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Hoodwinker posted:Bonds. They're poorly placed in a taxable account usually. It really all depends on what you're investing in and what the tax rates work out to be in either case. Fair point. My retirement accounts are already well balanced for bonds so I didn't think about them for non-retirement. That and there's the current bull market which hasn't stopped charging forward. I'll keep in mind for down the road.
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Aug 3, 2017 21:43
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You're also missing "Stash $5500 of non-deductible principle each year in a traditional IRA so I'll have that principle after I turn 59.5, and then stash another $85k a year (or whatever) in a good index fund, the exact same fund my IRA is in even, if I want, so I'll have that principle available after I turn 59.5, also before I turn 59.5, also with no limit to how much I choose to stash or when" E.g., if you're saving a lot of cash annually, putting a small fraction of it into a non-deductible IRA could offset a little bit of tax burden while not significantly impacting your total liquidity before you're 59.5.
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Aug 3, 2017 21:46
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As always it comes down to your tax rate at time of contribution and tax rate at time of withdrawal, and in what measures for each, etc. etc. etc.
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Aug 3, 2017 21:47
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Even if your principle contributions to a Traditional IRA are non-deductible the gains are still sheltered until withdrawal, right?
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Aug 3, 2017 22:30
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Oneiros posted:Even if your principle contributions to a Traditional IRA are non-deductible the gains are still sheltered until withdrawal, right?
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Aug 3, 2017 22:34
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A tax-efficient fund with qualified dividends like VTSAX has a tax ratio of about .43 last I looked, which on $5500/year (if we limit this to just putting nondeductible in an IRA or not) is next to nothing. Different situation if you sell/withdraw money but then you aren't in any different a situation you would be with a traditional IRA, other than you may have a higher marginal rate now vs. retirement. On the amount of principle we're talking about though I don't know it's worth giving up the flexibility to be able to sell pre-retirement without also having to pay the 10% penalty. Just in terms of principle alone (taking the growth out) even a 25 year old today is unlikely to save more than $200k or so, principle-wise, at the current caps, plus inflation increases by age 60. Not saying one is right and one is wrong, rather that there are two perfectly reasonable ways to look at it.
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Aug 4, 2017 04:29
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I have a Roth TSP account and a Roth IRA. I do use roboadvisors as a guide for investing, but they want me to do some things I would consider impossible because 80% of my retirement is tied up in TSP, which only has a few options. I'm in: 30% domestic total, 8% domestic small cap, 39% developed markets, 6% emerging markets, 5% domestic REITs, 4% domestic bonds, 3% international bonds, 5% TIPS They recommend: 13% domestic total, 13% domestic value, 3% domestic small cap, 11% developed markets, 11% foreign value, 5% foreign small cap, 17% emerging markets, 7% domestic REITs, 7% international real estate, 3% domestic bonds, 4% international bonds, 6% TIPS The vast majority of TSP is developed and domestic markets; is it worth dropping to the point where I'm maxing the matched contributions and putting the difference into my IRA, or am I just way better off keeping as is?I mean, the Roth IRA is NEVER going to catch up to the percentages they recommend. Am I that bad off if I can't diversify further into value, REITs, and emerging markets ETFs?
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Aug 4, 2017 05:54
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I think you should max out your match (i.e. 4% for 100% up to 4%, or 6% for 50% match up to 3% of income, whatever it is), and then max out your IRA at least before the end of the year. If you still have money left over, well I guess bump up your contribution into your TSP unless you think you'll need it earlier then just put it into a brokerage account. What kind of funds do you have available? Also that robo recommendation is loving kind of crazy and honestly seems way too much to bother. I wouldn't put 17% into emerging markets at first glance of how poor it is. Keep it simple and you'll be happier imo. I think what you have is mostly good and simple enough enough, just stick with it. The only thing i'd say is that's a lot of developed markets. IDK how you feel but maybe bring that down to like 25-30% and bump up REIT to 10% or and spread out the rest. Also if you can, maybe S&P 500 like VOO/VFINX instead of domestic total but the overlap between the two is pretty high that it won't matter much. Also I like mid-cap grwoth (VOT) over small cap but it's not a big deal either way. I suppose 5% tips couldn't hurt but might be simpler just to put it into something else like municipal bonds or just more bonds period. Xaris fucked around with this message at 08:54 on Aug 4, 2017 |
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Aug 4, 2017 08:52
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Xaris posted:Also that robo recommendation is loving kind of crazy That is my thought. I would question the algorithm that created that... mess.
