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asur posted:One thing to note is that having an IRA essentially removes the ability to backdoor contributions into a ROTH IRA. Does this apply to SIMPLE IRAs as well?
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Sep 2, 2014 01:22
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Hey guys, I have a 401k with Fidelity through my work. Currently, I have the following allocations: 35% Russell 2500 Index 30% Russell 1000 Index 15% MSCI ACWI ex-U.S. Index 20% Barclays Aggregate Bond Index All have crazy low ERs, and I am overall happy with everything. I just noticed that on the 401k web page there is a link to "Fidelity BrokerageLink" (BL for short). From the limited reading that I have done it seems that though BL I can buy practically any Fidelity fund, and not be limited to the handful of funds that I see on the standard 401k web page. Is this right? Are there any traps I should be aware of? Thanks.
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Sep 2, 2014 04:08
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theHUNGERian posted:I just noticed that on the 401k web page there is a link to "Fidelity BrokerageLink" (BL for short). From the limited reading that I have done it seems that though BL I can buy practically any Fidelity fund, and not be limited to the handful of funds that I see on the standard 401k web page. Is this right? Are there any traps I should be aware of? Check to see if there are any additional administration fees. In any case, your selection of funds in your 401k is already fine.
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Sep 2, 2014 04:12
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theHUNGERian posted:Hey guys, That portfolio has a lot of overlap. The Russell 1000's 500 smallest companies are already part of the Russell 2500. Also, the Russell 2500 is about 19% of the U.S. market capitalization, while you have it weighted as 44% of your stock portfolio, excluding overlap from your other fund. You need to find some fund choices that don't overlap so much, and I would generally recommend against concentrating so much of your portfolio on such a small portion of the overall stock market.
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Sep 2, 2014 04:19
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Inept posted:That portfolio has a lot of overlap. The Russell 1000's 500 smallest companies are already part of the Russell 2500. Also, the Russell 2500 is about 19% of the U.S. market capitalization, while you have it weighted as 44% of your stock portfolio, excluding overlap from your other fund. You need to find some fund choices that don't overlap so much, and I would generally recommend against concentrating so much of your portfolio on such a small portion of the overall stock market. I admit that I haven't put a whole lot of thought into my 401k allocations but that's because I only have the choice between four index funds - the ones I listed above. I have an IRA with Vanguard where I am diversifying more. Thanks ntan1. I'll try to find out if there are any additional costs.
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Sep 2, 2014 04:55
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Inept posted:That portfolio has a lot of overlap. The Russell 1000's 500 smallest companies are already part of the Russell 2500. Also, the Russell 2500 is about 19% of the U.S. market capitalization, while you have it weighted as 44% of your stock portfolio, excluding overlap from your other fund. You need to find some fund choices that don't overlap so much, and I would generally recommend against concentrating so much of your portfolio on such a small portion of the overall stock market. On the other hand, a small cap weighting isn't a terrible thing in general, and the overall allocation of the 401k is really good. He'd probably be just as fine buying the Russell 3000 for the entire US equity portion of his portfolio, but we'd need to see what other index funds are available to him. Overlap is only an issue if you don't realize it's there. Edit: since these are the only ones available, I think things are looking pretty good in the 401k. If overall asset allocation across 401k and other investments checks out, there's no big tweaks needed here.
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Sep 2, 2014 04:58
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Does anyone here have experience with the Thrift Savings Plan offered for federal employees? I'm looking to help out my father who wants to retire at 30 years of service around January. There are some options I need to go over with him concerning his pension (penalties for retiring before 62) but I want to help him the most with the money he has in the TSP. I'm a little bit over my head when looking at all the options offered to him when he terminates his service with them. He is pretty scared to do anything that has to do with balancing his portfolio and right now he has everything in their C fund which just tries to match SPY. This is an overview of the available funds: https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml He can stay in this TSP until 70 1/2 at which point he will need to make a decision on whether to take a lump sum, monthly payments, or purchase an annuity (or any combination of these). From my limited knowledge it seems like it would be a good idea to stay in this TSP as long as he can, maybe rebalancing the portfolio to be a little less volatile when he actually retires, and then taking the monthly payment option when he comes up on 70 1/2. Keep in mind he is super lazy and doesn't want to actively manage any funds and I don't particularly want to manage his poo poo either. I'm pretty uneducated when it comes to what you should do with your money when you actually retire. He won't talk specifics with me but from past conversations I would guess he has anywhere from 200-300k in this thing. punch drunk fucked around with this message at 07:18 on Sep 2, 2014 |
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Sep 2, 2014 06:33
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aw yiss posted:Does anyone here have experience with the Thrift Savings Plan offered for federal employees? I'm looking to help out my father who wants to retire at 30 years of service around January. There are some options I need to go over with him concerning his pension (penalties for retiring before 62) but I want to help him the most with the money he has in the TSP. I'm a little bit over my head when looking at all the options offered to him when he terminates his service with them. How old is he and does he have any other retirement accounts? He'll want to judge his asset allocation across the entire portfolio and not just from one account but yeah, 100% stock is a bad idea if he wants to use it anytime soon. Look for low expense bond funds and read the books in the OP. Do it for yourself even if you don't want to take over running his stuff.
