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Their time horizon is infinity 
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Dec 31, 2016 00:27
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Accretionist fucked around with this message at 07:51 on Apr 5, 2017 |
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Dec 31, 2016 02:48
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2017 ira deposit in process. happy new year my retirement friends
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Jan 1, 2017 10:02
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I hosed up my 2017 Roth IRA contribution. Because of big gains in the US and almost no or negative gains in bonds or international last year, my IRA was more than a few % off its allocation (and more in dollar amounts than 5.5k), so I decided to re-balance it before I put my 2017 contribution in. Now when I try to set up my contribution, it informs me that the funds I'm invested in can only be bought once a month and I have to wait for February. Boo. I know in the future I should calculate the re-balancing and the new contribution together, but that's more math and I didn't know about the limit. 5500 at 10% a year for 1 month is only about $45 so I guess its not the end of the world.
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Jan 1, 2017 16:01
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Ooh yeah, forgot about that. DONE. Also tried to get started on taxes but loving turbotax isn't ready yet.
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Jan 1, 2017 16:54
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I make enough money that I'm going to need to do a Backdoor Roth IRA, however I don't have enough on hand to just do the entire chunk for 2017 right up front. Normally for a regular IRA I would just contribute as soon as I got the money, but I'm not sure what affect needing to do a backdoor roth has on that. Does it make sense to just hold the money in checking until I have enough to do the hole IRA in one go, or to just contribute non-deductable to a traditional until I max it for the year and then backdoor roth it, or can I do a miniature backdoor roth each month?
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Jan 1, 2017 22:00
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Xenoborg posted:5500 at 10% a year for 1 month is only about $45 so I guess its not the end of the world. You speak as if this were somehow guaranteed.
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Jan 2, 2017 05:30
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I haven't really seen any international stuff in this topic (last 20 pages I read at least). All I can say that the retirement system seems awfully complicated in the US  In here a fixed percentage of my income gets paid (already by the employer) to the state investment fund who will then invest it and I will (hopefully) have a retirement at the retirement age of 65. Cannot affect it at all really. I can only hope they don't keep raising the retirement age and there will be some money left for me too. No tax advantages for additional retirement savings, they are just regular investments as far as I know.I'm in my late 20s and have saved for down payment on an apartment (not bought yet, hopefully this year) and will start investing this year. As for my investment goals my goal is definitely to be able to retire as early as possible (looking at how much health related issues my family already has at around 65 I'm definitely willing to retire much earlier on less money!) but I should have a pension at 65 so I will not have to go homeless even if I don't save anything. Hard to set a goal or anything but if I manage to maintain a cheap lifestyle (like I currently have) and going by the 4% withdrawal a year rule I could at least currently live with 1000 €/month after taxes ASSUMING I'd have a paid off house/apartment so in practice the minimum amount of savings/investments I'd need is in the range of ~400 k€. Assuming no inflation, no change in my wages or life in general saving this much (not investing) would take me 30-40 years. I'd say I'm not super risk-averse considering I _should_ have social security and pension in some form no matter what. ETFs definitely seem like the best option and the PDF linked in the OP seems pretty reasonable and straightforward at 33% US equities, 33% international and 33% bonds. As for how investments are taxed it is quite straightforward; You only pay taxes on profit you have earned and that tax is currently around 25% of the profit. This includes dividend payments, so funds which re-invest dividends are cheaper because you do not have to pay any taxes on the dividends then. Some banks offer a limited selection of ETFs which you can buy monthly without any transaction costs. For my bank almost all of them are from the Blackrock iShares series or Deutsche Bank x-trackers series. I have basically ruled out all of the DB ones due to the... unstable situation of DB. I'm not sure how much risk would there be in actual physical ETFs even if the issuer would go bankrupt but it does not sound like a fun situation any way. With synthetic ones AFAIK you can lose everything since the counterparty would be DB. I was thinking of going for "iShares Core MSCI World UCITS ETF" (EUNL, TER 0.2%), "iShares Core S&P 500 UCITS ETF" (SXR8, TER 0.07%) and "iShares Global Corporate Bond UCITS ETF" (IS0X, TER 0.2%) OR "iShares Euro Corporate Bond ex-Financials UCITS ETF" (EUNR, TER 0.2%) all of which are physical ETFs. I could get a fourth one monthly (with no transaction costs) which I'm considering. I cannot see any clear "winner" for the fourth one though (or if I even should have a fourth one). Possible options would include "iShares Core MSCI Japan IMI UCITS ETF (Acc)" (EUNN, TER 0.2%), "iShares Core MSCI Pacific ex Japan UCITS ETF" (SXR1, TER 0.2%) and "iShares Core MSCI Emerging Markets IMI UCITS ETF" (IS3N, TER 0.25%). Here is a full list of the whole selection http://docdro.id/jikxEOy I guess my question is just rather broad at how should I consider my situation and translate it to the actual investments and relative percentages? I guess I should have a relatively higher amount of equities instead of bonds if I'm allowing for more risk? One thing to note is that for the dividends paid out by the bond ETFs (why does a bond ETF pay dividends btw.?) I have to pay tax which seems to amount to 10-20 basis points a year for example with the IS0X ETF.
