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DrSunshine posted:Is there a "global market index fund" out there, one that tracks every economy in the world? Or would my best bet, if I want to diversify across the entire globe, be to buy into index funds based on those areas' respective shares of the global economy? There are ultra-broad ETFs like Vanguards VT's or Ishares AICW that track stock behavior for the whole world. Still I would go with something like a life strategy fund given how a overseas stock big tilt causes problems like more volatility and also currency fluctuations. The Life Strategy fund on the other hand has a 56% US stock tilt, with a 23% overseas market allocation, the rest being in a bond mix. etalian fucked around with this message at 22:09 on Feb 9, 2015 |
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Feb 9, 2015 18:38
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DrSunshine posted:Is there a "global market index fund" out there, one that tracks every economy in the world? Or would my best bet, if I want to diversify across the entire globe, be to buy into index funds based on those areas' respective shares of the global economy? Funny you should ask!
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Feb 9, 2015 19:28
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To clarify, the reason why many people do not buy something like the above and buy a US one and an International one separately has to do with taxes. But yes, such a fund exists.
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Feb 10, 2015 00:51
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ntan1 posted:To clarify, the reason why many people do not buy something like the above and buy a US one and an International one separately has to do with taxes. But yes, such a fund exists. if you are taking about tax efficiency due to qualified dividends, the total world ETF has a 81% qualified income rate and also only pays a 2.5% yield. Even developed market ETFs like VEU are fairly tax efficient with a 80% QDI rate. etalian fucked around with this message at 01:49 on Feb 10, 2015 |
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Feb 10, 2015 01:45
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Yea there are really no tax issues with it, that is not present in a mix of domestic and international. The actual reasons people may not use it is because: - They prefer a fixed allocation between domestic and international (like 50/50, or 70/30 or whatever) - The expense ratio is actually higher than the weighted expense ratio of an equivalent mix of a total domestic and total international stock index fund.
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Feb 10, 2015 02:16
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It's only with emerging market ETFs that you get a dramatically lower QDI rate.
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Feb 10, 2015 02:37
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moana posted:And hey, here's a no-cost option for you: tell us your age and what you're investing the money for (house, retirement, what?) and we'll tell you exactly what to do for free. Please don't waste your money on "a money guy." For example: What's the best balance for my taxed and non-taxed investments, considering I plan on retiring early within 10 years and will need to live off the income for ~20 years until I can start withdrawing from my IRA and become eligible for SS? How does the balance shift if I want to spend $200 more a month? Can I even afford to retire, will I "make" it to the point where I can start using the IRA funds? What if I planned on buying a house and pulling some/all of the value out of an IRA? What percentage is sensible given all the above? There aren't any perfect answers and it's a pretty complicated question with a lot of moving parts. And I can't be the only one playing around with questions like this - it's good to ask someone else (other than an internet comedy forum) for perspective. Bhodi fucked around with this message at 03:45 on Feb 10, 2015 |
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Feb 10, 2015 03:42
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Bhodi posted:There aren't any perfect answers and it's a pretty complicated question with a lot of moving parts. And I can't be the only one playing around with questions like this - it's good to ask someone else (other than an internet comedy forum) for perspective. I know the internet comedy forum thing was tongue in cheek, but we honestly have some very knowledgeable people who post in this thread. We probably have some CFP's, etc, but even if not, I'm frequently impressed with some of the responses given here by some of the regular posters. Then again, sometimes you do have to read enough to be able to separate the wheat from the chaff... but thankfully there are also people who typically call out any bad advice. That being said, having a more intimately personal session with a professional who you can open all your books to and also has a fiduciary responsibility to help you make the best decisions is probably not a bad idea if you have that much at stake.
