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When people quote S&P 30-year real returns as a basis for retirement planning, they seem to elide the fact that people should be holding balanced portfolios and that people will likely skew heavily towards fixed income towards the tail end of their career when their portfolios are the largest.
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Oct 19, 2017 09:10
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Kylaer posted:So Vanguard officially announced its global Wellington/Wellesley funds. I have to say, I love the idea of the Wellesley fund. I know the performance numbers are lackluster, and for optimal outcomes I should just do VTSAX/VTIAX/a smattering of some kind of bond (and that's currently where almost all of my money is going), but...I'm tempted to buy in to the global Wellesley as a minor component of my investments going forward For a 35%/65% equity/bond fund Wellesley's numbers are outstanding. 10.59 CAGR and 9.9 StdDev since 1985? Good stuff. VFINX over the same period is 11.05 and 14.85%. You're giving half a point of performance for 1/3rd less volatility. I'm a big fan. e: Also, I completely disagree with Droo's parroting the 'New Normal' line from 6 years ago. It was a poo poo analysis in 2010 when we were coming off a huge recession and it's even more poo poo now. "Oh no, as the world vastly increases interchange of goods and services, opens trade borders, stabilizes markets and just generally optimizes production well, obviously everything is going to go to poo poo." is just such a dumb analysis it makes me rage. Murgos fucked around with this message at 14:24 on Oct 19, 2017 |
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Oct 19, 2017 14:20
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Would I be an idiot to contribute to my 529 account? I'm already meeting my 457b contribution goals and I figured I should be saving for grad school.
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Oct 19, 2017 15:11
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Woof Blitzer posted:Would I be an idiot to contribute to my 529 account? I'm already meeting my 457b contribution goals and I figured I should be saving for grad school.
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Oct 19, 2017 15:18
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The problem with 529s is if you suddenly decide that grad school isn't a good choice for your career, you're stuck with an account that you can't do anything with, short of passing it on to someone else in your family. Speaking from experience here. My wife has a generous 529 that was put together for her by her grandparents, she didn't use any of it for college since she got a full ride, spent half a semester in grad school, and now we don't know what to do with it. Admittedly, it's a very different situation, since you can withdraw the principal from a 529 without penalty. In our case, it was set up 25 years ago, so a major chunk of it is going to be subject to tax and a 10% penalty if we try to move it anywhere. That wouldn't be the case if you were socking money away for potential grad school in the next few years, I suppose. Yeah not sure what we should do about her 529 and it gives me headaches.
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Oct 19, 2017 15:44
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MockingQuantum posted:The problem with 529s is if you suddenly decide that grad school isn't a good choice for your career, you're stuck with an account that you can't do anything with, short of passing it on to someone else in your family.
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Oct 19, 2017 15:48
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Is there a waiting period for 529 distributions? My spouse is planning on going back starting this coming January. We were planning on just paying in cash. Can I contribute to a 529 now, avoid the income taxes and just withdraw it in a few months to pay for school?
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Oct 19, 2017 15:50
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Hoodwinker posted:Withdraw it, pay the tax and eat the penalty because it's still essentially a chunk of "free" money? I mean yes, that's literally the only option. The only headache source is that, if I understand correctly, 529 withdrawals on anything besides principal are treated as income, so they're taxed at income tax rates and have the potential of pushing us into a higher tax bracket if I'm not careful about how much I draw at one time.
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Oct 19, 2017 15:54
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spf3million posted:Is there a waiting period for 529 distributions? My spouse is planning on going back starting this coming January. We were planning on just paying in cash. Can I contribute to a 529 now, avoid the income taxes and just withdraw it in a few months to pay for school? 529's are post tax if I recall correctly. It's just the gains that are tax free if used for education. For the inherited one: are you planning to have kids? Save it for them. Generational wealth is a great way to not be saddled with debt. Or take some classes at a qualified place like community College or trade school.
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Oct 19, 2017 16:06
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H110Hawk posted:529's are post tax if I recall correctly. It's just the gains that are tax free if used for education. We neither can have kids nor are we looking to adopt, and my niece (the only potential one at this point) got a full ride. It's kind of a perfect storm of "well what the hell do we do with this now?"
