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Sanity check Vanguard $10380 - Total US stock market index, Roth IRA VTSAX $6538 – Total US bond market index, Roth IRA VBTLX $9191 – taxable account, 100% sp500 VFINX Fidelity $21,786 – International index (all stocks?), roth 401k FSIVX $9,914 – Extended market index (all stocks?), roth 401k FSEVX $2,967 – US Bonds, roth 401k FSITX $2,935 – SP500, roth 401k FXSIX Investments Total: $63,711 SP500: $12,126 Total US stock: $10,380 Extended market US stock: $9,914 International stock: $21,786 Stock total: $54,206, 60% US 40% International US Bonds: $9505, 100% US Total: 51% US Stock, 34% International Stock, 15% US Bonds It's hard to break down large cap vs. small cap US stock ratio since I have it so split up but I think it's probably good enough Does this look fine for now? 25 y.o but want to retire as early as possible
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Oct 5, 2016 21:29
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| # ? May 26, 2024 20:34 |
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I'd reduce your international footprint substantially. What's the rule of thumb? No greater than 20%?
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Oct 5, 2016 21:41
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Hoodwinker posted:I'd reduce your international footprint substantially. What's the rule of thumb? No greater than 20%? Completely depends on the advisory service you want to listen to. 34% is by no means extreme, just a little on the high side. Vanguard VTTSX Target Retirement 2060 for example, currently has 36% international equity. It all looks fine. Personally, I don't plan on investing in any regular bonds anytime soon (I'll take P2P, REITs, and various private equity thanks), but I understand that path isn't for everyone.
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Oct 5, 2016 21:51
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baquerd posted:Completely depends on the advisory service you want to listen to. 34% is by no means extreme, just a little on the high side. Vanguard VTTSX Target Retirement 2060 for example, currently has 36% international equity. That's fair. I'm a yeehaw-cowboy riding like 70% in US equities right now so that's my angle.
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Oct 5, 2016 21:55
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Vanguard's retirement date funds have 40% of their equity allocation in international as of 2015, and can be seen a pretty conservative. I figure they're a pretty good authority.
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Oct 5, 2016 22:29
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Ralith posted:Vanguard's retirement date funds have 40% of their equity allocation in international as of 2015, and can be seen a pretty conservative. I figure they're a pretty good authority. Huh, their rebalancing bands would be interesting to see, looks like some variation on that 40%.
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Oct 5, 2016 22:36
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Ralith posted:Vanguard's retirement date funds have 40% of their equity allocation in international as of 2015, and can be seen a pretty conservative. I figure they're a pretty good authority. I'm giving myself 3? (it might have been 5) years of tracking my current setup against the 2055 Target Date fund before I realize I'm probably not going to outperform/probably going to underperform and just dump it all in there. I'm young and I'm hardly doing anything wild and crazy with it. It's all in Vanguard funds anyway.
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Oct 5, 2016 22:38
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Hoodwinker posted:I'm giving myself 3? (it might have been 5) years of tracking my current setup against the 2055 Target Date fund before I realize I'm probably not going to outperform/probably going to underperform and just dump it all in there. I'm young and I'm hardly doing anything wild and crazy with it. It's all in Vanguard funds anyway.
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Oct 5, 2016 22:44
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Ralith posted:Why not just duplicate their allocation manually? Saves on expense ratio. I could in the future, I suppose. The reason my domestic equity allocation is so high right now (it's not supposed to be above 60% based on my plan) is because I have 3 accounts (TSP, 401k, and an IRA) and it would be more work than it's worth to rebalance so my overall portfolio matches when I can get it all in-line by the end of 2017 just from my contributions. In the meantime I can sit on that sweet US stock volatility.
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Oct 5, 2016 22:52
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FWIW, I have also been keeping my portfolio underweight on international compared to the ~35% in a target 2050 Vanguard or Fidelity fund. I'm at only about 10% international stocks, but have a lot of large cap US equity exposure which kinda-sorta includes international exposure. It's worked out hugely in my favor the past few years, but I fully recognize that it could go the other way as well.
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Oct 5, 2016 22:55
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Hoodwinker posted:I could in the future, I suppose.