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Aug 4, 2017 13:36
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Drewski posted:I have a Roth TSP account and a Roth IRA. I do use roboadvisors as a guide for investing, but they want me to do some things I would consider impossible because 80% of my retirement is tied up in TSP, which only has a few options. Why not just use your TSP L funds and not worry about it? That's a pretty wild set of funds the roboadvisor wants you to be in.
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Aug 4, 2017 14:22
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Diversification does not mean "many different funds". You can have a very well-diversified portfolio that self-balances with one fund: a target date fund. Don't get too caught up in min-maxing retirement accounts. For one, why is robo-advisor smarter than Vanguard (or Fidelity, Schwab, etc)? You may be complicating your own holdings AND enjoying worse performance (at higher cost!). Secondly, your efforts are better spent on contributing more -- make more, spend less, and/or optimize your existence. Finding a way to throw $10 more per month into your retirement accounts will have a guaranteed positive impact on your retirement savings. If you max your retirement space, taxable brokerage accounts are cool too!
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Aug 4, 2017 15:39
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Does employer matching count toward the 18k IRS limit for 403b, TSP, or 401k? If my employer match is 7k, can I only contribute 11k, or can I contribute the full 18k and have the employer's 7k on top of that?
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Aug 4, 2017 19:31
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laxbro posted:Does employer matching count toward the 18k IRS limit for 403b, TSP, or 401k? If my employer match is 7k, can I only contribute 11k, or can I contribute the full 18k and have the employers 7k on top of that? The full 18k. There is a second, separate employer limit of about $35k that limits them separately from the $18k for like $53k total.
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Aug 4, 2017 19:32
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laxbro posted:Does employer matching count toward the 18k IRS limit for 403b, TSP, or 401k? If my employer match is 7k, can I only contribute 11k, or can I contribute the full 18k and have the employers 7k on top of that? No. You can contribute 18k no matter what.
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Aug 4, 2017 19:32
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Oneiros posted:Even if your principle contributions to a Traditional IRA are non-deductible the gains are still sheltered until withdrawal, right?  This makes after-tax IRA contributions make WAY more sense to me!
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Aug 4, 2017 20:47
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Hubis posted:
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Aug 4, 2017 20:50
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Hoodwinker posted:This is why you put bonds in a tax-advantaged account, usually. Right, I just wasn't making the right "pre-tax"/"post-tax" distinction, i.e. gains in a Roth fund aren't taxed at withdrawal, but gains in a traditional fund still aren't taxed *until* withdrawal so your gains still accrue faster (i.e. taxes you don't pay get to compound). I was scratching my head as to why you'd put after-tax money into a Traditional IRA if you weren't eligible for deduction unless you were trying to do some kind of Backdoor Roth maneuver.
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Aug 4, 2017 20:59
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Hubis posted:I was scratching my head as to why you'd put after-tax money into a Traditional IRA if you weren't eligible for deduction unless you were trying to do some kind of Backdoor Roth maneuver. You still wouldn't for stocks since they don't have enough tax drag to make the back-end tax hit worthwhile (unless you live to be like 140). Only stuff that pays heavy dividends at regular tax rates are ever worth putting in an after-tax IRA/401k without backdooring.
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Aug 4, 2017 22:31
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TSP has absolutely the lowest fee funds you'll find anywhere , even Vanguard, and in my opinion contains every fund you really need (although the international fund tracks the MSCI EAFE which neglects developing markets and Canada). It's a great deal for Government workers and I'd think hard about putting a lot of money elsewhere.
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Aug 5, 2017 01:51
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There is also pending legislation to allow partial TSP withdrawls. Iirc, you now have to take an annuity or a lump sum. E:. For my 90/10 stock/bond mix I went with 10/44/21/25 in F/C/S/I. I underweighted the I fund due to the previous mention of how the I overweights developed countries like Japan with no developing. Evil SpongeBob fucked around with this message at 04:53 on Aug 5, 2017 |
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Aug 5, 2017 04:47
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Tetraptous posted:TSP has absolutely the lowest fee funds you'll find anywhere , even Vanguard, and in my opinion contains every fund you really need (although the international fund tracks the MSCI EAFE which neglects developing markets and Canada). It's a great deal for Government workers and I'd think hard about putting a lot of money elsewhere. Fidelity has some of their Premium funds like FSTVX for just under TSP fees, I suspect more may be following suit. And honestly the difference between TSP and VTSAX isn't enough to think about.
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Aug 5, 2017 05:09
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Evil SpongeBob posted:There is also pending legislation to allow partial TSP withdrawls. Iirc, you now have to take an annuity or a lump sum.