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Feb 10, 2015 04:02
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Bhodi posted:There aren't any perfect answers and it's a pretty complicated question with a lot of moving parts. And I can't be the only one playing around with questions like this - it's good to ask someone else (other than an internet comedy forum) for perspective. I love that you think the 30 minute sessions with a mutual fund salesperson at Fidelity will be more useful than online forum conversations. Here are my answers to your questions which are obviously useless I guess. quote:What's the best balance for my taxed and non-taxed investments, considering I plan on retiring early within 10 years and will need to live off the income for ~20 years until I can start withdrawing from my IRA and become eligible for SS? Put as much money as you can into retirement accounts. If you plan to (successfully) retire at 40, you will probably not be able to put all your savings in anyway. Even if you do, there are lots of ways to get the money out early without paying a penalty. Even if for some odd reason you have to pay a penalty, you will probably still come out ahead. quote:How does the balance shift if I want to spend $200 more a month? What percentage is sensible given all the above? Irrelevant because you are putting as much as you can in. quote:Can I even afford to retire, will I "make" it to the point where I can start using the IRA funds? You can use IRA funds any time you want. If you use the existing tax laws to your advantage (e.g. SEPP, conversion ladders, roth principal withdrawal), you can use quite a bit of them penalty-free. quote:What if I planned on buying a house and pulling some/all of the value out of an IRA? If you are draining your IRA to buy a house I am a bit worried about you retiring at 40. But with that being said, I guess if you MMM it then this wouldn't really affect much in terms of planning. Edit: here are my two prior relevant posts on tax deferred vs not tax deferred. http://forums.somethingawful.com/showthread.php?threadid=3259986&userid=0&perpage=40&pagenumber=452#post439626072 http://forums.somethingawful.com/showthread.php?threadid=3259986&pagenumber=453&perpage=40#post439735426 Droo fucked around with this message at 05:54 on Feb 10, 2015 |
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Feb 10, 2015 05:49
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I wasn't slighting you personally! There's a lot of smart people here. But as was said, sometimes it's hard to get accurate advice without showing your finances to a public forum. The balance question referred to stock/bond/other for risk management, obviously you max out all tax advantaged options before overflowing, but semi / early retirement is not the same as traditional retirement so it throws the traditional advice of shifting allocation to bonds out of wack. For me, it's about calculating if I really can retire when I want, and if I need to squeeze some to get my monthly spend down or let the date slip a bit. Plus family planning, incidentals, but it all requires exact figures. 30m probably isn't enough, but it's also not "lol worthless"
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Feb 10, 2015 06:22
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Bhodi posted:For example: What's the best balance for my taxed and non-taxed investments, considering I plan on retiring early within 10 years and will need to live off the income for ~20 years until I can start withdrawing from my IRA and become eligible for SS? How does the balance shift if I want to spend $200 more a month? Can I even afford to retire, will I "make" it to the point where I can start using the IRA funds? What if I planned on buying a house and pulling some/all of the value out of an IRA? What percentage is sensible given all the above? As Droo says, retiring at 40 means you're maxing out your tax advantaged accounts every year besides also saving a good amount of cash post-tax every month, or that you live extremely frugally. It also means that you should be able to do this calculation yourself because you're the sort of self-reliant and forward thinking person who retires at 40 and doesn't want to keep having to pay financial advisers. If your plans are to exhaust your post-tax accounts at roughly the time you qualify for typical IRA and SS withdrawals, you're doing it wrong. If $200 a month changes your plans substantially, you're doing it wrong. If you're drawing down your IRA to pay for a house while intending to retire at 40, you're doing it wrong. In short, perhaps you should consider talking to a financial adviser. Keep in mind your sort of questions are far from the norm and will probably cost you a good thousand dollars or so and at least a solid 2 hour conversation to answer thoroughly by a fiduciary financial adviser. Alternatively, you could listen to an internet comedy forum and use one of the many calculators such as http://www.firecalc.com/
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Feb 10, 2015 06:25
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Bhodi posted:For me, it's about calculating if I really can retire when I want, and if I need to squeeze some to get my monthly spend down or let the date slip a bit. Plus family planning, incidentals, but it all requires exact figures. 30m probably isn't enough, but it's also not "lol worthless" 30 minutes is pretty much worthless because it's just enough time for an adviser to say "hi", get a very basic idea of your question and numbers, and then let you know that they're available for a follow-up appointment tomorrow at the same time. If you actually got a question like you have answered in 30 minutes from a service like you describe I would be utterly shocked, and even more so if the information was of more value to you than 30 minutes of reading on your own.
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Feb 10, 2015 06:28
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Oh personally my fallback plan is to just scrape all the money I can into a giant bin and at some point starting around 40-45ish I'll drop a few days a week of work and go from there. I'm way off track but I was trying to suggest there is a moderate ground between someone who can be told to just go with whatever has the lowest fee and to max out your 401k and someone like me who needs to spend a dozen hours with some books or a two hours and a grand, or of course posting here.
