|
cowofwar posted:Ugh I have a large yearly contribution to make but the market is up 20% yoy. What is it up 20% from? The actual value? The value on a date that has any actual meaning? What % will it be up on the day you retire? Who's gonna win the 2024 superbowl?
|
#
?
Mar 13, 2017 19:16
|
|
|
|
| # ? May 16, 2024 16:28 |
|
|
PSA: How to report backdoor Roth IRA on your taxes: https://ttlc.intuit.com/questions/2688118-how-to-report-backdoor-roth-in-turbotax-using-a-version-installed-on-my-computer
|
|
#
?
Mar 13, 2017 22:09
|
|
|
A bit of a newbie/long term investing question for the BFC crew. My wife and I make around 250k gross a year and file our taxes as a married couple. We just finished paying off our student loans and are looking for a way to save for retirement. We have been contributing the 6% to our employer 401ks in order to get the match, but are looking for ways to save more for retirement. From what I can tell, we aren't eligible for Roth IRA contributions. What's the best way to sock money away? Regular IRA? Backdoor Roth? Dumping the maximum into our employer's mediocre 401ks?
|
|
#
?
Mar 14, 2017 01:45
|
|
|
Post as much info as you can on the mediocre 401ks. You're contributing less than $15,000 a year when you've got the potential for $36,000. A 401k has to be truly abysmal to be worse than a taxable account, so fingers crossed it's actually mediocre or better!
|
|
#
?
Mar 14, 2017 01:47
|
|
|
Here's a poorly formatted list of my fund options. Let me know what you think. American Century Equity Income Fund 0.59% American Century Small Cap Value Fund 0.91% American Funds - Balanced Fund 0.29% American Funds - EuroPacific Growth Fund 0.50% BlackRock High Yield Bond Portfolio 0.54% Dreyfus Structured Midcap 0.84% Federated Capital Preservation Fund 0.41% Fidelity Advisor New Insights Fund 0.53% Fidelity Spartan 500 Index Fund 0.04% Invesco Small Cap Growth 0.73% Janus Enterprise Fund 0.67% Janus Forty 0.69% Metropolitan West Total Return Bond Fund 0.37% MFS Value 0.51% T Rowe Price Retirement I 2010 Fund 0.49% T Rowe Price Retirement I 2020 Fund 0.51% T Rowe Price Retirement I 2030 Fund 0.57% T Rowe Price Retirement I 2040 Fund 0.65% T Rowe Price Retirement I 2050 Fund 0.59% T Rowe Price Retirement I 2060 Fund 0.61% Vanguard Mid Cap Index Fund 0.08% Vanguard Small Cap Index 0.08% Vanguard Total Bond Market Index Fund 0.06% Wells Fargo Emerging Markets Equity Fund 1.18% Wells Fargo Special Mid Cap Value Fund 0.79% Hutzpah fucked around with this message at 02:54 on Mar 14, 2017 |
|
#
?
Mar 14, 2017 02:49
|
|
|
Oh no, low cost Fidelity and Vanguard index funds! What's a fella to do? *looks down and kicks up some dirt sheepishly*
|
|
#
?
Mar 14, 2017 03:12
|
|
|
Hutzpah posted:
Boom, done. This is a fantastic 401k plan. Figure out your stock/bond allocation first. Divide up your stock allocation between 80% SP500, 5% Midcap, 15% smallcap. This is an approximation of the "Total Stock Market" which is what you should be holding if you don't already have a counterargument in your head.
|
|
#
?
Mar 14, 2017 03:18
|
|
|
SpelledBackwards posted:Oh no, low cost Fidelity and Vanguard index funds! What's a fella to do? *looks down and kicks up some dirt sheepishly* I know right? It's like he didn't even pay attention in class when they covered this.
|
|
#
?
Mar 14, 2017 03:22
|
|
|
Well I'm thoroughly embarrassed but happy it was that easy. Spent the night changing both of our contributions so we should hit just around the 18k limit each by the end of the year. Is there any big penalty for going over, or should I just commit to keeping an eye out as it gets closer to the end of the year and readjust every year to make up for pay increases?
|
|
#
?
