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Easychair Bootson posted:I've been reading on bogleheads about asset allocation across multiple accounts, and one thing I don't see mentioned is consideration about the timing of withdrawals. I have a traditional IRA from a 401k rollover and I have a Roth IRA that I'm currently contributing to. Both are at Vanguard. I'm guessing that I'll want to tap the Roth first, at age 60 or older, and I may not be fully retired then, meaning I'm in a higher tax bracket. I'm in my 30s now. Should I be weighting the Roth slightly less aggressively than the traditional? Or is that such a minor consideration at this point that I can ignore it for now? Don't worry about withdrawal location, in regards to risk and asset allocation. Bogleheads also recommend having stocks in taxable and bonds in IRA's. It is customary to access taxable accounts first (Being able to choose tax lots and take advantage of lower cap gains rates tends to be very tax efficient), which often mean selling stocks on a whim.This is no big deal... the effect on asset allocation is often quite small and even if it were large, you could re-buy the same asset class in your IRA's to maintain balance. In your case, withdrawing from a Roth while rebalancing in a traditional would achieve the same purpose. Once you start spreading your funds around several different accounts (which could include a spouse's), it is only the overall asset class that matters and any withdrawals from any location can be easily fixed from an asset allocation point of view.
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Mar 4, 2015 01:57
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80k posted:Don't worry about withdrawal location, in regards to risk and asset allocation. Bogleheads also recommend having stocks in taxable and bonds in IRA's. It is customary to access taxable accounts first (Being able to choose tax lots and take advantage of lower cap gains rates tends to be very tax efficient), which often mean selling stocks on a whim.This is no big deal... the effect on asset allocation is often quite small and even if it were large, you could re-buy the same asset class in your IRA's to maintain balance. In your case, withdrawing from a Roth while rebalancing in a traditional would achieve the same purpose. Once you start spreading your funds around several different accounts (which could include a spouse's), it is only the overall asset class that matters and any withdrawals from any location can be easily fixed from an asset allocation point of view.
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Mar 4, 2015 03:57
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GoGoGadgetChris posted:You guys and gals are insane if you think an HSA should come before a Roth IRA. Contributing to a Roth is as easy as depositing in a checking account, and I could withdraw every penny I've ever contributed right this second without any penalties or a fistful of Nasonex receipts. MJBuddy posted:The first rule should always be: Do some math to figure out which is better for you. If your HSA is empty, it's probably better to contribute to it before your Roth; if your HSA has 10k in it, the Roth takes advantage. The point is that the choice is dependent on a combination of investment minimums, investment options, immediate medial expenditures, home dynamics (1 HSA for an entire family on a non-family HCP vs 2 HSAs vs etc etc), your deductible (in which your HSA directly influences your emergency fund requirements and allows you to carry a smaller emergency fund with tax advantage over Roth IRA), and probably some other things. My wife goes to PT frequently, for instance, and it's a known cost that we can pay with pre-tax dollars; it's stupid to contribute to a Roth IRA over an HSA to pay for that, because in one case is literally paying 50% more for medical expenses. Ease has nothing to do with it, because I can just swipe a card to handle an HSA, and again if your account is empty you can literally get tax free income by just claiming medical expenses on your taxes and just distributing to yourself. Again, as your HSA grows all of those benefits drop, but if you've got an empty Roth IRA account and an empty HSA account, the HSA makes more sense in the short run; long run retirement leans Roth, but hell Maxing Roth and HSA isn't even that difficult and if it is for a given income level, the difference between the two entire depends on your current health needs. Fancy_Lad posted:
It's a pretty common thing, from what I can tell. All HSA eligible plans are HDHP, and all HDHP + HSA options are CDHP, but not all CDHP are HDHP.
