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Steampunk Hitler posted:My question is, what significance is the "signal" part of what my 401k offers? Is it reasonable to try and correlate the Vanguard funds over and do something like: Yes. Go ahead and round to integer percentages, though, that's just the effect of day-to-day fluctuation. You can optionally put 5-10% in that REIT fund too. Take it from VTSSX if you do. edit: baquerd's advice makes sense if you're looking at taxable investments too. You can do it this way, and it's easy, but baquerd's plan optimizes your taxes better. Make your overall allocation look like this, though. Kilty Monroe fucked around with this message at 06:43 on Aug 13, 2014 |
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Aug 13, 2014 06:38
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Kilty Monroe posted:edit: baquerd's advice makes sense if you're looking at taxable investments too. You can do it this way, and it's easy, but baquerd's plan optimizes your taxes better. Make your overall allocation look like this, though. At least until you've read enough to be more confident in your decisions. Steampunk, I'm actually in a remarkably similar position to you, albeit you've got almost a decade of youth on me, and my target asset allocation looks like this: 55% US Equity, market cap neutral 20% Foreign equity, double weighting emerging markets by market cap 15% REIT 10% P2P Lending These holdings are split across Roth and Traditional IRA, HSA, 401k, and taxable accounts. I don't like regular bonds right now for reasons I've stated in previous posts and that has nothing to do with short term speculation and everything to do with the fact that since public inception in 2007, P2P lending has been amazingly non-volatile and consistent in returns, while bonds are set to under-perform in almost all feasible scenarios for the next 5-10 years. I'm strongly considering doubling my P2P allocation while diversifying company risk.
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Aug 13, 2014 06:57
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Hey guys and gals, I recently took a state-of-the-union look at all my long-term financial goals and I'm looking for a gut check on a few things to make sure I'm on the right track and have solid future plans. Info Salary: $90,000 / yr + 10-20% yearly bonus Age: 30 Single and renting Assets Current liquid savings: $25,000 Total 401k (old rolled over into IRA + current emp): $98,000 Whole Life Insurance policy (started 4 years ago): 9,000 Debt Car: $1200, will be paid off by January So 12 months ago I went through a divorce when my wife of 7 years decided she no longer wanted kids and started messing around with another guy. Oh well! The only reason I bring it up is because there were financial ramifications: - I had a great rate on a house with a 10yr mortgage but still only had maybe $40k in equity at the time of the divorce. My wife seemed perplexed why we didn't get more out of the despite selling at the same price we bought and I had to explain to her that when you sell a house, the realtor % fees are calculated on the entire price of the house, but come out of your equity. Yay 2nd grade math. So I got roughly $11k when it was all said and done and we split the remaining equity check. - We had a nice savings egg built up but obviously I only got half of that. Still decent. - I gave myself some space and time to splurge a bit and went to Japan with my sister and traveled the country playing volleyball tournaments with some friends. Knowing I was setup really well financially, I gave myself the most leeway I've ever allowed with spending for like 6 months to do every cliche finding myself / letting loose / retail therapy impulse that I felt like. Honestly I'd say it was worth it, and I don't miss the money. Roughly $10k over 6 months. All paid off. I guess now when I look on paper, I'm still really well off and on the right path, but it sucks that I know I was even way more ahead of the game when my wife and I had everything laid out. Knowing I'd have a nice nest egg and a paid off house by 40 with almost enough money to retire was awesome, and it hurt a bit coming back down to this. But "this" is still really good, I just need to get back on the path of staying ahead of the game. Advice I'm looking for So now that I've settled back down into a normal budget and I'm single again, I want to make sure I have my priorities straight. I'm already maxing out my 401k (with 3% contrib on top of that). With that in mind, here are what I think my next steps should be, highest priority first... - Open a Roth IRA through Vanguard (where my IRA sits now) and max that out each year while I can. When do I need to worry about not qualifying? loving MAGI makes my head explode and I think I might be on the cusp? - Open a personal investment account through Vanguard. When I have Roth and 401k contributions maxed out, this is the next best place to sock money away, right? I'm not looking to day trade, but lump purchasing some ETFs from time to time (like when I get my yearly bonus) seems like a decent way to keep building. - Convert some more of my term insurance to whole life insurance. This is iffy. To really make whole life worthwhile you sort of need to start like mid 20s, which I did. I just don't think converting more insurance to whole life would make that big of a difference in the long run. Keep those plans around as is ($750k coverage, with $500k in term, the rest in whole) for when I meet a lady girl and make baby goons? Is that a solid plan? I mean, I'm 30. I love traveling and going out with friends and I've always thought I have really nice stuff, but what I consider "really nice stuff" seems more like average to other people. That's a really nice problem to have since I feel like I'm living like a king and can splurge when I want but still live within my means and save well without coming off like a penny pincher. Do you guys see any glaring holes or flaws with any of this? I think I started early enough where I can balance the "have fun now" with "prepare for the future" nicely. And having a personal investing account would give me options down the road like paying for kids college (if I ever get back on that horse again) along with the whole life insurance nest egg that will exist by then. I realize how lucky I am to be where I'm at, just making sure I maximize what I'm doing since I can.  Thanks in advance!
