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slap me silly posted:In the last five years, VFICX has had two 6% drops almost overnight. The first one took two years to recover and the second one hasn't recovered yet. If your time horizon is 2-3 years and your withdrawal is determined by when your car breaks down, you have zero ability to avoid that kind of thing. Are you comfortable with taking on that kind of risk to boost your expected (not actual) return by a couple of percent? That's a good point and my risk aversion would depend on comparable/better funds. But definitely thank you for pointing out the ETF/normal fund point, I was looking only at Vanguard's description of the fund. I'm leaning towards them since my IRA and brokerage are already with them. I'm also at this point open to mutual funds so long as they're diversified enough - I'm not looking for a single industry/region/market focus. Its drops were quick to recover. VSMGX seems to have fared well enough over time. Would that be a better option for my needs?
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Apr 15, 2015 15:14
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honestly, i would be wary of investing in any stock-heavy fund with that kind of time horizon.
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Apr 15, 2015 15:18
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MJP posted:I'd like to put that extra $15k into something that will have a decent balance between risk and maintaining the principal so that if I need to buy a new car in the next two or three years (or more, hopefully) that would help with the cost. I'd rather keep with ETFs and as such VFICX looks fairly solid. My concern as a newbie - given the likelihood of interest rates going up within the next year or sooner, and VFICX's focus on bonds approaching maturity, would that put a hurt on the 2/3-year performance? Should I be looking at different factors in my research? I've been wondering myself about the effects of interest rate hikes on bond performance lately so I've spent a fair bit of time on it. The answer seems to be that if the fed raises the rates slowly (over many years) and by moderate amounts (quarter point at a time?) there won't be much effect in the bond market as a whole so if you stay very broad you won't see much change at all. Particularly if the market has plenty of time to see the move coming and adjust ahead of time (the fed does seem to be willing to signal way out.) Yes NAV's will go a little down for a period but the fund will still be making dividend payments to offset that. After all bond funds are basically designed as giant smoothing filters that absorb shocks and react slowly to changes. Rates have been this low in the past and have shot up rapidly over short periods of time and the only time to really be concerned is when those changes happen in a rapidly rising inflation period in which case the bonds still show returns, just not as fast as inflation (i.e. the mid-late 70's). Even moderate inflation can erode the real return of bonds over long periods in a rising interest rate environment. From the 40's to the late 60's bonds did okay on paper but when factored in for CPI adjustments were net losers, ie a 2% return doesn't give a lot of breathing room for even moderate inflation. Even so they still don't have the risk of stocks where tomorrow they could plummet 50% or more. If you are worried about rampant inflation (and many are due to unknown long term affects of QE) then you would need to be at least a little in stocks. Even a small allocation to the stock market (30%) can be enough to offset inflation at it's worst. Also, pay attention to the tax implications. e: VVVV Exactly what I am talking about. VFICX returned ~3% CAGR for the last three years despite the price shocks. Price is the wrong thing to look at with bonds. Murgos fucked around with this message at 15:35 on Apr 15, 2015 |
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Apr 15, 2015 15:22
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Aren't bond mutual fund stock prices rather uncorrelated with their return? Bonds pay out much like dividends and are then reinvested, and this means your share count increases as you hold. Even if the price is trending negative, you can have an overall gain. That VFICX fund might have price drops but the fund's return is not the same as its ticker gain.
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Apr 15, 2015 15:24
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MJP posted:That's a good point and my risk aversion would depend on comparable/better funds. But definitely thank you for pointing out the ETF/normal fund point, I was looking only at Vanguard's description of the fund. I'm leaning towards them since my IRA and brokerage are already with them. I'm also at this point open to mutual funds so long as they're diversified enough - I'm not looking for a single industry/region/market focus. Its drops were quick to recover. If I were in your position I would use a high interest online savings account, a CD ladder or some other FDIC insured vessel. JibbaJabberwocky posted:Well okay then. Any suggestions for online banks with a similar rate that aren't poo poo? I don't know about similar rates, but I use Ally. Can't banks still go to the Reserve and get money at 0%? Why would they pay you much more than that? For sure they need deposits for some of the rules governing leverage, but I guess they are getting enough while offering sub-1% rates. Welcome to secular stagnation!
