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Residency Evil posted:Is there anything special I have to do to have my extra 2016 Roth contribution count towards 2015? Is it just 5500-2015 contributions?
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Feb 29, 2016 14:05
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Residency Evil posted:Is it just 5500-2015 contributions? Assuming you use either Fidelity like I do or Vanguard (this one I can't speak on) there should be a place to specify what tax year you're contributing to. (I don't use Fidelity on purpose- it's just where my former employer had all my 401k money parked)
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Feb 29, 2016 15:19
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Vanguard clearly asks which year you want to contribute to before depositing.
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Feb 29, 2016 16:48
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I've read Four PIllars and The Bogleheads' Guide. I completely understand diversification and asset allocation. Am I hurting myself if, even after all that education, I still just want to be lazy and put my money in a Target Retirement fund and call it a day?
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Feb 29, 2016 19:36
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Good-Natured Filth posted:I've read Four PIllars and The Bogleheads' Guide. I completely understand diversification and asset allocation. Am I hurting myself if, even after all that education, I still just want to be lazy and put my money in a Target Retirement fund and call it a day? No.
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Feb 29, 2016 19:38
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Good-Natured Filth posted:I've read Four PIllars and The Bogleheads' Guide. I completely understand diversification and asset allocation. Am I hurting myself if, even after all that education, I still just want to be lazy and put my money in a Target Retirement fund and call it a day? A target retirement fund is all about diversification and asset allocation, so I think you've got it down. Kinda the whole theme of 4P and Bogleheads is that "diversification does not mean holding 10+ funds"
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Feb 29, 2016 19:39
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Good-Natured Filth posted:I've read Four PIllars and The Bogleheads' Guide. I completely understand diversification and asset allocation. Am I hurting myself if, even after all that education, I still just want to be lazy and put my money in a Target Retirement fund and call it a day? "Hurting yourself"? No. If you have lower-cost fund options in your 401(k), or if you're doing an IRA (and therefore could do it with, say, Vanguard, whose individual funds are lower cost than the target retirement funds), then you are spending a little bit extra in order to be lazy. Not very much extra. Example: your target retirement fund has an ER of .16% (that's Vanguard's ER for its target retirement funds). You could instead do your own allocation using Vanguard's cheapest three-fund portfolio: VTSAX for total domestic stock market: ER .05% VTIAX for total international stock market: ER .12% VBTLX for bonds: ER .07% These are all "Admiral" class shares, available if you have a minimum of $10k in each fund. Depending on your actual allocation, your average ER will be lower than .16% by some amount (less if you're very heavy on VTIAX, more if you're mostly weighted into domestic stocks and bonds). So you'll probably save a few hundredths of a percent per year in fees. On a portfolio of $100,000, if you save (say) .07%, you're saving $70 a year. So you're effectively paying $70 a year to be lazy. All of these numbers vary depending on the actual ERs available to you in your particular retirement account, though. In some cases you may be paying much more for a target retirement account, in others, you might not have access to Admiral shares, etc. etc. As long as you're comfortable with the (probably) slightly higher fees, that's fine. You're certainly not going to cripple your retirement.
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Feb 29, 2016 19:53
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Thanks all. I figured I'd just have to do the math to compare how the expense ratios would affect the overall balance. For reference, my and my wife's Roth IRAs are in Vanguard Target Retirement funds (0.16% expense ratio). My 401k is in some nebulous 401k system that makes it hard to find details about the funds, but it looks like expense ratios are ~0.5% on average (I use an auto-allocation thing, based on my risk tolerance). My HSA is at Bank of America, and has an average of 0.2% expense ratios for its Vanguard fund options (other funds have higher expenses. It's a manual allocation). I put the company match into my 401k, max our Roths, and am working on maxing my HSA before I go back to increasing the 401k. Maybe when we get enough assets in Vanguard I'll look into admiral funds, but it's just so nice to put money into a target retirement fund and let it go for 30-35 more years.
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Feb 29, 2016 22:10
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Good-Natured Filth posted:My 401k is in some nebulous 401k system that makes it hard to find details about the funds, but it looks like expense ratios are ~0.5% on average (I use an auto-allocation thing, based on my risk tolerance). My HSA is at Bank of America, and has an average of 0.2% expense ratios for its Vanguard fund options (other funds have higher expenses. It's a manual allocation).
