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Sounds good, go for it.
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Jan 16, 2017 02:43
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Fuzzie Dunlop posted:I wasn't in the market then, no. I'm probably about as confident as someone could be without having gone through the experience of losing 30-50% of my investments that I have a high risk tolerance . I would never sell an investment because it dropped in price. I'm comfortable that I have 30-35 years until I withdraw this money, so what it does over a 3-5 year period isn't a huge deal. When stocks go down, I think about buying more, not selling. Well then you have my blessing! (We're in the same boat. Only started investing since the last crash, confident enough to go 100% equities until I get closer to actually needing the money. But I still don't know that I'll make it through a crash, you know?)
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Jan 16, 2017 04:43
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I too started working/investing right after the GFC. We've only experienced a bull market for our entire investing horizon so I'm concerned about subconscious biases creeping in about equity return expectations etc. Don't forget the S&P500 has been averaging 15% a year for the past 7 years.
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Jan 16, 2017 05:55
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shrike82 posted:I too started working/investing right after the GFC. We've only experienced a bull market for our entire investing horizon so I'm concerned about subconscious biases creeping in about equity return expectations etc. This is a valid concern if you've never been through a stock market crash. 100% stocks to me is crazy talk no matter how long your investment horizon is. I do like putting money in international - it's been underperforming recently, at least partly due to the strong dollar, so may as well buy cheap foreign stock while it's there. I believe "market cap weight" is around 60/40 which is what Vanguard uses for their target date funds.
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Jan 16, 2017 06:00
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crossposting from the BWM thread: So what's some "GWM" advice for finding a financial adviser? My wife and I have been meaning to do it for years, and now with a child on the way, we really want to talk to someone who can at least help us lay out a roadmap if not necessarily actively manage accounts/investments. I have no idea where to even start looking for someone like that, and the couple of "financial guys" I know through friends/family I'm a little skeptical of--one is a dual registered dealer-broker, the other gave my coworker the advice to invest in all of the heavily managed i.e. high-fee plans in our company's 401(k) portfolio with zero investment in the offered Vanguard index funds. Basically we've been reliably saving up money, throwing money into my 401(k) and an IRA for my wife (she's a teacher so no 401k and the optional retirement plan offered through her work were some garbage life insurance annuities that are popular with teacher plans for some historical reasons). Also been paying down debts as we go, trying to get rid of the last few outside of the mortgage within the next year or so. I picked up one of the Bogleheads books when I graduated college, so we've been following that low-cost index fund plan since we started working real jobs. We make enough that we have a "loose" budget I track via Quicken, but we don't have any real long term road map and want to get something in place especially with the upcoming kid. Should we be looking for a Certified Financial Planner? Are there any certs or anything that we should look for or look to avoid?
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Jan 16, 2017 17:57
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•Make an estimated monthly budget -remember to include stuff like auto insurance or annual dues -plan how you allocate any excess (retirement / savings accounts) •Write down your expected large expenses for the next 20 years (cars, houses, expected medical expenses, generic vacations, childcare expenses (IT'S EXPENSIVE), college funding, Christmas/birthday gifts) •Extrapolate your monthly budget x 12 for a yearly budget •Extrapolate THAT x 20 for your basic financial plan -where appropriate, add in your large expenses --DO YOU HAVE ENOUGH SAVED? No matter what else you do, that's necessary before any 3rd party is gonna be able to help you. That being said, once you do this budget stuff the actual nickels and dimes are (imo) extremely simple to move around. Short-term funds: Savings Account Medium / Long-term funds: Vanguard Brokerage Account -- use their "lifestrategy" line based on your risk (or roll your own with VTI / VXUS / BND) Retirement: 401k / IRA The only thing you maybe want to look into is a 529 for college savings -- these have complicated tax benefits depending on what state you live in / which plan you choose. e: lest you think this is necessary or "smart", I personally find 529s to be dubiously beneficial for a large increase in tax and account complexity. I'm planning on just using a brokerage account to hold college gift money. Other, more specific, advice is going to be catered around your employer mostly. FLEX compensation and/or which health insurance plan you go with, etc. I'd look for CPA's with a CFP accreditation for tailored advice -- but go to the meeting with them with all of the above already sketched out. Have them review it and discuss some of the finer points of your plan. Make sure you pay them a flat fee for consulting, and be wary of specific investing advice or giving them money to manage. DNK fucked around with this message at 18:56 on Jan 16, 2017 |
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Jan 16, 2017 18:50
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One more Backdoor Roth IRA question: I now have a traditional IRA with Vanguard, funded with $5500, invested in "Vanguard Federal Money Market Fund." Do I just hit the "Convert to Roth" button now?