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Jan 2, 2017 13:25
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MrKatharsis posted:You speak as if this were somehow guaranteed. Just a quick and rough guess to make me feel less bad about missing the window.
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Jan 2, 2017 16:24
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This seems too obvious, so I want to make sure I'm not missing something dumb (also sorry if this is a 1000x repeat, but I didn't see it in the last few pages). I have a Vanguard Roth IRA and a Vanguard Rollover IRA with roughly equal balances. Right now, they're both invested in a Target Retirement fund far in the future. If I don't mind doing the extra rebalancing work, would it make sense to hold the total stock market shares in the Roth and the bonds in the Rollover, since the stocks should grow more and I've already paid taxes on that money? Edit: More broadly, is there a good place I could read about structuring investments for tax purposes? I don't hold many non-tax sheltered investments right now, but if things continue going well for me, I may start having some left over funds to invest. Grumpwagon fucked around with this message at 16:50 on Jan 2, 2017 |
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Jan 2, 2017 16:45
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Grumpwagon posted:This seems too obvious, so I want to make sure I'm not missing something dumb (also sorry if this is a 1000x repeat, but I didn't see it in the last few pages). https://www.bogleheads.org/wiki/Tax-efficient_fund_placement
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Jan 2, 2017 17:37
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Also besides this: the Vanguard Target Date funds buy Investor-class shares of funds and aren't offered in Admiral-class shares. If you have enough, buying the Admiral shares of the component funds will decrease your yearly expenses in addition to any benefits you may get from putting stocks in taxable for qualified dividends or following the other guidelines in that Bogleheads article.
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Jan 2, 2017 18:39
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Okay I've been putting this off long enough so here goes. I've done some research but have a few questions to make sure I'm not doing something wrong. I switched jobs in August 2016. I am interested in rolling my 401k from my old job into it. All it has in it is T Rowe Price target date 2055 with $17,500. 1) Is it possible to roll the whole thing into a Roth IRA? Obviously way over the yearly limit of $5500 but I didn't know if it was treated as an exception. 1b) How do taxes on that work? I assume I need to withhold ~25% of the money coming out of the 401k? 2) I know there's a lot of advice on here to use Vanguard and read Four Pillars. What I gather is that they're just low fee stocks so if you're a hands-off person like me it seems ideal. Is there an ideal broker I should use or is Vanguard's website good enough?
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Jan 2, 2017 21:32
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The Big Jesus posted:Okay I've been putting this off long enough so here goes. I've done some research but have a few questions to make sure I'm not doing something wrong. 1. Rollover amounts don't count towards the $5500 limit. 1b. Yes, you'll have to pay taxes on it if you're converting it from a regular 401k to Roth IRA. It's called a Roth conversion. I don't know the specifics, but Vanguard customer service is pretty helpful. 2. Vanguard's website is good enough.
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Jan 2, 2017 21:41
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You can also roll it into a Rollover IRA, which is a traditional IRA and won't trigger any taxes. There is no particular reason to rush a conversion if you are young and currently in the 25%+ tax bracket, unless you are a doctor or some other career profession with high lifetime earnings.
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Jan 2, 2017 21:58
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Hyvok posted:All I can say that the retirement system seems awfully complicated in the US Yeah we have this too and pay it at 12.4 percent (split between employer and employee) of our income. It's called social security (OASDI) and as you mentioned since it's subject to a lot of hope, people plan accordingly.
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Jan 2, 2017 22:52
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The thing though is SS is not enough for a reasonable retirement by itself, not by a longshot, even if it stayed as it is right now. Which is why the OP talks up maxing both IRA and 401k if you can. It really is a pretty big clusterfuck when you think about it, especially how the availability of a 401k is tied to your employer. That's a major disadvantage if your employer doesn't offer one, and a major advantage if they give you a hefty match that grows tax-advantaged.