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Oct 19, 2017 16:34
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H110Hawk posted:529's are post tax if I recall correctly. It's just the gains that are tax free if used for education.
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Oct 19, 2017 17:23
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H110Hawk posted:529's are post tax if I recall correctly. It's just the gains that are tax free if used for education. Federally, yes, but I believe you can also deduct contributions for state income tax, depending on state/fund/etc.
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Oct 19, 2017 17:28
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Kylaer posted:So Vanguard officially announced its global Wellington/Wellesley funds. I have to say, I love the idea of the Wellesley fund. I know the performance numbers are lackluster, and for optimal outcomes I should just do VTSAX/VTIAX/a smattering of some kind of bond (and that's currently where almost all of my money is going), but...I'm tempted to buy in to the global Wellesley as a minor component of my investments going forward (e: VGWAX actually requires $50k, not sure if that will drop later to the normal 10k for other Vanguard admiral shares) Syrinxx fucked around with this message at 18:24 on Oct 19, 2017 |
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Oct 19, 2017 17:48
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MockingQuantum posted:We neither can have kids nor are we looking to adopt, and my niece (the only potential one at this point) got a full ride. It's kind of a perfect storm of "well what the hell do we do with this now?" Pay the piper, then pay down your mortgage. If you're looking to take up a hobby though, use that money to learn about it because why not? Santa Monica City College offers surfing classes. There is likely a trade school near you if you ever wanted to learn how to fix a car, work with metal/wood/whatever. P.S. Will you put my kid through college. Harveygod posted:Federally, yes, but I believe you can also deduct contributions for state income tax, depending on state/fund/etc. 529's are such a weird poo poo show, as with all tax advantaged savings in the USA. I'm in CA using the NH plan because the CA plan wasn't that great.
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Oct 19, 2017 18:13
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I never looked into it much but I might be in a scenario to try and do a back door roth for just this year. My wife has a 401k to roll over but hasn't gone to a new job yet and hasn't worked since February. Because of this, our tax liability will be a lot lower this year than normal, so I thought it would be good to try and get that 401k into her Roth IRA if possible. Does anyone have a good link for figuring out how to do so? Neither of us have a traditional IRA. Will we be able to put the full amount in (13k) and does that affect our 2017 contribution which we already maxed?
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Oct 19, 2017 18:33
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H110Hawk posted:529's are post tax if I recall correctly. It's just the gains that are tax free if used for education. I thought the rules around changing the beneficiary for a 529 precluded going to later (as in younger) generations, same or higher only. Maybe i am mis remembering but this was part of why we didnt choose to pile money into accounts for our kids.
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Oct 19, 2017 19:00
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waloo posted:I thought the rules around changing the beneficiary for a 529 precluded going to later (as in younger) generations, same or higher only. Maybe i am mis remembering but this was part of why we didnt choose to pile money into accounts for our kids. https://www.usnews.com/education/be...lan-beneficiary There are rules around more than N changes in a year, but it's all state-and-plan-combo-specific. I set one up in my name prior to my child being born, then switched it to him. Nothing happened.
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Oct 19, 2017 19:26
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Based on prodding from this thread I just upped my retirement from 13% to 21%. Now maxing both my Roth and hitting the 401k limit. We've been coming out ahead every month anyway, and I've been moving the extra cash into a brokerage so might as well reap the tax benefit. Might bring some peace of mind later too if we can't put away so much every month.
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Oct 19, 2017 20:31
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Xguard86 posted:Based on prodding from this thread I just upped my retirement from 13% to 21%. Now maxing both my Roth and hitting the 401k limit. We've been coming out ahead every month anyway, and I've been moving the extra cash into a brokerage so might as well reap the tax benefit. Might bring some peace of mind later too if we can't put away so much every month.  congrats. Enjoy the peace of mind that you might actually have enough to retire.
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Oct 19, 2017 20:36
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How do people fund their IRAs? I've been putting 5500 divided by 12 into a savings account every month to put in on Jan 1st, but it seems like kind of a waste to have money sitting around for most of the year not doing anything.
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Oct 19, 2017 22:18
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Xenoborg posted:How do people fund their IRAs? If you're funding 2018's IRA on Jan 1, 2018 then you're doing great. If you're funding 2017's IRA on Jan 1, 2018 then start just depositing it directly into the IRA.
