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I'm not sure if this is where I should ask this. A few years ago I stopped working for a company who had a retirement plan where we had accounts created for us at American Mutual and the employer would occasionally deposit money into the accounts. We got to choose two funds that these deposits would be allocated to. When I quit the company, I had approximately $35k in the account. I don't know what I can do with the money now. I still have the account, but the funds I chose (spur of the moment with very little help) have greatly under performed the S&P (tracked via Mint). Can I do anything with this money? It's just sitting there and I don't know if I should just leave it there or somehow transfer it somewhere else (can I do that?). Another question: My current employer has a 401k that matches 100% up to 15%, but it's matched in stock, not cash. I have it set to do the full 15%, but I don't like that it is matched in stock. Should I stay matching the full, or only do like 5% and put the money I would "save" elsewhere? Sorry, I'm not sure I've given all the information needed. Any advice would be great. I really have no idea how to reconcile these 2 accounts.
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Jul 15, 2014 04:08
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1) Contact them to rollover your old 401k(?) to Vanguard. If you are in a lower tax bracket, convert it to a Roth but remember you will need to pay taxes on it. 2) 15% match is insane, though the stock portion is less appealing. A couple of questions... Does your company stock yield dividends? Also, if they match with stock, can you convert to a different fund once it is vested?
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Jul 15, 2014 04:17
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Obsolete posted:Another question: My current employer has a 401k that matches 100% up to 15%, but it's matched in stock, not cash. I have it set to do the full 15%, but I don't like that it is matched in stock. Should I stay matching the full, or only do like 5% and put the money I would "save" elsewhere? If the company you work for isn't a secret, can you post the ticker or name? Depending on their performance that could be benefit of the decade or a loser. Ropes4u fucked around with this message at 04:41 on Jul 15, 2014 |
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Jul 15, 2014 04:25
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ETB posted:1) Contact them to rollover your old 401k(?) to Vanguard. If you are in a lower tax bracket, convert it to a Roth but remember you will need to pay taxes on it. 1. It's not a 401k as far as I know, just investments in individual funds. I've contacted the "fund manager" that set it up but never heard back. I can log into the account and see the funds, but there doesn't seem to be an exchange function or anything. Should I just contact American Funds directly? 2. I will find out the answer to your first question (off hand I believe we do get dividends). The stock vests after 5 years (I'm 2.5 years in). I've been told I can switch it out once I'm fully vested, or I leave the company.
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Jul 15, 2014 04:29
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Unless your new company has a really volatile stock, that 15% match sounds pretty solid, especially since you can swap the funds after 5 years (assuming you stay that long). And I would definitely just contact American Mutual directly and get the details.
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Jul 15, 2014 04:43
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How does a stock contribution work in a 401(k)? Can you just not sell the stock til you're 59.5? I only have access to a 457 so the whole world of "matching" is foreign to me 
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Jul 15, 2014 04:51
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What do you guys think about the riskiness of the bond market right now? Interest rates are low and the bond section of my portfolio is divided up like this: 50% VBTLX (Vanguard total bond) and 40% VWIUX (Vanguard intermediate term tax exempt) and 10% (Wesselley) I'm considering exchanging half of total bond into the Vanguard TIPS fund because of possible future inflation. I just don't know enough about bonds to gauge whether this is even worthwhile with the interest rates like they are today.
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Jul 15, 2014 05:28
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pig slut lisa posted:How does a stock contribution work in a 401(k)? Can you just not sell the stock til you're 59.5? Taking money out of a 401k early is not a good idea since it has extra tax penalties even though there special cases such as a hardship withdrawal. Once you reach retirement age 401k withdrawals are taxed at ordinary income rates, which is why the Roth IRA is attractive. Modus Operandi posted:What do you guys think about the riskiness of the bond market right now? Who knows, bonds if anything just serve as a useful hedge for a diversified portfolio. I consider muni bonds to be a good bet given the decent yield and also less historic defaults compared to the higher bond types like corporate. etalian fucked around with this message at 06:31 on Jul 15, 2014 |
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Jul 15, 2014 05:29
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Modus Operandi posted:I'm considering exchanging half of total bond into the Vanguard TIPS fund because of possible future inflation. I just don't know enough about bonds to gauge whether this is even worthwhile with the interest rates like they are today. This is the thread where we vehemently discourage timing the market. In other words, don't change your long term portfolio allocations in response to current market conditions.