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Oct 5, 2016 23:00
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Ralith posted:What's your mortgage's interest rate? Historically, the average long-term real return of a S&P 500 index fund is something like 7%, which means the opportunity cost of not investing usually dominates the interest savings on paying off a mortgage early, unless you expect the economy to crash permanently. On the other hand, there's no volatility to paying off a mortgage, so it may be easier to actually stick with. 4.625%. I could theoretically refinance and reduce the payment by, like $120 a month but I'm not 100% sure that's worth the effort. I Like Jell-O posted:Keep in mind the mortgage tax deduction (assuming you live in the US). This will reduce the amount of money you "save" by your marginal tax rate. To keep the math simple, if you expect to pay a 25% rate, that means you're only "saving" $60,000 over 20 years. The reason I keep putting saving in quotes, is because you also need to take into account inflation, which has a big impact on value over the course of a 30 year mortgage. A dollar paid now is worth significantly more than a dollar saved in 30 years. What that means is that, if your interest rate is low enough (or inflation high enough), you might end up not saving any money at all in real terms by paying off the mortgage early. I am in the US, yes. Sounds good - I'll max the roth IRA preferentially. Is it considered prudent to split between roth and traditional? I've maxed the matching rate on my 401k with my employer(7% with a 3.5% match from the employer, IIRC). I see in the OP that I should see about raising my contribution to $18k/yr. Which will be a tough pull this year since that'd be a significant chunk of the rest of my paychecks for the rest of the CY. I have no interest in playing the stock market directly, and the traditional investing structures are sort of exhausting to research, so the robo advisor thing that betterment/wealthfront do is pretty attractive. So far I've pretty consistently netted 3-5% on the amount in betterment, which isn't terrible I guess, though I guess not as good as a well performing more hands on portfolio. Would it generally be considered worth my while to try the more traditional route as well, or instead? Am I oversimplifying by comparing putting $10k to start in something that, for argument's sake, gets me 4% yield, adding another $10k/yr in monthly chunks of ~$835, vs putting $10k into premium payoff now and $200/week into premium payoff on 4.625%? In theory, I'd be "spending" $90k in scenario 2 if it takes to ~2024ish to save, like $78k on overall mortgage cost if left to run the whole term (net -$12k). In scenario 1, I "spend" the same 90k, and end up with ~$107k (again, assuming a consistent 4% return), or +$17k, plus the liquidity of all that money which I don't have in the mortgage payoff situation. Does this make sense or did I wander off on a nonsensical path? In the scenario where the only debt I have is the mortgage, which is under 20% of my take home, and I have a decent "gently caress you" cushion, should my goal be to maximize retirement investments as much as possible? Any rule of thumb to say that you should only ever invest X% of your income beyond retirement accounts, or is it more the case of "sock everything away into stable investments beyond your basic living expenses and maintenance of your cushion"? As I put 10% down, I'm paying PMI which is due to expire in, I think June or so of 2020. It's around $70/month, I believe. If I put in a $12,673.15 payment, I'd be to 22% of the loan value paid off and it should automatically drop off, saving around $3k that I'm otherwise paying over that time. Doing the same kind of calculation as above for ~3 years at 4%, I'd be spending $12,673.15 tomorrow to net +$2900 guaranteed, vs $12,673.15 going into the investment at 4% would net +$2200. Or maybe I'm oversimplifying again.
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Oct 6, 2016 08:01
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I like turtles posted:4.625%. I could theoretically refinance and reduce the payment by, like $120 a month but I'm not 100% sure that's worth the effort. Run the numbers using various calculators available online. You could drop over a percent, which is almost always a huge win in the long term.
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Oct 6, 2016 15:29
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If you have PMI you should absolutely look into refinancing or paying a big enough lump sum to remove it. Just make sure to call your mortgage servicer before paying a lump sum as sometimes you have to wait X number of years or get a new appraisal, etc. Also, if you are 31 you want to be aggressive with your investments. What type of account is your betterment account? The nice thing about a Roth IRA is that it does allow you some flexibility for if you absolutely need to withdraw some money for a down payment on a house or if you decide to retire early and want to get a regular disbursement for living expenses.
