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EugeneJ posted:You can lease a new Smart Fortwo for $99/month if you don't mind a Smart Car. Yeah, but then you're leasing a base model Smart car. The real problems are that you can't analyze something as complex as transportation in a one-variable linear model, and that if you do try to boil it down to a single input, income is a pretty bad choice. It makes a lot more sense to split transportation costs into "necessity" and "luxury" components, and then look at what level of luxury you want and can sustain once all your necessities (including savings!) are taken care of.
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Jul 19, 2014 19:35
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Space Gopher posted:Yeah, but then you're leasing a base model Smart car. Agreed. I mean think about it: the overwhelming majority of people that make around $40k don't exactly have $4k in cash to spend on a car. Most people are living paycheck to paycheck and don't have quick access to that much cash. You can finance a car and still live within your means, even if it goes beyond the 10% rule. OK, derail over. What funds do people use for their Roth IRAs? My 401k is in a Vanguard targeted retirement fund. Any shame in putting my Roth funds there too, or should I put it someplace else, like a Vanguard index fund?
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Jul 20, 2014 00:12
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Omne posted:What funds do people use for their Roth IRAs? My 401k is in a Vanguard targeted retirement fund. Any shame in putting my Roth funds there too, or should I put it someplace else, like a Vanguard index fund? Vanguard retirement funds are pretty decent overall when you look at things such as tracking error, the fund also pays a decent 1.79 percent dividend and is also low expense ratio. for the actual composition:  If you want to make your own mix go for ETFs that cover US markets(VTI), foreign developed world(VEU), emerging market(VWO), US REITs(VNQ) and finally intermediate US corporate/emerging world bonds. etalian fucked around with this message at 04:32 on Jul 20, 2014 |
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Jul 20, 2014 04:28
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Omne posted:Agreed. I mean think about it: the overwhelming majority of people that make around $40k don't exactly have $4k in cash to spend on a car. Meh, 40k is plenty to have cash on the side unless you are a single earner supporting a wife and 2 kids or something. I live in one of the higher COL cities in the US (Seattle) and expenses are easily under 25k a year. When I had a lower paying job (albeit in a cheaper city) making around 30k a year I saved roughly 8k of that per year. Taxes are really small when your income is low :p Omne posted:What funds do people use for their Roth IRAs? My 401k is in a Vanguard targeted retirement fund. Any shame in putting my Roth funds there too, or should I put it someplace else, like a Vanguard index fund? I think just throwing it all in target date funds are fine until you save up enough that the lack of admiral is relevant. Reevaluate in a couple years when you've got 20k in your Roth (imo) Vilgan fucked around with this message at 04:34 on Jul 20, 2014 |
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Jul 20, 2014 04:31
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I'm 24 years old, no debt whatsoever, fairly minimal recurring expenses, pretty high-paying job, and I want to start saving as aggressively as possible while this set of circumstances holds. I opened up a vanguard account a month ago, because I realized that I was making quite a bit more money than I was spending and didn't want to let the excess sit around in my checking account. I created a Roth IRA, picked the Vanguard LifeStrategy Growth Fund basically arbitrarily and put 4k into it. I realized recently that I make just slightly more than the $114k limit on yearly Roth IRA contributions (I'm over that threshold by less than a thousand dollars). I haven't sat down and calculated exactly how much less than 5.5k I can put into it this year and avoid the tax penalty, but I'm sure 4k is much less than it. Still, is the fact that I'm already slightly above the income threshold where the contribution limit starts going down a sign that I should be looking into a traditional rather than a Roth IRA? And how should I decide what the best funds to put in the IRA are? I picked the LifeStrategy Growth Fund basically arbitrarily, with the idea that it didn't matter a whole lot which particular fund I picked because I'm planning on touching the money for 40 years, and for the same reason I might as well pick one with a high risk, which VASGX is. Is that a stupid way of thinking about it, or should I be trying to micromanage exactly which funds I'm in more carefully?