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Jul 15, 2014 07:56
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etalian posted:Taking money out of a 401k early is not a good idea since it has extra tax penalties even though there special cases such as a hardship withdrawal. Yeah I get that. I'm asking more about how having a 401k partially in company stock works. Obsolete mentions being able to switch it when he's fully vested...does that mean it's essentially like a mutual fund he can't reallocate for a period of years?
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Jul 15, 2014 13:29
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A bit of a conundrum here: I'm able to max out Roth easily. As for the rest of my cash I have two options and I wanted some opinions. I'm able to pay down my mortgage a bit extra per month. It was 95% ltv; I'm in a very large college city with a good home market. Is paying down a bit extra + appreciation -> get appraisal -> get rid of PMI a good strategy in general? Or should I just invest the rest in more target fund but not roth or whatever? I have no debt outside of the house and a 0% interest TV purchase that I pay the minimum on (will be cleared before interest kicks in, solely to get a credit rating for the home loan in the first place).
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Jul 15, 2014 15:30
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Wozbo posted:mortgage and TV First pay off the TV, ugh. Then pay down the mortgage faster. 95% LTV is kind of dangerous because the value of the house can easily fluctuate a few percent due to whatever reason and if some poo poo hits the fan you can find yourself needing to sell but not having enough equity+cash to be able to. At least, that's my opinion 
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Jul 15, 2014 16:13
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I disagree. Take advantage of the 0% APR on the TV, so long as you don't accrue any payment interest. As for the mortgage, I'm in a similar situation. The PMI will automatically fall off at ~78% LTV, which doesn't require an appraisal. I'm gunning for that since the appraisal comes out of pocket and doesn't guarantee you'll get the LTV you need.
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Jul 15, 2014 16:44
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ETB posted:The PMI will automatically fall off at ~78% LTV, which doesn't require an appraisal.
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Jul 15, 2014 16:55
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pig slut lisa posted:Yeah I get that. I'm asking more about how having a 401k partially in company stock works. Obsolete mentions being able to switch it when he's fully vested...does that mean it's essentially like a mutual fund he can't reallocate for a period of years? To expand on this since I'm now at the office and can get the answers to some of this. My employer matches my contribution 100% up to 15%. The match is in stock, not cash. So, when I look at my 401k info, 50% is in cash, which is split into a preplanned "RetireView" thing that's allocated according to whatever funds correspond to this system. There's a couple Vanguard funds in there, for example. It's like 10 different funds this 50% is spread across. The other 50% of my 401k portfolio is stock. It's not allocated into anything aside from company stock. That stock vests 20% a year, becoming fully vested after 5 years. I was mistaken earlier, and it looks like I can start to transfer the matching funds from stock to another available investment fund. My third year will be in March so I'll be able to start hacking away at that 50% of my 401k portfolio being in company stock. There was also a question about dividends. Dividends are done quarterly and are reinvested into the account in the form of additional company stock.
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Jul 15, 2014 16:57
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Yeah, the TV thing was because I have 0 credit cards, never went into any debt, and owned my car outright (aka I had no credit score). It's ~ 5 months from being paid off, with like another year before the interest kicks in (ghost edit, I'm paying just a little bit more than minimum, enough to finish it out in 2 years instead of 3 when the interest kicks on). E: Looks like I'm currently 92% LTV on the house. Wozbo fucked around with this message at 17:04 on Jul 15, 2014 |
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Jul 15, 2014 17:00
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With regards to PMI, if you have an FHA loan, keep in mind that it's 78% LTV and 5 years. I bought my house in 2008, but refinanced in 2011. My mortgage guy says it's an and-condition for FHA loans and refinancing resets the stop watch on the 5 years. This $225/month payment can't drop off fast enough...
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Jul 15, 2014 17:06
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Naw, got a bog standard 30 year; I think I had a problem qualifying for the FHA/ I got a better rate on the 30 (couldn't remember which). It's a 4% rate though.
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Jul 15, 2014 17:08
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Henrik Zetterberg posted:With regards to PMI, if you have an FHA loan, keep in mind that it's 78% LTV and 5 years. Actually now, I believe on new 30 year FHA loans the PMI is permanent for the life of the loan. On 15 year I think it cancels once the amortization schedule hits 78% LTV.
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Jul 15, 2014 17:14
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Yeah the insurance on FHA loans sucks a lot more now. I had the same experience, FHA cost a lot more than just getting a regular mortgage no matter how I sliced it.
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Jul 15, 2014 17:27
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flowinprose posted:Actually now, I believe on new 30 year FHA loans the PMI is permanent for the life of the loan. Holy poo poo, what a scam.
