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Sucks to be someone who can't be hosed to read the four pillars.
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Feb 3, 2017 14:45
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Yes and your tax exemption on municipal bond taxes will also depend on your state and the state the bonds were issued in. Generally you are only exempt from state income tax on bond income from bonds issued in your state. Also you should be aware that the favorable tax treatment of munis allows them to offer lower rates. If your tax rate isn't high enough it might be costing you more than if you invested in a higher paying corporate bond.
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Feb 3, 2017 16:28
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So I understand the TSP is well regarded around here. I have a target date traditional TSP which I contribute up to the max the government will match, so like 5%. I was planning on setting up a Vanguard Roth IRA as well. Trying to decide if I should skip the Vanguard Roth and just shovel that money into the TSP since it has lower expense ratios? Or is it a solid idea to have both for tax purposes? I'm 29 btw.
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Feb 3, 2017 16:31
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pig slut lisa posted:RIP to the fiduciary rule, probably So what's the real impact of this on me? I have to go only for vanguard funds?
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Feb 3, 2017 16:42
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oliveoil posted:So what's the real impact of this on me? I have to go only for vanguard funds? This is for advisers, nothing to do with funds themselves (aside from advisers can push you towards funds that give them incentives). If you're informed enough to not need a financial adviser, it won't affect you at all.
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Feb 3, 2017 16:51
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pig slut lisa posted:RIP to the fiduciary rule, probably Too bad fiduciary rule doesn't apply to all investment advice and just tax-advantaged ones. oliveoil posted:So what's the real impact of this on me? I have to go only for vanguard funds? You should do this anyway but if you're not talking to a financial consultant then it doesn't matter. If you are, you should still ask them if they're fiduciary and if the advice they give you is conforming to this standard. People often wear both hats at the same time and they're not always clear about it when they change from one to the other.
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Feb 3, 2017 16:50
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The fiduciary rule made all brokers giving retirement advice fiduciaries who had to act in your best interest. Without the rule they can go back to giving only "suitable" recommendations. RIAs on the other hand have always been and will continue to be fiduciaries. It will be interesting to see what some of the big banks do if it gets repealed. Some like BOA have already gone whole hog into the new rule. Not sure if they will go back because it can actually be more profitable for them to charge ongoing management fees instead of one time commissions.
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Feb 3, 2017 17:02
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I've heard from a friend who has worked in financial compliance before that this was a well-intentioned rule but was poorly written such that it'd create a huge compliance headache especially for small and mid-level shops. I have an old rollover IRA with Prudential that I want to move to someone better and with more options. Opinions on Vanguard or Fidelity? Or someone better?
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Feb 3, 2017 17:11
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AndrewP posted:So I understand the TSP is well regarded around here. I have a target date traditional TSP which I contribute up to the max the government will match, so like 5%. I was planning on setting up a Vanguard Roth IRA as well. Trying to decide if I should skip the Vanguard Roth and just shovel that money into the TSP since it has lower expense ratios? Or is it a solid idea to have both for tax purposes? I'm 29 btw. In my opinion, you should max out your TSP first, since the choice of funds is good enough--you can replicate US total stock market with S and C and the G fund is unique to TSP and offers all of the security of Treasuries with the liquidity of cash which will be useful when you enter retirement--and the expense ratios are unbeatable, even by Vanguard. Even the I fund is a decent international index (the MSCI EAFE) and the F is a good aggregate bond index if you choose not to use the G fund for some reason. There are no transaction fees, so reallocations are also free through TSP and you really shouldn't be doing it more than the twice a month limit, anyway. Roth is available through TSP, but the way it works today is pretty weird because your Roth and Traditional balances are mixed and distributions must be taken out proportionately, which gives you less tax flexibility later. However, that's subject to change since your retirement date is way out and they're still working out Roth. Moreover, I don't know that it's something to worry too much about if you're not already maxing out your contribution. I personally contribute all of my money as Roth--the Government contributes their match as Traditional--and then I end up with a mix. Tetraptous fucked around with this message at 17:24 on Feb 3, 2017 |
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Feb 3, 2017 17:15
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brugroffil posted:I've heard from a friend who has worked in financial compliance before that this was a well-intentioned rule but was poorly written such that it'd create a huge compliance headache especially for small and mid-level shops. Bhodi fucked around with this message at 17:20 on Feb 3, 2017 |
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Feb 3, 2017 17:15
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I heard that on NPR this morning and it just makes me SO enraged. Like how do you justify that as "limiting consumer choice" that their financial advisor isn't allowed to just brazenly, nakedly fleece them?