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Jul 20, 2014 08:38
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Hyper-Urho-Kekkonen posted:I'm 24 years old, no debt whatsoever, fairly minimal recurring expenses, pretty high-paying job, and I want to start saving as aggressively as possible while this set of circumstances holds. I opened up a vanguard account a month ago, because I realized that I was making quite a bit more money than I was spending and didn't want to let the excess sit around in my checking account. I created a Roth IRA, picked the Vanguard LifeStrategy Growth Fund basically arbitrarily and put 4k into it. I realized recently that I make just slightly more than the $114k limit on yearly Roth IRA contributions (I'm over that threshold by less than a thousand dollars). I haven't sat down and calculated exactly how much less than 5.5k I can put into it this year and avoid the tax penalty, but I'm sure 4k is much less than it. Still, is the fact that I'm already slightly above the income threshold where the contribution limit starts going down a sign that I should be looking into a traditional rather than a Roth IRA? And how should I decide what the best funds to put in the IRA are? I picked the LifeStrategy Growth Fund basically arbitrarily, with the idea that it didn't matter a whole lot which particular fund I picked because I'm planning on touching the money for 40 years, and for the same reason I might as well pick one with a high risk, which VASGX is. Is that a stupid way of thinking about it, or should I be trying to micromanage exactly which funds I'm in more carefully?
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Jul 20, 2014 10:06
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SiGmA_X posted:Do you have a work sponsored 401k? Yes, through JP Morgan, it matches at 4.5 percent. I started contributing at 4.5% as soon as I had access to it, and raised my contribution to 10% a month ago when I decided I wanted to be more serious about saving money. Actually, my current 401k investment mix is something that I also decided on pretty arbitrarily - the JP morgan site had an automatic portfolio advice tool and I set the fund allocation percentages to what that told me (heavy on stocks, light on bonds). I haven't micromanaged the fund percentages beyond that, and I'm not sure if that's something that's worth it to do at this point.
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Jul 20, 2014 10:30
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Hyper-Urho-Kekkonen posted:I'm 24 years old, no debt whatsoever, fairly minimal recurring expenses, pretty high-paying job, and I want to start saving as aggressively as possible while this set of circumstances holds. I opened up a vanguard account a month ago, because I realized that I was making quite a bit more money than I was spending and didn't want to let the excess sit around in my checking account. I created a Roth IRA, picked the Vanguard LifeStrategy Growth Fund basically arbitrarily and put 4k into it. I realized recently that I make just slightly more than the $114k limit on yearly Roth IRA contributions (I'm over that threshold by less than a thousand dollars). I haven't sat down and calculated exactly how much less than 5.5k I can put into it this year and avoid the tax penalty, but I'm sure 4k is much less than it. Still, is the fact that I'm already slightly above the income threshold where the contribution limit starts going down a sign that I should be looking into a traditional rather than a Roth IRA? And how should I decide what the best funds to put in the IRA are? I picked the LifeStrategy Growth Fund basically arbitrarily, with the idea that it didn't matter a whole lot which particular fund I picked because I'm planning on touching the money for 40 years, and for the same reason I might as well pick one with a high risk, which VASGX is. Is that a stupid way of thinking about it, or should I be trying to micromanage exactly which funds I'm in more carefully? If you have a retirement account through work, the income maximum is actually much lower for a Traditional IRA than it is for a Roth IRA. http://www.irs.gov/Retirement-Plans...nt-Plan-at-Work You do not qualify to deduct for a traditional IRA. You can still open one but since it is not tax-advantaged in any way, it is pretty sucky. That said, you say you make slightly more than the Roth IRA limit but is that gross or modified/adjusted? Roth IRA income limit uses the latter. If you're only slightly over gross, I would be surprised if your modified AGI wasn't eligible. For instance, contributions to your 401k adjust your AGI down. Here is the least crappy explanation of stuff that affects your AGI I could find with two minutes of google searching https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/What-Is-the-Difference-Between-AGI-and-MAGI-on-Your-Taxes-/INF22699.html
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Jul 20, 2014 12:57
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Hyper-Urho-Kekkonen posted:Yes, through JP Morgan, it matches at 4.5 percent. I started contributing at 4.5% as soon as I had access to it, and raised my contribution to 10% a month ago when I decided I wanted to be more serious about saving money. Just raise your 401k contributions so that your AGI will be less than the Roth income limit.