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Apr 15, 2015 15:50
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JibbaJabberwocky posted:Well okay then. Any suggestions for online banks with a similar rate that aren't poo poo?
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Apr 15, 2015 15:56
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MickeyFinn posted:If I were in your position I would use a high interest online savings account, a CD ladder or some other FDIC insured vessel. Yeah, even if I go into bond funds like VBIRX, the increased rate of return assuming 2-year terms is less than 1%, and I'd much rather have the peace of mind than the money at this point. Thanks for the reality check, thread!
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Apr 15, 2015 15:57
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MJP posted:Yeah, even if I go into bond funds like VBIRX, the increased rate of return assuming 2-year terms is less than 1%, and I'd much rather have the peace of mind than the money at this point. Why don't you just invest in the same holdings as the rest of your retirement portfolio? I don't really see the point of being excessively risk adverse for a maybe, possible non-critical expense in 2-3 years. Your absolute worst case is the market drops 30% or something at the exact time your car breaks down and you end up with a.... cheaper car, right?
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Apr 15, 2015 16:22
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BEHOLD: MY CAPE posted:Why don't you just invest in the same holdings as the rest of your retirement portfolio? I don't really see the point of being excessively risk adverse for a maybe, possible non-critical expense in 2-3 years. Your absolute worst case is the market drops 30% or something at the exact time your car breaks down and you end up with a.... cheaper car, right? This is true. I wouldn't mind not having to buy another car or otherwise. I just had a stop-loss execute on another holding that the broker had thought of as a money park - IYC - so it brings things upwards a little bit. If nothing else, VFORX had very good 1-year returns.
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Apr 15, 2015 16:52
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So my employer just removed their cap for their match on 401k contributions. I was planning to make substantial investments in non tax advantaged accounts to try to retire early. This is going to make that impossible. Would it be insane to start contributing the federal maximum, then also start taking sepp distributions to try to bolster investments that I can tap before 60?
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Apr 15, 2015 17:09
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Missing out on free money is a bad way to retire early. Get everything in your 401k that you can (match included). Your Roth IRA will be a good source of early retirement money since all your contributions can come out at any time.
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Apr 15, 2015 17:38
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VorpalFish posted:Would it be insane to start contributing the federal maximum, then also start taking sepp distributions to try to bolster investments that I can tap before 60? http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/ Zool fucked around with this message at 17:52 on Apr 15, 2015 |
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Apr 15, 2015 17:47
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you should also look into whether your plan offers an after-tax 401k, which would normally be a terrible idea but allows you to convert to a roth IRA.
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Apr 15, 2015 17:49
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So question for you all....(I didn't even think about this until today tbh) For some reason, not sure why but, eh, we have about $5800 in a Vanguard taxable acct. Its invested in Vanguard LifeStrategy Growth Fund VASGX atm. So I was thinking today, and its a little late (but oh well), should we move some of that into our T-IRAS? There is a $3000 minimum to the fund to get that I guess if I am reading correctly...so I am wondering if it would be better for us to close the acct and divide in the entirety to the T-IRAs, or, leave $3k + in the fund, and take the remainder and divide that into the T-IRAs? Or, just leave it where it is.... We have only put a small amt into the T-IRAs atm for 2015, so it would not put us over at all limit-wise even if we threw the whole thing into both accts. What would you do?
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Apr 15, 2015 21:40
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VorpalFish posted:So my employer just removed their cap for their match on 401k contributions.
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Apr 15, 2015 23:21
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Disco Salmon posted:So question for you all....(I didn't even think about this until today tbh) I would definitely move as much money as possible into an IRA over having it in a taxable account.