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Jul 15, 2014 18:02
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As far as I can tell, the changes they made to FHA loans have ruined them. IMO just save the downpayment for a traditional mortgage.
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Jul 15, 2014 18:10
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Henrik Zetterberg posted:Holy poo poo, what a scam. Well, the PMI is cheaper per month now that you are locked into it for life. But yeah, in general FHA loans are your "loans of last resort" and aimed at people who can't get a loan in the normal fashion. Just build up a 20% downpayment and get a regular loan and be far happier. I think HUD would be happy if FHA loans dropped to 0 so its not like they are heavily incentivized to subsidize the process above and beyond what they already do. Vilgan fucked around with this message at 19:15 on Jul 15, 2014 |
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Jul 15, 2014 18:11
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etalian posted:financial planner planners usually charge around 1 to 3 percent of the total account worth to manage money. I would already be the moving the accounts to Vanguard however it's not my money or right. I'm going to be made a co-trustee because of worries she but even then I can only advise because it's not mine. I do need to start learning though because life will happen my dad passed competely unexpected I no longer take anything for granted when it comes to what may happen in the future.
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Jul 15, 2014 18:51
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DropsySufferer posted:I would already be the moving the accounts to Vanguard however it's not my money or right. I'm going to be made a co-trustee because of worries she but even then I can only advise because it's not mine. I do need to start learning though because life will happen my dad passed competely unexpected I no longer take anything for granted when it comes to what may happen in the future. I can't make sense of any of what you just wrote.
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Jul 15, 2014 19:07
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I am right now refinancing to get out of my FHA loan and into a conventional one, specifically to get rid of my MIP (which is what PMI is called when it's FHA). My FHA loan is from before the recent switch, so the deal was 78%LTV with a minimum of five years. The problem though, is that with an FHA loan you can't just get an appraisal and use that to establish your LTV. So, if you prepay or if your home's value rises (the latter in my case), you refinance into a loan that has no PMI to begin with. Of course this could mean accepting a higher interest rate, which is what I'm doing - my FHA loan was at 3.25%, my new loan is 4.325%. So calculating whether or not it's worth it is complicated. You are paying an up-front cost for a refi, to get rid of a monthly insurance premium, but accepting a higher APR, and also of course resetting the loan (30 years in my case). Exactly when I plan to sell (if at all) determines whether I should do the refi or not. In my case, I do not expect to sell in the next five years (so I will accumulate enough savings from not paying MIP to offset the cost of the refi), but I do expect to sell in the 10-15 year time frame (so, before the higher interest payments due to the increase in APR offset the savings from getting rid of the MIP). pig slut lisa posted:How does a stock contribution work in a 401(k)? Can you just not sell the stock til you're 59.5? A 401(k) (and a 457) is an account. You could have stocks, bonds, mutual funds, or just cash in one. Presumably this guy has the ability to sell the stock and use the proceeds to invest in whatever other investment options are available in his 401(k); this would not be a withdrawal and would have no tax consequence. Depending on the rules of the particular 401(k), there might be additional restrictions. In this case, he's got a vesting period, so the stock isn't actually his until he fully vests. That sucks somewhat because it means the stock could lose value, and (for example) if the company goes bust, the stock presumably goes to zero at the same time he's suddenly unemployed. That's why it's usually recommended in this thread not to keep a significant amount of money in your own employer's stock: you're already exposed to a lot of risk from that particular company, so increasing your exposure might not be a great idea. If you leave your employer, you can convert your 401(k) to an IRA. If you go from a regular (non-Roth) 401(k) to a Roth IRA, you have to pay taxes. If you have a Roth 401(k), you convert it to a Roth IRA and there's no taxes, and you can convert a regular 401(k) to a traditional IRA and pay no taxes. The IRA is great because you get to choose the financial institution you keep your IRA at, which effectively means you get to choose any drat investment you want. We like to recommend Vanguard in this thread because they have some of the lowest-cost (in terms of expenses) funds available. Vilgan posted:Well, the PMI is cheaper per month now that you are locked into it for life. During the mortgage crisis, FHA loans were a fantastic deal because you could pay as little as 3.5% down, and the MIP (which includes both an up-front premium (which you can opt to roll into the principal on the loan) and a monthly premium) was much cheaper than the PMI you'd have to pay with a conventional mortgage. Congress has been dicking with the rules regularly, though, out of concern for how much debt Freddie/Fannie was accumulating. Their explicit goal has been to reduce the attractiveness