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Jan 16, 2017 19:47
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Residency Evil posted:One more Backdoor Roth IRA question: I now have a traditional IRA with Vanguard, funded with $5500, invested in "Vanguard Federal Money Market Fund." Do I just hit the "Convert to Roth" button now? Yes
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Jan 16, 2017 19:55
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And I can just convert it to my current Roth IRA, right? I don't need to set up a new one?
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Jan 16, 2017 20:04
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Yes
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Jan 16, 2017 20:30
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If I have just blindly been contributing to my 401k but don't really know anything about it, is that bad? I contributed the maximum late last year and I know is it's some vanguard thin, but that's pretty much it. This is like, not a bank account thing, right? So it's theoretically feasible for me to somehow see the value of my contributions at any time?
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Jan 16, 2017 23:12
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oliveoil posted:If I have just blindly been contributing to my 401k but don't really know anything about it, is that bad? I contributed the maximum late last year and I know is it's some vanguard thin, but that's pretty much it. This is like, not a bank account thing, right? So it's theoretically feasible for me to somehow see the value of my contributions at any time? I had to check your post history to see if you were trolling. Please read the OP. You should be able to log into your 401k provider's website and see your fund selections and balance (both vested and unvested).
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Jan 16, 2017 23:30
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How have everyone's thoughts on long-term investing changed over the years? 10 years in, I'm still on board the low cost diversified passive train but my focus has shifted away from portfolio optimization to simplicity and behavioral modification. I've moved to 50-50 equities/fixed income although I'm in my thirties. After doing the CFA, I found the concept of mean-variance optimization to create a theoretically ideal portfolio extremely cool. Wealthfront is the natural end state of this approach with MVO + Black-Litterman. I disagree now with this approach. It forces you to forecast expected returns and co-variances for the various asset classes which I think is a fool's errands.
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Jan 17, 2017 02:05
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shrike82 posted:How have everyone's thoughts on long-term investing changed over the years? 50/50 in your 30's seems very very conservative. It's not wrong, per se, but if you don't plan to touch it until retirement age, then why go so heavy into fixed income? If you started that anytime in the last couple years, then you likely missed out on substantial gains.
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Jan 17, 2017 15:33
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Leon Trotsky 2012 posted:If you started that anytime in the last couple years, then you likely missed out on substantial gains. The worst reason to pick your portfolio allocation is because of recent performance. That's how we get people going "YOLO 100% STOCK." I do agree it's pretty conservative but it depends on risk tolerance. I hope those aren't long bonds in this interest rate environment.
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Jan 17, 2017 16:03
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monster on a stick posted:The worst reason to pick your portfolio allocation is because of recent performance. That's how we get people going "YOLO 100% STOCK." Yeah, I'm not saying that. I'm saying that going very conservative when you are decades from retirement means that you will miss the big gains (and the big losses) and the average historical return on stocks is better than bonds. If you don't need the money for 20+ years, it doesn't make a ton of sense to go that conservative unless you have a low risk tolerance. Edit: And depending on your time horizon, "YOLO 100% stock" is totally fine. Vanguard's Target retirement funds do 90% stocks for the first 20 years and they aren't cuh-raaaazy! Leon Trotsky 2012 fucked around with this message at 16:12 on Jan 17, 2017 |
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Jan 17, 2017 16:10
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short duration bonds. i've become skeptical of looking at long-run historical performance numbers especially after reading ilmanen's expected returns - your entire investment time horizon could fall within a regime with higher/lower returns than the l/r, and the gap between equities and fixed income is not a given especially once you factor one-off repricing. also, the # of people here talking up 100% equity just points me to the fact that a lot of people have only been in the markets since 09. it's easy to talk up risking up when we've been average 15% a year returns on the SPX since the GFC.