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Jan 3, 2017 00:56
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Just another piece of the total compensation package. If someone chooses a job just based on salary without looking at everything else, welp.
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Jan 3, 2017 03:24
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Hyvok posted:I haven't really seen any international stuff in this topic (last 20 pages I read at least). All I can say that the retirement system seems awfully complicated in the US It's not just programs like social security with this problem -- it's all the local and state governments with underfunded pensions, all underpaying for government now by promising to pay more later. A typical US baby boomer is estimated to receive 300k in government benefits minus taxes over the course of their life, while a typical millennial will receive negative 400k. That 700k, per person, is the amount of "generational theft". As a younger individual, you should probably favor personal retirement programs where offered. Gambling that your employer doesn't turn into the next Enron and blow away your pension is a heck of a risk to take over a 50 year timespan, even if your employer is a government.
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Jan 3, 2017 03:31
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The Big Jesus posted:1b) How do taxes on that work? I assume I need to withhold ~25% of the money coming out of the 401k? If you do decide to do the conversion to a Roth IRA instead of rolling it over into a Traditional IRA, ideally, you should be paying the tax with money outside the 401k. That's because any 401k money you use to pay for the taxes will be subject to the 10% penalty if you're under the age of 59.5, so your balance may be taking a larger hit than you'd expect.
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Jan 3, 2017 03:35
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Bad news: New job 401k has limited fund options. 10 asset-class funds plus 10 target retirement. Good news: Half of the regular funds are Vanguard standards. (The other half are managed "equivalents" of them.) Bad news: The target retirement are not Vanguard and are made up of the managed funds. The expense ratios of the target retirement aren't that terrible (0.5%), but I don't think the convenience of them allocating for me is worth 40 basis points.
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Jan 3, 2017 16:05
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smackfu posted:Bad news: New job 401k has limited fund options. 10 asset-class funds plus 10 target retirement. It's not. It seems like you know that already, though. You can basically make an all-equities version of the target retirement fund if you are a long way from retirement. Just use Vanguard Total Stock Market and Vanguard Total International Funds. In a 65/35 ratio and you will basically approximate the stock portion of the fund with low expenses. The Total Bond fund at 10% should approximate the actual Target Fund and is likely available if you have limited options. Probably best to go with all equities if you are a long way off from retirement and have limited fund choices, but it really depends on your options and risk tolerance.
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Jan 3, 2017 16:24
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Ancillary Character posted:If you do decide to do the conversion to a Roth IRA instead of rolling it over into a Traditional IRA, ideally, you should be paying the tax with money outside the 401k. That's because any 401k money you use to pay for the taxes will be subject to the 10% penalty if you're under the age of 59.5, so your balance may be taking a larger hit than you'd expect. Follow up question for this then. I plan on going back to grad school starting in August/September 17. So I will be much closer to the 15% tax bracket. For FY18 I'll definitely be in a lower bracket. Should I wait to do it then or does that not make a huge difference?
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Jan 3, 2017 16:53
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potatoducks posted:Just another piece of the total compensation package. If someone chooses a job just based on salary without looking at everything else, welp. Doesn't change the fact that it's rather complicated or that certain jobs let you grow more money tax-advantaged. There's only so many jobs out there that will offer a 100% match on maxing a 401k, but they do exist. Saying everyone should get that job if they want is just about the bootstrappiest thing I've ever heard. I mean, you have to work within the system you're in, but it really would be simpler and more fair if everyone could contribute X amount of dollars to a big personal IRA pool and a company could make contributions to that for you (but not exceed the maximum). That's not to say that people shouldn't try to maximize their retirement potential in this system, of course they should.
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Jan 3, 2017 17:20
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Nail Rat posted:I mean, you have to work within the system you're in, but it really would be simpler and more fair if everyone could contribute X amount of dollars to a big personal IRA pool and a company could make contributions to that for you (but not exceed the maximum). I wish this were the case, it could potentially simplify so much for defined contribution plans and taxes. But instead we've got a dozen different forms of 401(k)s, 403(b)s, IRAs, SEPs, etc. And if you're "lucky" you've got a pension or defined benefit plan that may or may not be worth anything. I take full advantage of the current system to the extent that I can, but so many people I know don't just because it seems intimidating and complicated.