Mar 14, 2017 04:03
|
|
|
Hutzpah posted:Well I'm thoroughly embarrassed but happy it was that easy. Spent the night changing both of our contributions so we should hit just around the 18k limit each by the end of the year. Is there any big penalty for going over, or should I just commit to keeping an eye out as it gets closer to the end of the year and readjust every year to make up for pay increases? You can't go over. Your payroll department will contribute (from payroll deductions) $18,000.00 and not one penny over. Nice and easy!
|
|
#
?
Mar 14, 2017 04:05
|
|
|
GoGoGadgetChris posted:You can't go over. Your payroll department will contribute (from payroll deductions) $18,000.00 and not one penny over. Nice and easy! To continue with this, you still get match added as your income increases after you max out, or at least my employer does.
|
|
#
?
Mar 14, 2017 04:07
|
|
|
GoGoGadgetChris posted:You can't go over. Your payroll department will contribute (from payroll deductions) $18,000.00 and not one penny over. Nice and easy! I'm shocked that it works so easy. I was always under the impression that you needed to constantly be watching it. This has been an educating evening.
|
|
#
?
Mar 14, 2017 04:12
|
|
|
GoGoGadgetChris posted:You can't go over. Your payroll department will contribute (from payroll deductions) $18,000.00 and not one penny over. Nice and easy! Caveat: if you change jobs mid-year, and especially if you change to someone with a different provider, it's best to make some phone calls and make sure everyone's on the right page.
|
|
#
?
Mar 14, 2017 04:25
|
|
|
Hutzpah posted:I'm shocked that it works so easy. I was always under the impression that you needed to constantly be watching it. This has been an educating evening. My employer has screwed this up before and resulted in overcontribution. Check around the time when you expect to hit max to make sure all is right.
|
|
#
?
Mar 14, 2017 04:28
|
|
|
crazypeltast52 posted:To continue with this, you still get match added as your income increases after you max out, or at least my employer does.
|
|
#
?
Mar 14, 2017 04:34
|
|
|
waloo posted:My employer has screwed this up before and resulted in overcontribution. Check around the time when you expect to hit max to make sure all is right. Ugh, that sucks. Did you at least find out before the end of the tax year?
|
|
#
?
Mar 14, 2017 04:40
|
|
|
GoGoGadgetChris posted:You can't go over. Your payroll department will contribute (from payroll deductions) $18,000.00 and not one penny over. Nice and easy! 
|
|
#
?
Mar 14, 2017 04:44
|
|
|
I'm maxing my Roth IRA. Is prioritizing brokerage account deposits over 401k deposits a reasonable move if I'm saving for large expenses in the next 2-5 years? Specifically down payment for purchasing real estate. I've got my 401k deposits set at $4500/yr right now. I feel like an obvious counterargument is to plop it in high yield savings or CD instead of brokerage.. thoughts? Might be the wrong thread since 2-5 years is not long term, but I want to find the "right" way to balance my medium-term goals with long-term savings. Maybe I should Google before posting, this guy https://www.thebalance.com/best-places-to-invest-down-payment-money-357990 says conservative capital preservation in savings or bonds when saving for a down payment is the way to go. Michael Scott fucked around with this message at 07:01 on Mar 14, 2017 |
|
#
?
Mar 14, 2017 06:49
|
|
|
2-5 year outlook probably shouldn't be in the market.
|
|
#
?
Mar 14, 2017 06:52
|
|
|
Yeah savings/CD for that timeline 100%.
|
|
#
?
Mar 14, 2017 12:44
|
|
|
Nail Rat posted:Yeah savings/CD for that timeline 100%. You could look at adding some bit of bonds, 10-20% for a bit more risk/reward.
|
|
#
?
Mar 14, 2017 13:55
|
|
|
totalnewbie posted:You could probably use this to buy all Vanguard (or other) index funds and still come out ahead, even with the extra 0.35% ER. Yeah. I want to call up their HR people and yell at them. These are the same people that randomly assigned her 100% to a single asset class with a high fee by default. That's a good point about the open window being cheaper even with the fee. I'll move her all into VFIAX El Mero Mero fucked around with this message at 15:43 on Mar 14, 2017 |
|
#
?