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Feb 10, 2015 06:42
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You know I just realized my entire problem; we all compare things to what we know and as a tech guy if someone picked up tech for dummies and put a few dozen hours into learning something, I'd be incredibly wary of lending any credence to their self-taught knowledge. I thus sort of conclude internally that it's the same for finance, even if it isn't really true, and there probably is a reason they get paid multi-hundred dollars an hour.
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Feb 10, 2015 06:51
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The tech analogue of the average commission-based financial advisor is the guy at Best Buy who helps you pick out a computer.
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Feb 10, 2015 06:56
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Bhodi posted:You know I just realized my entire problem; we all compare things to what we know and as a tech guy if someone picked up tech for dummies and put a few dozen hours into learning something, I'd be incredibly wary of lending any credence to their self-taught knowledge. I thus sort of conclude internally that it's the same for finance, even if it isn't really true, and there probably is a reason they get paid multi-hundred dollars an hour. As someone who's worked in tech and finance, there's a lot of depth to both. But, much like spending a few dozen hours seriously learning Excel will actually make you pretty darn good at it, a few dozen hours put into understanding basic asset allocation and tax strategies for a personal investor without any complicated financial holdings or "interesting" tax situations will make you pretty darn good at it. Put a few dozen more into reading about FIRE withdrawal strategies and you're pretty much good to go. If you want to get into the equivalent of systems administration or software engineering in finance, that's more like creating credit risk models for a combined portfolio of CDS, bonds, CDX, and preferred bonds, or to understand a merger arb deal. 99% of people who need to use a computer (or manage their own finances) don't need to know about it. slap me silly posted:The tech analogue of the average commission-based financial advisor is the guy at Best Buy who helps you pick out a computer. Pretty much. You could get lucky and find an under-appreciated tech guru, or you could find a person who will scan for nudes and charge you $100 to run a anti-virus suite.
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Feb 10, 2015 07:00
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Bhodi posted:You know I just realized my entire problem; we all compare things to what we know and as a tech guy if someone picked up tech for dummies and put a few dozen hours into learning something, I'd be incredibly wary of lending any credence to their self-taught knowledge. I thus sort of conclude internally that it's the same for finance, even if it isn't really true, and there probably is a reason they get paid multi-hundred dollars an hour.
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Feb 10, 2015 07:54
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Bhodi posted:The balance question referred to stock/bond/other for risk management, obviously you max out all tax advantaged options before overflowing, but semi / early retirement is not the same as traditional retirement so it throws the traditional advice of shifting allocation to bonds out of wack. For asset allocation, what I did was figure out what balance I would be comfortable with in retirement (50/50 stocks/bonds for me) as well as how much money I want to have inflation-adjusted in order to retire. Then I basically drew a straight line from 100% stocks to 50% stocks, and I adjust my stock allocation down as I get closer to my goal. I never adjust stock percentage back up, so I'm not really shifting back and forth. It's just an easy way to use portfolio value instead of age as a guideline for "percent in bonds".
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Feb 10, 2015 15:36
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quote:Unless you have a seven figure portfolio, no one of use will talk to you. I have a decent sized portfolio but my advisors are still the recent hires who did some lovely finance course and just dispense out-of-date advice for average people with average needs. The advice you get here will be much more useful because we aren't working off of commission. When it comes to active management though, it's not really clear if there's anyone who's "of use." Look at Bernstein's analysis of giant pension fund management. Nail Rat fucked around with this message at 19:14 on Feb 10, 2015 |
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Feb 10, 2015 18:49
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I have a 401k with a previous employer. I left before the employer contributions vested. Fund selection and fees aside, is there any value in leaving the 401k with the employer's provider? From my perspective, my portfolio is artificially inflated because I see gains on contributions that aren't really mine. I feel like I should take the hit and roll it over to my Vanguard account now, but it's been a while since I've researched the specifics, so I want to make sure I'm not missing something.