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Sep 2, 2014 13:04
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The Proc posted:How old is he and does he have any other retirement accounts? He'll want to judge his asset allocation across the entire portfolio and not just from one account but yeah, 100% stock is a bad idea if he wants to use it anytime soon. Look for low expense bond funds and read the books in the OP. Do it for yourself even if you don't want to take over running his stuff. He's 59 and no he doesn't. Besides the pension which I believe will be 1.5k a month for 30 years and my mother bringing in about 1.4k a month there is somewhere in the ballpark of 100k in savings and a house I'd guess is worth 175k. If he takes an annuity with them it looks like he could be bringing in about 1.8k a month for the rest of his life in addition to the pension but I don't know poo poo about annuities. I think he also gets social security benefits? He's been a federal employee for 30 years if that makes a difference. They are both looking to retire to a very cheap house they may buy outright out in New Mexico. My dad may even continue some type of small employment part time or something. If he doesn't have to I'm sure he would prefer that.
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Sep 2, 2014 14:30
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District Selectman posted:If you don't mind me asking, how much do you make, how much have you saved, and how much do you expect to have saved by retirement? My partner and I have joint finances and no interest in children. I make 79k/yr, he makes 18k/yr until he graduates in May 2017, at which time he will have very good prospects for a 50-65k/yr job. We haven't saved much yet, but have no debt whatsoever. I maxed a Roth IRA last year, he has about 4k in bonds given to him as a child, we both have like 1k each in our 401k. I just started making "real money" and have 10% going into my 401k right now, until we have enough saved to pay for the rest of us his school out of pocket. After that, I'm expecting to bump my 401k percentage in 2015, start maxing it starting in 2016. He should be able to max his starting in 2017, and we should be able to max both our Roth IRAs every year starting this year even while he's in school. Not sure if we will have much left for taxable accounts or not, it will probably depend on our lifestyle, size of our vacations, and cost of living whereever we end up settling. Right now we live quite comfortably on 25k/yr, so our "technically you can retire with a 4% withdrawal rate" number should be at 625k saved. Probably we wouldn't consider ourselves really retired until we had something like 750k saved and a paid-off house. Expecting to do a Roth conversion while living on taxable accounts or my part-time contracting for the first 5 years. I'm super new to all these concepts, like I had never even heard of early retirement for normal middle class people until 2 months ago. So if my strategy sucks I would definitely appreciate critique, thank you for asking!
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Sep 2, 2014 16:49
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I have a couple quick questions that I've been wondering about for awhile: In an index fund, say VTSAX, are dividends paid via check directly to the investor, or are they automatically reinvested to purchase further shares? Also, I know that dividends are generally redistributed profit that is set (quarterly?) per share. I also know that profit isn't always reflected in the stock price as there is some emotion behind it. My question is if stock prices go down, does the dividend amount always go down? Frequently? Are dividends tied to stock price at all? Are dividends AND/OR stock price increases subject to capital gains tax yearly? What if dividends are reinvested? Do you only pay taxes on profit from stock prices/index funds going up if you sell for profit above what you paid for them? Or if you make 10% of your portfolio you pay for that come tax time? Not ready to invest yet, but my curiosity has been nagging me.
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Sep 2, 2014 19:29
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Knyteguy posted:I have a couple quick questions that I've been wondering about for awhile: This depends on your account settings(also getting a dividend check would be an awful idea in a tax-advantaged account, and not a very good one in a taxable account really).
