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DNK posted:It's essentially impossible to be an IRA multimillionaire with target date funds due to the $5500 contribution limit. You'd need to max contribute for a long time. If an IRA is your only retirement plan, you are hosed period. its just a nice supplement. Pollyanna posted:Doesn't that go the other way too? They could be higher, they could be lower. Yes, the point is in a Roth they are predictable... which retirement needs to be. You always know the taxes you will hav to pay on a Roth, because its the ones you have already paid. Of course returns are unpredictable, but that is true of both. At least the Roth settles the tax questions and lets you know what else you need to do. greasyhands fucked around with this message at 05:50 on Jun 17, 2017 |
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Jun 17, 2017 05:47
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DNK posted:It's essentially impossible to be an IRA multimillionaire with target date funds due to the $5500 contribution limit. You'd need to max contribute for a long time. Except for 401k rollovers.
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Jun 17, 2017 12:27
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What's a good retirement calculator that takes into account different types of accounts? I'm 35, have $23k split between a Fidelity 401k and a Vanguard Roth IRA. I'm doing 10% (employer matches 50% of that) and maxing out the Roth. I'm making around $80k, should be making around $110k starting mid 2018, and over the next 30 years hope I will top out at around $220k. I wanna punch these numbers into an online thingie so it can guesstimate how much I'll have at age 65 and I can thus adjust how much I save.
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Jun 17, 2017 13:26
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DNK posted:It's essentially impossible to be an IRA multimillionaire with target date funds due to the $5500 contribution limit. You'd need to max contribute for a long time. 401k rollovers. Work places with good matches and max, then rollover to a low cost Vanguard if/when you change jobs. Tons of people do it these days. :Editing out irrelevant details Ixian fucked around with this message at 13:56 on Jun 17, 2017 |
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Jun 17, 2017 13:48
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I'm probably just gonna go for a Roth IRA cause it's a simpler option. At this point, I'm likely to gently caress up either way.Ixian posted:401k rollovers. So the basic idea is to open a Vanguard 401k, then when you quit a job, roll your job's 401k's money into your own 401k? I will need both an IRA and a 401k from Vanguard?
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Jun 17, 2017 15:52
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You don't get to pick your 401k, you take the one your job offers or you get nothing. You'd have a 401k from whoever and an IRA from Vanguard. There's a chance the 401k is from vanguard, but it probably isn't up to you.
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Jun 17, 2017 16:04
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Okay, so I set up a Vanguard IRA, then roll that 401k money into it when I change jobs. That sounds about right.
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Jun 17, 2017 16:18
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Pollyanna posted:Okay, so I set up a Vanguard IRA, then roll that 401k money into it when I change jobs. That sounds about right. Correct. And still take advantage of the new company 401k if they have one, of course. There's usually no advantage from rolling a prior companies 401k in to a new companies 401k plan. Many company plans have limited fund choices and higher fees compared to Vanguard. Not always the case, but it's something to consider. There are reasons to do it, for example if you want to set up a back-door Roth you'll want to stay away from a traditional IRA, or at least one you roll a large balance over to, due to the IRS's pro-rata rules. In that case it may make more sense to roll to another 401k and set up a traditional IRA for the sole purpose of back-dooring to a Roth. You'd have to really be weighing the benefits of Roth heavily though.
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Jun 17, 2017 16:35
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TFB (The Finance Buff) has a great article/how-to on backdoor Roth, btw: https://thefinancebuff.com/the-backdoor-roth-ira-a-complete-how-to.html Makes it very clear both if you should be considering one at all, and if so the right way to go about doing it.
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Jun 17, 2017 16:49
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Ixian posted:Correct. And still take advantage of the new company 401k if they have one, of course. Wait, I'm now confused. Do rollovers t count towards yearly contribution limits for IRAs / Roths?
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Jun 17, 2017 16:52
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Magnetic North posted:Wait, I'm now confused. Do rollovers t count towards yearly contribution limits for IRAs / Roths? no
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Jun 17, 2017 16:53
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I did roll my old 401k to my new 401k because the fees were so cheap (0.05 with no annual feel) but I feel that this is an exception.
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Jun 17, 2017 16:54
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Magnetic North posted:Wait, I'm now confused. Do rollovers t count towards yearly contribution limits for IRAs / Roths? No, moving from one qualified plan to another is allowed and there's no penalty or taxes. Which is why there are many people today with large IRAs in addition to an employer plan. The limit doesn't apply going from a 401k to a Roth either via the back-door method, but you will have to pay income taxes at your current effective rate when you do. For large balances most people won't want to do this, but there are exceptions.
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Jun 17, 2017 17:12
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I would like to add to all of this that if you're a service member or government contractor with access to the Thrift Savings Plan, that you should be rolling over your 401k into that. Super low fees, super good funds.
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Jun 17, 2017 17:34
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Motronic posted:They are typically exempt from fed and almost always exempt from state if it's a muni in your state. I had the impression that this is true of the interest, but not of the capital gains. What states exempt you from that on muni bonds?