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Oct 19, 2017 22:28
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I have Vanguard pull money from my checking account every payday so I don't have to think about it. Would rather set up direct deposit so I never even see the money, but then I'd have to do the math myself and that's a tiny bit more effort than letting them do it. I do have a direct deposit going to them for my taxable account, but of course there's no limits on that to worry about.
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Oct 19, 2017 22:37
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Xenoborg posted:How do people fund their IRAs? In the last three months of the year, I let my cash position/emergency fund grow a bit, so I contribute it out in full in early January out of that fund. For me, since I have to backdoor it into a Roth, one funding transaction and one conversion keeps things as clean as they can be. What would you rather do with the money? Invest it in a taxable account and sell it for ST gains/losses? Play the ponies?
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Oct 19, 2017 23:42
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Missing Donut posted:In the last three months of the year, I let my cash position/emergency fund grow a bit, so I contribute it out in full in early January out of that fund. For me, since I have to backdoor it into a Roth, one funding transaction and one conversion keeps things as clean as they can be. I'd love to have it invested along with my other taxable stuff. Paying for ST gains isn't bad because its still a gain. The case of a loss is less good, but I'd just sell more to get the full amount needed out. Could also just sell other LT shares than the ones there were saved for the IRA.
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Oct 19, 2017 23:50
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Murgos posted:For a 35%/65% equity/bond fund Wellesley's numbers are outstanding. Thanks, I'd overlooked that one. I compared some funds on this site and oh my:  Blue - Fidelity Contrafund Red - Vanguard Strategic Equity Yellow - Vanguard Wellesley Income Green - S&P 500 Benchmark
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Oct 20, 2017 00:05
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Xenoborg posted:I'd love to have it invested along with my other taxable stuff. Paying for ST gains isn't bad because its still a gain. The case of a loss is less good, but I'd just sell more to get the full amount needed out. Could also just sell other LT shares than the ones there were saved for the IRA. I made a quick and dirty calculator and it turns out it doesn't matter a whole lot. Saving everything month is on average a loss of around $150 a year compared to investing it. Saving compared to Back loading its less depending on how much you are investing a month. Here it is if anyone wants to play with it. https://docs.google.com/spreadsheets/d/1AzMDfXwv0566Cka-Qbh_1KJ5dAMq4EY3OzIjJo0w-UY/edit?usp=sharing Xenoborg fucked around with this message at 00:33 on Oct 20, 2017 |
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Oct 20, 2017 00:27
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Xenoborg posted:Saving compared to Back loading its less depending on how much you are investing a month Right, and I roughly do the backloading system. I’m also fortunate that I have a higher contribution amount each month which lowers the market loss.
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Oct 20, 2017 02:53
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H110Hawk posted:https://www.usnews.com/education/be...lan-beneficiary That said, the Bogleheads wiki seems to support my understanding of this (emphasis added): quote:The key factor involving the changing of a 529 beneficiary is that all changes must be to a member of the beneficiary's family tree (see the sidebox, Members of the beneficiary's family). As long as any change occurs "laterally" to the same generation as the old beneficiary, or "upwards" to an older generation, the IRS is indifferent to the transfer. [5] So I guess it's probably a matter of gift or estate tax implications, so, uh, hopefully when you changed it to your kid it didn't have enough in it to merit any special tax treatment then, and bear it in mind in case later you want to distribute some huge estate to your heirs?
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Oct 20, 2017 04:22
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waloo posted:So I guess it's probably a matter of gift or estate tax implications, so, uh, hopefully when you changed it to your kid it didn't have enough in it to merit any special tax treatment then, and bear it in mind in case later you want to distribute some huge estate to your heirs? Thankfully I am extremely unlikely to hit the exemption limit. 
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Oct 20, 2017 04:33
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Xenoborg posted:I'd love to have it invested along with my other taxable stuff. Paying for ST gains isn't bad because its still a gain. The case of a loss is less good, but I'd just sell more to get the full amount needed out. Could also just sell other LT shares than the ones there were saved for the IRA. If you already have taxable investments anyway, why not just put the funds in that and pull out your IRA contribution every Jan 1?