Mar 14, 2017 15:38
|
|
|
pig slut lisa posted:Ugh, that sucks. Did you at least find out before the end of the tax year? Yeah it all turned out ok since I had maxed out early in the year, I was able to catch and correct all of this in the same tax year. Still a hassle but not the worst case by any means.
|
|
#
?
Mar 14, 2017 18:18
|
|
|
baquerd posted:You could look at adding some bit of bonds, 10-20% for a bit more risk/reward. May I ask why not near 100% bond fund? Why so low at 10-20% if it is quite low risk in my understanding?
|
|
#
?
Mar 14, 2017 21:36
|
|
|
Michael Scott posted:May I ask why not near 100% bond fund? Why so low at 10-20% if it is quite low risk in my understanding? You can certainly do that, but it's about blended risk. If you have 100% CDs/savings accounts/money markets, your returns are basically guaranteed and it's just a question of juggling CD maturation dates and early withdrawal penalties to maximize your returns. Corporate and municipal bonds bought directly can also accomplish this goal if you only buy bonds maturing in your time frame, but then you incur the default risk if the company/municipality can't pay. Treasury bonds are essentially guaranteed, but other than the i-bond rate (which is floating high and can be taken advantage of in the short term), none of them are worth it over the CDs. If you need to sell a bond early though, or if you buy a bond fund, now you have exposure to other types of risk like interest rate risk. This may be quite acceptable, or it may not be. They're certainly not as volatile as stocks, but that doesn't mean they are entirely suitable for a 2-5 year outlook, because in that time frame you really don't get much compound interest rolling and you can't wait out the market. Most of your money in the 2-5 year time frame is going to be from principal, that is money you put in, rather than investment returns, unless you want to risk not having the money you were planning on having. It may be worth it to run some numbers on actual returns. Suppose, for example, you save $10k a year for 5 years. At 1%, you're looking in the ballpark of $1500 absolute returns on your $50000. At 4%, it's about $6k as you might expect. But the risk needed to get those 4% returns could easily have turned into -4% returns and you lose $6k over keeping it under your mattress. Adding 10-20% bonds limits your losses substantially, while providing some small upside.
|
|
#
?
Mar 14, 2017 22:12
|
|
|
Backdoor Roth question. I can contribute any amount to my Roth via the backdoor? Like, tomorrow I can put 20k into a traditional IRA, wait a day, then move it into a Roth IRA, buy VTSAX on sax on sax, and call it a day? I can also do this every year? This just doesn't seem to make sense, so I'm trying to make sure.
|
|
#
?
Mar 14, 2017 22:23
|
|
|
Dreadite posted:Backdoor Roth question. You are still limited to contributing $5,500 per year into the Traditional IRA. The amount of the conversion being unlimited just means if you spent 4 years contributing $5,500 per year for a total of $22,000, you can convert it to a Roth IRA all in one year.
|
|
#
?
Mar 14, 2017 22:34
|
|
|
Ancillary Character posted:You are still limited to contributing $5,500 per year into the Traditional IRA. The amount of the conversion being unlimited just means if you spent 4 years contributing $5,500 per year for a total of $22,000, you can convert it to a Roth IRA all in one year. This makes more sense, thanks. And the general consensus is to take advantage of this, right? I guess the only other alternative is a taxable account (or spend it all in a fit of nihilism/donate it all to the ACLU because trump)
|
|
#
?
Mar 14, 2017 23:01
|
|
|
Does a Roth conversion make the original IRA go away or does it have $0 balance?
|
|
#
?
Mar 15, 2017 00:52
|
|
|
smackfu posted:Does a Roth conversion make the original IRA go away or does it have $0 balance? Depends on the brokerage? At Vanguard it's $0 balance which is great because then you can do the backdoor next year without opening up a new account 
|
|
#
?
Mar 15, 2017 01:22
|
|
|
edit: Wrote too much. Just trying to decide between Vanguard mutual funds and Schwab ETFs for a lazy portfolio and my head got dumb. punch drunk fucked around with this message at 03:02 on Mar 17, 2017 |
|
#
?
Mar 15, 2017 09:09
|
|
|
Hey, so uh, newbie investor here, and it turns out my new job uses an IRA with Edward Jones.  I've got all my previous retirement rollover stuff from my last job with Vanguard, since goons advised it, and it's loving kickass. I asked my boss why we're using EJ, and he just said he doesn't know too much about investing but he trusts our advisor for our office. ...how bad is it. Should I just contribute the match and not think about it, or avoid particular garbage-funds, or try to push for Vanguard? I see a bunch of pissed off articles at them, but most are from 2013 or earlier. How hosed am I?
|
|
#
?
