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Cicero posted:Please add in the expense ratios for each fund. I think T-A is going through a remodel right now on their website and I can't find expense ratios for anything...should I just go with the lowest expense ratio options over something like the 10 year return rate? slap me silly posted:This is the main decision. Anything more detailed than that, you'll have a hard time finding a robust justification for it, and you can get any opinion you like if you ask enough times. What are you thinking right now? I'm thinking I want to add some small caps but dont know a lot about them other than their potential for growth into a large cap and that they are riskier than larger caps. what percentage of my portfolio should be small caps compared to large caps?
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# ? Sep 23, 2014 07:35 |
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# ? May 27, 2024 02:28 |
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seniorservice posted:I'm thinking I want to add some small caps but dont know a lot about them other than their potential for growth into a large cap and that they are riskier than larger caps. what percentage of my portfolio should be small caps compared to large caps? Impossible to say, in my opinion. You can get various estimates by looking at historical data in different periods. Someone else probably has a real number to suggest. I avoid the whole discussion by using market cap weighting and forgetting about it (Vanguard total stock market index). If you like a small or value tilt (read this and this), funds like NAESX and VIVAX will give you that but you need to know how much you want. Actually I think US/international allocation might be the second priority over stocks/bonds but anyone else feel free to chime in...
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# ? Sep 23, 2014 08:12 |
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seniorservice posted:Looking to rebalance my 401k, I'm late 20's and willing to take on a significant risk, but don't know a lot about most of these options. I'm familiar with Vanguard and like them for the low expense ratios, so I'l probably incorporate them into my portfolio. I think I'm looking for 90% stocks with 10% bonds per the recommendations but not entirely sure how much I should put in small caps vs big cap index funds. Any advice? these are the options that Transamerica gives me Pick the smallest expense ratio fund in each category. If I were you, I'd put 10% bonds, 25% international stocks, 5-10% in small cap and the rest in large cap. If you have an IRA of some sort, don't forget to take that into account. You want your 90/10 stocks to bonds ratio to apply to all the money that you are saving for retirement. This article gives a great overview.
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# ? Sep 23, 2014 14:45 |
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Can I take out a partial balance early from a 401k, or do I have to cash the whole thing out? Like if my 401k balance is $10,000 and I want to take $5000 out and leave $5000 in, can I do that and just pay the penalty/taxes on the money I took out? Or is cashing out the entire thing/taking a loan from the balance my only options?
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# ? Sep 23, 2014 21:53 |
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EugeneJ posted:Like if my 401k balance is $10,000 and I want to take $5000 out and leave $5000 in, can I do that and just pay the penalty/taxes on the money I took out? You're asking this in the long-term investing thread? Don't touch your loving 401k unless you're rolling it into an IRA or retiring. That said, sure you can take out $5000 from it and just pay the taxes and penalty on that.
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# ? Sep 23, 2014 22:11 |
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EugeneJ was the guy with the horrible 401k options managed by horrible people, I think. That said, it probably makes more sense to find work somewhere else (because IIRC he's paid badly anyway) and then roll it over into an IRA, if you're just pulling the money out because the 401k setup is bad.
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# ? Sep 23, 2014 22:15 |
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I get paid more now and am just verifying what kind of access I'll have to the 401k money in a worst-case scenario. Thanks guys.
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# ? Sep 24, 2014 00:40 |
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Pretty sure EugeneJ just trolls. Odds of paying the penalty ever making sense are pretty close to 0.
