked around in some plan documents, and it looks like Fidelity charges the company about 0.1% of the trusts's value per year to administer it, but I can't find any evidence of it coming from my account or shaved off of contributions. edit: 0.1%, not 1%. Jay B. Bulworth fucked around with this message at 03:08 on Mar 19, 2014 |
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Mar 19, 2014 02:55
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Jay B. Bulworth posted:So... I guess they stay as they are? Is there a danger that some funds might be converted to Roth if the account were kept open, causing a surprise tax bill? No you can pretty much leave the account open as a standard 401k, even though the other catch for some companies you need to have a decent balance to do this(>5000 at my place).
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Mar 19, 2014 03:04
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Jay B. Bulworth posted:401k details Those are some seriously great choices offered by your 401k. Most employer plans are much more mediocre. And a 0.1% admin fee is no big deal, it basically will put your Institutional & Advantage funds on par with Investor share funds in a Vanguard IRA. Maxing your 401k before an IRA is very reasonable given the quality of your plan. If I was you, I'd make a Bogleheads 3-fund portfolio with those 0.04-0.07% index funds and put as much as I could into it. DAMN IT fucked around with this message at 05:10 on Mar 19, 2014 |
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Mar 19, 2014 03:41
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Thanks for the responses, all. I always thought that our plan was "ok," but only after I finished the BFC bible* did I realize how important fund selection is, and how good I have it. *The Four Pillars, obviously
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Mar 19, 2014 04:33
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God drat I want to go work at your company with that 401k.
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Mar 19, 2014 13:38
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Nail Rat posted:God drat I want to go work at your company with that 401k. Seriously, mine doesn't have a single index fund.
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Mar 19, 2014 13:54
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The only thing I'd suggest is consider still maxing a Roth IRA. Depending on your income / free cash flow of course. It may make sense to just split your 401k between Roth and non and call it a day, or strictly Roth. Some people subscribe to balancing Roth/non to mitigate unforeseen tax changes. I'm not sure if that's my opinion, I feel like Roth is a more known option, and I don't see Washington drastically changing the tax free withdraw. That would have too much backlash, I hope. My strategy in your shoes would be all-Roth, probably. Ps, super jealous of your 401k offerings. I'm all-in with VINIX at 0.17% (total; includes management fee sadly) because everything else sucks, and then I balance in my Roth IRA. At least my company offers Roth 401k's and a strong match...
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Mar 19, 2014 17:21
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For you guys out there that work at smaller companies where you might have some pull with HR, seriously go start a conversation with them about improving your 401k options. I (and a couple of others) at the company I work for were able to get our HR lead to renegotiate our fund selection with Fidelity at the end of last year and expand it to include some Fidelity Spartan index funds. They're pretty on par with Vanguard funds in terms of expenses, perhaps ever-so-slightly higher. The ones we picked up are all in the 0.07% to 0.2% ER range which, while still not as awesome as the selection Jay B. Bulworth posted above but it at least gives us some good options compared to our previous selection where the cheapest funds we had were in the 0.75%-1.0% range. A lot of times HR doesn't know any more about this stuff than the average person and if their intentions are to provide the best benefits they can then they are willing to listen to well-constructed and well-researched advice. In our experience dealing with Fidelity, the account reps are as much salespeople as anything and they tried to push us to select packages of higher ER funds and steer us away from low-cost index funds. If the person negotiating for your company doesn't know to shoot that poo poo down then you end up with crappy 401k fund selections. Our HR person means well and is generally pretty good, and we've been able to iteratively improve our benefits in general by having an open dialogue between employees and HR about what it is we actually want. My next mission is to convince HR to figure out how to set up paycheck deductions for HSA contributions to avoid paying FICA taxes. When I talked with our HR person about it, they didn't even know that there was a difference between paycheck deductions and ad hoc contributions, and is now looking into it. Guinness fucked around with this message at 17:53 on Mar 19, 2014 |
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Mar 19, 2014 17:49
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What's the difference between a roth 401k and a roth ira? Does that just mean you can get your roth ira contributions matched by the company?
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Mar 19, 2014 18:15
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