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Feb 29, 2016 22:21
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Are you searching for yield on your bond investments in these lean times? Do you think diversification is overrated? Liquidity not really your thing? Then you might be interested in making loans secured against small commuter aircraft in Columbia via a new startup! http://forums.moneysavingexpert.com/showthread.php?t=5179953 (I think the funniest thing about this is that the best case scenario is 11% a year over three years. That's nice sure but not that great as a maximum yield)
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Mar 1, 2016 15:55
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Going to make a decision this year- either go with the advice in this thread or purchase a buy to let and be an absent landlord.
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Mar 2, 2016 00:01
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Just keep in mind that if you choose the latter and they cook meth in it, you'll probably have to burn it down in order to sell the place when you give up your dream
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Mar 2, 2016 00:45
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Fairly passive posted:Going to make a decision this year- either go with the advice in this thread or purchase a buy to let and be an absent landlord.
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Mar 2, 2016 05:57
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So my employer held a meeting today to go over the 401k program they're creating/sponsoring/initiating. From the limited research I've done, this 401k plan is, uh, not very good. Help me learn more, fellow goons. I work at a chemical plant with <50 employees near Philly Sponsor: hj wealth management via American Funds Type: Both normal and Roth 401ks are offered Employer Match: Discretionary. Its not a per-paycheck match. At the end of the year, The Company will crunch the numbers and decide how much to match, or not match at all. So any money put in 2016 wouldn't theoretically be matched until 2017. This decisions is solely up to The Company and us labor has no way to know if they will match. This decision could be based on number of people enrolled, overall health of The Company, corporate profitability, etc. This seems like a reason to hve a match of 0% without The Company straight up telling us they wont match poo poo. Expense Ratio: All available funds have expense ratios of ~1.5%. This seems ludicrously high Eligibility: Must be an employee of The Company for 1 year (I'm at 6 months so far) Loan against balance: Yes The variable employer match and high expense ratios seem sketchy to me, but I do have 6 months to go before I'm eligible to contribute and can think things through. I also don't plan to stick around for too long, probably around another two years. I do have a Roth IRA via Vanguard that I contribute to, so I am saving something right now. Frankly, The Company is dying and the owner is the cheapest gently caress imaginable so some of this doesn't really surprise me and I'm expecting a 0% match. The last time The Company had an 401k plan, it was scrapped because no one participated, though they matched 1% or some other minuscule amount. Is this 401k plan worth contributing to or should I stick with my IRA for now? FWIW my dad works at Vanguard and he had a near heart attack when he looked over the details
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Mar 3, 2016 02:39
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DOOP posted:So my employer held a meeting today to go over the 401k program they're creating/sponsoring/initiating. From the limited research I've done, this 401k plan is, uh, not very good. Help me learn more, fellow goons. I work at a chemical plant with <50 employees near Philly I think it's worth it in the sense that you can roll it over to Vanguard as tax-advantaged space when you leave.
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Mar 3, 2016 03:15
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Hypothetically, if I was a 65 year old making good money and planning to work part time through retirement and I had about 500 thousand in a savings account, what should I do with that money?
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Mar 3, 2016 03:50
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Tots posted:Hypothetically, if I was a 65 year old making good money and planning to work part time through retirement and I had about 500 thousand in a savings account, what should I do with that money? Hypothetically collect more information on the hypothetical scenario. Own a house? Any money outside the savings account? Any tax advantaged space? How good is good money? Etc
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Mar 3, 2016 04:00
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Jon Von Anchovi posted:Hypothetically collect more information on the hypothetical scenario. Own a house? Any money outside the savings account? Any tax advantaged space? How good is good money? Etc Yup, house is owned. There's about 750k just sitting in savings and that's it. No tax advantaged space. I'm sitting next to him right now and he keeps asking me what the internet thinks of annuities.
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Mar 3, 2016 04:09
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Tots posted:Yup, house is owned. There's about 750k just sitting in savings and that's it. No tax advantaged space. I'm sitting next to him right now and he keeps asking me what the internet thinks of annuities. Any dependants? Any spousal / other income? Annuities is a nice specific question, though one I know nothing about
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Mar 3, 2016 04:17
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Jon Von Anchovi posted:Any dependants? Any spousal / other income? Annuities is a nice specific question, though one I know nothing about Wife that works part time as a nurse and maybe paying for schooling for a daughter in the next year. Basically there are two people at retirement age with a grip of money just sitting a savings account and they have no idea what to do with it. I'm just trying to help out via my internet connection friends (hi guys!). I think primary concerns are making the money work until death being able to travel and live comfortably and having something to pass along for generational wealth.
