|
Good-Natured Filth posted:My wife's work recently started a 403(b) for all employees. They do zero match, and it looks to be an annuity option at retirement. She may want to verify that an annuity is the only option, not just the default option.
|
#
?
Aug 23, 2018 21:04
|
|
|
|
| # ? Jun 4, 2024 15:04 |
|
|
How do people think about asset allocation when dealing with options? Suppose I've got 10k sitting in cash and there's nothing anywhere else. Ok, 100% cash. That seems easy. Suppose I then sell a european-style put on something, expiring in a lot of time, and if it doesn't end up expiring worthless could theoretically cost me the entire 10k because the underlying went to zero. Until I close this position, am I 100% cash? Presumably not. Am I 100% the underlying? Something else?
|
|
#
?
Aug 24, 2018 00:04
|
|
|
Inept posted:She may want to verify that an annuity is the only option, not just the default option. I read the plan docs, and it's the only option unfortunately. Outside of just getting the principal back as a lump sum, I guess.
|
|
#
?
Aug 24, 2018 00:06
|
|
|
waloo posted:How do people think about asset allocation when dealing with options? If you have a liability on that cash, then you're at $0.
|
|
#
?
Aug 24, 2018 00:31
|
|
|
You have assets of 10k and a debt of 10k. Net worth 0.
|
|
#
?
Aug 24, 2018 02:36
|
|
|
I'm in a good position at the moment and looking for advice: My wife and I already cap out our retirement accounts; they are in Vanguard and Fidelity target retirement accounts, both IRAs and 401ks, which we've had going for close to 25 years. We plan on continuing this but so far, so good on that front. Invest early, kids. We have nearly 9 months of expenses in our emergency fund, which is an Ally savings account. We have no credit card or other loan (student, etc.) debt, and 26 months left on a 0% 36 month car loan, which doesn't make sense to pay off early. Other than that, it's regular household bills and the mortgage. Plus whatever we spend when we want to gently caress off and travel for fun. Took a lot of years to get here but we're basically stockpiling cash at this point. To wit: I have a comfortably large sum sitting in a taxable account, all in VTSAX. Obviously the market has been good to us for many years now, my returns have been nuts, but I feel like I'm too exposed on the taxable side of investments. I have a little more 12 years left on a 15 year mortgage at 2.9% . We're planning to retire in 18, 19 years. What I'm wondering is if I should pay the house off. We have more than enough in the taxable account; we wouldn't deplete it, or need to touch retirement/emergency funds to do so. Given the changes to the tax laws in effect this year we will no longer be able to deduct mortgage interest (not that it was a lot to begin with) so my effective rate is the 2.9%. I'd like to diversify; not trying to time the market but there's no way this bull run is going to continue forever and while my retirement accounts are balanced my taxable isn't. Does paying it off make sense? Even the best CD laddering won't get me much better than 2.9%. And we'd use the increase in cash flow to fund other investments. There's a certain part of me that likes the peace of mind of just owning the house - it's a nice house, we don't plan on moving soon, and if the economy takes a poo poo in the next few years we'd be in a good position. Am I overthinking this or missing something? What investment strategy do others use to diversify?
|
|
#
?
Aug 24, 2018 20:16
|
|
|
What are your actual investment numbers for the tax-advantaged accounts, taxable account, and retirement needs? This all influences the decision. If your current savings trajectory already takes you well above what you would need for retirement (and things like social security stick around at even half their present value) then it's a not complicated decision to pay off the house: you don't need the additional investment income and can afford peace of mind. I know people like to make only a direct comparison of the interest rates, but if you're at $800k in tax-advantaged and you only need $1m in order to retire comfortably, you don't really need the extra money; the extra percent from investments vs. mortgage just increases your likelihood of success by some fractional amount.
|
|
#
?
Aug 24, 2018 20:27
|
|
|
Over 1m in tax-advantaged. Over 250k in taxable. I'm targeting 2.5m to retire comfortably; with even half our SS that would be comfortable indeed by my standards, anyway. We're a minimum of 12 years, more likely 15-17, from when we would actually retire, at least at our current pace. What I want is the peace of mind knowing that if things take a poo poo for a few years (which is as likely as not right now, but I'm old enough to remember the 70's recession and was an adult for the early 90's recession, early 00's dot-com crash, and of course the bedshitting of 2007-2008, though I wasn't exposed for the latter.) Sooner or later it's gonna happen again and I'd like to be in a good position when it does.
|
|
#
?
