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Ron Don Volante posted: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? 401k administrators keep track of your contributions and should stop accepting employee contributions once you meet the annual limit. So if you've maxed it out you should start getting bigger pay checks. If somehow you're able to contribute more to the 401k than is legally allowed that could be a problem at tax time. Double check to see if you were including employer contributions or just your own contributions in the total. It shouldn't matter very much whether you max it early and then do taxable investments for the rest of the year, versus making continuous 401k and taxable investments throughout the year, as long as the total amount invested is the same.
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May 8, 2015 07:52
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warderenator posted:401k administrators keep track of your contributions and should stop accepting employee contributions once you meet the annual limit. So if you've maxed it out you should start getting bigger pay checks. If somehow you're able to contribute more to the 401k than is legally allowed that could be a problem at tax time. Double check to see if you were including employer contributions or just your own contributions in the total. The 401k provider is not required to enforce the federal limits by automatically refunding you. If they don't and you do not withdraw the excess in the same tax year, then you'll have to pay taxes on both the contribution and when you withdraw it. Maxing it early can potentially cause you to lose employer matching dependent on how the employer calculates it.
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May 8, 2015 08:17
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Yeah, my company's 401k through Charles Schwab does not have a true-up provision on matching (the match is capped on a per-paycheck basis, and if you max out the $18k match early in the year all company matching stops after that point). So in our case it really only makes sense to max out your 401k using even withholding which extends all the way through the last pay period of the year. On the other hand, our plan allows for both Roth and after-tax contributions as well (but not in-service rollovers) so that's kind of neat.
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May 8, 2015 08:34
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Just checked again and looks like I'm $600 over on contributions this year. For some reason, Vanguard is requiring me to take a loan before I'm eligible to take a withdrawal. Rather than go through that hassle, can I just leave it in there and take the tax hit or are there more significant consequences beyond double taxation?
Ron Don Volante fucked around with this message at 05:17 on May 9, 2015 |
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May 9, 2015 05:09
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Can you open a Roth and have them transfer the 600 to that? I'd call Vanguard and talk to a person.
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May 9, 2015 11:42
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Doesn't that count against the same maximum? VVV I thought he over contributed to a Traditional IRA, whoops ohgodwhat fucked around with this message at 15:19 on May 9, 2015 |
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May 9, 2015 14:11
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ohgodwhat posted:Doesn't that count against the same maximum? No, a traditional IRA and Roth IRA shared the a combined contribution limit, but a 401(k)'s is separate from those two.
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May 9, 2015 14:32
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onefish posted: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. Schwab's version has no management fee. They also do the tax loss harvesting but I only have my Roth in it so I don't use it. My only complaint is the website is pretty basic. They say they're adding improvements though. You can put in some numbers and your goals and get a suggested allocation without signing up. If you wanted to get an idea.
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May 9, 2015 15:41
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One of the potential setbacks I've read about Schwab is that the automatic system leaves a large chunk in cash on the sidelines before investing it; I have no idea what the cut offs are or how long before everything is invested so take that with a mountain of salt.
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May 9, 2015 15:56
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SpelledBackwards posted:No, a traditional IRA and Roth IRA shared the a combined contribution limit, but a 401(k)'s is separate from those two. 401k's have a combined contribution limit between traditional and roth as well. If he's already contributed 18k to a traditional 401k, then he can't make any contributions to a roth 401k for this year. (USER WAS PUT ON PROBATION FOR THIS POST)
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May 9, 2015 18:04
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balancedbias posted:One of the potential setbacks I've read about Schwab is that the automatic system leaves a large chunk in cash on the sidelines before investing it; I have no idea what the cut offs are or how long before everything is invested so take that with a mountain of salt. Cash is just part of the portfolio. They tell you up front what percent will be in cash. How much just depends on your timeline/goal/risk taking.