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Aug 5, 2017 05:25
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I do. TSP is about 60% of my portfolio. The rest is in Vanguard IRA in total and international stock/bond funds. Signed up for Vanguard advisor service in June after being with them for 20+ years. The hardest thing I had to do was approve them taking me out of Vanguard Health Care. That was my first fund. Like selling your first car. 😞
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Aug 5, 2017 16:59
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I have about 20k in a Fidelity fund my parents set up for me and we never touched. Why is Vanguard the preferred company? In the Motley Fool comparison between them, Fidelity looks like it has lower fees. I've done a pretty good job at saving so far, but all of that money is just in a savings account right now. LLSix fucked around with this message at 22:36 on Aug 5, 2017 |
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Aug 5, 2017 20:35
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LLSix posted:I have about 20k in a Fidelity fund my parents set up to me and we never touched. Why is Vanguard the preferred company? In the Motley Fool comparison between them, Fidelity looks like it has lower fees. There's honestly not much difference as long as you focus on low cost index funds for your investment picks. People itt prefer Vanguard since they pretty much started the competition to lower ER fees when other companies were ripping off investors.
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Aug 5, 2017 21:15
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From an ethics point of view, Vanguard is the clear winner and their pressure on the market is the only reason the fees are that low at fidelity. They are client-owned rather than profit seeking, treat their employees well, and are generally a great company. I support that by having them manage my money over the other options. I also happen to like their website layout and their phone support has always been top-notch. Fidelity is good on support, but (just as an example) I've had very bad experiences with merril lynch and would run away from them screaming in the future.
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Aug 5, 2017 21:49
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LLSix posted:I have about 20k in a Fidelity fund my parents set up for me and we never touched. Why is Vanguard the preferred company? In the Motley Fool comparison between them, Fidelity looks like it has lower fees.
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Aug 6, 2017 01:50
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Ralith posted:Fidelity is legally obligated to screw you out of as much money as possible. Maybe you're smart enough to take advantage of their loss leaders without falling for any of their bait, but with Vanguard it's not even a concern. For me, being able to trust the people managing my money is easily worth whatever marginal premium. This goes way too far. The corporate structure has a much smaller effect on things than the products they offer, and you are buying financial products. Some are good, some are not, and that's true of both Vanguard and Fidelity. It's like saying you should only do business with credit unions and never with a bank. It's arbitrary and limiting and kind of silly. Do what works best for your situation. TIAA is also organized as a nonprofit, but their offerings aren't any better than Fidelity's. Off the top of my head, for most people I'd recommend Vanguard, then Fidelity, then Schwab, then most of the rest. They all can be fine, however. Like banks, most of the products they offer are kind of commodities, with very little to differentiate them. So just find one that offers the product you want and is both cheap and convenient to use and don't worry too much about it.
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Aug 6, 2017 04:04
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I Like Jell-O posted:This goes way too far. The corporate structure has a much smaller effect on things than the products they offer, and you are buying financial products. Some are good, some are not, and that's true of both Vanguard and Fidelity. It's like saying you should only do business with credit unions and never with a bank. It's arbitrary and limiting and kind of silly. Do what works best for your situation.
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Aug 6, 2017 04:34
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Hoodwinker posted:But credit unions are almost universally lauded as a better option over banks for exactly that reason. Assuming you value more than the rates provided (and I doubt the spread is that high between a CU and a bank) is there any reason to go with a bank over a credit union? Lots of reasons. Convenience, quality of online platforms, number of branches and in-network ATMs, and a broader range of financial products are all possible reasons to go with a bank over a CU. I too think the "do business only with CUs" people are silly. Bank of America is dope. It also depends on regions, they have a pretty big lock on the Chicago market (Chase competes heavily too) so they have a bunch of branches and ATMs. Not that I ever have to go to branches. Their app and website is great. Screw Merrill Lynch though, Vanguard all the way for investments. Plus, one modern benefit: as someone that hates using cash, going with Chase or BofA means you get modern ATMs that can accept cash deposits whenever you have some spare bills in your wallet, and you don't want to pay for something with them and deal with coins as change. I don't think CUs have those. Michael Scott fucked around with this message at 05:46 on Aug 6, 2017 |
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Aug 6, 2017 05:41
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If your balances are high enough, banks practically offer shoulder rubs and hot towels. Bank of America's kickbacks start at $20,000 (combined checking, savings and brokerage). Also, gently caress Merrill Lynch.