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Jun 18, 2017 04:18
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waloo posted:I had the impression that this is true of the interest, but not of the capital gains. What states exempt you from that on muni bonds? Capital gains are not exempt from taxes on Munis. However they usually aren't much of a concern for regular muni investors either. There are situations where you can get discounted Munis that return more than the face value at maturity, in which case long term capital gains would kick in (assuming you held them more than a year, which is likely) and other less common situations, but overall it's generally a small part of the overall bond return. That would be the interest. A regular joe investing in VWLTX isn't going to have much to deal with on the capital gains front. The real problem with Munis today is bond prices have been falling and yields have been going up, which translates into a lot more volatility and lower returns. We can all thank Trump for that, in particular his vague but repeated promises/assurances/whatever to rebuild America's infrastructure. If that happens - and many expect at least some number of projects to kick off - that will be funded largely by bonds. More new bonds isn't a great thing for stable yields on existing bonds. The market is pricing some of that expectation in now, basically.
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Jun 18, 2017 13:31
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I own a muni fund that has gone up in value since I bought it in March, do I get to thank Trump for that?
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Jun 18, 2017 14:07
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monster on a stick posted:I own a muni fund that has gone up in value since I bought it in March, do I get to thank Trump for that? No one's stopping you  I'm not making a political statement re: whether I think Trump is a terrible person (or) the best person for the job. I'm repeating market analysis regarding the impact on the bond market as it relates to government plans to boost infrastructure spending. Also, Muni returns are quite volatile so next March and the March after that, etc. are going to be a better indicator for you.
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Jun 18, 2017 14:17
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Ixian posted:No one's stopping you Yes but some of what you said is a contradiction. If bond yields are going up, that is good for bond investors since we are getting more return for our money. I've heard people call bond investors Eeyores since we complain if bond prices drop (even if rising yields make up for it) or if yields drop (even if rising bond prices make up for it.) Maybe munis will take a dump, maybe not, people have been predicting a Trump-caused stock market collapse for a while and who knows, maybe they will eventually be right too. In the meantime I'm enjoying the very modest increase in VMLTX.
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Jun 18, 2017 14:25
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monster on a stick posted:Yes but some of what you said is a contradiction. If bond yields are going up, that is good for bond investors since we are getting more return for our money. I've heard people call bond investors Eeyores since we complain if bond prices drop (even if rising yields make up for it) or if yields drop (even if rising bond prices make up for it.) Higher yields churn the bond market more which over time has shown a more negative effect than positive. Though a well managed bond fund like VMLTX or VWLTX can insulate this. If you are in VMLTX I'd take a look at the latter as well btw. I wasn't talking about a Trump-caused stock market crash, or even the stock market. The *bond* market, particularly Munis, has been churning lately due to uncertainty over the impact of new infrastructure spending. Again, not a political post. I get enough of that from my angry aunts, uncles, and Mom friends on Facebook. Whether "Trump, Destroyer of worlds" is going to kill the market (because people who hate him want to see him fail on all fronts, whether he is directly responsible or not) is different from "the new Presidential administration (WHOEVER IT MAY BE) has given strong indications that new policies will be enacted encouraging large investments in infrastructure spending driven by bonds" and seeing the effect on the bond market.
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Jun 18, 2017 14:57
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Setting up my Vanguard account now. Do I want it to debit (i.e. tie it to) my savings account, or my checking account? I usually have all my money in savings, and try to keep ~2k in checking at all times. Is that what I should be doing?
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Jun 19, 2017 14:20
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Pollyanna posted:Setting up my Vanguard account now. Do I want it to debit (i.e. tie it to) my savings account, or my checking account? I usually have all my money in savings, and try to keep ~2k in checking at all times. Is that what I should be doing? Whatever makes sense to you, which sounds like your savings account. There seems little point in adding another transfer into the process and risk overdrafting.
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Jun 19, 2017 14:23
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Thanks! Just opened my first Roth IRA. I guess I'm an adult now. Once the money is in the account, what do I do with it? Do I let it sit? It seems to be going to something called Vanguard Federal Money Market Fund, am I expected to move the Roth IRA money around to different places? Pollyanna fucked around with this message at 15:53 on Jun 19, 2017 |
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Jun 19, 2017 15:25
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Pollyanna posted:Thanks! Just opened my first Roth IRA. I guess I'm an adult now. Congrads. Fund it like crazy while you can. Having a nice Roth balance when you retire will be like getting extra frosting on your cake for free. If/when you hit 70.5 and RMDs kick in for the tax-deferred investments then the income from a Roth is something you can totally control without jacking your taxes, affecting how SS is taxed, whole host of things.
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Jun 19, 2017 16:17
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Pollyanna posted:Thanks! Just opened my first Roth IRA. I guess I'm an adult now. haha have you started your required reading yet? Right now it's just a savings account. You need to actually invest the money. Sounds like you're young, are you planning on retiring around 2055? Plop all your money into the 2055 Vanguard Target Fund (VFFVX) and forget about it.