Aug 24, 2018 20:46
|
|
|
Ixian posted:Sooner or later it's gonna happen again and I'd like to be in a good position when it does. By this do you mean you want to reduce your equity allocation right before a market downturn? Are you worried about being in a good position for when the market goes up?
|
|
#
?
Aug 24, 2018 20:48
|
|
|
GoGoGadgetChris posted:By this do you mean you want to reduce your equity allocation right before a market downturn? No. I'm not trying to time the market. Just think I have too many eggs in VTSAX, good as it has been. If I reallocate now and it keeps going up for months/etc. I'm not going to lose sleep over it, I've long since learned not to stress over could have beens.
|
|
#
?
Aug 24, 2018 20:51
|
|
|
Frankly with those numbers I wouldn't worry about your VTSAX exposure. Presumably your tax-advantaged accounts have exposure to the total US equities market, no? Either way, I think you're probably in an okay position to do the payoff if you want, just keep in mind the gains you'll pay taxes on when you make your withdrawal.
|
|
#
?
Aug 24, 2018 21:01
|
|
|
Ixian posted:Obviously the market has been good to us for many years now, my returns have been nuts, but I feel like I'm too exposed on the taxable side of investments. What do you mean too exposed? Exposed to what? Why do you have a different risk profile for your taxable and tax deferred investments? Ixian posted:I'd like to diversify; not trying to time the market but there's no way this bull run is going to continue forever It might run forever. It might drop 50% in the next 12 months. No way to act on this knowledge. Ixian posted:while my retirement accounts are balanced my taxable isn't. What does this mean? You should be viewing your entire portfolio (taxable, 401k, IRA) as one thing and have that one thing be balanced. If you can't balance by buying and have to sell, don't sell taxable investments. Sell tax deferred investments to balance. Ixian posted:
You would sell assets and pay taxes on them so that over the next few years you can buy more assets at a higher cost basis. You would also be selling assets that likely return 7% in order to pay off 2.9% debt. Both of these things are bad. Ixian posted:
Why would you care about the economy taking a poo poo in the next few years? You aren't planning on moving, retiring, or dipping into retirement savings in the next few years. Ixian posted:
1. Pick an allocation that makes sense for your specific circumstances 2. Stay the course Ixian posted:Just think I have too many eggs in VTSAX, good as it has been. You feel over-exposed to US Equities? What is the new exposure you're seeking? International Equities? Domestic Bonds? Big picture, you are 15 years from retirement and only halfway to your retirement goals. You need to be saving a LOT between now and then, with a very high allocation to equities. I think selling anything to pay off your low mortgage rate is counter to your goals and just a sign of (baseless) fear of market downturn.
|
|
#
?
Aug 24, 2018 21:05
|
|
|
We don't know what your actual asset allocation is, but 20% in US equities is almost certainly not too high. Do you take the standard deduction, or can you deduct mortgage interest? Regardless, I wouldn't pay off the mortgage early.
|
|
#
?
Aug 24, 2018 21:06
|
|
|
My take: Only sell and payoff Mortgage if you'll sleep better at night. You'll be fine either way as you're very well set up on all fronts. One is slightly more efficient / productive than the other, but in your situation it won't make a significant impact if you choose one or the other. There is an impact for sure, but you'll be fine.
|
|
#
?
Aug 24, 2018 21:08
|
|
|
Are you current annual expenses close to $100k a year right now? Why $2.5m?
|
|
#
?
Aug 24, 2018 21:09
|
|
|
2.9% is really on the low side for wanting to pay it off, but can't blame you for wanting to accelerate payment. Rates wouldn't have to go up much to make it a dumb idea though, so keep an eye on those.
|
|
#
?