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Jan 3, 2017 19:11
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Guinness posted:I take full advantage of the current system to the extent that I can, but so many people I know don't just because it seems intimidating and complicated. This was me until last year. It really is intimidating if you don't know where to begin, so I did nothing. My old job matched 401k and I'm kicking myself for not doing it.
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Jan 3, 2017 19:54
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Guinness posted:I take full advantage of the current system to the extent that I can, but so many people I know don't just because it seems intimidating and complicated. The invention of target date funds has really helped. Most of the time when someone asks me "hey monster what should I invest in this is so confusing  " I just tell them to figure out when they're going to retire and pick the target date fund. As long as the expenses aren't outrageous it's easier than getting them to think about stock/bond allocation and managing a glide path.
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Jan 3, 2017 20:20
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Nail Rat posted:Doesn't change the fact that it's rather complicated or that certain jobs let you grow more money tax-advantaged. There's only so many jobs out there that will offer a 100% match on maxing a 401k, but they do exist. Saying everyone should get that job if they want is just about the bootstrappiest thing I've ever heard. I'm not saying that everyone should go get that job. My job certainly doesn't match 100%. I'm just saying that some jobs are better than others like they always are, and that a good retirement plan is part of that. It's certainly not very profound. It's also not bootstrappy.
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Jan 3, 2017 20:36
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You're talking past the point I was making, though, that it's a complicated system that's not fair. It is what it is and we need to work within it, but your response wasn't relevant unless the message was "bootstraps!"quote:It really is a pretty big clusterfuck when you think about it, especially how the availability of a 401k is tied to your employer. That's a major disadvantage if your employer doesn't offer one, and a major advantage if they give you a hefty match that grows tax-advantaged. quote:Just another piece of the total compensation package. If someone chooses a job just based on salary without looking at everything else, welp. The content I read from that is that the people who aren't getting as much tax-advantaged growth as others deserve it because they didn't choose the proper job. More pertinently, this post as a response to mine seems to say the system is fine, because you can pick a job where you get a 401k/401k match. People don't always have a surplus of job opportunities to select from, and sometimes entire industries don't offer a 401k (let alone a large match). A more simplified solution would be better for the majority of people and stop intimidating so many people into not saving (see above posts). If you think the system is fine, I'd be interested to hear why you think it's fine that these options vary based on employment. If you were just saying "it's hosed but you just need to game it as best you can" it wasn't clear. Nail Rat fucked around with this message at 20:57 on Jan 3, 2017 |
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Jan 3, 2017 20:41
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When are fees usually calculated for Vanguard mutual funds? If I wanted to rebalance my portfolio 11 months into the year, would I be assessed fees based on the funds held for 11/12ths of the year or just what I held at the assessment date?
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Jan 3, 2017 20:52
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The expense ratio is deducted from the cash held by the ETF near enough to continuously (x/365%). You're paying the fee every day you own it, to the annualized rate.
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Jan 3, 2017 21:03
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Vanguard bounced my transfer paperwork for lack of a Medallion Signature & Stamp. But the current custodian has a policy against providing those for outgoing transfers. Looks like I'll be waiting another half hour on the phone tomorrow with Vanguard to hassle them about processing it anyways. If Vanguard refuses, is there a generally accepted 'next best' company for passive low-cost index funds?