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Sep 2, 2014 19:36
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Knyteguy posted:I have a couple quick questions that I've been wondering about for awhile: There are basically 3 ways you will pay taxes on a non-tax-advantaged investment account that holds mutual funds. 1. Dividends. These are distributed to you automatically by the fund, but they are basically out of the funds control and really are distributed by the individual stocks in the fund. You can't control when you get these. You will pay 15% for most dividends you receive, and for some (foreign companies or very shortly held companies) you will pay your marginal tax rate. 2. Pass through capital gains. This is completely out of your control, and is caused when the fund is forced to realize capital gains based on rebalancing they do periodically. It's usually a relatively small amount of money, and should be very insignificant in a passive index fund. Some of these will be short term gains and some will be long term gains, and you pay the rate for whatever they are. 3. When YOU sell your shares, you will realize capital gains. This is fully in your control and you will ideally defer as long as possible on paying any taxes. If you have held for more than a year, you will pay long term gains rates (generally 15%). If it's less than a year, you will pay your nominal tax rate. If you have a loss, you can deduct it against your income (up to a limit each year). Search for "tax loss harvesting" to learn more. If you own mutual funds in an IRA/401k, you can set the dividends and capital gains to automatically reinvest without worrying about it, since your exact basis and timing don't matter, because you never have to pay any of the above taxes. In a taxable account, I would absolutely never allow dividends or capital gains to be automatically reinvested. It screws up your cost basis, average holding times, etc, and generally makes a mess of the tax accounting when you eventually have to sell. Usually dividends are not adjusted based on the share price of the company. The company generally plans a dividend payment far in advance and share price is irrelevant to their budget.
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Sep 2, 2014 20:03
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Knyteguy posted:In an index fund, say VTSAX, are dividends paid via check directly to the investor, or are they automatically reinvested to purchase further shares? All mutual funds are required to pass income on to investors at least annually, in the form of a dividend. Through your account provider (Vanguard, Fidelity, etc.) you will have the option to automatically reinvest dividends by buying more shares of the mutual fund. Typically they will not charge you a fee for this type of transaction. quote:Also, I know that dividends are generally redistributed profit that is set (quarterly?) per share. I also know that profit isn't always reflected in the stock price as there is some emotion behind it. My question is if stock prices go down, does the dividend amount always go down? Frequently? Are dividends tied to stock price at all? A company may choose to distribute a dividend at any time, but typically they do it quarterly, semi-annually, or annually. Profits are either distributed to investors in the form of dividends, or reinvested into the company, perhaps for buying new assets or hiring new employees or something like that (this is called "retained earnings"). So-called "blue chip" companies are large companies like GE or IBM that have been paying dividends consistently (and usually growing them consistently) for many years. Other companies may show less consistency in their dividend payments. You can pick a company on Yahoo Finance and look at a graph of their dividends, I imagine most of them will be pretty consistent. Some will have a bigger annual dividend and then the other three quarters will be smaller. These are the types of details that you avoid having to think about by just buying index funds. If the stock price is going to go down, that shouldn't affect the dividend. There's no reason for it to. However, a decrease in the dividend (or the idea that the dividend may decrease soon) would likely cause the stock price to drop. quote:Are dividends AND/OR stock price increases subject to capital gains tax yearly? What if dividends are reinvested? Dividends are considered income (NOT capital gains) regardless of whether you reinvest them or not. Reinvesting is just a convenience offered to you by your account provider. You should still do it though. quote:Do you only pay taxes on profit from stock prices/index funds going up if you sell for profit above what you paid for them? Yes, this is correct. A capital gain happens when you sell something for a price higher than what you bought it for. Echo 3 fucked around with this message at 20:47 on Sep 2, 2014 |
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Sep 2, 2014 20:03
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Thanks for the solid answers.