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Jun 19, 2017 16:25
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2055 would put me at 65 years old, so that sounds about right. I think I get it now, the Roth IRA holds money I then put into symbols like VFFVX. Investing in something like VFFVX is only what I do with the money I contribute to an IRA.
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Jun 19, 2017 16:32
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Some people like to be more active with their investments. I'm pretty passive so I just stuck them in a target retirement account and can ignore it for the most part.
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Jun 19, 2017 16:35
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Pollyanna posted:2055 would put me at 65 years old, so that sounds about right. I think I get it now, the Roth IRA holds money I then put into symbols like VFFVX. Investing in something like VFFVX is only what I do with the money I contribute to an IRA. That's right! If you get stuck let me know. Otherwise the "Buy & Sell" page will be important for you to understand. You'll want to go to "buy vanguard fund" then follow the steps. VFFVX is my jam.
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Jun 19, 2017 16:38
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No worries, I think I can figure it out. Once the transaction goes through I'll move stuff around. I got my reading to do, too. Edit: looks like it takes a week for transactions into a Roth IRA to go through. I'll come back in a week, I guess? Pollyanna fucked around with this message at 18:11 on Jun 19, 2017 |
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Jun 19, 2017 16:43
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Has municipal bond performance historically been correlated with the stock market?
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Jun 19, 2017 16:53
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oliveoil posted:Has municipal bond performance historically been correlated with the stock market? Not really. There's a small inverse correlation. quote:Year
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Jun 19, 2017 17:00
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Synchrony just bumped my savings interest from 1.05% to 1.15% 
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Jun 19, 2017 17:05
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Leon Trotsky 2012 posted:Not really. There's a small inverse correlation. Seems more associated with Dem/Rep presidents judging by that data 
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Jun 19, 2017 17:24
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Munis are for mid-income retirees who are carefully managing their marginal rates and high income professionals who are already at the highest marginal rate and are thus heavily incentivised to look for lower-medium risk investments that don't fall into the highest bracket. If your MAGI after all is said and done is, say, 500k/y, and you live in a high tax state like NY or CA, then every dollar you make over that (470k in 2017 for MFJ, technically) is taxed at 45% or higher when all's said and done. If you get into a Muni or Muni fund that pays 3% averaged out over the 7-10 year life (or longer) then you take your tax basis - 100-45=55 for example and divide the return by that. In this example: 3%/.55 = 5.45. Meaning in terms of actual dollars going into your pockets a 3% Muni equals a 5.45% taxable investment. And Muni's, despite their YTY volatility, are generally safer investments than taxable fund that earn over 5%. That is why they are attractive. That is really what Muni's are meant for. If it doesn't apply to you then there's little point beyond a general diversification strategy. This is the conclusion I have come to recently anyway.
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Jun 19, 2017 17:40
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Henrik Zetterberg posted:Synchrony just bumped my savings interest from 1.05% to 1.15% Come on, Ally! I believe in you! Ixian posted:Munis are for mid-income retirees who are carefully managing their marginal rates and high income professionals who are already at the highest marginal rate and are thus heavily incentivised to look for lower-medium risk investments that don't fall into the highest bracket.
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Jun 19, 2017 17:42
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The fabled "good problem" sure. Obviously, in times where Muni's have even higher yields - over the last few decades it wasn't impossible to get 8%+ averaged out though that is rare these days - they are like catnip to high income people, or more specifically, those who's high income is derived from short term and not Capital gains. Your basic Doctor, lawyer, dentist, etc. As I was recently going over on Bogleheads, time - specifically a short amount of time - is the enemy of all investments. Everyone would like to make more than a percent or so on their short-term funds, me included. There is no way to do that without taking on considerable risk. If you want returns of 5%+ you need to be willing to have an investment horizon of decades +. Or, find the next Bernie Madoff and get out early
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Jun 19, 2017 17:57
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Hopefully simple HDHP/HSA question... I just started at a new company and I'm weighing the two health plan options: Option A: $0/month premium $0 employer contribution to HSA Higher deductibles Option B: $45/month premium $62.50/month employer contribution to HSA Lower deductibles Am I correct to assume that, if I don't care about deductibles, that by going with Option A I'd be leaving $750/annually of free money from my employer on the table? So even if I factor in the monthly premiums, I'm getting $210/year richer by picking option B ([$62.50-$45]*12)?
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Jun 19, 2017 21:25
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dexter6 posted:Hopefully simple HDHP/HSA question... Yes. Option B will also be better in years you hit the deductible, of course. Is that the only difference between plans though?
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Jun 19, 2017 21:28
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Henrik Zetterberg posted:Synchrony just bumped my savings interest from 1.05% to 1.15% Goldman Sachs bank went up to 1.2% a few weeks ago
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Jun 19, 2017 22:10
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Steve French posted:Goldman Sachs bank went up to 1.2% a few weeks ago drat, I'm tempted to transfer my savings to there from Alliant. A cherry on top would be leaving Alliant with its lack of 2-factor authentication.
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Jun 19, 2017 22:13
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