|
VorpalFish posted:I have a Roth and a taxable brokerage account. Should I just be treating it all as one pool for the purposes of balancing? It's gonna be hard to rebalance between them and going forward the 401k will outpace the other accounts significantly when it comes to contributions. Check out the asset allocation in multiple accounts and principles of tax-efficient fund placement articles on the Bogleheads wiki. They should be able to answer your questions or at least get you started.
|
#
?
May 2, 2015 15:44
|
|
|
|
| # ? May 26, 2024 19:23 |
|
|
VorpalFish posted:I have a Roth and a taxable brokerage account. Should I just be treating it all as one pool for the purposes of balancing? It's gonna be hard to rebalance between them and going forward the 401k will outpace the other accounts significantly when it comes to contributions. Not really since a retirement account has much different goals than a taxable account. Mainly because with a retirement account you are looking at a much longer 30+ investment window.
|
|
#
?
May 2, 2015 18:47
|
|
|
VorpalFish posted:I have a Roth and a taxable brokerage account. Should I just be treating it all as one pool for the purposes of balancing? It's gonna be hard to rebalance between them and going forward the 401k will outpace the other accounts significantly when it comes to contributions. You should absolutely treat all your accounts as one pool of money when it comes to portfolio allocation and rebalancing. Not doing that would be ridiculous because it would lead to significant inefficiencies in taxes and (potentially) fund choices. Someone linked the bogleheads page that deals with taxes, which basically says the order of preference for accounts is: Roth: REITs, junk bonds, high quality bonds, domestic stocks, foreign stocks IRA/401k/etc: high quality bonds, junk bonds, reits, domestic stocks, foreign stocks Taxable: foreign stocks, domestic stocks, high quality bonds, junk bonds, REITs
|
|
#
?
May 2, 2015 19:35
|
|
|
Murgos posted:So, tech because finance would likely already know this stuff. Why would finance already know this stuff and how can I acquire the same knowledge? If I just need to buy like six textbooks and read them cover-to-cover, I can do that. Is that the way to go?
|
|
#
?
May 2, 2015 20:10
|
|
|
etalian posted:Not really since a retirement account has much different goals than a taxable account. Mainly because with a retirement account you are looking at a much longer 30+ investment window. This is all with the intention of retiring at 40-45 using a Roth conversion ladder, I'd be tapping retirement accounts within about 5 years of tapping regular ones. Droo posted:You should absolutely treat all your accounts as one pool of money when it comes to portfolio allocation and rebalancing. Not doing that would be ridiculous because it would lead to significant inefficiencies in taxes and (potentially) fund choices. Mr.Radar posted:helpful links Thanks for the replies! So the problem I'm running in to with this is I'm going to be allocated way too heavily in US stocks unless I bite the bullet and invest at least part of my 401k in to a 1.22 ER international fund, even if I go 100% international for Roth and taxable. My 401k savings is going to be over twice my Roth and taxable savings. My options are: *Be 2:1 US to international stock and forgo US indexes in non 401k accounts altogether - 85% S&P400 index (.5% ER) - 15% Bond fund (.85% ER) for 401k *Be 3:1 US to international stock and keep my US indexes in the other accounts with the same distribution as above for 401k *Have a 50 US/40 international/10 bond split but be weighted 60% S&P (.5%ER), 15% Bond (.85% ER), 25% international (1.22% ER). I guess what I'm really getting at is at what point does high expense ratio outweigh the need to have diversified exposure, especially since the index I can buy in the 401K isn't even a total US market index.
|
|
#
?
May 2, 2015 22:40
|
|
|
VorpalFish posted:So the problem I'm running in to with this is I'm going to be allocated way too heavily in US stocks unless I bite the bullet and invest at least part of my 401k in to a 1.22 ER international fund, even if I go 100% international for Roth and taxable. My 401k savings is going to be over twice my Roth and taxable savings. Just do whatever seems best and is closest to what you want. Personally I would prioritize stock/bond allocation, then expense ratios, and then US/international allocation.
|
|
#
?
May 3, 2015 00:13
|
|
|
VorpalFish posted:I guess what I'm really getting at is at what point does high expense ratio outweigh the need to have diversified exposure, especially since the index I can buy in the 401K isn't even a total US market index. Don't worry about being slightly overweight in US, take the S&P500 in your 401k and make up the difference the best you can everywhere else. Expense ratio reductions on index funds are basically guaranteed returns and will easily outweigh a 2:1 vs a 3:1 US/International split. I also recommend staying out of that bond fund.
|
|
#
?