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Aug 13, 2014 17:39
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Lank posted:- Open a Roth IRA through Vanguard (where my IRA sits now) and max that out each year while I can. When do I need to worry about not qualifying? loving MAGI makes my head explode and I think I might be on the cusp? quote:- Open a personal investment account through Vanguard. When I have Roth and 401k contributions maxed out, this is the next best place to sock money away, right? I'm not looking to day trade, but lump purchasing some ETFs from time to time (like when I get my yearly bonus) seems like a decent way to keep building. quote:- Convert some more of my term insurance to whole life insurance. This is iffy. To really make whole life worthwhile you sort of need to start like mid 20s, which I did. I just don't think converting more insurance to whole life would make that big of a difference in the long run. Keep those plans around as is ($750k coverage, with $500k in term, the rest in whole) for when I meet a lady girl and make baby goons?
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Aug 13, 2014 17:58
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Why do you have insurance? If you have no dependents (kid/wife) you don't need any. If you decide to keep some for your parents, siblings, etc, get rid of the whole plan. Whole insurance is 99 percent of the time a rip off and you'd be better of with separate savings and insurance plans. If you don't want to invest in taxable accounts, consider maxing out a health savings account as possible. Otherwise, sounds like you have your ducks in a row. 401k to match, Roth to max, 401k to max, hsa, then taxable investments.
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Aug 13, 2014 18:12
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Thanks for the replies, they seemed similar. Roth: Cool Investing: Cool HSA: Interesting. I have really low health fees each year so I never thought of doing something like a flex-spending account but I didn't know a similar thing existed that rolled over. I'll look into this. Life Insurance: These policies were originally started when I was married. The whole life insurance policy was taken out more as a future nest egg to help with kids college etc once it started snowballing after about 20 yrs. I started it early enough where it's not a dud (2009 when I was 25) and I've already paid most of the fees on it since they're front-loaded in the premiums. It just seemed like a bigger waste to kill it now. The term insurance is a really low rate so I guess I never thought of cancelling it. I guess I could? That policy is like < $20/mo. I love my sister to bits and thought she could take care of any debt / estate / corpse burning fees I have lingering around and then open a charity in my name or give some to my parents or something if I died young. I actually contacted Northwestern Mutual about this when I got my divorce and he said they're in your name and I'm not in danger of being over-insured or anything, so I just changed the beneficiary to my sis. Is there any logic behind keeping the locked in lower rates I got for $500k coverage through age 80 vs cancelling now and then having a new physical eval when I pick one up again if my plans to start a family still pan out? I'm assuming if I stopped now, and then picked up again at 35 or 40 I wouldn't have nearly as favorable rates for the same amount of coverage. I guess I'd have to see money saved now vs extra paid later and find the break-even point. Probably splitting hairs, but I hadn't thought of the HSA or cancelling my insurance policies. Thanks for giving me something to chew on.
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Aug 13, 2014 18:30
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Forgot to say thanks for the advice, I'll drop the loan idea and go with the whole "pay it off then IRA" plan. I figured I was doing something wrong but I've never really been too good at investing  .
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Aug 13, 2014 18:31
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EDIT: Double post, sorry.
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Aug 13, 2014 18:33
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baquerd posted:since public inception in 2007, P2P lending has been amazingly non-volatile and consistent in returns It doesn't really make sense to talk about volatility or returns expectations for a product class that has been around for less than a decade. Given the unregulated nature of the industry, you're exposed to a lot of regulatory and counterparty risk. There's been a lot of institutional money flowing into the sector so expect yields to go down and default rates to go up.
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Aug 13, 2014 23:29
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So something that's confusing me in Four Pillars is the talk of historical returns. Bernstein spends a lot of time talking about how past returns do not predict future returns (especially for individual funds and individual managers), but talks about the historical returns of asset classes as though we will continue to see those same returns. That is, small value in aggregate will continue to have high risk and high return, while small growth should be nearly ignored, etc. Am I understanding this correctly? I guess it seems like a reasonable assertion, given that the asset classes are analyzed over 100 years, while the individual stocks, funds, and fund managers only see success for a decade or less. Is that the basis for ignoring the historical performance of a fund, while relying on the historical performance of an asset class?