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Mar 4, 2015 06:15
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I just finished reading Straight Talk on Investing by Jack Brennan. Like The Bogelhead's Guide to Investing, it raised a few questions for me I'm hoping this fine thread can help out with. First off, I'm 25 and my only holding is Vanguard's VASGX. I hold it in a Roth IRA of which I've contributed the max. It's breakdown is 1 Vanguard Total Stock Market Index Fund Investor Shares 55.6% 2 Vanguard Total International Stock Index Fund Investor Shares 23.9% 3 Vanguard Total Bond Market II Index Fund Investor Shares 16.4% 4 Vanguard Total International Bond Index Fund Investor Shares 4.1% 1. Should I be investing in anything else? I have plenty more money to invest (~40k that's just sitting in a savings account), however I don't want to do so in a non-tax sheltered account if it's not worth doing; I'm unclear on whether or not it's worth it to invest additionally outside a Roth IRA for my purposes (just generally trying to make windfall money work for me rather than just sit; I don't have concrete plans to purchase a house or anything in the near future but having money to do so would be great). 2. Should I be putting additional money into a money-market fund? What are your experiences with that and if so which fund that Vanguard offers should I be looking at? 3. Can someone explain whether or not I should be "dollar-cost averaging"? I'm a little fuzzy on what this means and whether it means I should have put money slowly in my IRA over a period of months or not. Just generally confused on this concept. Thanks for helping out a newbie investor.
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Mar 4, 2015 10:19
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Tortilla Maker posted:I have a 401(k) through work and have been contributing well beyond my employer match of 5%. I currently do not have IRA accounts that I contribute to. My wife has neither 401(k) or IRA accounts, so all retirement investment has been through my 401(k). Saint Fu posted:You might want to consider contributing to an HSA if available to you. This could be either before or after priority #2. Otherwise, yeah you got it. You are correct that contributing to the traditional 401(k) or traditional IRA would reduce your taxable income this year. I'm glad it sparked some HSA discussion though. I personally wrestle with what would be more beneficial for me a well, so hearing other people's opinions on what isn't a cut and dry BFC consensus is very interesting to read.
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Mar 4, 2015 12:40
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GoGoGadgetChris posted:
This is the biggest disadvantage I see with HSAs today, the lack of selection. I don't have a direct deposit option available through employer so I had to find an account on my own, and I have my HSA funds parked in an account with Alliant earning 0.65% . That's the best I've found for an account of my size (opened last year, currently just <5k).
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Mar 4, 2015 15:38
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trigonsareNOThomo posted:I just finished reading Straight Talk on Investing by Jack Brennan. Like The Bogelhead's Guide to Investing, it raised a few questions for me I'm hoping this fine thread can help out with. VASGX is good for your age, and probably safe to leave there until you have enough that you can buy equivalent index funds as Admiral shares. I'd leave it as is, personally. You say you have $40k in savings, is that in addition to your emergency fund? If not, I would say that it is a good chunk of money as emergency fund or savings for a future house or something (even if you don't think so now, you could change your mind in 5 to 7 years, in which case it will be there). Money market funds are returning near 0% right now. Your are probably better off putting that money into a "high interest" (lol) online savings account at Ally or some local credit union. 1% APY is pretty much the most you'll get right now no matter where you look. The general consensus on investing money is the earlier the better. If you have the full $5500 to put in your Roth on January 1 of that year, do it. If not, put as much as you can each month to hit that goal as soon as possible. You can't time the market, so just get it in by any means necessary.
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Mar 4, 2015 15:46
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trigonsareNOThomo posted:3. Can someone explain whether or not I should be "dollar-cost averaging"? I'm a little fuzzy on what this means and whether it means I should have put money slowly in my IRA over a period of months or not. Just generally confused on this concept. Dollar Cost Averaging is a method for people who lack the ability to commit to get into the market. If you have no problem buying while knowing that the price may go down tomorrow then just go ahead and buy. Over a long time period it's going to make little to no difference. If you are totally worried that the fund you are buying might cost slightly less tomorrow and that possibility causes you to fail to enter the market at all then go ahead and use DCA to mitigate the cost of a likely minute and almost certainly temporary paper loss due to volatility. You are in a fairly aggressive fund though so I doubt if you are that concerned by volatility. Using DCA to enter the market will also cause you to mitigate any rises in the market that occur while you are cautiously getting your toes wet as well. TANSTAAFL and all that.
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Mar 4, 2015 17:45
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Investing assumes that your stock purchases will be worth more in the long term. Dollar cost averaging assumes your stock purchases will be worth less in the short term. It's market timing at worst and peace-of-mind insurance at best, but really, in 30 years you won't care if your 2015 purchase of SPY was at $210 or $205.8.
