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ETB posted:I love the huge, nullifying disclaimer at the bottom. Focus on the pretty colors! Pay no attention to all thems words!
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Aug 19, 2014 01:22
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Does the guy have the patent on this approach? I am thinking I might leverage it...
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Aug 19, 2014 02:22
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kansas posted:Does the guy have the patent on this approach? I am thinking I might leverage it... To make money sell high and buy low.
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Aug 19, 2014 04:30
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How over leveraged into one company is bad? Specifically talking here about your employer. Clearly you don't want your Job and all your savings invested in the same place, but mine keeps offering me really nice offers\discounts on stock (usually on the condition I keep it for between 3 & 5 years). The discounts are good (sometimes drat good), but if I took advantage of them all I'd be looking at 50% of my non-retirement savings\investments being with the same company that controls my employment and retirement. If it makes a difference this is a 100+ year old huge multinational, I mean it could always be another Enron in disguise but its not a fly by night scam. Also based in UK if it matters.
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Aug 19, 2014 07:56
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I think it's fine to take a lot of advantage if you're maxing your retirement vehicles and still have some "non-retirement" savings building up besides your company stock. It sounds like you're in a situation where the OP says to go stock trading or hire hookers. And after a few years you can sell the shares so it's not like you'll have decades of purchases vanish at once.
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Aug 19, 2014 13:28
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Nail Rat posted:I think it's fine to take a lot of advantage if you're maxing your retirement vehicles and still have some "non-retirement" savings building up besides your company stock. It sounds like you're in a situation where the OP says to go stock trading or hire hookers. Currently 22% of my gross into Pension, Partner is on Final Salary Scheme (we both earn about the same). Other saving is about 20-30% of our joint net. This would be moving the equation to about 15% other and 20% company stock. Schemes I'm interested in are buy 1 share, get 2 free. Hold for 5 year minimum. Dividends reinvested. Limited value per month. (This one is so stupidly good I max it every month). Other is contribute X amount for 3-5 years. After time you can buy shares at option price or get money back. Option price is set at closing price - 20% when you start. Not so sure on this one but the limit is so high I'm not going to be hitting it anytime soon. And yes as soon as things mature I intend to move to a more diversified setup.
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Aug 19, 2014 14:44
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Other people may have different opinions, but I think if you have 22% going into pension and 15% into other, you have plenty of solid ground to put 20% into company stock for a few years until it matures. It'd be one thing if that was most/all of your savings(like the poor bastards at Enron) but it's not.
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Aug 19, 2014 15:49
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Cast_No_Shadow posted:How over leveraged into one company is bad? I get a 15% discount on my company stock, which transacts every 6 months. Generally, I keep it for a year and a half to get into the long-term capital gains territory, then dump it if the price is right. If not, then I just hold it and collect dividends until I can sell it.
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Aug 19, 2014 22:35
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Is it possible to avoid paying federal income taxes on money that you contribute to a 401k or traditional IRA if you withdraw the money in "substantially equal periodic payments" during early retirement at a rate that will allow you to keep your income low enough to avoid paying federal income tax? I can't see any problems with this but it almost sounds too good to be true. If so, is it possible to convert a Roth IRA to a traditional IRA? I doubt it, so my follow up question is - would there be any problem with moving the contributions I have made to my Roth this year out of it and into a traditional IRA?
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Aug 20, 2014 00:02
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Keep in mind that you're taxed on your total income and not just the amount you withdraw. Even if the 20k you're taking out per year is below the taxable threshold, if you're supplementing that with 45k of other income your total taxable income is 65k, and you will pay accordingly. Roth is nice because it isn't counted as income. The money is yours, and if you take 20k in Roth funds and make 20k at some fun part-time work, you're taxed at 20k and NOT 40k.
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Aug 20, 2014 00:14
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DNK posted:Keep in mind that you're taxed on your total income and not just the amount you withdraw. Even if the 20k you're taking out per year is below the taxable threshold, if you're supplementing that with 45k of other income your total taxable income is 65k, and you will pay accordingly.
