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Make sure you're rolling it over and not liquidating and pulling out. If you do the latter you'll incur all of the penalties. Technically you shouldn't even have to go through your employer to roll over. You go through whichever company is managing the account.
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Jan 22, 2017 18:49
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Yeah, an IRA is just that, Individual Retirement Account. It's totally independent of your employer. And like the poster above said, make sure it's a transfer or rollover.
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Jan 22, 2017 18:55
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Dominoes posted:It would have dropped 18% * whatever the leverage factor was (and then climbed 100% * the leverage since then) Why would it have dropped by 18% * leverage factor when the S&P was down by 50% * leverage factor?
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Jan 22, 2017 18:56
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monster on a stick posted:Why would it have dropped by 18% * leverage factor when the S&P was down by 50% * leverage factor? quote:What does your math say would have happened to your portfolio in 2007-2009? Dominoes fucked around with this message at 19:17 on Jan 22, 2017 |
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Jan 22, 2017 19:09
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Dominoes posted:(1145 - 1400) / 1400 = -0.18 It's pretty clear that he was asking you about the 55% peak to valley loss the S&P experienced in that time period.
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Jan 22, 2017 19:23
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That's not what he asked!
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Jan 22, 2017 19:39
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pr0zac posted:If you're happy with 1-2% returns, I'd suggest looking at a CD instead since its guaranteed returns. Capital One pays 1.6% for a 3 year CD: https://www.capitalone.com/cds/online-cds/ Everbank pays 1.71% https://www.everbank.com/banking/cd Thanks, the problem with CDs for this case is the fixed entry and exit dates. It's not that I have a big chunk of cash to put away this very second and i know I'll need it in exactly 3 years. It's more that i have some cash I'd like to put aside, and slowly add more to over time as well, that i might need to tap into in the next 2-3 years. monster on a stick posted:2-3 years, I'd think CDs/money markets/high yield savings. But if you are looking at those two funds, you want to know your highest tax bracket. So maybe I'll look at money markets instead.
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Jan 22, 2017 23:38
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High yield bank accounts tend to pay more than money market funds right now.
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Jan 22, 2017 23:43
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check out some of the money market deals the local credit unions have. For instance you can get a 2.4% blended rate for up to $5k from Patelco: https://www.patelco.org/Checking-And-Savings/Savings/Money-Market/#MoneyMarket
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Jan 23, 2017 00:12
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Dominoes posted:That's not what he asked! If you are not thinking "recent worst case for market results" when someone asks about 2007-2009 then you are too stupid to be using leverage.
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Jan 23, 2017 00:25
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monster on a stick posted:High yield bank accounts tend to pay more than money market funds right now. CopperHound posted:check out some of the money market deals the local credit unions have. For instance you can get a 2.4% blended rate for up to $5k from Patelco: I was trying to avoid opening an account at another institution if possible, and my credit union doesn't have a money market deal like that or high yield savings :/ ideally there'd be something at vanguard to suit me since i already have an account there, but it might be worth it to go open high yield savings acct at a new institution. Anyway thanks for the input, I'll look at my options and make a decision.
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Jan 23, 2017 01:47
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monster on a stick posted:If you are not thinking "recent worst case for market results" when someone asks about 2007-2009 then you are too stupid to be using leverage.
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Jan 23, 2017 06:54
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A money market account seems like a fantastic place to keep an emergency fund. Even if it's at another institution and its liquidity depends on a 2-3 day transfer to my main institution, I can get $100+ per year by just plunking it somewhere else. Looks like I don't have eligiblity for Patelco, I'll look around me. https://www.patelco.org/Tools/Resources/Membership/ Michael Scott fucked around with this message at 07:01 on Jan 23, 2017 |
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Jan 23, 2017 06:59
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I Like Jell-O posted:Vanguard Target Retirement funds are always a great choice. They are perfect for passive investing. Use them. They aren't really "conservative", however, and it's best if you plan on not moving the money for a long time. Just keep adding money and don't pay much attention for the next 30 years. A winning strategy. Ripoff posted:Thank you both for your advice - after reading up on Vanguard, I like them the best by far and will be looking into this. Now just to do the proverbial teeth-pulling that is getting my employer-sponsored plans to let me liquidate and withdraw to Vanguard. They're totally cool with you opening an IRA within their organizations, but they get quiet on how you can pull it out.
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Jan 23, 2017 11:37
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ShadowHawk posted:If you want a more conservative fund choice, you can always pick a target retirement with an earlier retirement date. Target Retirement 2030 for instance is much more conservative than 2050 with its current asset allocation. There's also the lifestrategy funds which are designed to let you choose risk level instead of a target date.