May 3, 2015 00:22
|
|
|
flowinprose posted:You mean comparing putting money into a 529 vs just investing in normal taxable accounts? I would say that's pretty much a no brainer if you have kids that you think will eventually go to college. I'm also curious if anybody has any advice on this. California's plan (my home state) has reasonably low expense ratios; the passive age-based funds run from about 0.18-0.21%, which is worse than my retirement funds but not so terrible. But there aren't any particular advantages for sticking with California. Qualified withdrawals are California tax-free (as well as federal), but I have no idea if that will be relevant to me (or would it be the beneficiary?) 18 years from now. This study claims that there are a few states with cheaper plans, but several of them are residents only. Texas looks like it might be ok? Wait, no; on closer inspection, they tack on 0.5%+ management fees, so I don't know what is up with that site. Anything good out there that I'm missing? One concern is the possibility that the beneficiary might not go to school in the US. I understand that some international colleges are eligible, but I haven't looked into the details yet. Anybody have experience with this, or with 529 plans in general?
|
|
#
?
May 3, 2015 01:21
|
|
|
Alhireth-Hotep posted:Tne concern is the possibility that the beneficiary might not go to school in the US. I understand that some international colleges are eligible, but I haven't looked into the details yet. Anybody have experience with this, or with 529 plans in general? check this: http://www.savingforcollege.com/eligible_institutions/ From doing the brute force search looks like only EU/Australian schools are eligible. So yes the plan can be used for certain foreign colleges but it's mainly to a narrow range of universities mainly located in the EU.
|
|
#
?
May 3, 2015 03:26
|
|
|
I expect to have =<0% effective tax rate again this year, and for the foreseeable future of my military service until my wife starts working again. I've maxed my Roth IRA for the year, working on the spousal Roth now, and after that I've got the Roth TSP as an option. Am I correct in my assumption that I can potentially sock away $29,000 per year (5500 + 5500 + 18000) of money whose principal and earnings will never see a dime of tax? My intent would be to roll the Roth TSP account into my Roth IRA after leaving the military. That can be done penalty-free and without counting towards annual contribution limits to the IRA for the year it it is rolled over, correct?
|
|
#
?
May 3, 2015 20:26
|
|
|
Gray Matter posted:I expect to have =<0% effective tax rate again this year, and for the foreseeable future of my military service until my wife starts working again. I've maxed my Roth IRA for the year, working on the spousal Roth now, and after that I've got the Roth TSP as an option. I'm hoping that you have at least some earned income (which would likely be taxable) above whatever exclusions in order to contribute $11,000 per year into Roth IRAs
|
|
#
?
May 3, 2015 20:34
|
|
|
flowinprose posted:I'm hoping that you have at least some earned income (which would likely be taxable) above whatever exclusions in order to contribute $11,000 per year into Roth IRAs Gray Matter fucked around with this message at 20:49 on May 3, 2015 |
|
#
?
May 3, 2015 20:46
|
|
|
Gray Matter posted:I do have earned income, but being active-duty military a lot of the allowances I am paid (housing, food, etc) are non-taxable to begin with. We are a single-income family with one child and so receive considerable deductions and credits - my effective tax rate has been 0% for the past 3 years. http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230355 With this you might qualify to have eligible compensation to put in a Roth IRA that I guess would not be taxable: "Nontaxable combat pay. If you were a member of the U.S. Armed Forces, compensation includes any nontaxable combat pay you received. This amount should be reported in box 12 of your 2013 Form W-2 with code Q." However, the following is very important to keep in mind: IRS posted:"What Is Not Compensation?
|
|
#
?
May 3, 2015 20:54
|
|
|
Sorry for the double post, meant to edit my previous one... It should also be important to note that any pre-tax money you put into the TSP is also considered "excluded" for the purposes of IRA contributions. I'm not actually sure how this would work if you are putting money into Roth -TSP, but I suppose that would not be excluded since normally you would be taxed on it. flowinprose fucked around with this message at 21:01 on May 3, 2015 |
|
#
?
May 3, 2015 20:59
|
|
|
I already know I've got eligible compensation to contribute to Roth IRAs because I've been doing it for several years, that's not the issue. My major question is whether the Roth TSP, which is essentially a Roth 401k, can be rolled over into my Roth IRA in the future without counting towards the annual $5,500 contribution limit. In which case, I'd basically be able to save a maximum of $29,000 per year in Roth accounts that I will effectively never have paid or will pay tax on. A follow-up question would be, would any amount rolled over be withdrawable from the Roth IRA penalty-free being considered as contributed principal. Purely hypothetical, as I understand it's not ideal to withdraw principal early from a Roth IRA from a long-term investment standpoint. Gray Matter fucked around with this message at 21:36 on May 3, 2015 |
|
#
?