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Apr 15, 2015 23:46
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You can't "move" taxable account stock into an IRA though. You'd have to sell it and use that cash to buy stocks in your IRA, prompting whatever short/long term gains taxes you're subject to. Forget about that taxable account for now and make future contributions to the IRA instead, I say.
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Apr 15, 2015 23:48
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GoGoGadgetChris posted:You can't "move" taxable account stock into an IRA though. You'd have to sell it and use that cash to buy stocks in your IRA, prompting whatever short/long term gains taxes you're subject to. Forget about that taxable account for now and make future contributions to the IRA instead, I say. Ok thank you both for the info. We will leave it there then and not worry about it.
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Apr 16, 2015 00:10
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Thanks for the replies! That Roth ladder looks like the trick I need. I guess the money I convert counts as principal in the Roth? I doubt I could get my employer to offer a Roth option, but I have one I started separately. I assume I can convert straight from the 401k to that?
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Apr 16, 2015 02:57
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Yeah, what you roll into the Roth counts as principal. You could go a strait from the 401k to the rothIRA, but you would pay income tax as though you earned all that money at once. You can roll the 401k into a tIRA when you leave your employer without penalty. When you move money into the Roth you pay income tax on it, but if you aren't working that year, you'll be in the 10% bracket. If you only move what you can deduct, you don't pay any tax on it. Zool fucked around with this message at 13:11 on Apr 16, 2015 |
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Apr 16, 2015 13:03
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Last year I made just under the limit for contributing to a Roth IRA without penalty. January 1st I maxed out my contribution for 2015, but have found out that I'll be making a little more money than anticipated this year. Pending the exact amount of this additional bonus, I will finish somewhere in the 116-130 range, possibly over the 130 mark by the time I factor in 1099 income. Once I have all of my numbers in front of me in January/February 2016 and calculate what my reduced contribution is, do I just report this to my managing firm for the account? How annoying is it to manage, and in the future is it worth contributing the full amount early in the year if you know you will only be contributing a reduced amount?
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Apr 16, 2015 15:12
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Just do a backdoor roth and don't worry about it. If you have massive traditional IRA holdings then maybe don't, but if it's small or nothing, go for the backdoor.
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Apr 16, 2015 16:10
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DNK posted:Just do a backdoor roth and don't worry about it. If you have massive traditional IRA holdings then maybe don't, but if it's small or nothing, go for the backdoor. Don't think I can do a backdoor, I have sizeable traditional holdings already. Thinking right now that this year I'll be doing limited contributions and paying any penalties required to draw money out from my January contribution (hopefully not terrible), miss out on next year's contribution (or make contributions during tax season after I see where i end the year instead of doing it in January), and then resume whenever I get married if it brings me under the contribution cap for joint filing.
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Apr 16, 2015 17:03
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That's pretty much exactly what I did when I was in your position a few years ago. In the end I think I'd rather just wait until I know my contribution limit in the beginning of the next year instead of guessing and having to deal with an over contribution situation. Not that it's that bad, just kind of a pain.
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Apr 16, 2015 17:15
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I contributed to my Roth early in March 2014 for tax year 2014, when I had a salary well below $114,000. Then I won a poker tournament later in the year and my AGI went over $129k. When I filed my taxes a few days ago, I was surprised to see that I was over the limit and that I had to pay a $330 penalty. I'm already in the process of recharacterizing my Roth contribution (full $5,500) to a Traditional IRA so I don't have to pay any more penalties. My question is whether I can do a backdoor Roth on the contributions that will be recharacterized? I don't have any other money in my traditional IRA.