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Sep 2, 2014 20:19
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Perhaps wrong thread, but here goes. Girlfriend has $6200 left on her car loan @ 2.99%. The payment is $242/month. We are looking to buy a house next summer-time and are building up a fund for our down payment. She is getting a lump sum of cash through inheritance. I am having her use it to nuke her last CC. She will have ~$4200 left over from the inheritance after paying off her CC. Should I have her put it toward nuking her car loan, or putting it toward our down payment fund? Here are my thoughts on each option. - Car loan: Nuking car loan as fast as possible frees up $242/month after it is paid off. Money would not be sitting around earning poo poo interest. Psychological advantage from paying off another loan. - House fund: Putting money toward a higher ~4%ish loan would possibly be more beneficial in the long run than putting it toward a 2.99% loan. Money would be sitting in a low-yield savings account until we buy next year. I am leaning toward having her use the leftover for nuking most of her car loan. Any input? Henrik Zetterberg fucked around with this message at 23:59 on Sep 2, 2014 |
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Sep 2, 2014 23:56
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Option 3, keep it in cash until you're in the house. The loan isn't killing you and $4k extra will give you some nice flexibility. Also I would be amiss not to warn you that it's often a really bad idea to buy a house with your girlfriend.
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Sep 3, 2014 00:09
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not sure about your life situation but my understanding is that car loans are "good" debt to have when trying to build credit, so if you're planning on applying for a mortgage and your credit is currently somewhat suboptimal (<800) it wouldn't hurt to keep that around. e: somewhat unrelated but i also got a decent amount of mileage out of prepaying my credit cards (the day before the close of the statement cycle) to make it look like my credit utilization was lower. I pay off my credit cards every month but i was pretty consistently > 30% utilization in each bill, and the credit reporting agencies don't look at the fact that you pay 100% of your balance every month. Mr. Glass fucked around with this message at 00:32 on Sep 3, 2014 |
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Sep 3, 2014 00:21
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slap me silly posted:Also I would be amiss not to warn you that it's often a really bad idea to buy a house with your girlfriend. *Ended up being a great situation since the house appreciated $200k after we broke up, but I am the luckiest person in the world so don't do what I did
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Sep 3, 2014 01:45
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I'm not worried about that. There are other plans in the pipeline before buying a house together. Just go ahead and assume I used wife instead of girlfriend. Both of our credit scored are fantastic and we both make good money. I'm not worried about not being approved for a mortgage or anything.
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Sep 3, 2014 02:33
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Henrik Zetterberg posted:Both of our credit scored are fantastic and we both make good money. I'm not worried about not being approved for a mortgage or anything. sounds like you're overthinking it, then. if i were in your shoes I would hold on to the 4k for unforeseen house-related expenses.
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Sep 3, 2014 02:44
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Can someone explain to me why WFIOX (Well's Fargo S&P 500 Index) poo poo the bed to the tune of 4% losses that weren't reflected in the S&P around December 11th, 2013? And also why I can't seem to find any news regarding this, and why Bloomberg and Yahoo Finance see this while Morningstar does not? http://www.bloomberg.com/quote/WFIOX:US http://finance.yahoo.com/echarts?s=WFIOX+Interactive#symbol=WFIOX;range=1y http://quotes.morningstar.com/fund/WFIOX/f?t=WFIOX
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Sep 3, 2014 05:16
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baquerd posted:Can someone explain to me why WFIOX (Well's Fargo S&P 500 Index) poo poo the bed to the tune of 4% losses that weren't reflected in the S&P around December 11th, 2013? And also why I can't seem to find any news regarding this, and why Bloomberg and Yahoo Finance see this while Morningstar does not? Looks like an ex-dividend date to me.
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Sep 3, 2014 05:34
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Unormal posted:Looks like an ex-dividend date to me. Ah, right, stupid me. It's interesting that Morningstar isn't showing this drop or the long term effects of this. They must be reinvesting dividends while Yahoo and Bloomberg aren't I suppose.
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Sep 3, 2014 13:02
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Morningstar chart is labeled "Growth of 10K", the others are just price series. I'm actually surprised Yahoo Finance doesn't seem to have an easy way to get a total-return series (meaning, with re-invested dividends) for a stock.
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Sep 3, 2014 14:23
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baquerd posted:Especially for the rock-bottom expense ratio, that's a pretty awesome fund. What's the ticker on it? That said, if you're looking at retiring that early, you need to be maxing out your 401k and/or saving a lot of after-tax dollars, in which case the foreign stocks don't belong in your 401k (not the international REIT though). Missed this question, sorry. Thanks for the advice. The fund doesn't have a ticker as far as I understand - it's provided to my company through my 401k only.