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Jan 17, 2017 16:21
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shrike82 posted:short duration bonds. https://www.nytimes.com/2016/02/13/your-money/how-much-of-your-nest-egg-to-put-into-stocks-all-of-it.html Stocks have always outperformed bonds over a 30-year period. You essentially "trade" long-term growth potential for security when buying bonds. It makes sense to do so if you are risk-averse or nearing a point where you are withdrawing, but when you are 20+ years out going 50/50 seems very conservative. Doubly so if you don't plan on touching the money at all until retirement. Obvious caveats of: - The economy over those 90 years is different - Stocks could slump for decades for the first time ever because past performance doesn't predict future returns, etc.
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Jan 17, 2017 16:28
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Leon Trotsky 2012 posted:Edit: And depending on your time horizon, "YOLO 100% stock" is totally fine. Vanguard's Target retirement funds do 90% stocks for the first 20 years and they aren't cuh-raaaazy! Those Vanguard funds with 90% stock also means 10% bonds, which help balance out stock market declines, plus a healthy dose of international. 100% stock isn't a good idea unless you really understand your risk tolerance and have been through an actual bear market. EDIT: And referencing an article that says "go all in for stock" during a bull market is like quoting that magazine article in 1980 about the "Death of Equities" at the tail end of a bear market. shrike82 posted:short duration bonds. It's certainly possible, the problem is that right now bonds are priced so high (meaning yields are low) that you aren't going to get much gain from them. There's no good answer to this unfortunately. Also I hope you have some international stock. monster on a stick fucked around with this message at 16:33 on Jan 17, 2017 |
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Jan 17, 2017 16:29
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monster on a stick posted:Those Vanguard funds with 90% stock also means 10% bonds, which help balance out stock market declines, plus a healthy dose of international. Yes, but even in a hypothetical doomsday scenario where stocks tank for 20 years and bonds remain average, then the Vanguard fund's performance is going to still be minimally different. I'm not sure there are that many people out there whose risk tolerance on a 30-year timeline is totally fine with 90% stocks, but that extra 10% is enough to spook them or ruin them financially. The longer your timeline, the more sense it makes to go light on bonds.
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Jan 17, 2017 16:34
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Leon Trotsky 2012 posted:Yes, but even in a hypothetical doomsday scenario where stocks tank for 20 years and bonds remain average, then the Vanguard fund's performance is going to still be minimally different. Actually if you judge portfolios by their ability to use a SWR for drawdown, adding bonds is a good thing looking at backtesting which sucks but it is the best we have. 75% stock/25% bond gives a 92% success for 4% SWR/40 years; 100% stocks (88% success) isn't that much different than 50/50 (86%). https://www.onefpa.org/journal/Pages/AUG15-Sustainable-Retirement-Spending-with-Low-Interest-Rates-Updating-the-Trinity-Study.aspx And this is assuming people keep that allocation. Surprisingly when stocks drop by 25% or 50% for extended periods of time people tend to freak out and sell stocks, which is much worse than having a set allocation and unemotionally sticking to it.
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Jan 17, 2017 16:42
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shrike82 posted:How have everyone's thoughts on long-term investing changed over the years? Because a large portion of a stock price is composed of fundamentals, and the stock market represents the majority of the (usually US) economy, over time the size of the stock market correlates to the size of the economy. Stocks are a good investment over a long time horizon not because of speculation, but because of the growth of the underlying economy. Speculation goes up and down, but the fundamentals grow as the economy grows. The book does a better job of laying out the philosophical argument for why to invest in stocks. I'd recommend it to anybody reading this thread.
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Jan 17, 2017 17:26
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Last I heard, Bogle's recommendation was age-10 in bonds. This is what I do.