of FHA loans. They are still used if someone absolutely can't come up with more than the minimum down payment, because you basically can't get a regular loan with only 3.5% down payment, but if you are going to stay in your loan for 30 years, paying the MIP adds up to a huge amount of money. And as I said, you can get out of it only by refinancing, which costs money up front and may mean winding up in a worse interest rate. In 2009, something like 75% of all new mortgages were FHA loans (and a similar percentage of homes sold were foreclosures). Now, it's a much smaller percentage, like 5% or 10% or something (and the foreclosures are mostly done). Having said all that: I do not think the qualification rules for an FHA loan are worse than those for a conventional loan. At the very least I do not think FHA does subprime loans. So it's wrong to characterize FHA as a "loan of last resort" for people who can't qualify: it's for people who can't (or don't want to) pay a larger down payment, irrespective of their credit. You are correct that the current sentiment of HUD and the Congress is to discourage accumulating a lot more FHA-underwritten loans. Wozbo posted:Naw, got a bog standard 30 year; I think I had a problem qualifying for the FHA/ I got a better rate on the 30 (couldn't remember which). It's a 4% rate though. This is another good point. FHA can actually be more strict with its qualifications; they also have restrictions on the condition of the home you buy. For example, we were not even allowed to put in an offer on a particular house becuase it was missing a stove, and FHA requires that any home you buy has to be in "move-in condition" meaning all appliances there. We would have had to basically buy a stove and put it in a house we didn't own (it was bank-owned) in order for it to pass the FHA inspection during qualification. Wozbo: if your loan is at 4%, a refi is probably not going to run up that APR much. I assume you feel your LTV has improved not only because of paying down principal, but also because of your home's appreciation in value? If the latter, where are you getting valuation from - Zillow Zestimate, comps, something else? It might well be worth refinancing if you can get above 80% LTV. You'll have to consider the up-front cost of the appraisal and refi, vs. the remaining cost of the PMI, and consider your time frame if you might sell. Those numbers will determine whether it's worth it. By the way, this discussion is common in the BFC Housebuying thread.
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Jul 15, 2014 23:40
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Hi guys, can I get a quick sanity check on how I'm handling my retirement saving? I'm currently 27 and have ~$100k in my roth 401k. I'm basically dumping everything I can into it because of my employer's ridiculous contribution match (50%). I feel like I'm doing pretty well here but I'm not sure how to quantify this stuff. I don't currently have an IRA like the OP suggests; since maxing out my employer contribution is equivalent to making out my annual 401k contribution to begin with I'm dumping everything I can in that direction. In terms of portfolio, I'm essentially split evenly among VBMPX, VWIAX, VEMPX, and VTPSX. This has been doing pretty well for me so far (~15% over 3 years) but I'd love to hear opinions about how horribly risky I'm being or whatever. Basically, 1. Am I doing OK? 2. Should I also open an IRA? Obviously more saving is better but should I save more or focus on working down student loan debt?
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Jul 16, 2014 02:32
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Thanks for the  of explanation, Obsolete and Leperflesh
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Jul 16, 2014 04:08
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Mr. Glass posted:Basically, 1. You're doing wonderfully, massively ahead of most of your peers. 2. Probably. Depends on how crippling your student loan debt is. It doesn't look too bad if you've managed to sock away 6 figures at 27, but if the interest rate is above 5-6% you should definitely be attacking that. Personally I'd open an IRA and contribute what I could to that after hitting student loans above minimums.
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Jul 16, 2014 06:10
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There's always the satisfaction of not having student loans, so it may be psychologically beneficial for you in the long haul to pay them off first. But yeah, your company is matching 50% of your contributions? That's insane.
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Jul 16, 2014 06:26
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Obsolete posted:I'm not sure if this is where I should ask this. Is the new company Chesapeake?
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Jul 16, 2014 09:10
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Leperflesh posted:Wozbo: if your loan is at 4%, a refi is probably not going to run up that APR much. I assume you feel your LTV has improved not only because of paying down principal, but also because of your home's appreciation in value? If the latter, where are you getting valuation from - Zillow Zestimate, comps, something else? 2 things really: Market and home improvements of the actually making it better variety (fixed up the lawn so that its actually green/ not all weeds, landscaped around the house proper w/ mulch and everything, finished the garage, weatherproof painted it, put up pegboards. Stuff that just want there and now is. I'm thinking (/hoping) that both together makes my house look a lot better in the eyes of an appraiser (but I'm not sure, hence me coming in here to ask).