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Jan 3, 2017 21:09
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Super Dan posted:I don't know the specifics, but Vanguard customer service is pretty helpful. I'm going to disagree here. At least for me, the customer experience has been suprisingly awful. I've been trying to transfer an IRA since mid-November and they still haven't done it. I've called 3 times and sent a "secure message" through their website a week ago with no response. I literally just need them to drop the paperwork in the mail but they won't do it. Each time I call they say it's been cleared up...but then nothing happens. I was going to call again today but their website says their lines are going to be especially busy today. Maybe tomorrow.  Edit: Accretionist posted:Vanguard bounced my transfer paperwork for lack of a Medallion Signature & Stamp. But the current custodian has a policy against providing those for outgoing transfers. Speak of the devil! This is exactly what's holding me up! Harveygod fucked around with this message at 21:18 on Jan 3, 2017 |
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Jan 3, 2017 21:16
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Accretionist posted:If Vanguard refuses, is there a generally accepted 'next best' company for passive low-cost index funds? I think Fidelity's Spartan funds - or whatever they're called now - are considered the next best. Who knows if it's going to last, but a lot of them were changed this past year to have expense ratios that are even lower than Vanguard's equivalents. edit: just checked, and for sake of comparison the Fidelity 500 Index Fund investor shares are 0.09% ER, as compared to 0.16% ER for the Vanguard S&P 500. Assuming this stays true, when I (hopefully) finally open a taxable investment account at the end of this year, I may actually open it at Fidelity as opposed to Vanguard. Nail Rat fucked around with this message at 21:32 on Jan 3, 2017 |
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Jan 3, 2017 21:22
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The Big Jesus posted:Follow up question for this then. I plan on going back to grad school starting in August/September 17. So I will be much closer to the 15% tax bracket. For FY18 I'll definitely be in a lower bracket. Should I wait to do it then or does that not make a huge difference? The difference is the difference between your current marginal tax bracket (or whichever bracket the 401k money might find itself in) and your future bracket. The converted funds is added on to your annual income so it's taxed at your marginal rate. If your highest bracket is the 25% bracket, then your conversion is taxed at 25% (some could be taxed at 28% if you convert a large enough amount to spill over into a higher bracket, and add 10% if you can only pay the taxes with a withdrawal from the 401k) Now when your income is lower, some amount could be tax free, taxed at 10% or 15% (again add 10% if you can only pay the taxes with a 401k withdrawal), depending on how low your income is since its all added on top of your income. The less room you have left in those lower brackets, the less you'd save compared to converting now. One thing to remember is that there's potential for the tax brackets to get upended this year or next, except we won't know for certain how it will all shake out. You can look up the gist of the current proposals and guesstimate what your tax burden might be to see if it's still worth waiting.
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Jan 3, 2017 21:41
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I'm a F-1 STEM OPT visa holder in my first job in the US, and I'm saving about 1-1.5k a month. Do the basic 3 steps in the OP still apply to me?
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Jan 3, 2017 22:30
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Nail Rat posted:You're talking past the point I was making, though, that it's a complicated system that's not fair. It is what it is and we need to work within it, but your response wasn't relevant unless the message was "bootstraps!" I just don't think it matters. Jobs and industries that don't offer a 401k or matching or whatever do so because they can get away with it because their employees aren't as valued. Jobs that offer a match do so in order to get better candidates. It doesn't matter to me whether the whole job dependent retirement plan goes away or not. However, if it does I would expect an associated increase in my income to offset the loss of my 401k benefits. The same gradient will still be there. I'm not saying that people should bootstraps and get jobs with retirement plans. That's the same thing as saying they should bootstraps and get jobs that pay more. Pointless. If you're saying that the system is just too complicated and a lot of people can't figure it out then ok I guess I can get behind that, although I highly doubt that complexity is the main problem behind our national lack of saving. Nail Rat posted:That's a major disadvantage if your employer doesn't offer one, and a major advantage if they give you a hefty match that grows tax-advantaged. That's the only thing I disagree with. If the system went away, employers who offer good plans will simply differentiate themselves in other ways. Net neutral.
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Jan 3, 2017 22:34
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potatoducks posted:If you're saying that the system is just too complicated and a lot of people can't figure it out then ok I guess I can get behind that, although I highly doubt that complexity is the main problem behind our national lack of saving. He's saying that it is unfair that certain people can put $18,000 into a retirement plan because they have a good job with benefits, but people with crappy jobs can't put that money into a retirement plan on their own. NOTE: both can contribute to an IRA so I ignored it. It has nothing to do with employers getting away with stuff, it is an issue of federal tax law fairness. I will add that it is incredibly unfair that employer-sponsored health insurance is tax deductible while solo health insurance is rarely deductible.
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Jan 3, 2017 22:43
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quote:It has nothing to do with employers getting away with stuff, it is an issue of federal tax law fairness. Bingo. Droo posted:I will add that it is incredibly unfair that employer-sponsored health insurance is tax deductible while solo health insurance is rarely deductible. This is one of those things where I think not a single person would defend it, but no one cares enough to do anything about it. It really is stupid as hell.
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Jan 3, 2017 22:50
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Droo posted:He's saying that it is unfair that certain people can put $18,000 into a retirement plan because they have a good job with benefits, but people with crappy jobs can't put that money into a retirement plan on their own. NOTE: both can contribute to an IRA so I ignored it. It has nothing to do with employers getting away with stuff, it is an issue of federal tax law fairness. Oh ok. Yeah you guys are right.
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Jan 3, 2017 23:09
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