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Mar 3, 2016 04:22
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Assuming you want to preserve principal, then you're going want to look at various bond funds. Safe-ish corporate bond funds pay about 3-4% right now, so that's ~25k/yr of income that can be used to supplement whatever he's getting from social security and part time work. If he wants to start drawing down the principal to live off of, then either keep it in cash or put it in Treasuries. Stocks are generally not appropriate for someone that age, because even though returns will likely be higher in the long run, there can be periods where the cash value of your investments take a huge dive. Since it's generally assumed that once you're in retirement you want access to that money in the short term, and being forced to sell in a year when the market does poorly can be catastrophic. Annuities are very complicated but the general wisdom is that with a few exceptions they aren't a good deal. Financial firms don't sell annuities to lose money, so you basically have to exceed the average expected life span by a pretty significant amount before you come out ahead. In a certain light, an annuity is expensive insurance against living past 90+ years.
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Mar 3, 2016 04:34
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Tots posted:Yup, house is owned. There's about 750k just sitting in savings and that's it. No tax advantaged space. I'm sitting next to him right now and he keeps asking me what the internet thinks of annuities. You will generally not find the best advice here for your situation. I suggest you make a detailed post over at the early retirement forums (http://www.early-retirement.org/forums/) in the "Hi, I Am" forum asking basically the same question (with some more details). A lot of people over there will recommend some combination of the Vanguard Wellesley fund and the Vanguard Wellington fund, depending on your risk tolerance. In your situation, i would say you could throw it all into the Wellesley fund and be pretty happy (it has about a 1/3rd allocation to stocks, and the rest is bonds).
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Mar 3, 2016 05:49
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mrmcd posted:Assuming you want to preserve principal, then you're going want to look at various bond funds. Safe-ish corporate bond funds pay about 3-4% right now, so that's ~25k/yr of income that can be used to supplement whatever he's getting from social security and part time work. I don't really agree that stocks are not appropriate. They have 15-30 years still and that's plenty of time to recover from a crash and stocks have significantly higher gains. I wouldn't recommend a 90/10 portfolio, but 50/50 or lower would still up your overall return a significant amount.
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Mar 3, 2016 14:03
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asur posted:I don't really agree that stocks are not appropriate. They have 15-30 years still and that's plenty of time to recover from a crash and stocks have significantly higher gains. I wouldn't recommend a 90/10 portfolio, but 50/50 or lower would still up your overall return a significant amount. I agree with this, especially because there's a desire to pass along some of the wealth as an inheritance
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Mar 3, 2016 14:14
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Also http://www.bogleheads.org/forum/index.php where there is a lot of discussion about Wellington/Wellesley/annuity/index funds by people in very similar situations.
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Mar 3, 2016 16:40
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slap me silly posted:Also http://www.bogleheads.org/forum/index.php where there is a lot of discussion about Wellington/Wellesley/annuity/index funds by people in very similar situations. Just doing a quick glance through and it seems like there's a very high number of short threads. I'm going to pore through it when I'm at a computer, but in the meantime do you know of any specific good threads to check out?
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Mar 3, 2016 20:17
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Re: passing along generational wealth, you should also look into setting up a trust.
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Mar 3, 2016 21:00
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Scenario: 29, making 100k, employer offers roth 401k and 401k. Is the wise thing to do contribute to the regular 401k so I'm in a lower tax bracket (so around 11%) and then try to max out the 18k with the roth 401k (around 7%). Then moving forward in my career, should I just slowly shifting towards focusing more on 401k instead of Roth 401k? Thanks in advance
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Mar 4, 2016 08:26
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At your age I'd recommend going all Roth because you effectively get to same more dollars (since dollars going in are post tax).