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Aug 20, 2014 00:43
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DNK posted:Keep in mind that you're taxed on your total income and not just the amount you withdraw. Even if the 20k you're taking out per year is below the taxable threshold, if you're supplementing that with 45k of other income your total taxable income is 65k, and you will pay accordingly. I will be living in a country where the average monthly income is $560, so it should be easy to live below the threshold. I will not have any other taxable income. In this case, all federal income tax is avoided on the traditional IRA and 401k contributions, right?
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Aug 20, 2014 00:49
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You may already be aware, but the IRS has a specific definition of what "Substantially Equal Periodic Payments" means. You have to follow a set formula that is based on your life expectancy. Further, once you start taking the payments, you have to take them for at least five years. If you stop before then you will be penalized. This isn't necessarily a dealbreaker for what you are planning, but if you would be starting the payments while you are relatively young, and if your account balance is relatively small, you may not get enough money to live on. The guidelines for SEPP can be found here: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Paymentsf
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Aug 20, 2014 01:31
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Crabby Abby posted:Further, once you start taking the payments, you have to take them for at least five years.
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Aug 20, 2014 01:33
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Cicero posted:Wait, money taken out of a 401k/trad IRA counts as regular income? I thought it would only be subject to capital gains? No, of course it's regular income... it wasn't taxed when you put it in.
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Aug 20, 2014 02:12
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Crabby Abby posted:You may already be aware, but the IRS has a specific definition of what "Substantially Equal Periodic Payments" means. You have to follow a set formula that is based on your life expectancy. Further, once you start taking the payments, you have to take them for at least five years. If you stop before then you will be penalized. This isn't necessarily a dealbreaker for what you are planning, but if you would be starting the payments while you are relatively young, and if your account balance is relatively small, you may not get enough money to live on. I didn't know this - thank you very much, this is some extremely important information for my planning!
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Aug 20, 2014 03:09
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Bisty Q. posted:No, of course it's regular income... it wasn't taxed when you put it in.
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Aug 20, 2014 03:43
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I put this in the newbie thread but thought it might get a better response here: Some background: I am Australian, 27 years old. My wife is 30, now a stay-at-home mother with our two-month old. I am the sole worker and will be for the foreseeable future. I earn $80,000 a year, about $1050 a week after tax, with extra from freelancing. (About $5-10k a year). We are completely debt free. I have a six-month emergency fund. Our budget is as tight as we can get it, so we’re roughly saving around 20-25%. We rent. My question is, I’m at a point now where we are budgeting really well, all our emergencies and expenses are covered and then same. I have lots of money to play with. What do I do with it? We’re never going to buy a house, (a deposit in Australia is upwards of $60k and that will take forever). I want to do something with it in the mean time. But what? I’ve been considering going into shares and doing some small trades. But is there something better I can be doing? I’ve looked mutual funds but the returns aren’t particularly great. Then again, they’re safer. I’m not sure if I can receive Australia-specific advice here, but what should I be doing? I should add 9.5% of my salary is put into a retirement account by my employer. We have about $40,000 between us combined in superannuation.
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Aug 21, 2014 21:38
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Vanguard target retirement funds don't distribute dividends, right? The only way I could see a benefit from compounding would be if I was invested in funds like VFIAX?
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Aug 21, 2014 21:43
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Vanguard's Target Retirement funds distribute dividends annually. For example: https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT#tab=4
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Aug 21, 2014 21:56
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Guy Axlerod posted:Vanguard's Target Retirement funds distribute dividends annually. Perfect. Thanks!
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Aug 21, 2014 22:06
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I'm not sure if this is the correct thread or not since it's not retirements savings... But I'm looking to put away money in case my daughter goes to college (She's currently 13 and just started 8th grade). I'm wondering if a 529 plan from Vanguard is a bad idea?