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Oct 20, 2017 15:03
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Neon Belly posted:If you already have taxable investments anyway, why not just put the funds in that and pull out your IRA contribution every Jan 1? That is what I've been leaning to after thing about it some more. Is there any reason to to? Investments may lose value and all, but if its retirement savings anyway the long term trend will be up.
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Oct 20, 2017 15:18
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http://www.marketwatch.com/story/theres-talk-of-capping-401k-contributions-at-2400-per-year-2017-10-20?mod=gennews_twitter&link=sfmw_twquote:Proposals floating around Washington to cap the amount that Americans can contribute before taxes to 401(k) plans and individual retirement accounts are unsettling professionals in the retirement industry. This will be bad if it happens.
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Oct 20, 2017 16:32
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Holy poo poo. $2400?!? We're all hosed if this happens.
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Oct 20, 2017 16:40
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"Bad" is putting it mildly. However, the interest the retirement industry has in keeping all those fat fees they get from our 401ks should work in our favor for once, in that they are going to fight like hell to keep it from happening. I wouldn't worry too much just yet.
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Oct 20, 2017 16:44
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Isn't marketwatch total bullshit though?
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Oct 20, 2017 16:55
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I think they have a point in reducing the amount that you can contribute tax free, but clearly capping it to $2400 is too far. I believe the current cap for a 401K in 2018 will be $18,500. The max IRA contribution is $5,500. That means a married couple could in theory put away the better part of 50 grand away every year. That's great for them, but any household that can do that probably isn't middle class, and just like a lot of deductions meant to help the middle class, the rich end up benefiting way more. They could reduce it to $10 K per individual and from a percentage of the population it would hardly affect anyone. All that said, there is so much that I disagree with about what Trump is trying to do, but this wouldn't be terrible policy if done within reason. But congress has not been good at passing laws lately so no one should lose sleep over any detail yet.
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Oct 20, 2017 17:44
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Hoodwinker posted:Isn't marketwatch total bullshit though? This isn't the first time I've seen these floater articles pop up. It's likely the Republicans are seriously considering it but are leaking out these stories to gauge the reaction from the public. I seriously seriously doubt they'll attack their upper-middle class suburban base this ruthlessly just to give more money to the rich but I've been wrong as gently caress about them a ton of times. edit: I wouldn't be surprised at all if more of these articles pop up in order to anchor that number in so that when they  only lower it to $10k people won't feel so burned.edit2: Oh hey Zeta and I pulled the same number out of our asses lol PIZZA.BAT fucked around with this message at 18:14 on Oct 20, 2017 |
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Oct 20, 2017 18:11
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Zeta Taskforce posted:I think they have a point in reducing the amount that you can contribute tax free, but clearly capping it to $2400 is too far. I believe the current cap for a 401K in 2018 will be $18,500. The max IRA contribution is $5,500. That means a married couple could in theory put away the better part of 50 grand away every year. That's great for them, but any household that can do that probably isn't middle class, and just like a lot of deductions meant to help the middle class, the rich end up benefiting way more. They could reduce it to $10 K per individual and from a percentage of the population it would hardly affect anyone. I disagree with this unequivocally. It shouldn't be tied to employers, but anyone should be able to contribute over 20k per year if they have the means. 401ks were a replacement for pensions. A household that had enough income to comfortably max their 401ks would also probably lose the ability to deduct traditional IRA contributions. Retiring in this country is already difficult enough. It does *not* need to be made more difficult.
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Oct 20, 2017 18:47
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The 'magic' of flat tax is that it fucks over the poor and middle class. Today, the poor have an effective tax rate that's in the low single digit percents after their average deductions and etc... The middle class are generally in the low to mid teens. Personally, we are in the 28% bracket and last year paid 11% after all was said and done. A flat income tax at 20% and removal or reduction of most deductions or exemptions is an enourmous tax hike for 98% of the population. For the upper 2% who pay AMT it's obviously a massive tax break.
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Oct 20, 2017 18:56
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Nail Rat posted:I disagree with this unequivocally. It shouldn't be tied to employers, but anyone should be able to contribute over 20k per year if they have the means. 401ks were a replacement for pensions. Man if you think it's difficult to retire you should see how hard it is to transfer an estate. Truly no one understands the plight of the wealthy. How can anyone expect them to survive at 40%? May as well just burn it all at that point.
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Oct 20, 2017 18:56
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