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Jan 23, 2017 14:40
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Did this thread ever come to agreement about whether or not it makes sense to have a lot of US stock rather than international? Having stock in your own company is considered a bad idea because you could lose your job + the value of that stock, seems like deleveraging ourselves by working in the US but holding international stock makes sense on paper. Also the whole thing about "just because the US has had high returns the past 100 years compared to other countries doesn't mean they will the next 100" and all that
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Jan 24, 2017 00:01
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No idea if there's a thread consensus but I found this paper from Vanguard instructive: The role of home bias in global asset allocation decisions.
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Jan 24, 2017 00:08
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Blinky2099 posted:Did this thread ever come to agreement about whether or not it makes sense to have a lot of US stock rather than international? 
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Jan 24, 2017 00:21
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Blinky2099 posted:Did this thread ever come to agreement about whether or not it makes sense to have a lot of US stock rather than international? I'm heavily leveraged in the US and company stock. The US by choice and the company due to matching funds that must stay there until 50/55 (I need to look) but it has served me well but I will divest myself of some of it when I can.
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Jan 24, 2017 00:25
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slap me silly posted:No, and there's not really consensus anywhere else either. Strong opinions, yes, but they differ quite a bit even among people who know what they're talking about (https://www.bogleheads.org/forum/viewtopic.php?t=196956). I go about 50/50 US/international myself, but that's no use to anybody else I'm partial to Jack Bogle's reasoning that large US companies are all multinationals, so you don't really gain much diversification by investing US dollars in foreign exchanges, but are still opening yourself up to currency risk and the associated costs of international trading. But if the current trend towards protectionism is here to stay, maybe that's worth reconsidering in the future. I think the situation is also different if you think it's likely that you might retire in another country; in which case it makes sense to have funds invested in that currency. I'm about 15% invested in the MSCI EAFE and the rest essentially indexed to the S&P 500 and a total stock market completion index, because that's what's available to me. There's no great logic behind the precise US/foreign allocation, but I see no good reason to change it, either. Tetraptous fucked around with this message at 00:43 on Jan 24, 2017 |
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Jan 24, 2017 00:40
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Blinky2099 posted:Did this thread ever come to agreement about whether or not it makes sense to have a lot of US stock rather than international? The "US only" boils down to several arguments: * US companies already have significant overseas exposure - so if the US 'caught a cold' but the rest of the world was fine, the companies themselves would still be happily selling stuff. * Conversely, international companies already have significant exposure to the US, so investing in Nestle/Toyota/Samsung/etc. would not protect yourself as much as you'd think. * Overseas investing is more expensive and (especially in emerging markets) may not use the same accounting standards/stock market oversight (both official and unofficial) * The US is a well-diversified economy so you are more immune to sector issues than investing in a country which is more dependent on one industry (think Canada or Australia, both of which are heavy into natural resources like mining or energy.) * There's an additional tax drag due to dividends being taxed overseas that you aren't getting back even with the foreign tax credit. * Since the US is still the largest economy, if we "caught a cold" there's not much of a place to run anyway. Note I don't agree 100% with these arguments. I have a bunch of foreign stock just because why wouldn't I want to invest in Nestle, Toyota, and Samsung, they are dominant companies in their sectors.
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Jan 24, 2017 00:40
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It's more nuanced than that. The case for investing non-US equities has primarily been volatility reduction, and that's been weakening - Due to increasing correlations  Which has meant that exposure to non-US equities has actually increased portfolio volatility over the past 10 years  And if you decide to focus on specific sub-sectors (e.g., emerging markets), the classification methodologies that indices use to decide which countries to include are non-intuitive. Many people assume "emerging markets" or even "frontier markets" means growth but that's not always the case since the focus is often on market accessibility and liquidity/size constraints. 
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Jan 24, 2017 01:41
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shrike82 posted:Which has meant that exposure to non-US equities has actually increased portfolio volatility over the past 10 years Blinky2099 fucked around with this message at 02:23 on Jan 24, 2017 |
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Jan 24, 2017 02:19
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Developed markets have traditionally shown higher volatility than the US market historically and this is even more pronounced with emerging markets. The main benefit of investing in equities abroad has been the benefit accrued from the correlation side of the overall co-variance matrix rather than the variance side of things. The question is whether this increase in correlations we've seen over the past 30 years is structural or some kind of cyclical event that will revert. Many people believe it's the former due to the opening up of markets and removal of capital constrictions.