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Feb 3, 2017 17:22
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EAT FASTER!!!!!! posted:I heard that on NPR this morning and it just makes me SO enraged. Like how do you justify that as "limiting consumer choice" that their financial advisor isn't allowed to just brazenly, nakedly fleece them? I remember when this rule was announced last year that some in the financial industry at least came up with plausible-sounding arguments about different consumers having different needs, fee-for-a-service maybe being prohibitively expensive upfront etc. Then this guy comes and just gives the whole game away! "IT'S NOT A FREE MARKET IF YOU CAN'T GET EASILY SCAMMED ON COMPLEX-YET-LIFE-CHANGING SERVICES AND PRODUCTS!"
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Feb 3, 2017 17:30
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brugroffil posted:I remember when this rule was announced last year that some in the financial industry at least came up with plausible-sounding arguments about different consumers having different needs, fee-for-a-service maybe being prohibitively expensive upfront etc. Then this guy comes and just gives the whole game away! "IT'S NOT A FREE MARKET IF YOU CAN'T GET EASILY SCAMMED ON COMPLEX-YET-LIFE-CHANGING SERVICES AND PRODUCTS!" Oh sure. If you are Mr Simple Main Street man paying 4.5% upfront for a class A mutual fund could be less expensive than an ongoing 0.5% annual fee if you keep it for 10 years and don't need anything else. Of course that assumes the proprietary class A share the bank advisor recommended doesn't have a huge expense ratio on top of the sales charge. And that his proprietary fund isn't a poorer choice than another fund from a different provider. And that your bank guy won't recommend another fund purchase a few years from now.
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Feb 3, 2017 17:59
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EAT FASTER!!!!!! posted:I heard that on NPR this morning and it just makes me SO enraged. Like how do you justify that as "limiting consumer choice" that their financial advisor isn't allowed to just brazenly, nakedly fleece them? It's like having a menu with only healthy food choices on it so that you live longer. Except that the unhealthy food tastes waaaay better so they should give you that option too. Oh, by the way, this particular menu is the hospital food menu in the coronary bypass recovery wing. Enjoy your greasy burger and fries!
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Feb 3, 2017 19:12
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Tetraptous posted:In my opinion, you should max out your TSP first, since the choice of funds is good enough--you can replicate US total stock market with S and C and the G fund is unique to TSP and offers all of the security of Treasuries with the liquidity of cash which will be useful when you enter retirement--and the expense ratios are unbeatable, even by Vanguard. Even the I fund is a decent international index (the MSCI EAFE) and the F is a good aggregate bond index if you choose not to use the G fund for some reason. There are no transaction fees, so reallocations are also free through TSP and you really shouldn't be doing it more than the twice a month limit, anyway. Thanks. Right now total contribution is around $10k per year, so I guess instead of a separate Vanguard Roth it would make more sense for me to just try to max the rest of this TSP as a Roth TSP. I was planning on doing the Target Date anyway so I'm really not looking for something that I have to ever touch or even look at. Still starting a Roth IRA for my wife, of course.
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Feb 3, 2017 19:40
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EAT FASTER!!!!!! posted:I heard that on NPR this morning and it just makes me SO enraged. Like how do you justify that as "limiting consumer choice" that their financial advisor isn't allowed to just brazenly, nakedly fleece them? From what I've read, all the Fiduciary Rule really did was get all these firms to change from loaded funds (pay 5.5% up front!) to an AUM fund (pay 1% per year for our guidance!) So they were still being fleeced, just fleeced in a different way because AUM is also a ripoff - even if the advisor put them in the cheapest index funds they could get their hands on.
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Feb 3, 2017 21:08
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monster on a stick posted:From what I've read, all the Fiduciary Rule really did was get all these firms to change from loaded funds (pay 5.5% up front!) to an AUM fund (pay 1% per year for our guidance!) So they were still being fleeced, just fleeced in a different way because AUM is also a ripoff - even if the advisor put them in the cheapest index funds they could get their hands on. It would have also added legal liability to them if they churned their clients through a bunch of front-load mutual funds to get a higher personal commission, I think. Right now people don't have any recourse if they find out that a financial adviser had been putting their parents money into a new 5.5% front load fund every year. But at some point we should all really just go with the flow - a whole lot of stupid people voted for Donald Trump, or Jill Stein, or didn't vote because "they're both bad", and maybe it's OK to rip them all off. Why the hell not.