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Feb 11, 2015 21:03
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Kobayashi posted:I have a 401k with a previous employer. I left before the employer contributions vested. Fund selection and fees aside, is there any value in leaving the 401k with the employer's provider? From my perspective, my portfolio is artificially inflated because I see gains on contributions that aren't really mine. I feel like I should take the hit and roll it over to my Vanguard account now, but it's been a while since I've researched the specifics, so I want to make sure I'm not missing something. There is literally no benefit to leaving it in your previous employer's plan. Roll it over into an IRA or your new 401k.
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Feb 11, 2015 21:19
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Mr. Glass posted:There is literally no benefit to leaving it in your previous employer's plan. Roll it over into an IRA or your new 401k. I know he said "fees and fund selection aside", but I would like to Reigate to anyone else reading that they certainly do matter as well. My employer started offering an If I left my current job, I'd leave my money in their 401k as long as I could! Edit: institutional, not investor. SpelledBackwards fucked around with this message at 05:40 on Feb 12, 2015 |
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Feb 12, 2015 02:32
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SpelledBackwards posted:I know he said "fees and fund selection aside", but I would like to Reigate to anyone else reading that they certainly do matter as well. Yeah the biggest factor is the quality of the funds, does it have low cost options like Spartan funds or Vanguard funds?
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Feb 12, 2015 03:42
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SpelledBackwards posted:My employer started offering an investor class total stock market Vanguard index fund (VINIX, similar to VTSAX) last year, and its ER is something ridiculously low like .02 or .04%. Just so you know, the "I" is for "Institutional" and not "Investor".
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Feb 12, 2015 05:08
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VINIX has an expense ratio of 0.04%, and VTSAX has 0.05%. Personally I don't think a 0.01% difference in expense ratio ($10 for every $100k you have in there) is worth leaving your retirement in the hands of your former employer.
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Feb 12, 2015 05:24
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baquerd posted:Just so you know, the "I" is for "Institutional" and not "Investor". Doh, it's what I was thinking, but not what I typed.
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Feb 12, 2015 05:38
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Thanks, that's what I figured. I'll start the rollover process this week. As a followup, I'm interested in what happens to my unvested contributions and the unrealized gains on that money from the employer's perspective. Does that automatically roll over to some general pool with the employer? Tax-wise, how are the contributions and subsequent gains treated for the employer?
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Feb 12, 2015 06:01
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When William Bernstein ("If You Can") talks about saving 15% of income, is that post-tax or pre-tax? Obviously pre-tax (with post-tax dollars!) is the better answer, but just wondering what the original intent was.
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Feb 12, 2015 23:28
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Beats me what he meant, but 15% of post-tax is not enough to make me comfortable, personally.
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Feb 12, 2015 23:48
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Kobayashi posted:Thanks, that's what I figured. I'll start the rollover process this week. Yup the employers gets back the non-vested portion of the account if you leave early. It also include any investment gains from the 401k employer contribution portion.
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Feb 13, 2015 01:30
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Radbot posted:When William Bernstein ("If You Can") talks about saving 15% of income, is that post-tax or pre-tax? Obviously pre-tax (with post-tax dollars!) is the better answer, but just wondering what the original intent was. I did some projections and to make myself comfortable I will keep on doing 15%* of gross income into a Roth. That amount saved makes me far more comfortable. If I did it into a traditional (tax in retirement) I would bump the % up higher. Something to consider in my decision is that I'm in a lower tax bracket (25%) now then I will be later. My figures proved to me that I will have more money across my whole lifetime by doing Roth investing at basically any income level, but it's very true I would have a good amount more take home doing traditional. You have to make the decision for yourself or have a financial advisor (some guys/gals here could qualify with their knowledge if not being legal/professional financial advisors) assist you in it. I picked Roth and I'm going to stick with it until I hit the 33% tax bracket and then I'll do some new projections. *I am only doing enough for a match as I save for a downpayment, but total savings is well in excess of 15%. SiGmA_X fucked around with this message at 03:47 on Feb 13, 2015 |
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Feb 13, 2015 01:45
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Radbot posted:When William Bernstein ("If You Can") talks about saving 15% of income, is that post-tax or pre-tax? Obviously pre-tax (with post-tax dollars!) is the better answer, but just wondering what the original intent was. Here's a chart that you might find useful. It's post-tax dollars.  The full post is here and worth reading: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
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Feb 13, 2015 01:56
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SiGmA_X posted:Droo and I got into a discussion about it. I think you might be confusing me with someone else - I don't think I would have argued against using a Roth at the 25% tax bracket. I think at 25% or 28%, you could probably go either way and the best course of action would depend a lot on your circumstances. For example, I don't really plan to work after I'm 40 or so so I will (hopefully I guess) have lots of years without income other than taxable dividends in order to convert traditional IRA money into roth IRA money at the 0% or 15% bracket. If I planned to work for basically my whole life then the Roth would be a lot more appealing. Assuming your marginal rate now is the same as your marginal rate in the future, then the net outcome of either account is identical (i.e. there is nothing complex built in to the compounding that makes one better than the other). The Roth does let you effectively put more money into a tax deferred account, which is nice if you are already maximizing all your options in that regard.