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May 9, 2015 22:18
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balancedbias posted:One of the potential setbacks I've read about Schwab is that the automatic system leaves a large chunk in cash on the sidelines before investing it; I have no idea what the cut offs are or how long before everything is invested so take that with a mountain of salt. Yeah I would not recommend the Schwab service since it requires a fairly large percentage to be tied up in cash. The service isn't free per se due the above, since Schwab makes money loaning and investing your cash portion similar to a bank savings account. The actual number below, for conservative target accounts in 15% and for more aggressive target allocation it's 7%: http://www.investmentnews.com/article/20150226/FREE/150229915/schwab-robo-adviser-bets-big-on-cash-and-smart-beta I've all the robo-services I've tried I found betterment to be the best for a few quick below reasons: -Betterment got a SEC go ahead to act as brokerage and custodian so it makes things like assigned transfer on death beneficiaries much easier. Wealthfront uses Apex and many basic things require mailing in old fashioned forms -Has fractional share investment and also doesn't leave any cash on the side unlike Wealthfront/Schwab -Their banking transaction side is noticeably faster for things like sending over funds and getting the cash funds quickly invested -Offers much better website features such as providing models for future investment growth or providing goal focused investing e.g advising you if you need to make more retirement contributions to reach x dollars -Avoids dubious investments like commodities etalian fucked around with this message at 22:34 on May 9, 2015 |
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May 9, 2015 22:26
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Hi guys. A little about myself - I'm 27 years old, have a $65k p.a. job (with 15% super on top), and I've just managed to save up $10k in cash. I want to invest this into things that provide for long term growth. I posted this in the BFC incremental thread, and they suggested I jump over here (probably because I said I wanted to get a financial advisor). I've looked at a few stocks (mostly blue chip, and one law firm), and I'm in the middle of reading a starters guide to stock investing (the for dummies one  ), but I still feel this isn't really enough.Hit me, guys - what should I be doing? Note: the next few years will have a reduced amount (if any) going into savings - I'll be doing some post grad courses which require up front payment (the Chartered Accountant qualification), and I'll start building my emergency fund as well.
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May 10, 2015 09:13
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ASIC v Danny Bro posted:Note: the next few years will have a reduced amount (if any) going into savings - I'll be doing some post grad courses which require up front payment (the Chartered Accountant qualification), and I'll start building my emergency fund as well. Not sure what the BFC pros will say but if you don't have an emergency fund already that's probably where your $10k should be.
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May 10, 2015 11:29
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ASIC v Danny Bro posted:Hit me, guys - what should I be doing?
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May 10, 2015 13:43
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ASIC v Danny Bro posted:I've looked at a few stocks (mostly blue chip, and one law firm), and I'm in the middle of reading a starters guide to stock investing (the for dummies one Good for you for starting to educate yourself on this! One thing you'll find in this thread is that we generally advise against avoiding in individual stocks. Instead, a broadly diversified index fund (or combination of such funds) offers better exposure to the total market and more consistent returns over time.
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May 10, 2015 14:57
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ASIC v Danny Bro posted:Hi guys.
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May 10, 2015 15:44
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ASIC v Danny Bro posted:I've looked at a few stocks (mostly blue chip, and one law firm), and I'm in the middle of reading a starters guide to stock investing (the for dummies one I agree that if you don't already have an efund, congrats! Now you do. $10k may seem like a lot of money right now, but you would go through it fast. If your current position is stable, sink half of that into a Roth and leave the other half as a mini efund.
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May 10, 2015 16:43
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Saint Fu posted:Are you in the US or abroad? I'm going to say he's in Aus 
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May 10, 2015 17:38
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Bhodi posted:Go with vanguard, Stick what you can in an IRA (trad/roth as you choose) @5.5k/yr, buy vanguard retirement 20XX funds with the balance of both accounts until you decide what, if anything, you want to change Yup just follow the advice and the OP which includes avoiding stock picking for long term retirement saving. The elegance of passive investing in something like a Vanguard target retirement fund is you don't need to be investing or financial genius to start saving up in a sound investment.
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May 10, 2015 18:46
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etalian posted:Yup just follow the advice and the OP which includes avoiding stock picking for long term retirement saving. Just do an S&P fund at Vanguard. I used the 2055 target retirement fund and lost out on half the markets' gains the past few years.
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May 11, 2015 03:01
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With perfect hindsight, you've missed out on huge returns. Too bad we don't have perfect foresight.
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May 11, 2015 03:14
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tesilential posted:Just do an S&P fund at Vanguard. I used the 2055 target retirement fund and lost out on half the markets' gains the past few years. There are arguments for going 100% plain S&P, but it's not a great idea for most people. You will bear the almost certain cost of increased volatility over a broadly diversified portfolio. You lose out on an edge from re-balancing (e.g. it's 2008 and the market has just gone tits up, it may be the biggest buying opportunity of the century, but you have no other assets to get liquidity to buy). It's not certain that the S&P will continue to outperform foreign stocks even over a 50 year plus time horizon. It is dead simple though, and will most probably outperform most target retirement funds over the life of the funds due to the bonds if nothing else.
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May 11, 2015 05:00
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tesilential posted:Just do an S&P fund at Vanguard. I used the 2055 target retirement fund and lost out on half the markets' gains the past few years. This really just depends on whether US or foreign stocks perform better in a given time period. US stocks happened to have performed better in the last few years, but there have been many years when they were worse. They should do about the same over the long term.