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Feb 3, 2017 21:14
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If it were only Trump voters that were going to take it in the rear end over the repeal of the fiduciary responsibility law, then it'd be whatever. Financial "advisor" scams are easily avoided if you have even the faintest clue. But unfortunately your average person across the political spectrum doesn't have a loving clue when it comes to finances (a separate problem) and trust "their money guy" without question or research. Good default options and laws against outright scamming ordinary people trying to do the right thing by saving for retirement in the first place shouldn't be a partisan issue, but welp here we are again. Guinness fucked around with this message at 21:43 on Feb 3, 2017 |
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Feb 3, 2017 21:41
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The worst part though is that if the election taught us anything, it's that the Drumpf demographic will get hosed by all of this, and yet somehow will still believe it when he tries to pass off the blame to someone else. So we should focus on trying to educate the public about retirement savings I guess?
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Feb 3, 2017 22:50
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Guinness posted:If it were only Trump voters that were going to take it in the rear end over the repeal of the fiduciary responsibility law, then it'd be whatever. Financial "advisor" scams are easily avoided if you have even the faintest clue. But unfortunately your average person across the political spectrum doesn't have a loving clue when it comes to finances (a separate problem) and trust "their money guy" without question or research.
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Feb 3, 2017 23:42
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Alereon posted:The thing is that in pretty much every other field it's considered the responsible thing to pay an expert for help if you're not sure how to do something yourself and worried about loving it up, to make financial planning the one weird exception where the expert is supposed to screw you unless you know better is bizarre. Which is exactly why the fiduciary rule is/was A Good Thing. People blindly trust financial advisers with their life savings. As a society we shouldn't allow your ordinary person to be robbed by salespeople working against their own interest. Even though I personally could never hand off such an important decision to someone else, millions of people do, without question or second opinion, all the time.
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Feb 4, 2017 01:03
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Guinness posted:Which is exactly why the fiduciary rule is/was A Good Thing. You guys know it only impacted retirement accounts anyway right?
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Feb 4, 2017 01:09
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Which is probably the only investing a majority of people do?
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Feb 4, 2017 02:12
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My wife has a very small amount of money in a couple 401k's from previous jobs. <$2,000 in each. What's the best way to handle these? They are in crappy funds and she's losing a lot in fees. We file jointly, and I think our AGI will come in under 120k this year, and likely in the foreseeable future. She doesn't contribute to a retirement account at work. She has poor plan options so we've opted to pay off her higher interest student loans instead. However, once those loans are paid off, probably within the next year, she'll start contributing to her works 403b (not sure how much yet). I'm thinking of just rolling them into an IRA, but I'm having a tough time deciding what kind.
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Feb 4, 2017 02:18
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Stryguy posted:I'm thinking of just rolling them into an IRA, but I'm having a tough time deciding what kind. If you don't have a compelling reason to do differently (and you don't from what you've said), roll it over into a traditional IRA. A ROTH IRA is going to have tax implications and doesn't really gain you anything.
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Feb 4, 2017 04:20
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monster on a stick posted:You guys know it only impacted retirement accounts anyway right? Which would be the accounts most in need of rigor and care in their planning and execution?
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Feb 4, 2017 14:46
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Unless you plan on banning every sales job, dumb or lazy people are still gonna get scammed.
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Feb 4, 2017 15:52
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Murgos posted:Which would be the accounts most in need of rigor and care in their planning and execution? Taxable because churning means you'd be paying capital gains, and bad fund choices means you could be paying taxes on non-qualified dividends.
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Feb 4, 2017 16:50
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Something I noticed this morning: Nutmeg now offer automated fixed-allocation investment portfolios, at a lower annual fee of 0.45% (compared to their vanilla managed portfolio fee of 0.75%) - the breakdowns are all at https://www.nutmeg.com/fixed-allocation-portfolios. Given that this includes any necessary dirty work needed to dip a toe into investing, it might be useful for those looking to just set up a direct debit and switch off for a few years.
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Feb 4, 2017 17:47
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so I could say that I finally figured out what this god damned cube is doing. Get well Lowtax.
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monster on a stick posted:Taxable because churning means you'd be paying capital gains, and bad fund choices means you could be paying taxes on non-qualified dividends. Ahh, I think I see. You shouldn't bother to protect retirement accounts, which most people have and depend on for their future, because taxable accounts are more easy to defraud. Gotcha.
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Feb 4, 2017 22:18
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So I got around to looking at how my wife's employer set up her 403B account (she told them to set it up for her - "the default"!)...I guess the plan rep did this? It doesn't even make sense either from the perspective of naked profiteering because it's also the lowest ER fund in the list of options (which range from .3-1.3). 0_o El Mero Mero fucked around with this message at 07:48 on Feb 5, 2017 |
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Feb 5, 2017 06:52
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Maybe it's a global fund? But yeah... Time to fix that.