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Jul 20, 2014 15:44
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Found out just on Friday both that my fiancee is getting a new job that pays much better and I'm getting a significantly higher pay raise this year than usual. I'll be saving well over 40% of my gross pay now, and she'll be saving over 30% of hers(2 maxed out IRAs, 1 maxed out 401k, and a shitton in savings each month). So I'll have reached the endgame of the steps in the OP after gradually starting from putting 5% in my 401k in January of 2013  In the near future maybe I'll start a
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Jul 20, 2014 18:59
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From a bit ago, I got my old employer's SEP-IRA switched over to Vanguard where I can more closely manage it myself. If I'm reading these recent comments correctly, it would still be worth it to convert from a SEP to a Roth, even if my wife and I have a combined salary above the AGI limit (we don't, but we probably will within the next 5 years or so). If somehow we were to be over the income limit for full Roth contribution, we could switch to maxing out the 401k first, which would let us keep fully contributing to a Roth by using the calculation of AGI. Is that right? Finally, converting from SEP to Roth obviously means I'd have to pay taxes. Any tips to doing that? I don't love the idea of just handing over 25% of the IRAs worth all in one go, and I'd rather not take it out of the current IRA funds. Is the answer just "suck it up and pay it - because it's worth it in the long run?"
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Jul 20, 2014 23:21
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Obsolete posted:From a bit ago, I got my old employer's SEP-IRA switched over to Vanguard where I can more closely manage it myself. Well the backdoor Roth sneaky trick only works good if you have minimal vanilla IRA assets. If you have a big IRA balance it's not as attractive due the way the conversion tax is calculated.
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Jul 21, 2014 01:03
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I've had a large sum of money sitting in a savings account since January. Normally I'd put it into something higher yield and higher risk, but: 1) I'm a terrible investor and I have no interest in the subject 2) Since I don't want to pick individual stocks and funds, I'd just put it into an index, but I'm terrified that the stock market is extremely overvalued and destined for a nosedive 3) The housing market in my area (SF Bay) is also extremely overvalued Doing my own research so far has been difficult because of the amount of fear-mongering and general blog spam that exists out there. I think the heart of the issue is really this: It seems crazy to me to follow the "automatically invest in an index on a regular schedule" when the stock market is at record highs. Or do I just not understand index investing?
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Jul 21, 2014 06:13
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Hog Obituary posted:I think the heart of the issue is really this: A growing market is frequently at all-time highs, that's the definition of growth. Yes there are ups and downs, sometimes significant, but in the long run the market grows. You can't time the highs and lows.
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Jul 21, 2014 06:20
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How far would the market have to fall for you, a self-described terrible investor, to be confident that you had optimally timed the market for buy-in?
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Jul 21, 2014 06:21
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pig slut lisa posted:How far would the market have to fall for you, a self-described terrible investor, to be confident that you had optimally timed the market for buy-in?  I hope it's obvious that I'm not making any claim of being able to optimally time the market. If I google for things like "stock market bubble 2014" I get a bunch of articles with graphs showing how today is exactly the same as Summer 2007.  So yes, they are fear mongering, but yes, it's working. I think my perception is also distorted by the local housing market which also has the appearance of a bubble... as does the local tech job market.