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# ? Sep 24, 2014 00:42 |
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Vilgan posted:Odds of paying the penalty ever making sense are pretty close to 0. Financial emergencies happen
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# ? Sep 24, 2014 01:13 |
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Worst case 401k scenario is that your company embezzles the whole thing and you lose it completely. Second-best-worst-case is it enters a 401k blackout period and you lose the ability to access it for years. There are plenty of cases where drawing on your 401k is the best of your terrible options. Unormal fucked around with this message at 01:26 on Sep 24, 2014 |
# ? Sep 24, 2014 01:23 |
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seniorservice posted:I'm thinking I want to add some small caps but dont know a lot about them other than their potential for growth into a large cap and that they are riskier than larger caps. what percentage of my portfolio should be small caps compared to large caps? If you are interested in a small/value tilted portfolio, something like 25% large, 25% value, 25% small, 25% small value is a common way to go. This is for your domestic allocation only. You would want to do something like 33% int large, 33% int small, 33% emerging market in your international allocation. This is rarely recommended here but it is a fairly common strategy. Some people go with even a higher tilt, coupled with a very high bond allocation. However, generally this is a riskier stock portfolio and your returns will not track the broad market, which some people have difficulty with. The idea of going with the tilted portfolio is that you have a more potent risk profile in your stocks, which means you would want to increase your bond allocation to compensate. Proponents of this strategy believe you have less tail risk because the stability added by an increase in bond allocation is significant. You also diversify across beta, size, value risk factors. The benefits of this diversification is enhanced due to a rebalancing bonus, when you rebalance your portfolio. I would only recommend doing something like this if you know you have the discipline to stick to the strategy for long periods of time. I have been a heavy tilter for awhile now (10 yrs or so). 80k fucked around with this message at 01:32 on Sep 24, 2014 |
# ? Sep 24, 2014 01:30 |
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EugeneJ posted:Financial emergencies happen
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# ? Sep 24, 2014 05:13 |
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Calling any experienced Vanguard users. I'm in a tight spot financially atm and am also worried that my car is going to die any second now. I really don't want to take out a loan if I don't have to. I think I could get some help from my family, and I also have an emergency fund, but I would prefer not to have to dip into either source any more than necessary. I have about $7800 in Vanguard Index 500 Investor Shares. This is not my Roth IRA and I haven't earmarked it for any other specific purpose. It's just been sitting there for years. Are there any penalties or outrageous taxes attached to cashing it in?
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# ? Sep 24, 2014 17:22 |
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If I understand you correctly, you own $7800 worth of VFINX in a plain old, vanilla, taxable, non-retirement account. There should be no fees associated with selling shares of this fund. You can sell any amount up to 100% of your shares; there is no need to sell all of them if you only need half of the money, for example. You will be subject to capital gains tax, which is (basically) a tax on the difference between the price you bought something for and the price you sell it for. To find out how much you have made in capital gains, you'll want to look for a tab or something called "cost basis" (which is, generally speaking, the price you bought the shares for) or "unrealized capital gains/losses" (which is the amount you've gained or lost) on the Vanguard website. You will be "realizing" these capital gains when you sell the mutual fund shares. They'll be split up into "short-term" and "long-term" capital gains. If you let us know how much capital gains you've made on these shares and what tax bracket you expect to be in, we could give you an idea of how much you'll pay in taxes if you sell all the shares.
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# ? Sep 24, 2014 17:33 |
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Long term capital gains taxes if you had any gains. No biggie, yank 'er out and solve your problem.
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# ? Sep 24, 2014 17:33 |
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Echo 3 posted:If I understand you correctly, you own $7800 worth of VFINX in a plain old, vanilla, taxable, non-retirement account. There should be no fees associated with selling shares of this fund. You can sell any amount up to 100% of your shares; there is no need to sell all of them if you only need half of the money, for example. I am in the 25% tax bracket. This is what I see on the Vanguard site's "Unrealized gains & losses" page for the fund: Short term capital gains/loss: $24.21 Long term capital gains/loss: $4,198.48 Thanks guys!
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# ? Sep 24, 2014 17:46 |
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You'll take long term capital gains taxes. And we will call you a quitter.
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# ? Sep 24, 2014 18:03 |
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Blue Scream posted:I am in the 25% tax bracket. This is what I see on the Vanguard site's "Unrealized gains & losses" page for the fund: Tax rate if you're in the 25% bracket is 15% for long-term, 25% for short-term, I think.
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# ? Sep 24, 2014 18:35 |
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Just out of curiosity, does that tax come out automatically when you transfer the money out? I've not lived in the US long and find the tax system bizzare. I will also shortly be getting myself some mutual funds with vanguard - do i need to document all of this on my end of year return, and if I pull some cash out in 3 years (assuming it went up) am I likely to have to pay tax 6 months after that when I file my return? Just want to get my expectations in check.
