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GoGoGadgetChris posted:Opening an IRA doesn't cause any implications of any sort. You could open up 10,000 IRA accounts and it wouldn't matter. Just to clarify for anyone who's new to having an IRA, the above doesn't mean you can contribute $5,500 each year to each account. Your total annual contribution is limited to $5,500, whether that's in one account or multiple accounts.
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Oct 10, 2014 21:22
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So have anybody else's portfolios been making GBS threads the bed recently? My 401k went from ~15% rate of return in July to .26% return this morning.
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Oct 11, 2014 14:57
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TwoSheds posted:So have anybody else's portfolios been making GBS threads the bed recently? My 401k went from ~15% rate of return in July to .26% return this morning. Yeah the S&P 500 is down over 3% in the last three months and down over 5% in the last four weeks. I'm thrilled. I just doubled my biweekly 457 contributions a couple pay cycles again so now I'm buying stocks on sale. Unless you're hoping to cash out your 401k in the very near term you shouldn't worry about this at all, and should instead try to up your contribution if you're not already maxed out for the year.
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Oct 11, 2014 15:16
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pig slut lisa posted:Yeah the S&P 500 is down over 3% in the last three months and down over 5% in the last four weeks. I'm thrilled. I just doubled my biweekly 457 contributions a couple pay cycles again so now I'm buying stocks on sale. Not worried, just making sure it wasn't just me. In fact, I just popped another $1000 into my IRA yesterday. Just $1,500 left for this year!
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Oct 11, 2014 16:04
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TwoSheds posted:So have anybody else's portfolios been making GBS threads the bed recently? My 401k went from ~15% rate of return in July to .26% return this morning. The SP500 is down to what it was two months ago, it's been on a pretty consistent slide for 3 weeks. In the large scheme of things it's nothing, but you're definitely not alone in seeing your accounts dip.
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Oct 11, 2014 18:30
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Its times like this where I wish I didn't max out my Roth every year.
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Oct 11, 2014 18:34
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This is exactly what Bernstein etc. talk about. This is overall good for young investors and making any moves to sell now is dumb. I'm all for as big a market crash as happens that doesn't cost me my job 
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Oct 11, 2014 21:02
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Alright, the OP is from 2008 and I'm not sure how accurate the info is, since a lot of the vanguard links go to a 404 page error. Anyways, here's some background on me: 32 years old/married/no kids Military Contribute to a Roth IRA on USAA, it's the: URFRX Target Retirement 2040 fund. I only put in about $150/month expendable income is roughly 300/month after doing a balanced budget. I'm debt free except for my wife's car Anyways, I've got about 12 years left in the military before I'm retirement eligible, when I plan on getting out and going to do something else with my life. I do not currently contribute to the TSP. Long story short, I "won" a free consultation with someone from First Command financial planning. After going there and googling what I 'won', it turns out I didn't win anything-they provide military members with a year long free consultation, and if you want to continue with them after a year, they start charging. After he learned the above information, he told me he didn't like that fund at all and it just mirrors the market, and I can afford to be more risky. He also suggested I start up whole-life insurance for my wife and myself. Now, my wife and I did Financial Peace with Dave Ramsey, and he is strongly against whole life insurance and suggests term life instead. He quoted me about $130/month for my wife and I, though I can't remember the specific amounts. I declined the offer. Anyways, the military provides me with $400k life insurance for me and 50k for my wife, which I pay a total of 35/month for, so I'm keeping that for the foreseeable future. He also told me to invest 1-3% of my paycheck into the TSP, but didn't suggest any specific funds. Apparently all this is supposed to happen at our next meeting, but I'm a bit hesitant to go. Anyways, looking for some decent advice on if I should stay with USAA or go with Vanguard for my Roth IRA...will there be any fees to transfer if I do this? Why would I want to go with Vanguard over USAA? What funds should I look at for a Roth IRA where I can afford to be a little more risky? Should I contribute to a TSP? Any idea which fund? Thanks in advance for any light you all can shed on this. Just want to make sure I'm setting myself up decent. And also, if what that guy is offering is actually good advice, I'd appreciate to hear that too.