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Jan 17, 2017 17:29
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shrike82 posted:short duration bonds. I also have a very conservative portfolio (65/35 in my early 30's and shifted to 50/50 now in my late 30's). I am very globally diversified with half my stocks in international and emerging markets. For bonds, most of it is in CD's that I spend some time every year looking for best rates to lock in at various terms. Like you, I also used to be quite into portfolio optimization, but more recently shifted to a model of simply diversifying across the globe as much as possible. I also read Ilmanen and think it's an amazing book. That and Dimson/Staunton/Marsh's Triumph of the Optimists are the two most influential books for me. One caveat for my portfolio, though, is that we have little need to take risk.
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Jan 17, 2017 17:33
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monster on a stick posted:Last I heard, Bogle's recommendation was age-10 in bonds. This is what I do. 20% really seems like a lot for age 30.
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Jan 17, 2017 17:46
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monster on a stick posted:Last I heard, Bogle's recommendation was age-10 in bonds. This is what I do. Bogle's recommendation is actually age in bonds, but theres lots of discussion on his forums about age-10 and age-20. The Vanguard Target Funds for instance, are pretty close to age-20.
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Jan 17, 2017 17:53
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80k and I are quite familiar with the theoretical background for the various equity-skewed portfolio recommendations. the issue i (we) have is with the expected (constant) returns/volatility aspect of MPT. i think it's telling that someone was making a comparison of 100 equity to 50-50 over 30 years which makes me wonder whether we'll see a trend of people skewing equity beyond their planned glide path until the next major crisis where there's an over-reaction back. my focus is on simplicity and being defensive from a behavioral perspective. i don't think there's a single perfect portfolio allocation but why not take a moment and think about the pros and cons of 100 or 90 equity?
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Jan 17, 2017 17:57
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pr0zac posted:Bogle's recommendation is actually age in bonds, but theres lots of discussion on his forums about age-10 and age-20. The Vanguard Target Funds for instance, are pretty close to age-20. Maybe, but IIRC the Vanguard Target Date funds have shifted more aggressively into stocks recently, at least partially because other target date funds like TRP had higher stock allocations and so better performance due to the bull market. This is a good reason for you to pick the target date fund based on your risk tolerance, rather than your projected retirement date. VTTHX (which is 2035 retirement) is only 20% bonds; for someone who presumably would be in their mid-late '40s I think that's a tad aggressive. vvvvv - https://www.bogleheads.org/wiki/Tax_loss_harvesting is pretty good monster on a stick fucked around with this message at 18:19 on Jan 17, 2017 |
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Jan 17, 2017 18:05
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is there any general advice to doing tax-loss harvesting when rebalancing/reallocating? I've been avoiding it for a while but it's really time to just cut out a bunch of legacy underperforming things before this year's taxes. I want to dump them all but I don't know if I need to do it in chunks for maximum tax advantage, is there a guide to walk you through figuring out that and the tax type vanguard asks you about when you sell?
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Jan 17, 2017 18:17
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Bhodi posted:is there any general advice to doing tax-loss harvesting when rebalancing/reallocating? I've been avoiding it for a while but it's really time to just cut out a bunch of legacy underperforming things before this year's taxes. I want to dump them all but I don't know if I need to do it in chunks for maximum tax advantage, is there a guide to walk you through figuring out that and the tax type vanguard asks you about when you sell? I am not sure what you mean by "chunking," but managing individual lots during a sale is only advantageous if you are reducing, not closing, a position and want to maximize tax savings. Let's say today I sold some stock for a profit. Then, at the end of 2017, I do some routine portfolio rebalancing. During the rebalance, I could choose to sell some lots at a loss to offset the gains I earned earlier in the year. If your goal is to sell all shares of a position, and that whole position has a net loss, then just do it all at once. edit: this can get weird if it's a mix of short-term and long-term shares but you said "legacy" so I'm assuming you've owned this for longer than a year fartzilla fucked around with this message at 19:08 on Jan 17, 2017 |
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Jan 17, 2017 19:04
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fartzilla posted:I am not sure what you mean by "chunking," but managing individual lots during a sale is only advantageous if you are reducing, not closing, a position and want to maximize tax savings. Let's say today I sold some stock for a profit. Then, at the end of 2017, I do some routine portfolio rebalancing. During the rebalance, I could choose to sell some lots at a loss to offset the gains I earned earlier in the year. e: yes, they're all more than a year old. I'll just hit the sell button, thanks! Bhodi fucked around with this message at 19:12 on Jan 17, 2017 |
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Jan 17, 2017 19:09
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Bhodi posted:I didn't know if there was some sort of cap or maximum on applying realized losses to other capital gains taxes and if I'd have to do it in parts over a period of years. It's entirely possible that I lack understanding in this as historically I have just put numbers in boxes in turbotax and write a check for what it tells me every year. Using TLH, you can offset any capital gains for the year, plus an additional $3000 against ordinary income. You can carry losses forward to other years. There are people who took tax losses during 2008-9 and are still using up their carry-forward losses.