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Aug 21, 2014 22:33
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CelestialScribe posted:I earn $80,000 a year... Not that you should definitely buy a house, but it sounds to me like it would only take you three or four years to save up a down payment. That's totally reasonable for most people. IF you decide to save money for a down payment for a house in 3-5 years out from now, that money should be in cash or guaranteed cash-equivalent, e.g., don't invest where there's risk. That aside, you need australia-specific advice about tax sheltered retirement accounts for long-term retirement savings.
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Aug 21, 2014 22:33
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Leperflesh posted:Not that you should definitely buy a house, but it sounds to me like it would only take you three or four years to save up a down payment. That's totally reasonable for most people. We're talking $60,000 to $80,000, though. I suppose five years is doable. Let's say my wife and I chose that five year goal. Would something like a Vanguard account be of assistance here in growing our money, or are Vanguard accounts considered too risky over such a short time period? I know nothing about investing  Should I speak to a financial planner?
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Aug 21, 2014 22:55
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CelestialScribe posted:We're talking $60,000 to $80,000, though. I suppose five years is doable. It's not always a bad idea to invest your house down payment money, as long as you can handle not having to buy the house if the markets do poorly.
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Aug 21, 2014 23:37
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CelestialScribe posted:We're talking $60,000 to $80,000, though. I suppose five years is doable. You're in Australia so again it's hard for me to know the details that might be really important. But you should take a look at the house buying thread to learn more about saving up for and buying houses. For financial planning you should start with 4 pillars and/or other books in the OP.
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Aug 21, 2014 23:49
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So to save for retirement, I've done my best to max out my 401k plan for the past several years. My 401k has about $110k in it. To max out my contribution I've been putting in 14% of every paycheck (salary at $119k), and thats that. Recently I got a 5% raise, and a letter that my contribution was changed to 6% which I obviously didn't choose to do. I learned I'm now classified as a high compensated employee and my limit is capped. This really sucks because I was proud to be maxing out my 401k.. I almost wish I didn't get the raise. What are some options I have for my missing 8%?
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Aug 22, 2014 00:48
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Do you have a Roth IRA? You can backdoor $5500 into that a year.
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Aug 22, 2014 01:43
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Donald Kimball posted:Vanguard target retirement funds don't distribute dividends, right? The only way I could see a benefit from compounding would be if I was invested in funds like VFIAX? This question was answered but I thought a little further explanation might be in order. All mutual funds have to pass on income (such as dividends or bond coupon payments) to investors at least annually via a dividend that you see in your account; they do not have an option of reinvesting within the fund or anything like that. Occasionally they may also have to make a "capital gains distribution" which is them passing on to you the value of some capital gains that they incurred. You can set up your account to automatically reinvest these distributions back into more shares of the fund.
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Aug 22, 2014 02:10
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Henrik Zetterberg posted:Do you have a Roth IRA? You can backdoor $5500 into that a year. No I thought I read that my salary was too high for it.. I'll have to look into it again
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Aug 22, 2014 02:16
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FateFree posted:No I thought I read that my salary was too high for it.. I'll have to look into it again Contribute to a Roth IRA regardless of your income level with this one weird trick http://www.bogleheads.org/wiki/Backdoor_Roth_IRA
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Aug 22, 2014 02:34
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Mr. Glass posted:Contribute to a Roth IRA regardless of your income level with this one weird trick The main catch is you can't have piles of money in a IRA account for it to work.
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Aug 22, 2014 03:13
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CelestialScribe posted:We're talking $60,000 to $80,000, though. I suppose five years is doable. If you have a fairly short investment windows than things like low risk/short term bonds make the most sense since want some return for your money but not lots of investment risk/volatility.
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Aug 22, 2014 03:17
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etalian posted:The main catch is you can't have piles of money in a IRA account for it to work. And if he already has that, wouldn't it be better to leave it where it is than to pay taxes at such a high income level? I think at 119k though, he's just into the phase-out zone for a roth ira contribution. Also, don't the 401k contributions bring that number down? So the 6% should even put him under the beginning of the phase-out, allowing him to max out the roth with straight contributions.