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Jan 24, 2017 03:13
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Blinky2099 posted:Are 10 years worth of data enough to estimate which markets are most volatile? No, but let's start from a baseline that's probably unrealistically favorable to the "hold foreign stock" argument: assume that US and Rest-Of-World have the same base expected return and risk parameters (amusing to those who have ever done business outside the US/EU/Japan). Right off the bat, even if you (foolishly) assume 0 correlation between the two, a 50/50 split is already off the table because foreign stocks are subject to extra risk from exchange rates on top of their base business risk. On top of that, correlations are in reality very high. And there is a maximum benefit to diversification (asymptotic lower bound to coefficient of variation) among correlated risks because systemic risk can't be diversified away, axiomatically. The US economy is extremely well diversified - the difference in risk between the US and an economy of infinite size isn't as large as you'd think. This stuff doesn't dictate 0% international but it does put some serious bounds on how much you can hold before it starts actually being detrimental. A lot of arguments for large international weight rely on historical instances of much smaller, more focused economies underperforming. Or stuff like the Russian revolution (yeah dude, your international assets held in an account at Vanguard comma US based company is totally not gonna be confiscated in the glorious revolution).
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Jan 24, 2017 03:50
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This is probably a hilariously naive question but here goes: How does investing in US companies that do a lot of international business simultaneously grant the benefit of international diversification while insulating from the risks of currency exchange? Surely those companies conduct a hefty portion of their international business using foreign currency? So my ostensibly US equity is in companies that find it easier or harder to do business in other countries depending on what the exchange rates are. That sounds pretty similar to my international equities moving around with their respective exchange rates. The issue seems similar to another, and maybe this will clarify where I've taken a wrong turn. I understand why, as a Canadian, my buying an S&P500 index fund denominated in Canadian dollars gives me exactly the same currency exposure as buying the same index using US$. Because the underlying equities are in US$, both funds will move relative to CA$ in the same direction and magnitude. I'm not magically insulated from the US$ just because the fund manager accepts my loonies. What's the difference between these two scenarios? I'm probably misunderstanding something here but I can't tell what.
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Jan 24, 2017 05:39
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In both your examples, currency isn't really relevant*. When people talk about foreign exposure/diversification, it's exposure to the foreign macro/micro economic conditions. * assuming your S&P 500 ETF isn't CAD hedged
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Jan 24, 2017 06:27
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International currency risk is a diversifying factor. USD can devalue.
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Jan 24, 2017 15:17
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Hufflepuff or bust! posted:I set up a mid-term taxable investment portfolio with a planned horizon of 2-3 years-ish: So if we accept that these investments were a mistake (or at best misallocated) - is the best strategy to sell at a loss and do better next time (redirect to retirement accounts, etc), let it ride until 1 year for long-term treatment of the one successful investment (VYM), or just try to re-allocate the worst of those (REIT and PFF) but otherwise leave the rest alone.
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Jan 24, 2017 17:38
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baquerd posted:International currency risk is a diversifying factor. USD can devalue. This isn't true unless exchange rates are substantially negatively correlated to foreign stock prices, and I would not use the word diversifying in this context. A US based investor owning foreign assets is taking on more risk than a foreign investor owning the same assets under sane assumptions. The exchange rate isn't diversifying, it's just straight up uncompensated extra risk in this context. You can argue that your portfolio risk as a US person is less than (stddevCurrency + stddevForeignstock) and you'd be right, but I'm talking about base principles, not exact values. The total is still higher than a foreigner's would be.
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Jan 24, 2017 17:41
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I sure hope international markets start to pick up soon, my emerging markets and even vanguard retirement funds have been sandbagging for the past 4 or 5 years. I'm sticking it out, obv.
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Jan 24, 2017 17:43
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Hufflepuff or bust! posted:So if we accept that these investments were a mistake (or at best misallocated) - is the best strategy to sell at a loss and do better next time (redirect to retirement accounts, etc), let it ride until 1 year for long-term treatment of the one successful investment (VYM), or just try to re-allocate the worst of those (REIT and PFF) but otherwise leave the rest alone. Why do you think holding for a year helps you? If the capital loss is greater than the capital gain then gain is cancelled by the loss and it shouldn't matter if it's a long term or short term gain. There is probably a corner case if you can split it across years, but it seems a little late for that.
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Jan 24, 2017 23:26
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asur posted:Why do you think holding for a year helps you? If the capital loss is greater than the capital gain then gain is cancelled by the loss and it shouldn't matter if it's a long term or short term gain. There is probably a corner case if you can split it across years, but it seems a little late for that. It probably doesn't help, but I'm also aware that I'm deciding 6 months into an investment that I had planned to hold over a longer term "oh god it's not performing well sell sell sell" and that it may be more prudent to resist that impulse and just give it more time - UNLESS I accidentally made it super risky and so stupid that I'm better off dumping it at a loss and not taking a longer-term view of it.