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Jul 21, 2014 06:50
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Hog Obituary posted:I've had a large sum of money sitting in a savings account since January. Normally I'd put it into something higher yield and higher risk So your current portfolio is 100% cash that is (I presume) in FDIC insured accounts. Some examples of portfolios that would be higher yield and higher risk: 50% cash, 35% bond index fund, 15% stock index fund 50% bond index fund, 50% stock index fund 100% stock index fund In other words there's a spectrum, you don't have to dump the whole thing in the stock market. What you do have to do is detach mentally from the year-to-year performance of your portfolio, because the only thing that's important is keeping the ratios where you want them to get your desired compromise between risk and expected return. Time horizon plays a role too. How long will it be before you want that money for something?
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Jul 21, 2014 07:04
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It's crazy how much of investment/retirement planning is tax planning.
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Jul 21, 2014 07:07
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slap me silly posted:So your current portfolio is 100% cash that is (I presume) in FDIC insured accounts. Some examples of portfolios that would be higher yield and higher risk: Thanks. I mostly understand these things. I think I need to get over the feeling of "wait! but we were just year a few years ago! don't you remember?" My assets are: 50% cash 15% etrade (80% US stocks, 20% bonds) 35% 401k (mostly Vanguard Target 2040 and 2050) no debt, no property, single, 30 yrs old I've been considering buying property for a while, but I'm too fickle, fussy, and gun-shy to get on with it. Also the whole "real estate is not an investment" thing that's been thrown around since '09. So yeah, maybe I want that cash to be available as a down payment? I dunno. Maybe there's a 5-year horizon? Does something like this seem reasonable? https://investor.vanguard.com/mutual-funds/lifestrategy/#/mini/fees/0724 I'm pretty close to walking into a big bank and handing it all over to them just so I can blame somebody else when it tanks. :P
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Jul 21, 2014 07:41
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Hog Obituary posted:I dunno, that's why I'm asking for financial advice on something awful dot com. Read A Random Walk Down Wall Street. Yes the market will eventually crash. But charts mean nothing and plenty of "experts" said we were due for a 10% drop/correction in 2013 and it was a banner year instead. You can't time the market.
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Jul 21, 2014 11:34
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Hog Obituary posted:I'm pretty close to walking into a big bank and handing it all over to them just so I can blame somebody else when it tanks. :P If you really want someone else to manage your money there are probably options in SF. IMHO Real estate is still an investment just not a good only investment.
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Jul 21, 2014 12:22
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Hog Obituary posted:no debt, no property, single, 30 yrs old I guess one issue I'm seeing is you're asking a lot of "should I do ____" without any, "well eventually I want to accomplish _____." If you don't actually know what your goals are, no one can really help you. Like, "Maybe I should buy a house?" is not a good question if you have no idea why you would even want one. Like hey, if you want to hole up in a bomb shelter and live on 3k a year, who says you can't "retire on cash"? (You probably still can't but HYPERBOLE.) Buying in the SF Bay Area is a pretty huge commitment in terms of cost as well as, if you do, you are just stuck for a long time. You say you think the tech jobs there is a bubble, why would you buy in a place you are semi-convinced won't even have good jobs? Also, are you going to buy assuming your potential future spouse and children will be okay with the choice you made before you met them? These are the questions to ask yourself. Not, "Maybe I should do ___ because other people are doing it." As for investing advice, if you are investing for the long-term (think 20+ years) for retirement, timing the market is just not something you can do. Sure things are high now... but assuming markets behave the same as they always have, in the long-term horizon they will be higher still. If, however, you are thinking of parking some money for 5 or fewer years, that is not long enough to really take advantage of how the markets behave with time so don't park them in risky investments: cash, bonds, just plain old savings account would probably be better.