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Mar 4, 2016 09:20
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I'd be contributing to the traditional to save paying your highest marginal rate unless: - your income will grow substantially in the future and you expect to be in a high tax bracket for all future years - and you can already afford to max all tax advantaged space including Roth 401k - and there's nothing obvious you need to be saving after tax dollars for, eg house Traditional is the best choice for most people unless you have really high income/inheritance or you personally believe taxes will rise in real terms. If you're in the 28% bracket now, you're likely to be in a lower one in retirement. antiga fucked around with this message at 16:44 on Mar 4, 2016 |
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Mar 4, 2016 13:34
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antiga posted:I'd be contributing to the traditional to save paying your highest marginal rate unless: Well I mean, at some point in the reasonably near future the dude should probably buy a house to live in, right? I'm aiming to buy a house at some point around 30 years old. I would feel weird renting as a 40 year old, unless I bounced around jobs constantly. And that would be a bad thing.
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Mar 4, 2016 16:24
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Michael Scott posted:Well I mean, at some point in the reasonably near future the dude should probably buy a house to live in, right?
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Mar 4, 2016 16:41
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That's what I was getting at, traditional being preferable unless all three bullets were met. If you have something to save for now, chances are the added cash flow now from deferring taxes is the right move. Similarly if you can't afford to max the Roth option you can get more money in earlier via traditional. If the cash is immaterial to your current financial situation and you're on track to retire with a shitload of money, it may make sense to go Roth. antiga fucked around with this message at 16:45 on Mar 4, 2016 |
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Mar 4, 2016 16:43
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The nice thing about Traditional is that you don't just have to retire in a lower bracket for it to work out really well, you can convert it at any point along the way. Want to take a couple years off to travel? Decide to work for a non profit or startup for awhile? Government creates some weird tax holiday year (e.g. the death tax in 2010)? Move from a state with a relatively high tax on IRA conversions to one with no tax on IRA conversions? Those are all great years to convert big chunks of IRA assets at a lower rate.
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Mar 4, 2016 16:47
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My dad was awesome and set up IRAs and mutual fund accounts with a few different companies when I was younger - I've got stuff in Oakmark, Janus, American Century, Royce, and (including my personal stuff) Vanguard. Are there any downsides or fees I would have to deal with to transfer IRAs (both Roth and Traditional) from these other companies over to Vanguard? Anything in particular I should think about when doing it? Everyone of those companies has higher expense ratios than Vanguard and it mostly seems like they don't have much better performance, if they do at all... Some also charge account maintenance fees which can be decently substantial on the small account sizes. I think there shouldn't be any sort of penalty but I wanted to check with you guys before I make a mistake.
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Mar 4, 2016 19:16
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I would think they all are probably going to have a transfer fee, Edward Jones' was $95 for a taxable transfer in kind. They all should have their fees listed so you can see.
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Mar 4, 2016 19:21
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There will likely be fees but in my experience you're better off ripping off the band aid and do it than leaving them to absorb whatever yearly fees/expenses those firms are charging.
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Mar 4, 2016 19:28
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antiga posted:there's nothing obvious you need to be saving after tax dollars for, eg house Not really referring specifically to the quoted post, but when saving after tax dollars for something (ie a house) does that mean just dump it into a savings account until some sufficiently high dollar threshold is met? What vehicle is preferred here? I ask because before we had been thinking about saving for a house we were basically just dumping savings into Vanguard funds and forgetting about it. Is there a reason we shouldn't keep on doing that?
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Mar 4, 2016 22:33
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Well most people don't want to expose their savings for a specific purpose (house) to the market because of bad performance which can skew your timeline. Sure, you should eventually make your money back in the market over a long term but what if you want to put a downpayment on a house in less than 5 years and the market performs poorly, wiping out 20-50% of your savings? Do you just wait until the market recovers (could be a decade)?
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Mar 4, 2016 22:40
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Joiny posted:Well most people don't want to expose their savings for a specific purpose (house) to the market because of bad performance which can skew your timeline. Sure, you should eventually make your money back in the market over a long term but what if you want to put a downpayment on a house in less than 5 years and the market performs poorly, wiping out 20-50% of your savings? Do you just wait until the market recovers (could be a decade)? I guess house prices and market performance are also either sufficiently uncorrelated or the market crashes way out of proportion with housing prices that this makes sense. It's irrational but it feels weird to have this big chunk of change sitting there not doing anything, but I guess not fast approaching zero is a kind of doing nothing I should be happy about, rather than some misplaced fear of missing out on it going up. Probably time to figure out moving some of this stuff into cash then as this plan for a house gets more concrete.
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Mar 4, 2016 22:45
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