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Feb 5, 2017 09:02
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El Mero Mero posted:So I got around to looking at how my wife's employer set up her 403B account (she told them to set it up for her - "the default"!)...I guess the plan rep did this? It doesn't even make sense either from the perspective of naked profiteering because it's also the lowest ER fund in the list of options (which range from .3-1.3). He saw an article on Brexit. "It'll bottom out! She's all set for the bounce!"
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Feb 5, 2017 15:54
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A single parent of mine is retiring soon and has gone to a financial advisor and an annuity has been suggested. I'm hoping to get some advice on the right way to think about these things without too many numbers that I am not comfortable giving out. I hope this makes sense. The options as I see it are: 1) Skip the annuity. Without the annuity the yearly withdrawal rate to cover expected expenses, which they've always been excellent at tracking, is 3.7%. This seems to mesh pretty well with the 3-4% yearly rate I've seen used as a general rule for whether you have enough to retire. What else should I consider? 2) The suggested split with the annuity is 40% of savings into the annuity and 60% sticking around in investment. At this rate the withdraw rate from the invested money is 2.27%. It is an SPIA annuity with a guarantee on money in, i.e. if my parent dies before they've paid out at least as much as initially goes in, I get the difference. The company is reputable. As near as I can tell from here and Bogleheading, if you want an annuity, this is the best kind. There is the option of removing up to 100% of the initial sum once. I didn't see anything in the documents about penalties, so I'll have to ask about that. It is scheduled to last the rest of their life. There is some inflation offset for 1%. If my reading of various sources is correct, an annuity insures that some amount of money is available in exchange for giving up all returns (or losses) on the money. They also potentially come with loss of purchasing power due to inflation. In principle, they are a comforting thing, but I'd rather make a more rational decision. From some posters here it also looks like a way to increase income if one's nest egg isn't big enough. Some questions: Does anyone have a link to a (retirement) calculator that monte carlo's an investment in the market? I've been using this calculator, is there a better one? I seem to remember one that shows all the results, a bunch of curves on one plot, this one only seems to show positive results and I can't adjust the percentile band to plot. It predicts that throwing 100% of the nest egg into the US stock market (I know this isn't optimal) has a 91% chance of lasting 30 years. 83% for 50 years. If the annuity is taken the "chance of success" is 98% for 30 years, 94% for 50. In the histograms for the above calculator, what is Max Drawdown? How do I use it/interpret it? The annuity seems like a less than good deal, but I think my parent is right on the edge of the easy choice. If the withdrawal rate was 2% on the full amount of savings, no annuity. If they needed the extra money to meet expenses due to low savings, then the annuity would be a good option. Does the choice boil down to risk tolerance, as I suspect? What am I not considering that I should? Bogleheads seem to recommend waiting on the annuity until deeper into retirement, like 75-80 or so. How should I think about that?
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Feb 6, 2017 00:14
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If I expect to contribute the maximum this year (after maxing my 401k) to a post-tax 401k and doing an in-plan conversion to an IRA, is it worth doing a non-tax deductible contribution to a traditional IRA? My understanding was that instead of doing backdoor roth ira (trad ira which I convert to a roth ira), it would be better to do a mega backdoor roth if my company supports it ( which it does - through something called an in-plan conversion that apparently doesn't require me to quit my job) by contributing post-tax to my 401k plan, then immediately converting those contributions to a roth ira. But there's still yearly contribution limits on a mega backdoor roth, so it seems like at some point I should consider maxing out my traditional ira contributions, too. Does that sound reasonable? Mostly, I ask because last year I didn't contribute to a traditional ira, so I'm trying to figure out if it would be worth doing before I file my tax return for 2016.
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Feb 6, 2017 03:53
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I think you're mixing up terms a bit. An in plan conversion mega back door is when you convert after tax 401k contributions into Roth 401k. Your IRA doesn't need to come into it. The ideal in your situation is probably: Max pre-tax 401k. Max after tax 401k, in plan convert to Roth 401k. Max after tax contribution to traditional IRA, convert to Roth IRA.
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Feb 6, 2017 04:07
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Illusive gently caress Man posted:I think you're mixing up terms a bit. An in plan conversion mega back door is when you convert after tax 401k contributions into Roth 401k. Your IRA doesn't need to come into it.
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Feb 6, 2017 10:25
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I didn't realize you could do 401k->IRA without changing jobs
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Feb 6, 2017 12:31
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Yeah, I've got vanguard.
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Feb 6, 2017 16:01
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Illusive gently caress Man posted:I didn't realize you could do 401k->IRA without changing jobs Not every 401k plan allows it (in-service rollover), but the ones that do make the mega-backdoor Roth viable.
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Feb 6, 2017 21:11
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