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# ? Sep 25, 2014 01:01 |
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You pay it when you file your regular tax return. Vanguard (or any provider) will send you documents with all the necessary information, it's not really very much extra work. Out of curiosity, what country are you from? After reading your post I searched on Wikipedia and was surprised to see how many countries don't have capital gains tax.
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# ? Sep 25, 2014 02:42 |
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cubicle gangster posted:Just out of curiosity, does that tax come out automatically when you transfer the money out? No it does not. If you think that the capital gains tax you will owe on your withdrawal is greater than the money you will get back on your tax return, then you should withdraw extra to cover your tax burden.
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# ? Sep 25, 2014 18:08 |
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cubicle gangster posted:Just out of curiosity, does that tax come out automatically when you transfer the money out? No something like a stock sale will just be reported by your custodian/brokerage and you have pay the IRS during tax season. For taxes you end either paying at the ordinary income rate or at the long term capital gain tax rate assuming you held the stocks long enough.
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# ? Sep 27, 2014 17:39 |
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Also note that if it's enough in sales that you're liable to owe a lot at tax time next year, you can avoid any underpayment penalties by paying estimated taxes on those sales now through the The Electronic Federal Tax Payment System site.
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# ? Sep 27, 2014 19:04 |
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Sorry to parachute in like this, but I've read the first couple pages and the last few without seeing this topic addressed. If I missed it on page 150 or something, I'm very sorry. I like to think I make sensible financial decisions, but after reading the entirety of the Slow Motion trainwreck, I decided to take a fresh look at my finances. I've realized that I've been ignoring the substantial student loan from my wife's education. The total is $36,000 and it's at 2.875% fixed. I have the savings to pay this off while retaining a substantial emergency fund. The question I have is whether I should pay it off or invest that money in something like an S&P 500 index fund. My gut says to pay it off so I never have to think about it again, but even given the financial fuckery in the last 10 years, it looks like the average return over the last 10 years was 9%. Goons, help me make a smart decision instead of simply the one that feels good. P.S. If the answer is invest it, should I do something other than a simple Vanguard S&P 500 index fund?
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# ? Sep 28, 2014 04:10 |
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Peanut3141 posted:I have the savings to pay this off while retaining a substantial emergency fund. My gut says to pay it off so I never have to think about it again This is a solid course of action. Go for it and cry no tears about the extra % that you may or may not have gotten. (Investing it in something risky for the long term would probably be reasonable, too. You can totally be guided by your personal preference here.)
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# ? Sep 28, 2014 04:43 |
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slap me silly posted:This is a solid course of action. Go for it and cry no tears about the extra % that you may or may not have gotten. Yeah. Three percent is a nice rate to begin to create this internal dilemma. You could do better in the market as the debt will roughly match inflation, but you're guaranteed that return by otherwise paying it off. If you've got any heartache about having that debt active into the future---go ahead and pay it off. Peace of mind is PRICELESS.
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# ? Sep 28, 2014 13:27 |
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Peanut3141 posted:Goons, help me make a smart decision instead of simply the one that feels good. First off, the best financial decision can be the one that feels good, you still have to live with your money decisions. It seems like you've got a ton of savings, is there anything else you'd do with the money besides invest it? Buy a house? Take a trip around the world? Eat condor eggs? My preference would be to pay it off if the only two options I had were invest or pay it off. Keep in mind that student loan debt (I assume you are American) is nigh impossible to get discharged. No matter what happens (almost) in your life from now until that balance hits zero, you will have to pay that money back. That made me really adverse to holding on to my debt, even though it was ~$10k and 1.6% when I left school.
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# ? Sep 28, 2014 16:52 |
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Is the student loan interest deductible at your income? Do you have 401k, IRA, or HSA space available? If either one of those is a yes, in my opinion you should carry the debt and invest in a portfolio with a stock:bond breakdown that you're comfortable with. If both are no, consider investing anyway IMO. That interest rate is negligibly different from inflation and it's obviously not causing a cash flow problem for you to carry it. The mental benefit of being debt free isn't really priceless if you can quantify what you're giving up to buy it.