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Jan 17, 2017 19:12
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monster on a stick posted:Using TLH, you can offset any capital gains for the year, plus an additional $3000 against ordinary income. You can carry losses forward to other years. There are people who took tax losses during 2008-9 and are still using up their carry-forward losses.
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Jan 17, 2017 19:13
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Bhodi posted:Excellent, that was exactly what I hoped for! Silver linings and all that. Make sure you read the article I linked to earlier from Bogleheads, and be aware of wash sale rules if you are going to take the tax loss and put it into another fund.
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Jan 17, 2017 19:21
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Bhodi posted:I didn't know if there was some sort of cap or maximum on applying realized losses to other capital gains taxes and if I'd have to do it in parts over a period of years. It's entirely possible that I lack understanding in this as historically I have just put numbers in boxes in turbotax and write a check for what it tells me every year. There is a cap (it may be $3,000 for you), but you can carry over remaining losses into subsequent tax years until you use it up. For example, you can deduct a $10,000 loss over 4 years - 3 years of $3,000, then one year of $1,000. You may want to go talk to a flesh and blood Tax Professional instead of Internet Finance Nerd Weirdo (or at least research this yourself), but what I described is the gist of what will happen. Furthermore, it will happen entirely in your taxes, and Vanguard will have nothing to do with it beyond actually performing the sale.
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Jan 17, 2017 19:24
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After repeated horrifying conversations with my coworkers about their 401k behavior, I really feel like I should track down the corporate HR guy that made the new hire default allocation 100% fidelity target date and send him cookies for trying.
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Jan 17, 2017 22:35
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Does anyone use Everbank for CDs? I have a portion of my cash reserves earmarked for a purchase in a year or so. Everbank's 1- and 1.5-year CDs are better than the 1% savings rate at Ally, and the highest I can find for that timeframe. I haven't heard of them before and haven't seen anyone recommend them so I dunno, good idea/bad idea?
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Jan 17, 2017 23:34
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fartzilla posted:Does anyone use Everbank for CDs? I have a portion of my cash reserves earmarked for a purchase in a year or so. Everbank's 1- and 1.5-year CDs are better than the 1% savings rate at Ally, and the highest I can find for that timeframe. I haven't heard of them before and haven't seen anyone recommend them so I dunno, good idea/bad idea? How high? Ally has 1.20 to 1.35% CDs at 1.5 years as well
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Jan 18, 2017 00:03
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fartzilla posted:Does anyone use Everbank for CDs? I have a portion of my cash reserves earmarked for a purchase in a year or so. Everbank's 1- and 1.5-year CDs are better than the 1% savings rate at Ally, and the highest I can find for that timeframe. I haven't heard of them before and haven't seen anyone recommend them so I dunno, good idea/bad idea? Are you asking if Everbank's CDs are good or not? https://research.fdic.gov/bankfind/...veFlag=&tabId=2 Thanks to the Great Depression you don't need to worry about a bank's reputation. You only need to worry about if your FDIC insured product is FDIC insured. You'll get your money even if they fail. Now if you are concerned about their customer service or website then I have no idea.
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Jan 18, 2017 01:06
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monster on a stick posted:Maybe, but IIRC the Vanguard Target Date funds have shifted more aggressively into stocks recently, at least partially because other target date funds like TRP had higher stock allocations and so better performance due to the bull market. Yikes, I just took a look at their current glide-path settings and they're at 80+% equities for a 45-year old.
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Jan 18, 2017 01:09
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