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Aug 14, 2014 00:20
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Kilty Monroe posted:Yes. Go ahead and round to integer percentages, though, that's just the effect of day-to-day fluctuation. baquerd posted:At least until you've read enough to be more confident in your decisions. Steampunk, I'm actually in a remarkably similar position to you, albeit you've got almost a decade of youth on me, and my target asset allocation looks like this: Awesome, thanks a lot!
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Aug 14, 2014 02:15
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What is the level of coverage for your whole life? And what is your monthly/annual premium? It seems silly to have whole life period. I can get a half mil 30yr for less than what you paid over the last 4yrs. I can add shorter higher coverages once my situation changes, eg marriage and house purchase. (Fwiw I only was shopping, I have no dependents or a mortgage ATM, and I have 300k for $74/yr through my employer which will cover funeral and mental health care for my family and gf.
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Aug 14, 2014 03:21
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Speaking of strange and maybe horrible too it came from silicon valley investing startups: https://www.motifinvesting.com/ 
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Aug 14, 2014 04:41
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CHINA INTERNET
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Aug 14, 2014 05:34
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short sell it
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Aug 14, 2014 05:45
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etalian posted:Speaking of strange and maybe horrible too it came from silicon valley investing startups: Mint.com was peddling that poo poo for a bit. Buy motifs like... Christmas! Or... Luxury!
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Aug 14, 2014 06:40
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Hog Obituary posted:So something that's confusing me in Four Pillars is the talk of historical returns. Bernstein spends a lot of time talking about how past returns do not predict future returns (especially for individual funds and individual managers), but talks about the historical returns of asset classes as though we will continue to see those same returns. That is, small value in aggregate will continue to have high risk and high return, while small growth should be nearly ignored, etc. He's not making specific predictions about the performance, but the asset classes in general should behave more or less the same, at least within stocks. Large growth are big, mature companies. That has very low risk, so the stock price is ultimately going to reflect that; people are willing to pay a high price for it, so the prospect of returns is low. Small value are tiny, fragile companies. People will only buy those stocks if the price is low, and so if they succeed, you get big returns. The longterm performance of the asset classes within stocks just boils down to risk and reward being inseparable. Of course international versus domestic, and stocks versus bonds, those are ones that are harder to project out for the very long term in terms of overall behavior, and he says as much IIRC.
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Aug 14, 2014 13:33
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etalian posted:Speaking of strange and maybe horrible too it came from silicon valley investing startups: Yeah, the motif stuff looked awful the first time I looked at it and hasn't gotten any better since it has been spammed all over the interwebs. Mint likes (or liked?) to show motif ads as well. Voluntarily taking on risk that could have been diversified away and having it marketed as a good thing is 100% marketing and all bad.
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Aug 14, 2014 16:07
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Vilgan posted:Yeah, the motif stuff looked awful the first time I looked at it and hasn't gotten any better since it has been spammed all over the interwebs. Mint likes (or liked?) to show motif ads as well. Voluntarily taking on risk that could have been diversified away and having it marketed as a good thing is 100% marketing and all bad. Yeah I had a good laugh after reading about in you standard standard "next gen startup disruption" article. Basically you allocate money to motifs which are comprised to jut around 8-10 stocks that meet a criteria such as good dividend yield. Just overlook how the above example is heavily weighted to US energy companies and also contains a laughable amount of different companies.
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Aug 14, 2014 23:52
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I am asking this question on behalf of someone else. This person wants to know which retirement funds you can use to buy property (meaning, they invest now, then at retirement age, cash out and use it as a down payment on real estate)? I don't understand her question. I always thought if you have a retirement nest egg, whether it be a pension, Roth IRA, 401(k), etc, you could use it however you see fit once you hit the proper age. Is this correct? She also wants to know how to access the funds and how to report it on income taxes and how to report the rental property and related expenses. I feel like all of this is not much different than pre-retirement, the only difference is that instead of regular paychecks, you'd be using pension/401(k)/Roth IRA withdraws which is still income. If it was tax deferred it would be taxed, but if it was post-tax like a Roth, there isn't tax. I just don't get why she thinks she can't use retirement investments, at the proper age, however she wants?
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Aug 14, 2014 23:53
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Hip Hoptimus Prime posted:I am asking this question on behalf of someone else. Maybe they are talking about purchasing alternative investments like real-estate from within an IRA itself? It is possible to do this with a self-directed IRA, though it has to be a business property, not personal property that you would live in yourself.