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Aug 6, 2017 05:57
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Accretionist posted:If your balances are high enough, banks practically offer shoulder rubs and hot towels. Xenoborg fucked around with this message at 06:07 on Aug 6, 2017 |
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Aug 6, 2017 06:04
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Xenoborg posted:20% bonus on your savings account interest rate sounds really good until you find out the base rate is 0.03%. Maybe BoA is better now but banks did some seriously irreparable hosed up poo poo in the mid to late 2000s. Charging annual fees for a god drat checking account, shady overdraft bullshit, signing people up for things they didn't ask for, and awful get-hosed support. Basically if you were poor they bent you over backwards. They've been tarnished for good reason and I'd stay the gently caress away from BoA and Wells Fargo and most of the rest just out of the shittiness they did even if they are "good" now. Especially because at that point in time CUs were doing everything right that banks were doing wrong, no fees, better OD services, good customer services, ATM fee rebates, better rates, etc. I think now the parity between Big Banks and CUs are more level, but I still stick with my CU because the web UI is very nice and simple without the garbage Web 2.0 site bloat that makes it impossible to navigate some of the bigger banks/ccs I've used; unlimited ATM rebates so I can use any atm regardless of the fee (which is very handy at cash-only bars/places); better rates than most major banks (at the time), and their service is top notch. I think you can probably say the same now about big banks but that wasn't the case 5 years ago so the inertia has stayed with me and probably others. So yeah the dudes point that pretty much everything is more or less about the same now is a valid point so use whatever you want. I use Vanguard because Bogle owns and I like the company model and the ETFs are good but as mentioned you can't go wrong with Fidelity either. Xaris fucked around with this message at 06:29 on Aug 6, 2017 |
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Aug 6, 2017 06:26
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Xenoborg posted:20% bonus on your savings account interest rate sounds really good until you find out the base rate is 0.03%. But at that point, fees disappear and your cashback's almost doubled. Also, 1200 free trades per year and on-point customer service. If you don't have money, though, retail banks are a total screw job. Everyone who isn't rolling in it should be with a credit union, and this is most people.
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Aug 6, 2017 06:31
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I like credit unions, they're great. I use one for my checking, savings, and mortgage. They have no fees for my cash accounts and good rates on my mortgage with good customer service. If I cared to shop around I could find similar products from a for-profit bank. If I had an arbitrary "NO BANKS" rule I also wouldn't have the credit cards the I use all the time, and I'd miss out on both the rewards and the convenience. My point is, as a consumer, you should be far more concerned with the product that is offered to you than corporate governance. Vanguard is great, John Bogle is one of my heros, but my 401k and ESPP are with Fidelity; my love of the Vanguard concept doesn't move me more than having to maintain an additional login. I don't feel like I'm missing out. Also, Fidelity has a great cash rewards credit card that I use all the time. That's a product they offer that Vanguard does not. When it comes to long term investing, what you invest in is more important than which institution happens to hold the investment.
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Aug 6, 2017 07:48
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Thank you for the advice on Vanguard vs. Fidelity. It sounds like Fidelity is mostly ok right now, but is more likely to switch to consumer unfriendly practices than Vanguard is. I may leave the money I have with Fidelity there to avoid the penalty for transferring it out; and open an account with Vanguard to direct new funds into. Since it came up, what are good banks or credit unions? We just started the process of switching our accounts to Ally since none of the local banks or credit unions offer checking interest better than 0.05% or savings better than 0.10% and most have all kinds of terrible fees. My wife used to have Bank of America accounts, but they don't have any ATMs in our area because we live in a small town in Illinois.
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Aug 6, 2017 16:12
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I'm a pretty new investor and I'm curious about about index funds. I've been reading all the information I can pull from google and the few tools I have (investopedia, etc.). What would be some advice about index funds that a new investor like myself should consider before putting money into funds like these?
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Aug 6, 2017 16:15
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If Vanguard goes tits up, none of their investments are FDIC insured, correct? I brought up IRA CD's through Ally earlier in the thread and it was met with "meh" since the rate of return was only 2.25% - but isn't FDIC protection worth something? The only asset I have that isn't FDIC insured is my 401K
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Aug 6, 2017 16:17
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Mukulu posted:I'm a pretty new investor and I'm curious about about index funds. I've been reading all the information I can pull from google and the few tools I have (investopedia, etc.). What would be some advice about index funds that a new investor like myself should consider before putting money into funds like these? Read the OP, for most long term retirement saving a majority of people are best served by low cost retirement funds if available. For 401k type savings focus on low expense ratio investments, so it's the best way to quickly sort out the better options. EugeneJ posted:If Vanguard goes tits up, none of their investments are FDIC insured, correct? Equities are not insured as a rule of thumb, only more traditional bank products low return investments like CDs are.
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Aug 6, 2017 16:21
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EugeneJ posted:If Vanguard goes tits up, none of their investments are FDIC insured, correct? https://www.bogleheads.org/wiki/Vanguard_safety is a good theoretical about what would happen if Vanguard went bust.
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Aug 6, 2017 16:25
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