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Jul 21, 2014 12:23
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Hog Obituary posted:I dunno, that's why I'm asking for financial advice on something awful dot com. I snark because I love. I agree with Nail Rat and ExtrudeAlongCurve in that timing the market is something that simply cannot be done. Is there a market crash coming sometime in the relatively near-term future (like within a few years)? I'd say the odds are pretty good. But is it gonna start today or in three months or six months or eighteen months? Well that's a lot less certain. So yes you could hold out now and protect yourself against losses if the market tanks immediately, or you could hold out now and miss a massive run-up over the next 12 months. Maybe you would be comfortable with setting up a modest monthly purchase for now and then increasing it if/when prices tumble. That could serve as a hedge against being wiped out by a near-term massive market drop, although again, we have no idea when a drop will happen and you would also be limiting your future potential returns. As for the real estate thing, there are reasons to buy or not buy, but I'd avoid comparing that pricing behavior to the stock market. The SF housing market's price explosion isn't a bubble so much as the logical outcome of an incredible supply/demand balance. SF refuses to let more than a handful of new housing units to be built within its borders, despite massive demand by people who want to move to the city. It's not really a speculation fueled market like stocks can be, nor is it the same dynamic that was present across much of the country's housing markets in '06-'08.
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Jul 21, 2014 13:07
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Given how often market timing questions come up, this link should probably be in the OP: http://awealthofcommonsense.com/worlds-worst-market-timer/
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Jul 21, 2014 14:47
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Vilgan posted:Given how often market timing questions come up, this link should probably be in the OP: I hadn't heard that hypothetical case study before, it's a very powerful illustration.
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Jul 21, 2014 14:52
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Thanks. I like this example and find it understandable. ExtrudeAlongCurve posted:I guess one issue I'm seeing is you're asking a lot of "should I do ____" without any, "well eventually I want to accomplish _____." If you don't actually know what your goals are, no one can really help you. everyone posted:you can't time the market  I don't know if I'll need this money sooner. I think this is the core issue. The remaining uninvested cash that I have is not necessarily for retirement. If I do want to buy a home, I'll need it for a down payment.For what it's worth, I believe my 401k is generally following the BFC-approved strategy. I don't know what y'alls opinion is of target-date retirement funds over straight-index, but I'm comfortable with it. So let's try to solidify things a little bit: I think there is a high chance that I will remain in California for a long time. I think there is a high chance that I will be married within 5 years. I think there is a high chance that I will buy a home after getting married. Now, I can buy a home today. I can buy a condo, live in it for 7 years, and sell it. I can buy a condo, live in it while continuing to save, and then keep it as rental income source when my future spouse is ready to buy a house. I can also say "home buying is for chumps" and rent for the rest of my life. I don't know. If I was certain of that, then it actually seems reasonable to put my cash into an index fund today. Perhaps the calculus here is "what percentage of this cash am I willing to lose entirely?" and invest only that much. In the meantime, is the remainder better off in a savings account or in bonds? I don't understand bonds. I just buy them because I thought that's what you're supposed to do. I only know that they are the "safer" investment over stocks. When is it smart to buy bonds over CDs?
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Jul 21, 2014 16:25
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Home buying eventually makes sense for a lot of people, but the less you put down, the worse a deal it is. If you can buy a place that's in good shape for cash or at least with a large percentage down, it's where you want to be and the size you need for 10+ years, and you have a number of handyman skills that will keep five dollar jobs from turning into $200 ones, it makes sense. That's rarely most people early on in their lives though. Also as far as "real estate as an investment" - it's not an investment if you're living there, because you can't count on prices going up or not going down, and over time they do not necessarily beat inflation the way the stock market always has(again, over time). You can look at a house as being like owning stock in an individual company; it may stay the same, get better, or get worse, and it crash completely without any hope to get better. However, it is an investment if you buy it for real estate, because it pays a dividend that, if you get a good property and price it properly, can pay for itself in a decade or less and then be pure profit. Nail Rat fucked around with this message at 18:21 on Jul 21, 2014 |
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Jul 21, 2014 16:33
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Hog Obituary posted:
The short-term of markets is the unpredictable part. We're all assuming that the long-term of the market is fully predictable (and our prediction is it will go up). That's why it is important, rather than futile, to know whether you will be investing this money for a long time (which will keep it safe from the dangers of the unpredictable short term). The most important parts of investing are having a plan, and spending time in the market.