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Aug 15, 2014 00:06
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Hip Hoptimus Prime posted:I am asking this question on behalf of someone else. Yeah once you reach the right age you can start taking all the money out of your retirement fund without extra tax penalty. 401K/IRA income becomes ordinary income while Roth IRA distributions are tax free.
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Aug 15, 2014 00:58
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flowinprose posted:Maybe they are talking about purchasing alternative investments like real-estate from within an IRA itself? It is possible to do this with a self-directed IRA, though it has to be a business property, not personal property that you would live in yourself. Can you explain this a little bit more (if you know anything else)? e: Googled and found a lot. You don't have to explain, unless you feel like it.
Hip Hoptimus Prime fucked around with this message at 01:09 on Aug 15, 2014 |
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Aug 15, 2014 00:59
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Hip Hoptimus Prime posted:Can you explain this a little bit more (if you know anything else)? Honestly I don't know that much about it other than the fact that it exists. I would think it would be inappropriate for most people to attempt, given the extremely undiversified nature of it. Therefore, I have never really looked into it for myself.
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Aug 15, 2014 02:24
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Does anyone have experience with the Thrift Savings Plan for federal employees? I'm already maxed out on the matching but I'm not sure which fund to put my money in. Right now I've got it in the Lifecycle fund for 2050 (projected retirement 2045-2048), but I'm not sure if I should just distribute 80% to the common stock fund and 20% to the riskier funds instead. Or do something else entirely.
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Aug 15, 2014 14:41
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A PC Game posted:Does anyone have experience with the Thrift Savings Plan for federal employees? I'm already maxed out on the matching but I'm not sure which fund to put my money in. Right now I've got it in the Lifecycle fund for 2050 (projected retirement 2045-2048), but I'm not sure if I should just distribute 80% to the common stock fund and 20% to the riskier funds instead. Or do something else entirely. If you don't have significant investments outside of the TSP, then the Lifecycle funds are fine. Actually, they are fine even if you do have investments outside that are balanced similarly. The only time that I would recommend using a distribution of the individual TSP funds is if you had a substantial amount of retirement savings elsewhere with limited fund choices (a second job with a lovely 401k that has high expense ratios, for example). If that were the case then you would probably be best off picking the lowest cost fund in your other retirement vehicle and then balancing your TSP against that to get an overall portfolio that would match your goals.
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Aug 15, 2014 14:53
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flowinprose posted:Honestly I don't know that much about it other than the fact that it exists. I would think it would be inappropriate for most people to attempt, given the extremely undiversified nature of it. Therefore, I have never really looked into it for myself. Given what I found by Googling, I agree. It is not something you can do alone. At the minimum you need a team of a CPA, an attorney, a real estate agent, and an "administrator" plus there's like 829582957 rules about the property. Like you can't fix it up yourself with "sweat equity," no one related to you in any way can be the tenant (so, none of your other businesses outside of the IRA LLC, no relatives can live there, you yourself can't live there, etc). If you break any of the rules it's not tax exempt anymore. Plus, it looks like the best way to go about it is to have enough money in the IRA where the rental property won't have a mortgage...ugh. Not something I would recommend. It looks like the devil is the details and if one little thing is wrong, it's not a retirement investment anymore.
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Aug 15, 2014 15:55
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In the four pillars Bernstein recommends treating a pension like a bond, and adjusting your asset mix accordingly. Wouldn't that potentially limit my ability to restructure my portfolio, especially when the markets are down, as in buying up cheaper stock indexes from my bond indexes? Did what I say make sense or am I way off? Should I just ignore my pension, or consider it part of my portfolio as a bond and adjust accordingly?
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Aug 15, 2014 17:21
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Hip Hoptimus Prime posted:Given what I found by Googling, I agree. It is not something you can do alone. At the minimum you need a team of a CPA, an attorney, a real estate agent, and an "administrator" plus there's like 829582957 rules about the property. Like you can't fix it up yourself with "sweat equity," no one related to you in any way can be the tenant (so, none of your other businesses outside of the IRA LLC, no relatives can live there, you yourself can't live there, etc). If you break any of the rules it's not tax exempt anymore. Plus, it looks like the best way to go about it is to have enough money in the IRA where the rental property won't have a mortgage...ugh. I haven't looked too much into it, but it looks like it's mainly geared for people wanting to buy a stake in a real estate deal as an investor only. Not for someone wanting to buy a house and fix it up.