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Apr 16, 2015 18:37
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Ugh I am hoping this is the right place to ask, if not I will make a new thread. My husband is a permanent resident of the US from the UK. He has been living here since 97. We were talking a little while back and he casually mentions that he has a little pension from when he was working back in the UK before he moved here. Apparently he forgot about it and never ever mentioned it to me until just a little while back. He says its not a huge pension or anything like that, but the fact that he forgot about it worries me a little. I don't know if we should have claimed it on taxes etc etc.... Do we need to worry about moving it to the US since he is not planning to ever move back? Or, should we just leave it there and "forget about it" until he retires here. I just don't know what kind of tax implications we would be looking at either side.
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Apr 17, 2015 17:12
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If you didn't contribute or withdraw from it while in the US then it shouldn't matter for taxes. A quick google search indicates that you can probably either choose to leave it in the UK and claim it under the normal rules or potentially transfer it to a qualified provider. You should probably contact the pension provider to verify what your options are.
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Apr 17, 2015 22:33
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Ok, appreciate that info. He didn't contribute/withdraw at all after coming to the US for work on his visa. As far as he knows it is just sitting there doing whatever it is doing while he has been here. I was starting to worry that we should have mentioned it on taxes and so on. I feel better now, thank you  Just makes me a little grrrrr that after 15 years of marriage and 2 years of dating he just now remembered. He knows I get spergy about financial items...and he just "forgot". He is so lucky to have me take care of these things, I tell you what. Disco Salmon fucked around with this message at 22:43 on Apr 17, 2015 |
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Apr 17, 2015 22:41
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I guess I just missed the Vanguard version of index fund investing, but I'm curious about Fidelity. I have a Roth IRA at Fidelity, and soon I will have a brokerage account to invest what's leftover. My company does not offer a 401k match, so I figured I'd start investing in money I can use before retirement- I'm 31 now. I don't need this money for anything in particular for the foreseeable future. I'll buy a house someday, but the money I put into my brokerage account isn't earmarked for a down payment. Not yet at least. I'm interested in just regularly contributing money over time into a vehicle that be reasonably predictable. Two of Fidelity's funds I have been looking at are FUSVX and FSTVX. Are those two redundant because one seeks to mimic the S&P 500 and the other is for the total market? Since those two represent a large portion of the total market, I can assume when the market's up, I'm up and when it's down, I'm down. Right? No stressing over my investments being battered while the rest market is still growing. I currently have my money in Fidelity Contrafund and Fidelity Freedom Fund 2050, and both are performing alright, I guess, but their expenses are higher. Is it worth it to keep those rather than invest in one of those index funds above that have much lower expenses? As you can tell, I'm new to this. I don't have the time right now to spend six months reading a ton about investing. I just want to park some money for the time being and hope it appreciates. Moneyball fucked around with this message at 00:22 on Apr 20, 2015 |
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Apr 20, 2015 00:17
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Moneyball posted:I guess I just missed the Vanguard version of index fund investing quote:I have a Roth IRA at Fidelity, and soon I will have a brokerage account to invest what's leftover. My company does not offer a 401k match, so I figured I'd start investing in money I can use before retirement- I'm 31 now. quote:I'm interested in just regularly contributing money over time into a vehicle that be reasonably predictable. Two of Fidelity's funds I have been looking at are FUSVX and FSTVX. quote:Are those two redundant because one seeks to mimic the S&P 500 and the other is for the total market? quote:Since those two represent a large portion of the total market, I can assume when the market's up, I'm up and when it's down, I'm down. Right? No stressing over my investments being battered while the rest market is still growing. quote:I currently have my money in Fidelity Contrafund and Fidelity Freedom Fund 2050, and both are performing alright, I guess, but their expenses are higher. Is it worth it to keep those rather than invest in one of those index funds above that have much lower expenses? quote:As you can tell, I'm new to this. I don't have the time right now to spend six months reading a ton about investing. I just want to park some money for the time being and hope it appreciates. Cicero fucked around with this message at 01:58 on Apr 20, 2015 |
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Apr 20, 2015 01:56