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Oct 11, 2014 23:55
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nwin posted:Thanks in advance for any light you all can shed on this. Just want to make sure I'm setting myself up decent. And also, if what that guy is offering is actually good advice, I'd appreciate to hear that too. This guy is a shill, run. Just read the books in the OP, they're still all totally relevant. I like Four Pillars! There's no rush, investing is long, slow and boring. You're better off just spending the time getting educated at your leisure.
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Oct 11, 2014 23:58
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Unormal posted:This guy is a shill, run. Just read the books in the OP, they're still all totally relevant. I like Four Pillars! Care to expound on why? He tried to sell me on all his accolades and what he's done in the past, but I was a bit hesitant. That and how during our initial meeting he was trying to sell me whole life insurance made me wonder (iirc they can get a decent commission off those premiums, right?). Also, trying to see if it would be worth it to start investing *something* into a TSP now rather than nothing, or just add that money into the Roth I currently have going.
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Oct 12, 2014 00:01
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Index funds beat nearly all active fund management over time and when you factor in the costs of the active fund management, they beat pretty much all active funds. Of course he wouldn't like a target retirement index account, because he doesn't make money off of that. Read The Four Pillars. It's a quick, easy read and he explains pretty well why financial advisers are generally crooks and what to look for in one if you actually need one(most people do not with a little education, because successful investing strategies are very simple unless you have lots of capital in lots of vehicles). Also depending on the choices in your TSP, you should only consider putting anything in there if you're maxing out your Roth, which you're not yet. Personally I think if you start maxing your Roth, with a military pension in your mid-40s you ought to be in great shape. Nail Rat fucked around with this message at 00:17 on Oct 12, 2014 |
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Oct 12, 2014 00:14
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nwin posted:Care to expound on why? This is advice from the bogleheads section on military finances: "Stay away from anything that says “First Command” on it."
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Oct 12, 2014 00:17
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nwin posted:Care to expound on why? Whole life insurance is terrible. If he is trying to sell it to you, he is most likely not your friend. Lots of people offer "free consultation" and pretty much anyone who is offering this is a salesman and their suggestions should not be trusted. Access to the TSP is great. Vanguard is great. USAA is great as a BANK but their investment options are kinda meh (I love USAA and use them for pretty much everything except investment). The expense ratio you are getting from URFRX isn't awful (0.86% I think?) but it isn't the best. Moving it to Vanguard someday is probably a good idea but is not critical. Main thing is to look at your expenses and figure out how to save more. You can retire and not worry about a different job after 20 in the military but only if you have some money of your own saved up. The military pension on its own won't be enough. TSP is awesome, so if you can put away 5500 each year into your Roth IRA and then another 17,500 pretax into your TSP (Pretax means your actual income will drop by a lot less than 17,500) and do that for the rest of your time in the military you should be in good shape.
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Oct 12, 2014 00:36
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nwin posted:Care to expound on why? Insurance is not an investment, and investments aren't insurance. They're almost exact opposites of each other: with an investment, you generally get a payout because you've risked your money: you lent it to somebody who did something with it and paid you back more, you bought some real or notional chunk of something like a gold bar or a piece of a corporation and sold it for more later, etc. With insurance, you pay the insurer a fixed amount to cover your risk. Whole life insurance is a bad investment, a bad insurance policy, and a way for insurance companies to make huge amounts of money by selling a complicated product that looks kind of like both. Because insurance companies love making huge amounts of money, they offer juicy commissions to shady financial planners, who push them like crazy. If a financial planner offers you a whole life product, your first instinct should be to run like hell. The comment about doing better than the market is a huge red flag, too. That is drat near impossible to do over the long term (or, if you're convinced by the strong form of the efficient market hypothesis, it is impossible through anything but incredible dumb luck). Last year's world-beating fund managed by an absolute genius is almost always this year's middling performer. Not only do actively managed funds tend to suck because they charge huge fees, but they suck because they don't do as well as the dumb funds that just track the market. Basically, your "financial adviser" is Matthew McConaughey in this scene: https://www.youtube.com/watch?v=cBmlpHr_iH4
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Oct 12, 2014 00:44
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You'll understand why we are quick to recommend Four Pillars to you once you read it. It thoroughly warns individuals against "professional" investors, as it is equivalent to gambling, but they get to charge you money for them gambling.