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Aug 15, 2014 17:54
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Pirate Ken posted:In the four pillars Bernstein recommends treating a pension like a bond, and adjusting your asset mix accordingly. Wouldn't that potentially limit my ability to restructure my portfolio, especially when the markets are down, as in buying up cheaper stock indexes from my bond indexes? I get what you're saying, and it does confuse the issue of rebalancing... but I think the point Bernstein is trying to make is that the added layer of security given to you by a pension should allow you to be more aggressive in your overall portfolio than you might be otherwise, since you have a presumably "guaranteed" income stream from the pension. Then again, there is much talk these days of pension funds showing risks of being unsustainable, that may be a false sense of security. I have a pension plan myself and I do not consider it at all in terms of my retirement portfolio, to me it will just be icing on the cake. I am probably saving more towards retirement than 95% of the population, so the pension would hardly matter in my case anyway. Even if you do consider it a part of your bond allocation, I would still leave a minimum of 10% of your portfolio in short-term bonds in order to take advantage in rebalancing situations.
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Aug 15, 2014 23:44
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Most (but not all) pensions are guaranteed by the Pension Benefit Guarantee Corp. If yours is, it is as reliable as a US government bond, in that your benefit is guaranteed by Uncle Sam. So even if your company goes kaput or the pension itself is mismanaged into ruin, you won't go without your pension. However, if your pension isn't guaranteed by Uncle Sam, I'd treat it as similar to a corporate bond. E.g., it's as reliable as the underlying company's ability and willingness to pay when you are retired, and no more than that. Since a single corporate bond is much riskier than a corporate bond fund, I'd say you'd want to generally be more conservative with the rest of your retirement savings.
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Aug 16, 2014 00:23
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Hello friends, I'm lucky enough to be able to max a roth IRA and a 401k (no HSA for me based on health insurance plans I have through work); and I'm about to have the necessary amount (3k) to open a vanguard account. I should be able to put regular binmonthly deposits in per paycheck, but I have zero idea on what funds I should be looking at to minimize my tax burden. Are there specific target retirement funds that are aimed at taxable account holders? Or maybe something else? I'm 100% solid on all pretax investments but a bit lost on my post-tax savings. thanks!
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Aug 16, 2014 04:38
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Minty Swagger posted:I'm lucky enough to be able to max a roth IRA and a 401k (no HSA for me based on health insurance plans I have through work); and I'm about to have the necessary amount (3k) to open a vanguard account. I should be able to put regular binmonthly deposits in per paycheck, but I have zero idea on what funds I should be looking at to minimize my tax burden. Are there specific target retirement funds that are aimed at taxable account holders? Or maybe something else? I'm 100% solid on all pretax investments but a bit lost on my post-tax savings. First and foremost, reallocate all your foreign equity index holdings to your taxable account due to a foreign tax credit you receive on them. If you end up with your entire foreign allocation in taxable accounts and need more options, straight up VTSAX or VSMAX are good options. Don't put (non-municipal/taxable) bonds in there as a general rule, though there is a faction of mouthbreathers who will tell you that the current low interest environment means that short term bonds are acceptable. If you feel like doing this, just get a high interest savings account. Read this 50 times until it makes sense: http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement
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Aug 16, 2014 06:06
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flowinprose posted:I have a pension plan myself and I do not consider it at all in terms of my retirement portfolio, to me it will just be icing on the cake. I am probably saving more towards retirement than 95% of the population, so the pension would hardly matter in my case anyway. Thanks for the feedback guys. I take the same view, an added bonus. I think I'll continue maintaining the 10percent in bonds. It's through a large school system in a heavily blue state, so it should be safe
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Aug 16, 2014 23:37
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So I'm staring at the Savers credit and reading about it on this page: http://www.irs.gov/Retirement-Plans...%80%99s-Credit) If my gross income as a single person is going to be around $30,000 this year, am I right in saying I could put $8,000 into a 401k and $5000 into a IRA to get my AGI below $18,000, and then the IRS would refund me 50% of the $13,000 I contributed through the Savers credit? If true...holy poo poo EugeneJ fucked around with this message at 13:59 on Aug 17, 2014 |
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Aug 17, 2014 13:42
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EugeneJ posted:So I'm staring at the Savers credit and reading about it on this page: Up to 50% of $2,000, so max $1,000.
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Aug 17, 2014 14:19
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TwoSheds posted:Up to 50% of $2,000, so max $1,000. ....yeah I missed that
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Aug 17, 2014 15:01
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I came across this site while browsing financial advisors in my area. http://www.winstonpaul.com/services/investment-management/ quote:DEFEND & Deploy® is our disciplined approach to investment management and is utilized to:  Seems pretty cool to me, buy and hold is for chumps.
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Aug 19, 2014 00:14
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Market timing always works. What could possibly go wrong?
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Aug 19, 2014 00:37
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I love the huge, nullifying disclaimer at the bottom.
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Aug 19, 2014 01:09
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