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May 11, 2015 08:09
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Cheers, thanks for the prompt feedback. I've had people suggest I invest fund, for the reasons outlined above (researching shares, though interesting, does take up quite a bit of time). That said, I've got a few more questions/things now that you guys have jumped in: quote:Stick what you can in an IRA (trad/roth as you choose) @5.5k/yr, buy vanguard retirement 20XX funds with the balance of both accounts until you decide what, if anything, you want to change I don't think these IRA's are available in Australia - from what I gather, they're only applicable to 401ks which I'm assuming is America's superannuation. I'm on the Aus Vanguard website right now, and the list of what they offer is here: https://www.vanguardinvestments.com.au/retail/ret/investments/managed-funds-retail.jsp#fundstab I'm not looking to use these funds anytime soon, so an Australian Share/International Share/High Growth fund seems appealing - they're recommending a minimum of 7 years investment, which I'm fine with. However, I've noticed that a few funds only take a minimum of $5k for an initial deposit. Is this normal (i.e. having a somewhat large establishing amount)? I'll do some more reading and see what I can find to ask later in my next post, most likely to do with the costs involved in being in a fund. Cheers guys. Edit: I've also found a few other funds, which may worth be investing in. That said, I've heard the Vanguard name being used quite a bit - does it have a reputation for being a quality fund manager or something? http://www.investsmart.com.au/managed-funds/top-funds
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May 11, 2015 11:41
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ASIC v Danny Bro posted:I'm not looking to use these funds anytime soon, so an Australian Share/International Share/High Growth fund seems appealing - they're recommending a minimum of 7 years investment, which I'm fine with. However, I've noticed that a few funds only take a minimum of $5k for an initial deposit. Is this normal (i.e. having a somewhat large establishing amount)? Vanguard does typically require a higher minimum investment than many of its peers (for U.S. investors, $3,000 initial investment for a mutual fund is common). However, you also have access to Exchange Traded Funds (ETFs) which have no minimum. You can look up the difference between a mutual fund and an ETF, but for your purposes you should consider them basically the same thing. Without diving too far into the specific allocations of your particular portfolio, it seems like you can use ETFs to build a pretty well diversified portfolio. Buy VTS for exposure to the US stock market, VEU for access to the rest of the world's stock markets, and a bond fund (VAF? VGB? I dunno Australian investing.) for access to bonds. People can help you tweak the ratio of these based on your risk tolerance, etc. ASIC v Danny Bro posted:Edit: I've also found a few other funds, which may worth be investing in. That said, I've heard the Vanguard name being used quite a bit - does it have a reputation for being a quality fund manager or something? The reason people love Vanguard is not just because they keep costs low. Plenty of firms offer low cost index fund investing, although Vanguard was the pioneer of this and can rightly claim a lot of responsibility for exerting downward pressure on the price of investing. Vanguard has a unique structure among all other investment firms in that, by investing in a Vanguard fund, you become an investor in the Vanguard corporation itself. This means that the company lacks any motivation to charge investors high fees, because those fees would just get recycled back to the shareholders a.k.a. the original investors. This is different from how everyone else does it. Consider Fidelity, which also offers low cost investing. Fidelity is a publicly traded company, meaning I can buy shares in Fidelity the company whether or not I buy Fidelity mutual funds. So Fidelity has an interest in keeping fees low to attract investors to its mutual funds, but it also has an interest in keeping fees high to earn more money for its shareholders. Jack Bogle, the founder of Vanguard, perceives this as a conflict of interest and thus set up his company differently because he thought "no man can serve two masters". That's why I invest with Vanguard. Every company will tell me they're committed to my best interests. Vanguard is the only one where commitment to my best interest is inextricably tied up in the company's corporate structure. You can read more about this here and here.
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May 11, 2015 13:43
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tesilential posted:Just do an S&P fund at Vanguard. I used the 2055 target retirement fund and lost out on half the markets' gains the past few years. It's because the retirement fund includes a sizable portion in international stocks, which have sucked the last few years compared to US equities due to things like the Eurozone's poor economy. Diversification means you give up maximizing short term gains in order to reduce your long term investment risk. All the books in the OP emphasize that US stocks will not always outperform international stocks over long investment windows. ASIC v Danny Bro posted:I not looking to use these funds anytime soon, so an Australian Share/International Share/High Growth fund seems appealing - they're recommending a minimum of 7 years investment, which I'm fine with. However, I've noticed that a few funds only take a minimum of $5k for an initial deposit. Is this normal (i.e. having a somewhat large establishing amount)? Yes fairly large minimum investment is a feature of mutual funds. A good alternative to Target Retirement are the Life strategy Funds since it sounds like Target funds are not available in Australia. The High growth just means the fund has a very small 10% bond allocation. etalian fucked around with this message at 23:11 on May 11, 2015 |
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May 11, 2015 23:07
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tesilential posted:Just do an S&P fund at Vanguard. I used the 2055 target retirement fund and lost out on half the markets' gains the past few years. Did you know that over the 30-year period from Oct. 31, 1981 to Oct. 31, 2011, U.S. Treasuries outperformed the S&P 500? Would you have said, in 2011, "Just put all your money in Treasuries"? Sometimes some asset classes outperform others. Sometimes this even happens over a span of thirty years. It doesn't mean you should abandon diversification, just because one asset class happens to have outperformed recently.