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# ? Sep 28, 2014 17:09 |
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MickeyFinn posted:First off, the best financial decision can be the one that feels good, you still have to live with your money decisions. No, I'd just invest it. I already have a house/mortgage, though I might be moving closer to the new job soonish. It might be easier to just have the downpayment in hand as opposed to buying on contingency. I am American, so there's no way to get rid of it. My wife did declare bankruptcy before we met and that was the debt that couldn't be discharged. antiga posted:Is the student loan interest deductible at your income? Do you have 401k, IRA, or HSA space available? If either one of those is a yes, in my opinion you should carry the debt and invest in a portfolio with a stock:bond breakdown that you're comfortable with. If both are no, consider investing anyway IMO. That interest rate is negligibly different from inflation and it's obviously not causing a cash flow problem for you to carry it. It looks like I will be able to deduct the interest, as I'm below the limit. Is there a phaseout region or is it binary? There's still a little space in the 401(k) and HSA, but I contribute close to the max on both of them. However, I haven't been diligent in maxing the IRA for both of us, so that is definitely an option. To be completely honest I have 80k in my CU savings and 15k in checking because I live cheap, every purchase is a minor mental anguish and though I didn't lose my job through the financial crisis, I worried about it all the time. I need to put that money to work avoiding student loan interest or making gains to offset it plus some. I'd like to hold back approximately 20k for an emergency fund. Due to my anxiousness, I'd like to keep another 25k in something convertible inside a year. That leaves roughly 35k that could be thrown at the debt or used for something long-term that I may not be able to access until retirement. Peanut3141 fucked around with this message at 18:08 on Sep 28, 2014 |
# ? Sep 28, 2014 18:01 |
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quote:It looks like I will be able to deduct the interest, as I'm below the limit. Is there a phaseout region or is it binary? There's still a little space in the 401(k) and HSA, but I contribute close to the max on both of them. However, I haven't been diligent in maxing the IRA for both of us, so that is definitely an option. Any tax-advantaged space (401k, IRA, HSA) will blow away 3% (pre-deduction) interest, so do that first. The phaseout starts at 60k MAGI single, 125k joint - details for deducting SL interest are here: http://www.irs.gov/publications/p970/ch04.html You have a large amount of money to invest - you should take some time to read the OP of this thread and some literature (such as Bogleheads guide to investing). It sounds to me like you are a risk-averse person (no problem with that) but that makes it more important to really do your research until you feel comfortable. In my opinion, a Vanguard Target Retirement fund that is appropriate for your age is a good, easy choice for almost anyone to start with for IRA/401k investing.
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# ? Sep 28, 2014 18:35 |
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Peanut3141 posted:No, I'd just invest it. I already have a house/mortgage, though I might be moving closer to the new job soonish. It might be easier to just have the downpayment in hand as opposed to buying on contingency. I am American, so there's no way to get rid of it. My wife did declare bankruptcy before we met and that was the debt that couldn't be discharged. It sounds like you are trying to manage your anxiety as much (or more) than your money. The above poster is right, read the stuff in the OP and get comfortable with your options.
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# ? Sep 28, 2014 19:12 |
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antiga posted:Any tax-advantaged space (401k, IRA, HSA) will blow away 3% (pre-deduction) interest, so do that first. The phaseout starts at 60k MAGI single, 125k joint - details for deducting SL interest are here: http://www.irs.gov/publications/p970/ch04.html I've read the OP and most of the Boglehead's Guide, but your point is well taken. I am rather risk averse, but I do understand that overly-cautious investing itself is a risk that could lead to insufficient funds at retirement. My plan so far is do the following over the next few weeks: 1. Set up a Vanguard Roth IRA for the wife and myself. Contribute 2014 max immediately and 2015 in January. -22k 2. Rollover 401k from last job to Vanguard IRA. 3. Transfer personal AmericanFunds Roth IRA balance to Vanguard Roth IRA. Their loads are what stupidly chilled me on IRA contributions for a few years now. 4. Pay off 3k of the student loans, which is the portion not fixed, currently at 2%. I really don't want to have to track this to see if the rate shoots up at some point. The rest is at 2.875% fixed, sorry for the misinformation prior. 5. Transfer remainder of savings balance to a Vanguard investment account. Questions: A. Will doing 2 have any adverse affect other than keep me from being able to do the Roth IRA conversion trick? I don't really anticipate going past the joint income limit anytime soon. The advantage is avoiding administration fees I didn't pay as an employee and the ability to reallocate funds without transfer charges. B. Regarding 5, suppose I continue to add budget surplus over the next year, 11k for argument's sake. If I then draw out 11k to add to 2016's Roth IRA accounts, does that count against long-term capital gains, or does it pull "fresher" funds first. Again, thanks for all the useful advice. Edit: Oh, and Mint is awesome. We set up all our accounts in it this afternoon and that's what revealed that 3k of the SL was actually not fixed. Now if only I can convince my wife that getting that Net Worth number to move higher and higher each month is a fun game in itself. Peanut3141 fucked around with this message at 00:46 on Sep 29, 2014 |
# ? Sep 29, 2014 00:44 |
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Peanut3141 posted:
Sounds like an excellent plan to me. No personal experience with your questions so I'll invite anyone to jump in. I don't think 2 will have any gotchas other than backdoor rIRA contribution headaches. For your second question you should be able to choose which assets you are selling to avoid short term capital gains. This will be obvious now that you've read Bogleheads but just for the benefit of anyone lurking, there is pretty much no reason to ever buy a loaded fund.