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Jul 21, 2014 18:14
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GoGoGadgetChris posted:The short-term of markets is the unpredictable part. We're all assuming that the long-term of the market is fully predictable (and our prediction is it will go up). That's why it is important, rather than futile, to know whether you will be investing this money for a long time (which will keep it safe from the dangers of the unpredictable short term). This. Hog Obituary posted:Perhaps the calculus here is "what percentage of this cash am I willing to lose entirely?" and invest only that much. In the meantime, is the remainder better off in a savings account or in bonds? It sounds like you will need your money at least somewhat liquid because your question has to do with money that is probably earmarked for a down-payment in 5-ish years. In which case, CD vs. Bonds (bonds themselves mind you, not a bonds fund which is an investment and not guaranteed), one is not inherently better than the other. Shop around for rates and time. Both will be "stick money in here for some amount of time for guaranteed growth" and how much you get depends on what rates are and how long you're willing to park it. Bonds are more transferable, CD's you are mostly stuck with. So I think CD's tend to have slightly better rates (note rates are dogshit right now no matter what). Basically: Is there a chance you need the cash NOW? Park it in a savings account. Can you definitely stand to be apart from the cash for a few years and want SLIGHTLY better returns than a savings account? Get a CD or buy bonds.
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Jul 21, 2014 18:26
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I played with Vanguard's online portfolio-matic thing and it gave me this: My input was that I want to withdraw the money in 3-5 years and I want it at once. I have "medium" risk tolerance (the example was for 1-year I'd be willing to lose 10% or gain 20%). code:Also I don't fully understand the advice against bond funds versus buying the bonds myself. Do the bond funds allow much more liquidity? Is it just the fact that they are not guaranteed the way a bond itself would be?
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Jul 21, 2014 20:57
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If you can basically count on a year-end bonus of some indeterminate size, and you've already maxed out your 401k contributions for the year after 24 bi-monthly paychecks, do you just miss out on the employer match from a bonus 401k contribution? I know that's first world problems and all, but I hadn't really seen this mentioned anywhere and googling doesn't turn anything up, but I'm guessing the standard company policy would be to not provide a match on that bonus as you haven't contributed from it.
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Jul 21, 2014 21:26
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Hog Obituary posted:I played with Vanguard's online portfolio-matic thing and it gave me this: Okay now I'm confused again. I thought your question was, "I have a bundle of money not doing anything but I'm going to want access to it before too long. Don't worry, I already have retirement investment accounts with allocations I like etc. etc." Because I was under that impression, thereby the advice is, "Don't invest your bundle of money if you want to just grab it within 5 years." Bond funds go up and down in value, buying a bond is literally buying a note from the government (or from municipal etc.) that says, "In ___ years this will keep collecting ___ interest." The advice was not, "Invest it in ___," the advice was "don't invest it in anything that might go down because within 5 years, it could all tank." The idea is, don't gamble the market with money you might need soon. Advice would be completely different if you want to park it for longer than that. Does that make more sense? EDIT: if you want to park it somewhere more risky and take that chance, that's a personal choice and no one can stop you. It's just not what I would do. Nail Rat posted:If you can basically count on a year-end bonus of some indeterminate size, and you've already maxed out your 401k contributions for the year after 24 bi-monthly paychecks, do you just miss out on the employer match from a bonus 401k contribution? Yeah I believe so. Based on what I could tell from personal paystubs, employer is not going to match anything if you're not putting anything in. And when you are maxed, you can't put anything in. vvvvv Did not know that, thanks for the info! ExtrudeAlongCurve fucked around with this message at 22:06 on Jul 21, 2014 |
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Jul 21, 2014 21:39
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Nail Rat posted:If you can basically count on a year-end bonus of some indeterminate size, and you've already maxed out your 401k contributions for the year after 24 bi-monthly paychecks, do you just miss out on the employer match from a bonus 401k contribution? Generally yes, you'll lose out. However, if they allow after-tax contributions you can do that and still get the match. Note: After-tax is a 3rd type of contribution, it is not Roth and it is not pre-tax. The only two times it makes sense is if you are planning to roll it over into a Roth IRA or if your employer has a match but you've already hit your 17,500 limit. You can contribute to after-tax until you hit ~52k in total 401k contributions (the 17,500 and all employer matching funds count towards this 52k limit).