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Mar 4, 2015 20:11
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GoGoGadgetChris posted:Investing assumes that your stock purchases will be worth more in the long term. Vanguard had a white paper on DCA and found that even though it lowered short term risk by a bit, it led to worse long term returns.
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Mar 5, 2015 00:13
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I would compare DCA to the "snowballing debt" strategy in that neither is necessarily the most mathematically optimal strategy, but they may give confidence or peace of mind to someone who is otherwise stressed out by financial stuff. If using DCA gets you to consistently put your money where it should be and prevents you from otherwise psyching yourself into trying to time the market, then it is a beneficial strategy. If you have no trouble maxing out your IRA on January 2nd of every year without reservations, then to use DCA to spread your purchases out even further would actually be counterproductive.
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Mar 5, 2015 00:45
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Guinness posted:Many HR people are clueless when it comes to investing, just like the average American. They get sold a bundle of high-expense funds by the likes of Fidelity or whoever when they inquire about setting up a 401k plan, and since they don't know any better they just take what they get offered. I think my big corp parent did a pretty good job of bossing fidelity into some no nonsense funds. Our selections are solid plain jane low fee Vanguard, Spartan and the Fidelity ones present are pretty low fee. Some peoples fund selection are so sad I'm floored. How the gently caress people get saddled with these horseshit boutique funds. Hell, I think the Fidelity targets are moronic duds but I think we either have to have those in the package or our corp masters just think that's what they have to do to make it easier.
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Mar 5, 2015 06:11
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AgrippaNothing posted:I think my big corp parent did a pretty good job of bossing fidelity into some no nonsense funds. Our selections are solid plain jane low fee Vanguard, Spartan and the Fidelity ones present are pretty low fee. Some peoples fund selection are so sad I'm floored. How the gently caress people get saddled with these horseshit boutique funds. Hell, I think the Fidelity targets are moronic duds but I think we either have to have those in the package or our corp masters just think that's what they have to do to make it easier. Fidelity also offers lower cost target date funds for 401Ks through their Pyramis subsidiary that deals with institutional investors. I bet they don't advertise them though, because the expense ratios are much lower than the "freedom" series funds.
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Mar 5, 2015 06:26
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AgrippaNothing posted:Hell, I think the Fidelity targets are moronic duds but I think we either have to have those in the package or our corp masters just think that's what they have to do to make it easier. One of the big mistakes fidelity made in their target retirement funds was betting on commodities and then doing a selloff after a few years of bad returns. Vanguard Fund is much better in this respect since it has a fairly consistent strategy and also wisely sticks to broad market focus low turnover mutual funds for the composition.
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Mar 5, 2015 07:22
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Thank you guys for answering and clearing that up. On the money-market subject, that book was written in 2002, so that's probably why money-market funds were even suggested.
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Mar 5, 2015 10:28
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So, uh, market timing. The Fed has been strongly hinting that interest rates are going to go up this summer. You know, just to check things out, see how it goes. They've done this twice since 2008 and each time brought them back down after six months or so. Each time they have done this the bond market has responded with a dip, as you would expect, which then bounces back once the rates go down again. So, uh, yeah. So, hold and aggressively re-balance? Or just move bond allocations to cash and wait for things to settle and buy back in next winter (unless they say they want to go up more so wait another 6 months/year)? Is it really market timing when you know what's going to happen? I just don't feel like I need to be Johnny on the Spot with bonds, the point of them is to smooth out the curve of your total investment over time. I mean the Fed is basically saying this so that you have plenty of warning to get out of the way, right? I guess the risk of getting out to cash is that something emergent happens in the market and people run to bonds and the fed drops the rate again. But then you just buy with everyone else, right?
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Mar 6, 2015 16:40
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Murgos posted:Is it really market timing when you know what's going to happen? I just don't feel like I need to be Johnny on the Spot with bonds, the point of them is to smooth out the curve of your total investment over time. I mean the Fed is basically saying this so that you have plenty of warning to get out of the way, right? You've correctly identified a risk your strategy faces. Now tell us more about how "you know what's going to happen".
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Mar 6, 2015 17:03
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Murgos posted:Is it really market timing when you know what's going to happen? I just don't feel like I need to be Johnny on the Spot with bonds, the point of them is to smooth out the curve of your total investment over time. I mean the Fed is basically saying this so that you have plenty of warning to get out of the way, right? My firm reduced the size of new long positions in bonds starting in 2009 because the bond market was clearly at a top.