May 3, 2015 21:33
|
|
|
fruit loop posted:Why would finance already know this stuff and how can I acquire the same knowledge? If I just need to buy like six textbooks and read them cover-to-cover, I can do that. Is that the way to go? The OP has a good list of the basics.
|
|
#
?
May 3, 2015 22:31
|
|
|
If the TSP is basically the government/military version of a 401k, I can't see it counting towards the IRA contribution limit.
|
|
#
?
May 4, 2015 16:09
|
|
|
fruit loop posted:Why would finance already know this stuff and how can I acquire the same knowledge? If I just need to buy like six textbooks and read them cover-to-cover, I can do that. Is that the way to go? The OP includes the Four Pillars which is pretty much the core training manual for investing. Read and understand that. Budgeting and debt elimination is a separate aspect and tends to take priority over investing and large scale savings. Cutting unnecessary costs or luxury lifestyle costs can make a large difference to your savings/debt repayment rate. Although advantaged retirement savings are often a priority because of the "free money" gains. Financial independence is something you look at closely when you sort out the above two items. Making a thread is always an option if you are prepared to take advice and offer detailed income and expenditure information to allow us to help you.
|
|
#
?
May 5, 2015 03:38
|
|
|
What am I going to want if I'm looking to invest in my future? If I have to ask that question, am I still ready to invest?
|
|
#
?
May 5, 2015 15:37
|
|
|
rizuhbull posted:What am I going to want if I'm looking to invest in my future? Target Retirement Fund 20##, go read Four Pillars.
|
|
#
?
May 5, 2015 15:46
|
|
|
rizuhbull posted:What am I going to want if I'm looking to invest in my future? Those are only bonds. Are those all your options or do you only really want to invest in bonds?
|
|
#
?
May 5, 2015 18:03
|
|
|
I'm trying to start the research process for whether I want to use one of the relatively low fee automatic or semi-automatic money management tools out there for investors. I ended up thinking about this because I'm using Personal Capital to get a bird's eye view of all accounts in one place (Mint.com straight up doesn't function for me), and they have a management service, too, which they pitch after sign up. I'm 31, unmarried, not in a high earner industry, but not a big spender either, so I save and have reasonably significant investments at this point. My general investing approach is the basics as generally recommended by SA/etc: Vanguard index funds, keep fees low, don't market time, don't pick stocks. Max out Roth IRA and go as high as possible in 401k (near max now). Have some asset class diversification (I hold an REIT index in my Roth). I figure that's most of the battle, and I have no real complicating circumstances for my finances; no specific short or medium-term goals, just seeking investment growth. But I'm NOT particularly good about rebalancing or deciding what my specific asset allocation should be, and I don't currently do tax loss harvesting or more than the very most basic tax efficiency placement. Do people have thoughts on the auto-adviser services, or have suggestions on where I can go for good research/more info? Is there any general wisdom, or just people's thoughts, on whether the gains from rebalancing and tax-loss harvesting will offset the management fees? (I'm also a bit bummed that I'll take a big tax hit when they reallocate if I give management of the $ in my taxable account over to one of these services, but I probably just have to deal with that--the alternative seems to be to keep holding in a way that may be inefficient until a year in the indefinite future when I could withdraw at 0% capital gains rate, but I don't *really* know how likely that is to happen.) Personal Capital's service emphasizes that they'll invest equally across sectors with a basket of stocks and ETFs rather than mutual/index funds, avoiding the disproportionate sector weighting that comes from simply going with indexes. They also do tax-loss harvesting, rebalancing, etc, and obviously have a whole pitch about their proprietary technology for all of that. Their free Mint-like service is functional, well-designed, etc, which did get me to listen to their pitch. But they're .89% annual fee total in my investment range. Betterment seems like it might be able to handle/advise toward a lot of this at a lower fee. And I haven't even really looked into Wealthfront, FutureAdvisor, etc yet. Anyone use (or consider using) any of these services and have thoughts, or have any other sites to point me toward? Thanks! onefish fucked around with this message at 18:11 on May 5, 2015 |
|
#
?