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Feb 13, 2015 02:43
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Droo posted:I think you might be confusing me with someone else - I don't think I would have argued against using a Roth at the 25% tax bracket. I think at 25% or 28%, you could probably go either way and the best course of action would depend a lot on your circumstances. You make an excellent point about being able to put more in via Roth, which is why high income people also prefer it. SiGmA_X fucked around with this message at 03:54 on Feb 13, 2015 |
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Feb 13, 2015 03:50
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I'm curious what y'all think about my 401(k) options. My 401(k) only has two index funds: NMSAX, an S&P small cap 600 tracker with a 0.50% ER and DSPIX, an S&P 500 tracker with a 0.51% ER (to me). All the other options are target dates with ERs around 1.00% and actively managed funds in the 1-2% range. I plan on retiring in 25-30 years and both my fiance and myself make enough money individually to carry both of us if poo poo truly poo poo the fan. We're in very different industries as well so the chances of us both being out of work at the same time are lower than average. We also have a good emergency fund and parents that would help us out if we needed it (only as an absolute last resort). I'm currently 100% in the small cap fund because it's the lowest ER, and I won't touch it for 25 years so roll them dice. My fiance is 100% in a total market index fund with a low ER and has roughly the same amount as I do. Our balances are on track with our retirement goals. I Roth my contributions and my match is traditional of course. Should I add the S&P500 tracker at that price? When I increase my contribution (already maxing out my match), should I do so in a private IRA (Vanguard funds) or by increasing my contribution to my 401(k)? Thoughts?
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Feb 13, 2015 04:04
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I prefer going with more money in a large cap fund, then just going 10-20% in small cap funds. Mainly because small caps are much more volatile than large cap funds but small caps do have better long term investment window returns.
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Feb 13, 2015 05:16
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pig slut lisa posted:Here's a chart that you might find useful. It's post-tax dollars. That dude is amazing. I wonder about that chart though - is it for MMM-style "eternal retirement"? Normally retirement models assume a drawing down of the original principal as one approaches death, but this one talks about being sustainable for 70yrs at a 4% annual withdrawal. Just not sure which model will be more realistic for me.
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Feb 13, 2015 05:23
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I'm pretty sure that chart assumes that if, for example, you're saving 75% of your current salary, you're going to be living on 25% of your current salary in "retirement". I personally don't think that's particularly realistic for most peoples' lifestyles, but if it works for you go with it!
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Feb 13, 2015 05:30
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Mr. Glass posted:I'm pretty sure that chart assumes that if, for example, you're saving 75% of your current salary, you're going to be living on 25% of your current salary in "retirement". I personally don't think that's particularly realistic for most peoples' lifestyles, but if it works for you go with it! Agreed. While certain costs for working go down (committing, work clothes, eating out for lunch if you do it), I imagine leisure trips would offset a good amount of that. Plus early bird specials at all the places seniors like to go, even if it is cheaper than normal meals And right now I get a ridiculous deal on my HDHP insurance, but even in a standard plan we have a great subsidy from the company. I'd hate to suddenly go from cheap health insurance each month to something the equivalent of a car payment or worse to obey the law and also keep from dying.
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Feb 13, 2015 08:25
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Mr. Glass posted:I'm pretty sure that chart assumes that if, for example, you're saving 75% of your current salary, you're going to be living on 25% of your current salary in "retirement". I personally don't think that's particularly realistic for most peoples' lifestyles, but if it works for you go with it! Yeah, it's 'sustainable' savings at that rate. Which is why the figures go particularly nuts when start saving 75%+
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Feb 13, 2015 08:26
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