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Oct 6, 2016 16:08
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Mr. Glass posted:yes, although you should make sure that she doesn't contribute more than she earns individually (unlikely, but i thought i should mention it). Going back to this for a second, what does this mean exactly? Like, don't contribute more in a month than she earns in a month? Why is that?
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Oct 6, 2016 18:01
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You can't contribute more to an IRA than you have in earned income, on a yearly basis. For example, if you only earned $4000 in a year the maximum you can contribute to an IRA is $4000. It's generally a corner case that doesn't apply to most people who would be contributing to an IRA in the first place, but it is a rule that exists. Pretty sure if you're married your household income counts, not just individual income, but I might be wrong...
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Oct 6, 2016 18:11
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Guinness posted:Pretty sure if you're married your household income counts, not just individual income. my understanding was the opposite, but now i'm not sure. if you're allowed to contribute to your spouse's IRA (which it sounds like you are) i would imagine that you are correct.
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Oct 6, 2016 18:17
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I like turtles posted:4.625%. I could theoretically refinance and reduce the payment by, like $120 a month but I'm not 100% sure that's worth the effort. I like turtles posted:I am in the US, yes. Sounds good - I'll max the roth IRA preferentially. Is it considered prudent to split between roth and traditional? I like turtles posted:I have no interest in playing the stock market directly, and the traditional investing structures are sort of exhausting to research, so the robo advisor thing that betterment/wealthfront do is pretty attractive.  . Buying whole-market index funds in Vanguard will at best give you equal expected returns to Betterment with somewhat lower fees, and getting more hands-on than buying whole-market index funds will result in worse performance unless you're some kind of world-class savant. On multi-decade scales, returns for the whole market have generally averaged 7% after inflation, but shorter timescales will see wide variance.I like turtles posted:Am I oversimplifying by comparing putting $10k to start in something that, for argument's sake, gets me 4% yield, adding another $10k/yr in monthly chunks of ~$835, vs putting $10k into premium payoff now and $200/week into premium payoff on 4.625%? In theory, I'd be "spending" $90k in scenario 2 if it takes to ~2024ish to save, like $78k on overall mortgage cost if left to run the whole term (net -$12k). In scenario 1, I "spend" the same 90k, and end up with ~$107k (again, assuming a consistent 4% return), or +$17k, plus the liquidity of all that money which I don't have in the mortgage payoff situation. Does this make sense or did I wander off on a nonsensical path? I like turtles posted:In the scenario where the only debt I have is the mortgage, which is under 20% of my take home, and I have a decent "gently caress you" cushion, should my goal be to maximize retirement investments as much as possible? Any rule of thumb to say that you should only ever invest X% of your income beyond retirement accounts, or is it more the case of "sock everything away into stable investments beyond your basic living expenses and maintenance of your cushion"? I like turtles posted:As I put 10% down, I'm paying PMI which is due to expire in, I think June or so of 2020. It's around $70/month, I believe. If I put in a $12,673.15 payment, I'd be to 22% of the loan value paid off and it should automatically drop off, saving around $3k that I'm otherwise paying over that time. Doing the same kind of calculation as above for ~3 years at 4%, I'd be spending $12,673.15 tomorrow to net +$2900 guaranteed, vs $12,673.15 going into the investment at 4% would net +$2200. Or maybe I'm oversimplifying again.
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Oct 6, 2016 22:09
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Mr. Glass posted:my understanding was the opposite, but now i'm not sure. if you're allowed to contribute to your spouse's IRA (which it sounds like you are) i would imagine that you are correct.
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Oct 7, 2016 00:26
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You can also request to get your house re-appraised, sometimes you can get enough equity to remove PMI from that. It doesn't automatically drop off BTW - since it makes the company money there are often hoops you have to jump through to get it removed.