May 5, 2015 18:08
|
|
|
So far I haven't seen any auto-investor that I would say is worth the fee. I'm patiently waiting for one of the startups to get bought out by Vanguard. Personal Capital I hate because they don't stop spamming my phone with their loving advisor poo poo.
|
|
#
?
May 5, 2015 18:12
|
|
|
moana posted:So far I haven't seen any auto-investor that I would say is worth the fee. I'm patiently waiting for one of the startups to get bought out by Vanguard. Ha. I just started with them. I'll see how much spam I get. And thanks for this perspective. Obviously willing to hear more from you or others. Are you better than I am about tax-efficiency, tax-loss harvesting, and rebalancing, though? (i.e. might there be value in it for me that there isn't for you?) Going to start here for some more research: http://investorjunkie.com/35919/robo-advisors/ VVV edit: Thanks. Looking like PC management is probably not the way I'd want to go. Still researching for something like Betterment. http://cashcowcouple.com/service-reviews/personal-capital-review/ http://cashcowcouple.com/service-reviews/betterment-review/ (p.s. I hate that basically all the reviews of these sites have some kind of conflict of interest in that they'll offer bonuses if you sign up through them...) onefish fucked around with this message at 18:24 on May 5, 2015 |
|
#
?
May 5, 2015 18:16
|
|
|
I found Personal Capital very respectful of No's. If you tell their advisor you're good, they stop all attempts to get you.
|
|
#
?
May 5, 2015 18:21
|
|
|
onefish posted:Anyone use (or consider using) any of these services and have thoughts, or have any other sites to point me toward? Thanks! Honestly, I don't see the point. If you just want a one-stop fire and forget investment just buy Vanguard Wellington every year and come back when you're ready to retire. It's after tax-returns are higher (historically) than even Vanguards Tax-Managed Balanced fund and it handles internally basically anything you would want to do anyway (i.e. re-balancing or asset allocation or whatever). If you can afford admiral shares the ER is only 0.18 which is MUCH less than what robo-adivsors charge (most tack on at least 0.25% on top of the funds you are in ER). Personally, I think I can do better riding on the tails of current research (FF factors and more international plus momentum mostly) but for a one-stop approach there are infinitely many worse things you could do than VWENX (or VGSTX if you want less risk). e: The only thing you don't get with a one-fund approach is tax loss harvesting. If that's critical to you then obviously these wont work for you. Murgos fucked around with this message at 18:44 on May 5, 2015 |
|
#
?
May 5, 2015 18:39
|
|
|
moana posted:Personal Capital I hate because they don't stop spamming my phone with their loving advisor poo poo. I immediately deleted my account after their first call. gently caress off with that poo poo.
|
|
#
?
May 5, 2015 18:50
|
|
|
onefish posted:And thanks for this perspective. Obviously willing to hear more from you or others. Are you better than I am about tax-efficiency, tax-loss harvesting, and rebalancing, though? (i.e. might there be value in it for me that there isn't for you?)
|
|
#
?
May 5, 2015 18:51
|
|
|
Pro tip; target retirement funds are auto-investors and they do a better job for less money.
|
|
#
?
May 5, 2015 19:44
|
|
|
Do you guys only re-balance every 6/12/whatever months, or when your allocation percentages get out of whack by too much? I just set up a spreadsheet so I can see my overall allocation percentages and of course the US stocks have grown by a few percentage points since I last re-balanced. I usually re-balance once in January, but if I see, say US stocks, keep growing and get way out of whack, do I just go ahead and do an early re-balance?
|
|
#
?
May 5, 2015 20:24
|
|
|
GoGoGadgetChris posted:Pro tip; target retirement funds are auto-investors and they do a better job for less money. Sure, but I generally want to be more aggressive than the retirement funds (and particularly, see no reason to hold bonds in) in taxable accounts. Murgos posted:e: The only thing you don't get with a one-fund approach is tax loss harvesting. If that's critical to you then obviously these wont work for you. I'm trying to figure out how important it is. Wealthfront talking up their tax-loss harvesting stuff: https://pages.wealthfront.com/faq/daily-tax-loss-harvesting/ Basic claim: average resulting annual tax benefit of TLH historically = 1.35% It seems like if I took them at their word, and this could increase my effective returns 1.35% for a .25% fee on managed assets over $15000, that would be a move I'd definitely want to make (that we'd all want to make). But, of course, I'm suspicious of taking a for-profit company at their word. Googled around for a skeptical opinion and hit this, which is mainly concerned about the IRS seeing or closing the "loophole" of avoiding wash sales by switching between two extremely highly correlated ETFs. (And this, which points out tax-deferral vs. tax-savings. It does acknowledge long term tax deferral IS a positive for most investors, given the fact that you're investing the amount deferred, but the numbers they propose are much lower than Wealthfront's, of course. edit: Oh, and apparently Vanguard itself now has advisors at a 0.3% fee, which I'll look into, too. onefish fucked around with this message at 21:30 on May 5, 2015 |
|
#
?