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Sep 3, 2014 15:02
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I currently have an investment account set up through my financial advisor and I have asked for a second opinion on how I should best consolidate my funds in terms of whether to keep putting money into my investment account or in my Roth IRA / 401k. They have asked me for the ticker symbols that I am invested in - is it generally frowned upon to tell others what my financial advisor has my money invested in?
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Sep 3, 2014 20:47
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Hell no. That information is yours to do what you want with.
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Sep 3, 2014 20:55
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aw yiss posted:Federal retirement stuff Your dad should get an annual letter detailing all of his retirement and pay benefits. Mine shows exactly what my pension and TSP annuity (if taken) would be worth if I retire at various ages. There is a wealth of information about what to do with TSP money, but very, very few (1% IIRC) take the TSP annuity. Here's a really good guide: http://www.fleoa.org/downloads/FERSGUIDE-NONAGENTv8.pdf There's also a huge section on retirement on OPM's website. http://www.opm.gov/retirement-services/
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Sep 4, 2014 04:08
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A cool thing about the TSP is the G fund, which is protected from losses by the entire federal government. So even if the stock market explodes, your investment is still safe, which is something that basically nothing else can match. That said, if the stock market exploded, we'd likely encounter hyperinflation, and the G fund doesn't protect you against that, so... yeah. Maybe throw some cash in an L fund too 
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Sep 4, 2014 04:58
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Paul Merriman came out with his 401k allocations for the 100 largest companies in the US. So if you work for one of those companies and you have a restrictive 401k, you could just go with him.
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Sep 4, 2014 18:14
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Background: I'm going to start pumping a Roth IRA. I don't currently have an IRA, and I'm paying down high-impact debt until December. I have a company 401k that's sitting at the match% (currently 4%) and is something like 60/25/15 domestic/bonds/international. I'd like to open a Vanguard Roth, and it looks like I'll need a lump sum of $1000 to begin. I'd like to just throw it in their STAR fund while I build up my reserves. My question is one of account transfers: once I hit $4000 in STAR, could I take $3000 of those funds and move it to another (index) fund penalty free? And, furthermore, does this sound like a good idea?
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Sep 4, 2014 18:28
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Honestly, it doesn't matter much. Save up $1k and use the STAR fund, then transfer to something else once you have $3k. Or save in cash until you have $3k and start with the target retirement fund (or whatever). It's a short term problem, the main thing is just to get the money together in the first place. To answer your actual question, re-allocations are free with Vanguard for the most part.
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Sep 4, 2014 18:49
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DNK posted:My question is one of account transfers: once I hit $4000 in STAR, could I take $3000 of those funds and move it to another (index) fund penalty free? And, furthermore, does this sound like a good idea? I did exactly this and experienced no penalties at all. Later I just dumped the STAR fund entirely for Target Retirement 20XX.
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Sep 4, 2014 19:30
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Droo posted:There are basically 3 ways you will pay taxes on a non-tax-advantaged investment account that holds mutual funds. You might pay 0% for some of these dividends if your taxable income (AGI - deductions) is less than $36,250 for single or $72,500 for married filling jointly.
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Sep 4, 2014 19:39
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Droo posted:You want to maximize a contribution to a roth IRA. You also want to maximize a contribution to a roth 401k if you have that option through your work. Thanks for this advice. But are these services only available through Fidelity? I was trying to go with Vanguard and it appears they didn't know what I was talking about when I asked them about these things.
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Sep 4, 2014 23:00
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Mostly Fidelity-specific, yes. Vanguard will certainly set you up with an IRA and a brokerage account though. I would not suggest changing up all your bank accounts right now. Wait until you have gotten this inheritance dealt with and have had time to figure out exactly what you want for banking.
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Sep 4, 2014 23:13
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Also, if I inherited that money, can't I NOT put it toward a Roth IRA??
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Sep 4, 2014 23:14
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slap me silly posted:Mostly Fidelity-specific, yes. Vanguard will certainly set you up with an IRA and a brokerage account though. Yeah, that's the thing, I'm really satisfied with my credit union. Maybe someone else can give some advice on my same initial question? I haven't made much progress researching on my own.
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Sep 4, 2014 23:15
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Redkist posted:Also, if I inherited that money, can't I NOT put it toward a Roth IRA?? Sure. He suggested that because you said you wanted to put it towards your retirement. Um, or the person who posted the question if it wasn't you. ....aaaaand I'm confused now. What is the question again?
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Sep 4, 2014 23:17
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