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Oct 12, 2014 01:51
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Vilgan posted:Whole life insurance is terrible. If he is trying to sell it to you, he is most likely not your friend. Lots of people offer "free consultation" and pretty much anyone who is offering this is a salesman and their suggestions should not be trusted. TSP is basically the military 401k, except all the index funds/target retirement funds don't have ripoff expensive ratios like in many private sector 401k plans. Just look at these great expense rations for the TSP funds:  Even cheaper than Vanguard
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Oct 12, 2014 02:57
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nwin posted:Alright, the OP is from 2008 and I'm not sure how accurate the info is, since a lot of the vanguard links go to a 404 page error.
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Oct 12, 2014 04:39
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Didn't see this mentioned in the OP, but what is the thread's consensus on using the investment services of my bank (HSBC) to help plan something out?
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Oct 13, 2014 03:54
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Inertiatic posted:Didn't see this mentioned in the OP, but what is the thread's consensus on using the investment services of my bank (HSBC) to help plan something out? Probably not helpful. I don't know anything about HSBC specifically, but I've never heard of a bank providing better advice than the usual Bogleheads "put your money in index funds, three-fund portfolio" type of stuff (which tends to be what we recommend in this thread). Typically the advice they provide is much worse, more like "put your money in the expensive, actively-managed funds that make the most money for us."
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Oct 13, 2014 04:54
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Banks are just a McDonalds style franchise that sell other businesses financial products and collect the commission. Not only will the person you deal with be useless in relation to financial advice but they will be so poorly trained they may screw up anything more complicated than buying a product from a set menu. The best simple advice is to read the four pillars listed in the OP and then get some advice on low effort passive investing from the thread.
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Oct 13, 2014 06:41
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Devian666 posted:Banks are just a McDonalds style franchise that sell other businesses financial products and collect the commission. Not only will the person you deal with be useless in relation to financial advice but they will be so poorly trained they may screw up anything more complicated than buying a product from a set menu. Also thank god for heavily diversified low cost ETFs like Vanguard total world and total bond. You can basically do all you investing with a few simple ETFs and never have to worry about stock picking.
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Oct 13, 2014 07:11
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Inertiatic posted:Didn't see this mentioned in the OP, but what is the thread's consensus on using the investment services of my bank (HSBC) to help plan something out? YMMV but I was offered a free consultation from a Chase investment adviser. By the end of the session I was explaining to him the differences between marginal and effective tax rate when contributing to a roth as well as why reservations about a CD and yield curves and liquidity premiums.
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Oct 13, 2014 15:02
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I usually drop 5,500 in my Vanguard Roth IRA (Target 2060) when I wake up every Jan 1. I'm considering putting this money in a taxable account early before the year starts (to get more time in the market) and then transfer that money to my Roth on Jan 1. Is there any disadvantage to doing it this way? Will I get ruined on December distributions or have annoying tax implications in April?
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Oct 13, 2014 16:00
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Well you'll pay short-terms capital gains taxes on any prospective gains, which means probably at least 25% for you if you have that cash sitting around well before the year. So let's say you do it two months early. You're essentially gambling that in two months you'll make enough in gains to be worthwhile after getting taxed 25% on those gains. That's an incredibly short period of time. I would think if anything, take some extra money and start a real taxable account(because obviously you can) and just keep contributing to the Roth with fully-liquid assets like you have been. But I could be wrong.
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Oct 13, 2014 16:15
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Nail Rat posted:Well you'll pay short-terms capital gains taxes on any prospective gains, which means probably at least 25% for you if you have that cash sitting around well before the year. So let's say you do it two months early. You're essentially gambling that in two months you'll make enough in gains to be worthwhile after getting taxed 25% on those gains. That's an incredibly short period of time. Yep, I agree with this. A well planned taxable plus tax deferred investment account sounds like the way to go. I have more than half our investable assets in a taxable account and usually go years without making a sale in the taxable. Just do aggressive rebalancing in tax deferred accounts to maintain overall balance in the overall portfolio. Read this: http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement 80k fucked around with this message at 16:28 on Oct 13, 2014 |
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Oct 13, 2014 16:26
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What is the general opinion of Acorns? I'm playing around with it a bit, having no experience in investing at all, but it was really easy to setup and I like the "round-up your purchases" way of contributing.