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Mar 6, 2015 17:06
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pig slut lisa posted:You've correctly identified a risk your strategy faces. Now tell us more about how "you know what's going to happen". I know the rate is going up, possibly temporarily. Yes, I think that's pretty clear. For the rest FUD is why you buy bonds so if the bonds themselves are uncertain then why hold them? e: I'm talking about holding cash instead not buying Hot Dog futures. Missing out on a small % of possible profit when you know a move is coming seems silly. Droo posted:My firm reduced the size of new long positions in bonds starting in 2009 because the bond market was clearly at a top. Total US stock CAGR 2009-2014 is 17.65% while Total Bond is 4.53% over the same period. Sounds like they made a good decision. Murgos fucked around with this message at 17:32 on Mar 6, 2015 |
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Mar 6, 2015 17:30
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Murgos posted:Total US stock CAGR 2009-2014 is 17.65% while Total Bond is 4.53% over the same period. Sounds like they made a good decision. You are made at least 3 incorrect assumptions. We are not a long only firm, the risk reduced from bonds was not automatically put into stocks (??), and cutting risk doesn't actually affect how much exposure we can have elsewhere. Edit: you also missed the point entirely, which is that people have thought the bond market is at a historic high and about to crash any day now for literally 6 years. Droo fucked around with this message at 17:40 on Mar 6, 2015 |
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Mar 6, 2015 17:37
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Droo posted:Edit: you also missed the point entirely, which is that people have thought the bond market is at a historic high and about to crash any day now for literally 6 years. I don't think it's going to crash. I think the Fed is going to raise the rate by a point, which will drop the Bond market temporarily by 10%. That the effect of raising the rate 1% will cause the bond market to drop is not arguable. They've done it twice, temporarily, in the last 6 years and have been getting hounded by the senate to get on with it. e: In case you missed it I had rebutted your superfluous point (what the gently caress your firm did with their money) with a superfluous point of my own (that the market went up). Murgos fucked around with this message at 18:34 on Mar 6, 2015 |
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Mar 6, 2015 18:29
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Are you looking for advice on whether or not to try to time the market, or the best way to go about doing that?
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Mar 6, 2015 18:38
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Please stop arguing about market timing in the "We don't time the market here" thread, thanks. This crew would probably love to pick up the discussion: http://forums.somethingawful.com/showthread.php?threadid=3259986
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Mar 6, 2015 18:43
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Past performance does not predict future results. Also, the OP's Warren Buffet quote has mysteriously gone missing
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Mar 6, 2015 18:54
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Not a Children posted:Also, the OP's Warren Buffet quote has mysteriously gone missing Whoops! Which one was it? I'll put it back.
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Mar 6, 2015 19:07
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slap me silly posted:Whoops! Which one was it? I'll put it back. It was this one I think 
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Mar 6, 2015 19:10
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Ok, I'm on i---- waaaaaaitaminit
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Mar 6, 2015 19:13
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On the topic of long-term vs short-term investing... if long-term investing is clearly statistically superior, why do people engage in short-term trading outside of viewing it as more interesting form of gambling?
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Mar 6, 2015 20:24
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Because they're special.