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Jul 21, 2014 21:50
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Hog Obituary posted:Also I don't fully understand the advice against bond funds versus buying the bonds myself. Do the bond funds allow much more liquidity? Is it just the fact that they are not guaranteed the way a bond itself would be? Always use ETFs since you at least at least have more diversity, for example a Muni bond ETF would consist of debt from multiple US states instead of putting all the eggs in one basket. On the flip side things like interest rates and other factors means even a diversified bond fund could still crash in a bad way.
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Jul 21, 2014 23:24
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4 Pillars suggest that if you reside in a state where you get bonds from, you may not have to pay state income tax on it, only federal. So there are advantages to not buying them from multiple states.
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Jul 21, 2014 23:28
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ExtrudeAlongCurve posted:Okay now I'm confused again. I thought your question was, "I have a bundle of money not doing anything but I'm going to want access to it before too long. Don't worry, I already have retirement investment accounts with allocations I like etc. etc." I think we are both understanding each other and we're in the same ballpark somewheres, but not exactly on the same page. quote:"I have a bundle of money not doing anything but I'm going to want access to it before too long. Don't worry, I already have retirement investment accounts with allocations I like etc. etc." That the advice was "don't invest it" seems a little less clear to me. I can afford to lose some of this money, but I would be sad to see it cut in half. If I absolutely needed it and it was 10% below where I started, I could live with that, but it kinda sucks. If I absolutely needed it and it was 40% below where I started that would hurt a lot. I guess, I'm also just comparing your advice to what Vanguard's "advice" is. Should I throw the latter away? Is it bad advice?
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Jul 22, 2014 01:02
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Henrik Zetterberg posted:4 Pillars suggest that if you reside in a state where you get bonds from, you may not have to pay state income tax on it, only federal. So there are advantages to not buying them from multiple states. There are state-specific muni bond mutual funds for this exact reason. Also keep in mind that the tax exemption of munis is really only worth it if you're in the highest tax bracket.
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Jul 22, 2014 01:10
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Echo 3 posted:There are state-specific muni bond mutual funds for this exact reason. Also keep in mind that the tax exemption of munis is really only worth it if you're in the highest tax bracket. Despite all the hullabaloo over things such Detroit/stockton munis also have a lower default rate vs US corporate bonds. For a basic white collar worker 25/28 percent top rate, you get a real world yield of 4.67% while a common US investment grade muni ETF like LQD pays around 3.5%. etalian fucked around with this message at 01:17 on Jul 22, 2014 |
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Jul 22, 2014 01:14
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Hog Obituary posted:That the advice was "don't invest it" seems a little less clear to me. I can afford to lose some of this money, but I would be sad to see it cut in half. If I absolutely needed it and it was 10% below where I started, I could live with that, but it kinda sucks. If I absolutely needed it and it was 40% below where I started that would hurt a lot. As Warren Buffett once said, "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."
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Jul 22, 2014 01:33
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pig slut lisa posted:As Warren Buffett once said, "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market." Ok, so by putting 40% into stocks I should be content to lose 50% of that 40%. That seems a little more than I want to lose, but not insane. So perhaps I would put 20-30% of my total cash into the market?
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Jul 22, 2014 02:27
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