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Jan 25, 2017 18:48
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A while back (maybe a year ago?) someone posted a study or graphic or something about the housing market underpeforming SP500 or some type of stock investment long-term; anyone have a link to such a thing?
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Jan 26, 2017 01:41
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Blinky2099 posted:A while back (maybe a year ago?) someone posted a study or graphic or something about the housing market underpeforming SP500 or some type of stock investment long-term; anyone have a link to such a thing? http://www.cbsnews.com/news/history-says-home-real-estate-is-a-bad-investment/ Some things to note: real estate is a bad passive investment compared to the alternatives (like a stock index fund), but the numbers can change based on how actively you exploit the real estate (like charging rent). This is why REITS aren't a bad investment, you're essentially passively investing in an active real estate portfolio. Also, I like the last part of the linked article. quote:There's another important point to make about residential real estate, especially your own home: A home does provide benefits beyond any consideration as an investment. And for many people, paying down the mortgage provides them with "forced savings." However, although a home is clearly an asset that belongs on your balance sheet, along with any mortgage, it should be viewed as a consumption item, rather than an investment. There are things you can do with investments -- like rebalance and tax-manage (or "harvest") losses -- that you simply can't do with a home.
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Jan 26, 2017 05:02
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Speaking of REITs, I've had this thought but haven't really looked into it. Has anyone used REITs as a tool for renters who hope to buy to protect themselves from real estate price increases? Basically put your down payment in a locally focused residential REIT and it kind of eliminates some of the fear of "We gotta buy now before prices go up!" Although I don't know if these even exist.
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Jan 26, 2017 06:00
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I Like Jell-O posted:It might have been me, I was researching the subject a little while ago and can't remember if I shared that on the forum. This article seems to sum things up pretty well: This is a pain point to me because I must decide between spending the savings I have earmarked for "retirement" (long-term savings) on a house down payment, or keeping the retirement savings untouched and continuing to rent. Keeping the money in passive equity-based savings will nearly unquestionably fetch me a higher yearly return than the rise in the price of a home in an average year. However, home ownership seems to be as reasonable a goal as "highest yearly return" too for many reasons. I hope what I'm saying makes sense to read. Despite the research I've done I'm having a hard time choosing what to do, and I think it'll be the one thing that spurs me towards formal financial advising in the near future. Michael Scott fucked around with this message at 06:14 on Jan 26, 2017 |
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Jan 26, 2017 06:10
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Fuzzie Dunlop posted:Speaking of REITs, I've had this thought but haven't really looked into it. Has anyone used REITs as a tool for renters who hope to buy to protect themselves from real estate price increases? Basically put your down payment in a locally focused residential REIT and it kind of eliminates some of the fear of "We gotta buy now before prices go up!" Although I don't know if these even exist. It's an interesting idea in theory, but I don't think there many locally focused residential REITs - most try to be diversified across multiple metro regions/states by the time they go public. Maybe there are private listings you can buy into but you shouldn't be going into that unless you really know what you are doing IMHO.
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Jan 26, 2017 07:39
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Michael Scott posted:This is a pain point to me because I must decide between spending the savings I have earmarked for "retirement" (long-term savings) on a house down payment, or keeping the retirement savings untouched and continuing to rent. Keeping the money in passive equity-based savings will nearly unquestionably fetch me a higher yearly return than the rise in the price of a home in an average year. However, home ownership seems to be as reasonable a goal as "highest yearly return" too for many reasons. I hope what I'm saying makes sense to read. In my opinion, home ownership should be a lifestyle choice and not an investment decision. There are a lot of negatives to owning your own home, so unless you get fulfillment from the positive aspects it's really not worth it. Looked at objectively, it's usually only a mediocre investment. If the idea of picking out a faucet at Home Depot doesn't intrigue you at least a little bit, it's probably not worth it. On the other hand, if you do find it appealing and want to put down roots you're doing the right thing by making sure you have the finances in place and not jumping in head first.
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Jan 26, 2017 08:33
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Whether you're renting or buying you're paying for and getting (and losing) a lot of different things, and only some of them are easy to quantify in dollars. As long as you're making the decision for the right reasons, and not to "stop throwing away money on rent" or to "get onto the real estate ladder," either is fine.
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Jan 26, 2017 08:59
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