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Cicero posted:What does this mean? Thanks for all the answers! My mind is a bit burnt out from writing a paper all day, so I apologize for my lack of clarity. Before posting, I read back a couple pages and noticed people were discussing a fund Vanguard offers that is similar to the ones I posted. The Vanguard ____ Admiral shares are like Fidelity Advantage class. So I meant I just missed that discussion. I am maxing out my Roth every year. I should take that a step further and start contributing to the 401k again? Those Fidelity funds are no-load, otherwise I wouldn't purchase them. I don't know enough yet to start paying to make a transaction or else I'd drag down my returns with fees. I actually planned to do exactly what you said and put some money into FSIVX as well. I don't want all my eggs in one basket. I guess I'll split between US, international, and bonds in some ratio. A novel concept, I'm sure... Moneyball fucked around with this message at 02:21 on Apr 20, 2015 |
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Apr 20, 2015 02:19
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quote:Those Fidelity funds are no-load, otherwise I wouldn't purchase them. quote:I don't know enough yet to start paying to make a transaction or else I'd drag down my returns with fees. quote:I actually planned to do exactly what you said and put some money into FSIVX as well. I don't want all my eggs in one basket. I guess I'll split between US, international, and bonds in some ratio. A novel concept, I'm sure... quote:I am maxing out my Roth every year. I should take that a step further and start contributing to the 401k again? Cicero fucked around with this message at 03:10 on Apr 20, 2015 |
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Apr 20, 2015 03:02
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I've just started reaching out to lawyers about my wife's 401k plan, which I believe is bad enough as to blatantly violate ERISA, and there are other compounding factors that I hope will make this very fun for a lawyer. Is there any interest in a new thread to cover ERISA lawsuits?
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Apr 20, 2015 03:04
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baquerd posted:I've just started reaching out to lawyers about my wife's 401k plan, which I believe is bad enough as to blatantly violate ERISA, and there are other compounding factors that I hope will make this very fun for a lawyer. Is there any interest in a new thread to cover ERISA lawsuits? Yes, I'm very interested. My stepdad got involved in an action in his union because of mismanagement of their retirement pension and funds, and stirred up enough poo poo that they eventually had to oust the idiots managing it. Mismanagement of retirement programs is very common and the only way to improve the situation is for members of these plans to throw shitfits and get as many employees as possible engaged and caring about what's going on and how they're being extorted.
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Apr 20, 2015 03:25
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Vanguard also offers target retirement fund which have expense relations and are perfect (IMHO) for set and forget investing
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Apr 20, 2015 04:54
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baquerd posted:I've just started reaching out to lawyers about my wife's 401k plan, which I believe is bad enough as to blatantly violate ERISA, and there are other compounding factors that I hope will make this very fun for a lawyer. Is there any interest in a new thread to cover ERISA lawsuits? Leperflesh posted:Yes, I'm very interested.
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Apr 20, 2015 06:56
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I'm very interested too. Every time I see someone post a list of 401k options where none of them are < 0.5% ER a little part of me dies inside. So glad my current and previous employer both used Vanguard.
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Apr 20, 2015 07:02
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OK, thread is here: http://forums.somethingawful.com/showthread.php?threadid=3714793
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Apr 20, 2015 15:44
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Cicero posted:I'm very interested too. Every time I see someone post a list of 401k options where none of them are < 0.5% ER a little part of me dies inside. So glad my current and previous employer both used Vanguard. My employer just started a new 401k plan and sat through an hour long finance 101 lecture before finally getting to the funds. Thank god there are Vanguard funds nestled into the long list of backwater poo poo.
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Apr 20, 2015 16:04
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Nephzinho posted:My employer just started a new 401k plan and sat through an hour long finance 101 lecture before finally getting to the funds. Thank god there are Vanguard funds nestled into the long list of backwater poo poo. The best way to quickly find good 401k investments is expense ratio. Vanguard's study found low ER funds actually have the best long term real performance, "You get what you don't pay for"
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Apr 20, 2015 23:22
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