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Oct 13, 2014 18:08
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Droid Washington posted:What is the general opinion of Acorns? I'm playing around with it a bit, having no experience in investing at all, but it was really easy to setup and I like the "round-up your purchases" way of contributing. It's a neat idea, but not really something to recommend. If you figure out your average monthly "round up" amount you can just as easily set up an automatic deposit of that amount to a better and cheaper account. Something a lot of people like is that there is only a $5 minimum, in comparison to $1000 for the cheapest Vanguard funds, but the $12/year fee eats up the gains of anyone with that little money invested. Also pretty much the entire target audience of this app should be investing into a Roth IRA where their investments can grow tax-free, but I think it only supports a standard taxable account at the moment. THF13 fucked around with this message at 19:18 on Oct 13, 2014 |
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Oct 13, 2014 19:07
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Here's a nice simple and dumb question from a goonette without a job (but who hopes to get one soon). When they say to save 15% of your income, does that factor in the amount your employer contributes? So if my employer will match up to 3%, should I just save 12% and let them boost me up to 15% or do I save the full 15% regardless?
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Oct 13, 2014 21:55
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JibbaJabberwocky posted:Here's a nice simple and dumb question from a goonette without a job (but who hopes to get one soon). When they say to save 15% of your income, does that factor in the amount your employer contributes? So if my employer will match up to 3%, should I just save 12% and let them boost me up to 15% or do I save the full 15% regardless? Short answer: The more you can get into tax-advantaged accounts, the better. If you can comfortably put away 15-20% you'll be set for retirement and have way more flexibility and security later in life. Generally if you're getting started in your early 20s, 10% is a fine amount but more will give you flexiblity.
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Oct 13, 2014 21:58
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JibbaJabberwocky posted:Here's a nice simple and dumb question from a goonette without a job (but who hopes to get one soon). When they say to save 15% of your income, does that factor in the amount your employer contributes? So if my employer will match up to 3%, should I just save 12% and let them boost me up to 15% or do I save the full 15% regardless? I like Twerk's answer. Here's my perspective, though. The 15% rule is a suggestion as an easy-to-remember number that will hopefully prompt a lot of people who are not saving adequately for retirement, to save more. But ultimately your own retirement savings should not be based on comparisons to how much other people are, or should be, saving. If you are the kind of person who gets cold sweats and panicking feelings every time you even think about long-term financial planning, then sure, by all means set your savings rate to 15%, pick a retirement date mixed mutual fund that roughly matches your retirement year, and then don't worry about it and you'll likely be fine. But the right approach is to sit down and try to figure out what your plans are for retirement. At what age do you plan to retire, how much money will you probably need each year of your retirement, how long are you likely to live (and how long will you be lucky to live). Take inflation into account, assume a modest rate of gain over the life of your retirement savings (say, 5-6%), and decide whether based on your career you can assume you'll be making more money at later years (and therefore able to save more) than you do now. Then you can figure out exactly how much you need to save to be on track based on your estimates. You'll have to take inflation and compound interest into account, as well as taxes, so it can get complicated. But there are calculators to help you out. Of course your assumptions today will likely wind up not being exactly right. This is why it's good to "check in" with your plans annually, just to see if anything has changed. Perhaps you'll have kids and want to save for their college funds, perhaps you'll have a change in your health or your career or something. That's OK, it's impossible to know exactly what your life will be like 30 years from now. But if you make reasonable savings plans based on conservative estimates for what you'll earn and liberal estimates for how long you'll live, you'll wind up OK. That amount you wind up calculating you need to save might be 8% or it might be 20%, and nobody in this thread can really tell you. The 15% number is just for people to get an idea and get started, because doing what I just described is sadly rare these days, even among people who outwardly seem to be "good with money." Understanding all of that, you'll get why nobody really wants to answer your question about whether you should include or exclude your employer match in your 15% number... if you're at the point of noticing you have a match and thinking about your retirement plans, you're already past the point where the 15% number should be your guide.
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Oct 13, 2014 22:23
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If you will have the same level of expenses in retirement that you do in your working years, and you believe that you can live off 4% of your assets in perpetuity, then a 15% savings rate produces a career of 43 years. Bump it to 20% and you're down to 37! Table:  (The table doesn't really make a whole lot of sense past 75% or so).