May 5, 2015 21:20
|
|
|
Henrik Zetterberg posted:Do you guys only re-balance every 6/12/whatever months, or when your allocation percentages get out of whack by too much? That's what I do. As far as I'm concerned, the major investment risks (once you've picked a reasonable allocation) are behavioral. Allowing myself the opportunity to rebalance anytime I feel like it is just another way for me to potentially gently caress myself over. I don't even really know how I might screw up rebalancing early; I just maintain strict investment discipline. I might take an unnecessarily hard line on this. Fake edit: I also think continuous rebalancing by shifting contribution %s (vs by selling and buying) is ok. That might be inconsistent of me.
|
|
#
?
May 5, 2015 21:30
|
|
|
onefish posted:
|
|
#
?
May 5, 2015 23:21
|
|
|
GoGoGadgetChris posted:Pro tip; target retirement funds are auto-investors and they do a better job for less money. Yup and it's to be seen if the hype for places like Wealthfront actually end up beating something like a target retirement fund/Vanguard life strategy fund.
|
|
#
?
May 6, 2015 01:15
|
|
|
Question: My company matches up to 75% at 8% for my 401k (so 6% match) plus a 3% company contribution that escalates up to 5% when I hit my mid 40s no matter what my election preferences are. I've been putting in 8% since that's been giving me free money. Upon looking at my budget, I think it's time for me to up my contribution to 10%. Since the company won't match an additional 2%, would it make sense to put it into a Roth IRA instead? The Roth won't have much money since 2% isn't much and I won't come close to hitting the max Roth IRA anyways. That no-tax post retirement deal sounds pretty sweet.
|
|
#
?
May 6, 2015 17:23
|
|
|
It essentially depends on whether you think your income tax will be higher in retirement. If you put the money away pretax now, you're saving money for now, but it will get taxed at the level of your retirement income when you eventually withdraw. On the other hand, if you take the tax hit now, you're taxed at your current rate and don't have to pay another dime when you withdraw in retirement. If you think your tax liability will be higher later on, ROTH IRA. If you don't, 401k. e: The accepted rule of thumb in these parts is to hit your 401k match for the free money, max the ROTH, then work towards maxing the 401k. That way you're hedging your bets, tax-wise. I personally agree with this. Not a Children fucked around with this message at 18:03 on May 6, 2015 |
|
#
?
May 6, 2015 18:01
|
|
|
Not a Children posted:It essentially depends on whether you think your effective income tax will be higher in retirement than your current marginal income tax. We put money into both to a) diversify our tax accounts and b) in retirement we're going to withdraw from our tax deferred account up to deduction, then withdraw from our tax exempt account. Rurutia fucked around with this message at 19:12 on May 6, 2015 |
|
#
?
May 6, 2015 19:05
|
|
|
Not a Children posted:It essentially depends on whether you think your income tax will be higher in retirement. If you put the money away pretax now, you're saving money for now, but it will get taxed at the level of your retirement income when you eventually withdraw. On the other hand, if you take the tax hit now, you're taxed at your current rate and don't have to pay another dime when you withdraw in retirement. I also consider a Roth a must have since it has other unique features vs a normal IRA such as not requiring mandatory distribution. Basically means if you had a good Roth nest egg you could just collect tax free on dividend income streams and then use things like part time work/social security to supplement the rest of the required monthly income instead of being forced to raid your Roth nest egg.
|
|
#
?
May 7, 2015 01:06
|
|
|
But if you're in that situation and >65 you can just convert your normal into a Roth slowly?
|
|
#
?
May 7, 2015 14:00
|
|
|
|
| # ? May 26, 2024 19:23 |
|
|
I've been contributing 90% of my first few months paychecks to my 401k and have maxed it out (looks like I actually went over the taxable limit) - does it make any difference for tax purposes now whether I invest further savings in the 401k or a taxable brokerage account? In general, does it make any difference whether I try to max out my 401k quickly at the beginning of the year vs. filling it up gradually throughout the year?
|
|
#
?
May 8, 2015 07:03
|
|