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# ? Sep 29, 2014 14:08 |
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Not sure if this is the right place for this, but here it goes. My girlfriend's parents having been paying into a $200000 whole life insurance policy (plus a $100000 critical illness insurance policy) for her for just over 20 years. The monthly premium on the whole life is about $80/mo, and the critical illness is about $60/mo. She has just turned 30, and her parents are transferring the plans over to her, and she will start paying the premiums. I know normally that whole life insurance is a bad choice. Plus, we don't have kids or any other dependants, and likely won't for some time (if at all). It's my thought that she should cancel these policies and just invest the premiums into mutual funds, and she could get term life insurance if the need arose. However, I've also read that whole life insurance policies really start increasing in value after ~20 years of paying into them. She met with an insurance agent a couple weeks ago and found that the current value of the whole life policies was only a couple thousand dollars if she withdraws. Any thoughts on this? Does it make more sense to just keep the plan at this point now that her parents have dumped over 20 years of payments into it? Or does it still make more sense to end the plan?
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# ? Sep 29, 2014 18:04 |
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2k as a seed plus 140 a month equals over 90k after 20 years with compounding in an investment account(assuming 8% return). It's still over 80k even after you pay long-term capital gains on it. How much would this policy be worth after another 20 years, assuming she doesn't die?
Nail Rat fucked around with this message at 18:55 on Sep 29, 2014 |
# ? Sep 29, 2014 18:41 |
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Freeze posted:However, I've also read that whole life insurance policies really start increasing in value after ~20 years of paying into them. She met with an insurance agent a couple weeks ago and found that the current value of the whole life policies was only a couple thousand dollars if she withdraws. One of these things is not like the other, one of these things just doesn't belong.
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# ? Sep 29, 2014 18:42 |
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Am I reading it right that they have paid 30 grand for 20 years of $300k coverage plus a negligible current cash value? I think you know the answer... But yeah, what NailRat said, what will the cash value be in 20 more years? The insurance part is essentially valueless to you.
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# ? Sep 29, 2014 18:53 |
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I'm not sure what it will be worth in another 20 years. It's so difficult to get any information about the account, we have to go in and talk to the insurance agent again (who is of course doing her best to make my girlfriend keep these plans). It's some type of guaranteed return investment. I have to imagine the cash value would be less than just investing the same amount monthly into an index mutual fund, but I'll get the actual numbers when we go in. So thanks guys. I really just wanted to make sure I wasn't missing something because of the ~20 years of payments already made into the plan. gently caress, what a waste of money. Freeze fucked around with this message at 19:09 on Sep 29, 2014 |
# ? Sep 29, 2014 19:06 |
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You should talk to an insurance agent that doesn't have a (probably large) incentive to convince you that it's a great idea to keep the plan, even if you have to pay them. Alternatively, search for 'whole life' on bogleheads.
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# ? Sep 29, 2014 19:18 |
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# ? May 27, 2024 02:28 |
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Freeze posted:gently caress, what a waste of money. Whole life is absolute garbage. Why does a kid need a life insurance plan anyway.
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# ? Sep 29, 2014 19:23 |