Mar 16, 2017 01:16
|
|
|
Withhold judgement until you find out what the expenses are.
|
|
#
?
Mar 16, 2017 01:26
|
|
|
Confirm that you mean IRA and not 401k. Your IRA is something you do on your own, independent of any employer. (I have heard of some weird cases where employers are able to set up and manage an IRA for you) If it's an IRA, ignore that poo poo and set up your own IRA with Vanguard. If it's a 401k or some similar combination of 4numbernumberletter, post all the information here that you can get on it.
|
|
#
?
Mar 16, 2017 01:34
|
|
|
It's SIMPLE IRA with 3% match. Maybe I'll just leave it at 3% to get the match, then invest whatever else in my own stuff. I'll take a look at the expense ratios tomorrow, today was just a quick overview of the program. lobotomy molo fucked around with this message at 01:44 on Mar 16, 2017 |
|
#
?
Mar 16, 2017 01:41
|
|
|
SIMPLE IRA's are like a 401k for teeny tiny companies. They have lower expenses to your employer, and a lower contribution limit for you. Definitely share whatever info you can get, and it's great that you get a match, but the SIMPLE IRA limit is totally separate from the Roth IRA limit, so there's a good chance you'll want to focus on the Roth IRA (after getting the SIMPLE match, anyway)
|
|
#
?
Mar 16, 2017 01:48
|
|
|
I asked in the stock trading thread but I'll also ask here. I'm kind of bouncing back the pros and cons of two different tax scenarios, what do you guys think? I just can't quite convince myself which scenario makes more sense. I'm planning to lighten up my holdings of a particular stock I've been accumulating for a couple of years. I'm somewhat torn on whether to sell my older shares that have appreciated significantly more, but would qualify for long term capital gains, or to sell my newer shares that have appreciated much less, but are short term gains. Basically, if I were to sell off $30k worth of shares, I could: Sell with $3k in short term gains (so ~$1.2k in taxes) OR Sell with $15k in long term gains (so ~$3k in taxes) I'm tending to think I should just do the long term gains, because I will probably sit on my newer shares until they hit the one year mark anyway.
|
|
#
?
Mar 16, 2017 16:47
|
|
|
Sell the long-term ones. You may be getting tripped up on sentimental value of your assets: the older ones have appreciated more...! ...but your new shares and your old shares are quite literally the exact same thing. If they were gold bars, they'd weigh the same and come from the same mint. To extend the gold bar analogy: you can sell your older gold bars for the same as your newer gold bars but pay less tax on the sale. Of course you sell your older ones!
|
|
#
?
Mar 16, 2017 17:45
|
|
|
DNK posted:Sell the long-term ones. But that's not the case here. Selling with the short term gains may make sense here because this defers $1.8k in taxes in the form of unrealized LTCG. The relative rate on the gains is higher, but the gains themselves are lower. To expand on this, consider the case where there are zero short term gains on $30k of stock. Surely you would sell these shares and pay no taxes over selling $30k of shares with LTCG, right? Raising the amount of short term gains, it continues to make sense in the short term until the STCG taxes equals the LTCG taxes on the $30k of shares. That said, in the medium/long term, the STCG become LTCG and you need to look at the overall picture. Paying $1.8k extra in taxes is a guaranteed loss realizable as opportunity cost if you cash in the LTCG shares, there are ways to avoid/limit your LTCG (go into the 15% marginal tax bracket, donate shares, die). It seems unlikely that eating this opportunity cost is worth the ~$600 of taxes you would "save" on letting the STCG become LTCG.
|
|
#
?
Mar 16, 2017 18:47
|
|
|
|
| # ? May 16, 2024 16:28 |
|
|
Ok, granted: if you have losses or the net "gain" is close to zero then short-term selling is an option. But for the tax-bracket stuff: just sell less long-term stuff. It's not 18k long vs 6k short -- sell 10k long (or 6k long, or whatever).
|
|
#
?
Mar 16, 2017 19:01
|
|