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Aug 22, 2014 03:46
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I'm a total noobie about financial stuff but have done some research and have decided investing into Vanguard is a good option. I have a modest five figured amount saved up thats just sitting in my banks savings at the moment. I've been reading http://www.mrmoneymustache.com/ and his advice was to invest in nothing but VSTMX and watch your money grow by about 7% a year at a .18 expense ratio with no maintenance. But I'm wondering if I'd be better off diversifying and choosing other index funds, or opening a Roth IRA through Vanguard instead. I have a 401k through work that is maxed out (it has really lovely matching though - matches only 25% up to 8% which works out to only 2% of income matched) but I'd rather not put more into it. I've also been thinking about buying a condo with a decent down payment, but I'd need to grow my savings a little bit for a decent down payment, hence using Vanguard. Is there any upfront expenses other than the expense ratio for investing in index funds at Vanguard? Should I just open a standard personal account, or open up a Roth IRA? What exactly would the difference be? Sorry if these questions are dumb, I'm just on the fence about investing and need a push in the right direction.
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Aug 22, 2014 04:38
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If you're investing 5 figures at the very least choose VTSAX instead of VTSMX for the lower expense ratio: https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT VTSMX/VTSAX is somewhat diversified itself since it's a index fund that covers large, mid, and small-cap stocks in the US. Also be careful about using stocks for what will become a down payment in the near or medium-term; the market could always tank between now and when you need it. I'm not saying don't do it, just be aware of the risk.
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Aug 22, 2014 05:20
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Cicero posted:If you're investing 5 figures at the very least choose VTSAX instead of VTSMX for the lower expense ratio: https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT Wow, .05 is really low thanks. I'm wondering, is there a way to calculate what the actual adjusted growth minus the expense ratio? I see all these indices with large growth but with high expense ratios, so I'm wondering if there's a way to calculate an adjusted expense ratio over the average growth of say, over ten years.
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Aug 22, 2014 06:49
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seniorservice posted:Wow, .05 is really low thanks. I'm wondering, is there a way to calculate what the actual adjusted growth minus the expense ratio? I see all these indices with large growth but with high expense ratios, so I'm wondering if there's a way to calculate an adjusted expense ratio over the average growth of say, over ten years. Click the fees tab. It shows you the estimated fees over 10 years compared with a "typical" non-Vanguard mutual fund.
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Aug 22, 2014 07:13
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CelestialScribe posted:I put this in the newbie thread but thought it might get a better response here: It depends on your time scale and risk tolerance. Short term - toss into a term deposit or online savings account. Medium term - managed fund (low effort) or ETFs (as low or high effort as you want). Long term - mutual fund/shares. Extra-extra-long term - salary sacrifice into your superannuation. Saving up for a house might take ages, but it could be worthwhile - the rental market can be hell for families with children here in Oz. Again, that's really dependent on factors like your current job security, the location of jobs in your field, the rental market and housing markets of your area, and so on. There's no reason why you can't do a mixture of the above. For example, you could do a small salary sacrifice into your super / do the spousal super contribution (and claim up to $540 off your tax at EoFY), toss the majority of your money into a term deposit and use the leftovers to open up a mutual fund.
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Aug 22, 2014 12:35
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seniorservice posted:Wow, .05 is really low thanks. I'm wondering, is there a way to calculate what the actual adjusted growth minus the expense ratio? I see all these indices with large growth but with high expense ratios, so I'm wondering if there's a way to calculate an adjusted expense ratio over the average growth of say, over ten years. The problem with this is that you can't accurately predict the return of any of these funds. Check out some of the books in the OP - historically, most of the higher cost managed funds have underperformed the simple cheap index funds after expenses. Choosing funds based on 5 or 10 year average returns is an exercise in futility and likely to cost you money.
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Aug 22, 2014 13:18
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