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Oct 13, 2014 22:36
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GoGoGadgetChris posted:(The table doesn't really make a whole lot of sense past 75% or so). How so? Looks like it's straightforward math.
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Oct 13, 2014 22:51
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baquerd posted:How so? Looks like it's straightforward math. Mathematically it does, but conceptually not as much. If you are able to save 100%, it means your annual expenses are $0 and you need $0 in savings. The 75%+ savings rates tend to produce very, very low annual incomes (75% savings rate of a $100,000 salary will yield you a $23,695 annual withdrawal, compared to $47,395/annually if you do 50% savings on that same $100,000 salary).
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Oct 13, 2014 23:04
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I'm trying to set aside 24k in savings over two years to help my husband cover expenses when I go back to grad school. So I think if I just put away 10% for those few years then when I'm out with my doctorate and making bank I can set aside 15% for the rest of my life easily. Sadly I wont have a lot in retirement by the time I'm 30 though (like 10k). I'll have basically been in college straight from 18 to 30 with only like two years of full-time work. After I hit 30 I wont be in school anymore and I can focus on saving money for babies, a house, and retirement. Oh and paying off my student debt. But it shouldn't be hard to pay off $25k in debt with a starting salary of like $80k, right? Does only having 10k in retirement by 30 sound like I'm hosed? I can't tell if I'm hosed.
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Oct 14, 2014 00:09
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JibbaJabberwocky posted:
How much will you plan to save per year ($, not %)? How many years could you stand to work? If you have $10,000 when you turn 30, and you save $12,000/year from age 30 to 55, you'll have $526,409 in today-dollars (assuming 7% return - 3% inflation). Doesn't seem hosed! Especially since you'll probably get raises and be able to save more than $12,000/year.
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Oct 14, 2014 00:13
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JibbaJabberwocky posted:I'm trying to set aside 24k in savings over two years to help my husband cover expenses when I go back to grad school. So I think if I just put away 10% for those few years then when I'm out with my doctorate and making bank I can set aside 15% for the rest of my life easily. Sadly I wont have a lot in retirement by the time I'm 30 though (like 10k). I'll have basically been in college straight from 18 to 30 with only like two years of full-time work. After I hit 30 I wont be in school anymore and I can focus on saving money for babies, a house, and retirement. Oh and paying off my student debt. But it shouldn't be hard to pay off $25k in debt with a starting salary of like $80k, right?
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Oct 14, 2014 00:21
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Saint Fu posted:The key is to keep living like you are now (with presumably little money available for discretionary spending) once you get a job. The people who are hosed are the people who inflate their lifestyle to match any increases in income. The smart people take their raise and dump most or all of it in savings and continue to live as if they were still on their previous income. I can't keep living like I will be next year when I actually get a job because I'll have extra expenses when I want to buy a house or have kids. Like, I get that I'm only 24 now and in a few years I'll be done with school and have a rad job as a Midwife and I will only make more bank the longer I work but I'm still afraid of not saving enough... But I guess it's better to be paranoid about money than running around spending it like I poo poo money.
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Oct 14, 2014 02:02
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Now would be a good time to start upping those 401k contributions. As a young investor, this is pretty fun to watch (as long as I don't lose my job).
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Oct 15, 2014 18:55
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Gorman Thomas posted:Now would be a good time to start upping those 401k contributions. As a young investor, this is pretty fun to watch (as long as I don't lose my job). Too bad I'm already at the cap 
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Oct 15, 2014 19:18
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nwin posted:Anyways, looking for some decent advice on if I should stay with USAA or go with Vanguard for my Roth IRA...will there be any fees to transfer if I do this? Why would I want to go with Vanguard over USAA? What funds should I look at for a Roth IRA where I can afford to be a little more risky? Should I contribute to a TSP? Any idea which fund? As active military you don't get TSP matching, right? Well TSP is highly illiquid. You can withdraw money but there are pretty severe penalties. So I recommend funding your Roth IRA first, and only after you max it out pump as much as you can into TSP. Yes, your fees are slightly higher in the Roth IRA than in TSP, but you're already making a great move transferring from USAA and at this point I think you'll be talking fees in the tens of dollars as opposed to hundreds or thousands of dollars later on when your accounts grow.
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Oct 15, 2014 19:35
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