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Jul 16, 2014 13:20
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DukAmok posted:1. You're doing wonderfully, massively ahead of most of your peers. Being ahead of my peers isn't saying much since most of my peers are saving nothing/very little. it's hard to get a feel for whether I'm actually on track or not since the first thing anyone tells me is how much better I am about saving than anyone else in my age group.  The student loan debt certainly isn't crippling, but some of the rates are insanely high (my wife took out several private student loans). I think the worst is 9%. We're going to be tackling those this year since we've mostly just been paying the minimums on those. The only other debt we have is a ~120k mortgage and a few grand left on a 4-year auto loan we took out in order to build up our credit a bit. No credit card debt or anything. I see both of these as "good" debt and I'm not as concerned about paying these down early/fast. My personal goal is to be student loan debt free by 30, but I'm not sure how realistic that is.
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Jul 16, 2014 14:57
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Mr. Glass posted:Being ahead of my peers isn't saying much since most of my peers are saving nothing/very little. it's hard to get a feel for whether I'm actually on track or not since the first thing anyone tells me is how much better I am about saving than anyone else in my age group. I posted this on the last page, but it bears repeating: a couple years ago, Fidelity posted some rough guidelines on how much you should have saved at different points in your life. Your personal "on track" numbers may vary a little from that based on your goals and expectations, but with $100K at 27, unless you're somehow making and spending $200K/year or something, I think you're doing just fine. E: Yes, definitely kill that 9% student loan, and probably any others as well. Your 401K match is going to beat that return up-front, but 9% will offset a whole lot of market gains until you can get rid of it. Cassius Belli fucked around with this message at 15:20 on Jul 16, 2014 |
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Jul 16, 2014 15:15
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Yond Cassius posted:I posted this on the last page, but it bears repeating: a couple years ago, Fidelity posted some rough guidelines on how much you should have saved at different points in your life. Your personal "on track" numbers may vary a little from that based on your goals and expectations, but with $100K at 27, unless you're somehow making and spending $200K/year or something, I think you're doing just fine. Oh. Wow, I'm definitely on track (or better) then. Thanks for the link.
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Jul 16, 2014 15:24
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Mr. Glass posted:Oh. Wow, I'm definitely on track (or better) then. Thanks for the link. You might be on track, but it's up to you to think if that's good enough for the lifestyle you want to be able to enjoy at a later date. How much do you earn? How much do you spend? Do you have any dependants (this will affect the 'how much you spend' question when the answer becomes 'yes')? Will you want to buy a house at some point? Everything is relative, you can use a chart like that as a point to work from, but everyone has their own circumstances.
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Jul 16, 2014 15:30
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Yeah, if you're set on really getting ahead and possibly hitting financial independence early, I would work from a chart like Financial Samurai's instead: http://www.financialsamurai.com/how-much-should-one-have-in-their-401k-at-different-ages/
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Jul 16, 2014 15:36
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any thoughts on my portfolio? it's a 401k so my options are limited; am I being an idiot by choosing funds myself instead of just using Vanguard's retirement target fund?
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Jul 16, 2014 15:46
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Mr. Glass posted:Being ahead of my peers isn't saying much since most of my peers are saving nothing/very little. it's hard to get a feel for whether I'm actually on track or not since the first thing anyone tells me is how much better I am about saving than anyone else in my age group. Posted recently, Fidelity suggests 0.5x salary (household of course) by age 30. I think that is less than it should be - but makes me happy cuz I'll be there and I'm a late career starter. I'm guessing most people really want a fair bit more than 8x their income, somewhere around 25x is the point at which you can withdraw without impacting principle. Market returns make that number lower than 25x, though Fake edit: looks like I should have read the rest of the thread before writing a post  I think it's time you Excel'd out a plan to be non home loan debt free by 30. I bet you can do it if you've been putting 15-20k/yr toward retirement. Then get back on the retirement track. I'd really clear that debt if I were you.
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Jul 16, 2014 15:54
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SiGmA_X posted:I think it's time you Excel'd out a plan to be non home loan debt free by 30. I bet you can do it if you've been putting 15-20k/yr toward retirement. Then get back on the retirement track. I'd really clear that debt if I were you. Yes, I think I should have tackled that before buying a house, but what's done is done. Ideally I would like to stay on the retirement track while killing the student loans due to the aforementioned employer match; with some slight lifestyle tweaks I think it's doable.
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Jul 16, 2014 16:12
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