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Oct 7, 2016 02:01
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Ralith posted:Lots of advice All great stuff, thank you. I'm annoyed to find out that I'm not able to do set amounts per paycheck for my 401k, it has to be integer percentages - so I'll be able to get to within ~$180 of $18k by the end of the CY. Eh whatever. I've done $5500 to the Roth since I've already got that going and I'm pretty well slamming my pre tax income! Next year I'll open a parallel traditional and start putting stuff in that. I'll look into the refi, which I guess I have the ability to be a bit more circumspect on than the original mortgage. If I don't go for the refi, I'll investigate knocking out PMI - from what I can tell I can request it to be taken off after I hit 20% (likely requiring the reappraisal/etc), or it'll come off automatically after 22% Edit: Oh so one other thing - my house has appreciated in value by around 20% in the ~3 years I've had it if zillow is even remotely accurate. If I refinance, is the loan amount pegged against the value of the house from the appraisal, so if I take a $120k loan on a $190k house, I'd effectively have a 36.8% equity all the sudden, instead of, nominally, 13.3%? I like turtles fucked around with this message at 03:17 on Oct 7, 2016 |
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Oct 7, 2016 02:49
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I like turtles posted:All great stuff, thank you. I'm annoyed to find out that I'm not able to do set amounts per paycheck for my 401k, it has to be integer percentages - so I'll be able to get to within ~$180 of $18k by the end of the CY. Eh whatever. I like turtles posted:Edit:
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Oct 7, 2016 07:36
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I've called around and one of the little local credit unions is offering 3.625 at 0 points, plus ~$2900 closing cost, 3.5 at 1 point, 3.375 at 1.75 points or 3.25 at 2.25 points. Logic I'm seeing online is that buying points is good if you plan to stay longer than the break even point, is that a good rule of thumb? If I were to look at a 15 year, I'd obviously get a lower rate, but then I would be stuck paying an extra, say, $X a month when I'd have the flexibility to decide if I wanted to with a 30. If I paid the extra $X consistently, that's effectively a 15 year mortgage with a higher rate and added in flexibility on payments, right? I also checked out better.com and their rates are a little higher (and I got a call in about 45 second into my application process with them which was slightly surprising), but they offer to match and beat any good faith estimates of loan cost. Are there significant benefits to going with a small CU? Edit: Looks like Better doesn't service your loan, whoever buys it does... If the small CU services the loan for its lifetime, even if they sell it (my current CU does), that sounds like a big point in their favor to me... Slick websites shouldn't matter too much these days, but do early 2000s type website matter I wonder? There's clip art on the CU's page...  I've decided that the clip art is adorable and their whole site is up to date and accurate and crazy friendly and personable. I like turtles fucked around with this message at 23:58 on Oct 7, 2016 |
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Oct 7, 2016 23:27
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I like turtles posted:I've called around and one of the little local credit unions is offering 3.625 at 0 points, plus ~$2900 closing cost, 3.5 at 1 point, 3.375 at 1.75 points or 3.25 at 2.25 points. They might be a little high, the place I got my mortgage from is showing 3.5% today with no points, and I paid about $2800 in closing costs ($990 origination, $350 appraisal, $1500 title services/lender title insurance). My loan was quickly sold but that isn't really too big a deal.
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Oct 8, 2016 00:18
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Droo posted:They might be a little high, the place I got my mortgage from is showing 3.5% today with no points, and I paid about $2800 in closing costs ($990 origination, $350 appraisal, $1500 title services/lender title insurance). Everyone else around here and online that I've checked out has been higher, some a little, some a lot. Guess it bounces around a lot, though. Since I'm not in a hurry I'll probably wait for a bit and keep an eye on what their rates do before I lock. And seriously I've been going through their whole site and this is honestly the first CU I've encountered that comes off like what I've heard credit unions should be. Every other one around here is a credit union and isn't malicious seeming like some of the bigger banks, but they're a lot more on the "bank" end of the spectrum. I mean, they offer "Johnny Appleseed accounts" for kids 12 and under, where the kid gets a present or an entry in a quarterly drawing every time they make a deposit.
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Oct 8, 2016 00:28
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I like turtles posted:If I were to look at a 15 year, I'd obviously get a lower rate, but then I would be stuck paying an extra, say, $X a month when I'd have the flexibility to decide if I wanted to with a 30. If I paid the extra $X consistently, that's effectively a 15 year mortgage with a higher rate and added in flexibility on payments, right?