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Mar 6, 2015 20:43
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pig slut lisa posted:It was this one I think  E: to add actual content Radbot posted:On the topic of long-term vs short-term investing... if long-term investing is clearly statistically superior, why do people engage in short-term trading outside of viewing it as more interesting form of gambling? Index funds are clearly statistically superior to large actively managed mutual funds. Large mutual funds have an effect on the market when they make trades, whereas a small time investor does not. I am not convinced that MY short term trading strategy (about 35% of liquid non-retirement investments) is inferior to my long term trading strategy. (LT strategy lines up more or less with this thread's recommendations. However, you'll note the amounts devoted and nothing from actual retirement accounts. It won't ruin me if my ST strategy fucks me hard. Bloody Queef fucked around with this message at 20:49 on Mar 6, 2015 |
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Mar 6, 2015 20:44
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slap me silly posted:Ok, I'm on i---- waaaaaaitaminit Pretty sure it was the one about always buying hamburger whether the price is up or down, 'cause you're always gonna need hamburger or whatever found it: quote:To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore. But psl's was p. good too quote:On the topic of long-term vs short-term investing... if long-term investing is clearly statistically superior, why do people engage in short-term trading outside of viewing it as more interesting form of gambling? Either they have knowledge of the industries that they deal in that makes them confident in their trades, or they're hoping to get lucky. A significant number of the latter group believe they can bolster their luck by looking for patterns in the market. They can't, they lose money and the people in the first group laugh all the way to the bank. Not a Children fucked around with this message at 20:52 on Mar 6, 2015 |
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Mar 6, 2015 20:47
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Bloody Queef posted:Index funds are clearly statistically superior to large actively managed mutual funds. Large mutual funds have an effect on the market when they make trades, whereas a small time investor does not. I am not convinced that MY short term trading strategy (about 35% of liquid non-retirement investments) is inferior to my long term trading strategy. (LT strategy lines up more or less with this thread's recommendations. However, you'll note the amounts devoted and nothing from actual retirement accounts. It won't ruin me if my ST strategy fucks me hard. That's fair enough, it definitely seems like you've got a good plan. I guess my question is that, if market timing is truly as silly as is preached here, and if trading individual stocks is a fools' errand, how can you even have a short term strategy in good conscience?
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Mar 6, 2015 20:53
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Radbot posted:That's fair enough, it definitely seems like you've got a good plan. I guess my question is that, if market timing is truly as silly as is preached here, and if trading individual stocks is a fools' errand, how can you even have a short term strategy in good conscience? I'm not sure if you realize just how much people enjoy gambling.
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Mar 6, 2015 21:08
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Radbot posted:That's fair enough, it definitely seems like you've got a good plan. I guess my question is that, if market timing is truly as silly as is preached here, and if trading individual stocks is a fools' errand, how can you even have a short term strategy in good conscience? This would be better handled in the stock thread by others much more knowledgeable than me, however, I'll weigh in. I view short term trading as one of my favorite hobbies. So far, I haven't lost money on my short term stuff on an annual basis since 2001 when I lost 3k during the whole Safguard Scientific crash. I was in high school, and a buddy of mine's father worked at SFE and I took some of his advice completely unresearched and I lost my loving shirt. It's the only hobby of mine that doesn't hemorrage money, and if I lost every dollar in individual stocks, I'd be ahead of the game compared to my other expensive hobbies. I take half the gains from any quarter of short term trading and plow that into my long term stuff. Short term is really only market timing if you're buying and selling index funds all the time. Individual stocks go well beyond that.
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Mar 6, 2015 21:10
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Radbot posted:On the topic of long-term vs short-term investing... if long-term investing is clearly statistically superior, why do people engage in short-term trading outside of viewing it as more interesting form of gambling?
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Mar 6, 2015 23:10
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Not a Children posted:Pretty sure it was the one about always buying hamburger whether the price is up or down, 'cause you're always gonna need hamburger or whatever Rollin' with it. Thanks.
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Mar 6, 2015 23:20
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Cicero posted:Because they're special. Yeah some people do seriously believe that due to analyzing fundamentals or charting you can predict future stock performance.
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Mar 7, 2015 00:03
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etalian posted:Yeah some people do seriously believe that due to analyzing fundamentals or charting you can predict future stock performance.
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Mar 7, 2015 03:49
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cowofwar posted:All you need is to assess the trending direction using indicators. Get in and out quickly. Momentum trading is one of the more common approach and if based on fundamentals, if you misread the sentiment then you still have bought something at a likely discount. So let's say that by getting in and getting out quickly, you can make 0.1% a day from base. That's 25% a year. All you have to do to get Madoff levels of returns is get a 0.1% edge a day. Of course, if you can't get 0.1% of an edge using your super duper awesome method, maybe it's not so great? As far as buying things at a likely discount, pretty much everything you can buy is at a discount from the future value 10-20 years from now.
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Mar 7, 2015 04:13
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What would you guys pick from my work's Fidelity 401k options? FID US EQ INDX CL 2 looks like it's just an S&P index fund, maybe that + a little international? There's also the option of target retirement date funds which somehow have an expense ratio of 0.75%. Funds:  Gross expense ratios: 
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Mar 7, 2015 08:30
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