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May 12, 2015 02:28
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Echo 3 posted:Did you know that over the 30-year period from Oct. 31, 1981 to Oct. 31, 2011, U.S. Treasuries outperformed the S&P 500? Would you have said, in 2011, "Just put all your money in Treasuries"? Sometimes some asset classes outperform others. Sometimes this even happens over a span of thirty years. It doesn't mean you should abandon diversification, just because one asset class happens to have outperformed recently. Not to mention diversification forces you to buy assets which are undervalued.
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May 12, 2015 04:18
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I've been seeing this "Acorns" app pop up in my Facebook feed a lot lately. The idea seems solid - round up all your purchases to the nearest dollar and invest the difference in an index-ish fund with a commission-free brokerage. However, reading the FAQ has has left me with a bit of a vague feeling. Does anyone know more specifics about this program or can recommend whether its a good idea or not?
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May 12, 2015 06:03
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Either this thread or the Newbie Personal Finance one used to have the subtitle "Acorns are for squirrels" if that gives you an idea of BFC's general feelings on the matter.Gray Matter posted:index-ish fund with a commission-free brokerage. That's the rub. As I recall, the fees were very much not worth it vs. making yourself save a little and purchasing directly with that. How many purchases would you have to make in a month for the rounded amounts to really sum up to anything worthwhile? That in itself could indicate a spending problem, which is almost always worse than a bad investing problem.
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May 12, 2015 06:04
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If you're the type of person who gets really excited because they just got back from that coinstar machine at the grocery store with two hundred bucks in a gift card and it's basically free money, I can just get that box set because hey I have a gift card I need to spend, than acorns is probably for you. If on the other hand you get angry that coinstar takes a ridiculous fee and won't even give you cash, I mean not that you'd ever use the dumb machine anyway, it takes an hour tops to roll your coins and you can get a bag of rolls for two bucks, acorn is probably not for you.
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May 12, 2015 06:15
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What if I'm annoyed by the fee but the marginal utility of my hour is greater than 9% of my sofa change?
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May 12, 2015 07:56
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Shim Howard posted:What if I'm annoyed by the fee but the marginal utility of my hour is greater than 9% of my sofa change? Go to your bank/CU and get it done for free.
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May 12, 2015 08:20
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Bhodi posted:If on the other hand you get angry that coinstar takes a ridiculous fee and won't even give you cash, I mean not that you'd ever use the dumb machine anyway, it takes an hour tops to roll your coins and you can get a bag of rolls for two bucks, acorn is probably not for you. They don't give you cash anymore? They always did when I used them... EDIT: app posted:Go to your bank/CU and get it done for free. Wait I can just go into my bank and throw a giant bucket of coins on the desk and go YOU HAVE TO ACCEPT THIS IT IS REAL LEGAL MONEY YOU ARE A BANK GIVE ME MY DOLLARS and they're fine with it?
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May 12, 2015 08:46
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Parallel Paraplegic posted:They don't give you cash anymore? They always did when I used them... If it's a large branch they'll probably have a machine to count it for you, if not they'll provide the wrappers and have a plastic counter thing that makes it easier to count it out.
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May 12, 2015 10:02
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Parallel Paraplegic posted:They don't give you cash anymore? They always did when I used them... You can open a pass book account at TD bank (it's crazy that they actually have those still) with no fees and a tiny minimum and use their coin counting machine for no fees.
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May 12, 2015 11:57
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You can also just get a card at the coin star machine and it won't charge the fee. I go with Amazon because there is no way I won't use it eventually.
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May 12, 2015 13:23
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The 2 main problems with acorns is that $12 a year is a actually a lot if you are starting from $0 and only investing spare change. The second problem is they don't support roth or traditional IRA accounts, which is really what their target audience should be investing in. 100 HOGS AGREE posted:You can also just get a card at the coin star machine and it won't charge the fee. I go with Amazon because there is no way I won't use it eventually.
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May 12, 2015 15:29
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THF13 posted:The 2 main problems with acorns is that $12 a year is a actually a lot if you are starting from $0 and only investing spare change. It's like the promotions where the company donates $1 for the $100 purchase. You're better off saving the $100 and making a $10 contribution. cowofwar fucked around with this message at 15:47 on May 12, 2015 |
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May 12, 2015 15:43
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