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Oct 8, 2016 01:00
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Ralith posted:15 vs. 30 year is again a question of opportunity cost and risk tolerance. The longer term will allow you to invest more in index funds, which are reasonably likely to make you more money in the long run than you would have saved on interest with a shorter term mortgage. If you can tolerate the risk of the stock market tanking massively at the same time you lose your job or something and making it difficult to make payments, it probably makes sense to stick with a 30-year. Idk about this, imagine if someone had paid of their mortgage. You'd never suggest they take out a new 15yr one and invest the money in the stock market.
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Oct 9, 2016 15:40
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pointsofdata posted:Idk about this, imagine if someone had paid of their mortgage. You'd never suggest they take out a new 15yr one and invest the money in the stock market.  The key reason behind this is today's rates are super low, which probably won't last.
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Oct 9, 2016 18:35
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Remember in 1999 when everyone was getting cash advances on their credit cards (at 20%+ rates) to invest in the stock market and they were making money hand over fist? Well until they weren't anyway.
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Oct 9, 2016 20:44
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Ralith posted:There are very few times in history where taking out a new 30-year mortgage at today's rates and investing it in the market wouldn't have worked out well for you. It's a judgement call Interest rates, inflation, and stock valuation are not independent events. I would not expect the same equity returns in a 0% environment as I would in a 10% environment.
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Oct 9, 2016 20:51
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Pryor on Fire posted:Remember in 1999 when everyone was getting cash advances on their credit cards (at 20%+ rates) to invest in the stock market and they were making money hand over fist? Well until they weren't anyway. Droo posted:Interest rates, inflation, and stock valuation are not independent events. I would not expect the same equity returns in a 0% environment as I would in a 10% environment. Ralith fucked around with this message at 21:08 on Oct 9, 2016 |
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Oct 9, 2016 21:02
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pointsofdata posted:Idk about this, imagine if someone had paid of their mortgage. You'd never suggest they take out a new 15yr one and invest the money in the stock market.
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Oct 10, 2016 01:24
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My company is closing our pension to new employees and instead putting them on an automatic 7% 401k company contribution (additional 3% match optional with employee contribution). They are offering existing employees a chance to freeze their pensions and enroll in the new enhanced 401k. I'm skeptical but would like the hive mind's views. Yea or nay? I already max my 401k contributions.
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Oct 10, 2016 19:47
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Depends on your pension terms, I'd say.
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Oct 10, 2016 19:54
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And your company's solvency / pension administration. 401ks and IRAs are nice because it's your money (or assets, rather). Since they're closing the pension to new applicants, that means that your retirement won't be subsidized / supercharged by new money. Which means that your pension's expected return is comparable to standard investing unless a significant portion of your cohorts die young AND you live to be really old. Basically, best case is that your pension remains solvent and you live to be really old. Worst case is that your company goes Enron. Middle-ground is that your pension benefits get fiddled with at some point in the future because liabilities are exceeding growth. All these questions have more to do with your company / pension administration / coworkers' life expectancy rather than the pension's benefits themselves.
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Oct 10, 2016 20:21
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I've got a pretty dumb/basic question, and apologize if it's already been answered: I opened up a Roth IRA with Vanguard and have $11,000 in it right now. Would putting it all into their Target Retirement 2055 fund be a good idea, or is it better to split up the money and invest it manually? I know close to nothing about stocks/bonds/investing.
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Oct 12, 2016 21:14
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Antoine Silvere posted:I've got a pretty dumb/basic question, and apologize if it's already been answered: I am no expert and started learning like you a month ago, the advice I got on this thread is that the Vanguard target retirement funds are the best in the business so you can set it and forget it. Manually doing it might not be worth the effort and risk of messing it up.
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Oct 12, 2016 21:16
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Antoine Silvere posted:I've got a pretty dumb/basic question, and apologize if it's already been answered: If you don't know what you're doing, just put it in the Target Retirement fund. If you want to, you can read the books in the OP and learn how index funds work, and then once you're better informed you can decide for yourself if you want to change it.
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Oct 12, 2016 21:25
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Antoine Silvere posted:I've got a pretty dumb/basic question, and apologize if it's already been answered: You're probably best if you don't worry about it until you have a much larger retirement balance.
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Oct 12, 2016 21:27
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| # ? May 26, 2024 20:34 |
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Awesome, thanks for the quick responses everyone 
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Oct 12, 2016 21:51
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