Aug 24, 2018 21:10
|
|
|
Ixian posted:No. I'm not trying to time the market. Just think I have too many eggs in VTSAX, good as it has been. If I reallocate now and it keeps going up for months/etc. I'm not going to lose sleep over it, I've long since learned not to stress over could have beens. At most I would sell taxable stuff until you hit what amounts to a target date asset allocation. Hit your mortgage with it and recast it. Keep your payments the same. There is a peace of mind value to that. Is it the spread between 2.9% (comically low cost of capital) and 7%? Only you know that. I would be hard pressed not to pay my mortgage down personally. Future me be damned. Speaking of long term planning: Make sure you have an estate plan (will, trust, advanced medical directive) and that your taxable assets are in the trust. House, savings, and taxable brokerage are the big ones. It's a few grand to setup now, and will save your heirs/spouse a mountain of headache and money down the road. H110Hawk fucked around with this message at 21:17 on Aug 24, 2018 |
|
#
?
Aug 24, 2018 21:13
|
|
|
I knew, in mulling all this over the last few weeks, that I needed a gut check from different perspectives who would also bluntly call out any idiot assumptions on my part. Who would do such a thing, I wondered? Goons of course. Thanks  You all are right, I'm not thinking of the total allocation, I had mentally divided taxable and not. My total exposure is pretty balanced and I have no current need for additional funds. And with my emergency fund I'm covered in case I do. Basically I was just staring at this growing pile of cash in my taxable Vanguard and thinking, "can I be doing something better with this?". I know, woe is me. I went through a bad period in my 20's financially (though in retrospect not nearly as bad as it could have been) and have been slightly paranoid ever since. Hoodwinker posted:Are you current annual expenses close to $100k a year right now? Why $2.5m? No. Counting everything including the mortgage they are far less than that. My definition of living comfortably in retirement means "even better" which comes out to around that amount, and also "well provided for medical issues as my wife and I age and our decrepit bodies degenerate further". I sock money away in an HSA today too.
|
|
#
?
Aug 24, 2018 22:02
|
|
|
Ixian posted:I went through a bad period in my 20's financially [stares at garage full of various incredibly depreciated assets] I know that feel bro
|
|
#
?
Aug 24, 2018 22:04
|
|
|
GoGoGadgetChris posted:[stares at garage full of various incredibly depreciated assets] I got out of the Army when I was 22. I didn't quite complete the "dumb grunt hat trick" - didn't marry a stripper or get anyone pregnant - but payday loans, selling plasma, buying stuff on store CC then having to pawn it later, I was pretty loving dumb, broke, and had bad credit. Even for a few years after - I started saving in my 401k late and did a 401k loan a couple times. Yes, I know. Been many years and a lot smarter than I used to be. Also the Army meant I have never had to carry a student loan (I also went to a decent but cheap public school) so in the long run it worked out but at the time....man, the stupid poo poo I bought. And did.
|
|
#
?
Aug 24, 2018 22:15
|
|
|
Ixian posted:No. Counting everything including the mortgage they are far less than that. My definition of living comfortably in retirement means "even better" which comes out to around that amount, and also "well provided for medical issues as my wife and I age and our decrepit bodies degenerate further". I sock money away in an HSA today too. It's not ideal to plan a far off retirement using today's support systems, but it's not totally necessary to plan for armageddon either. Hopefully SS is still around in some fashion, because it has effectively doubled their retirement assets. Hint to people closer to retirement: social security is a bond annuity that you can calculate the asset value of as (monthly_payout * 12 * 25). Hoodwinker fucked around with this message at 22:22 on Aug 24, 2018 |
|
#
?
Aug 24, 2018 22:20
|
|
|
My dad retired after 20 years in the army National Guard, plus a city pension, a county pension and a state pension. Even with 6 kids he and my mom socked away so much money he recently told me that they have so much money now they don’t know what to do with it. They live like paupers though, in a small house they bought in 1989, and have 3 beater cars but have recently begun to travel more, so I’m happy for them. The military can be GWM for some if they’re smart.
|
|
#
?
Aug 25, 2018 03:16
|
|
|
There's nothing stopping you from striking a balance on your path forward. How do any of these options sound as suggestions:
Or variations on the theme. I know once you get into this "debtless" mindset, it's very hard to shake the feeling that the mortgage is a pendulum swinging above you, even when your investments are outperforming it. I did a very non-optimal thing and did two large sales of taxable investments to put as lump sums toward my <4% mortgage over the last couple years, and now I really do sleep better even though my overall potential net worth suffered. And I'm much younger so the hit I took is worse considering the next several decades of compounding. But if I lost my job tomorrow I'd panic less than the next guy, and my cash emergency fund doesn't need to be as large anymore. Now my excess cash flow is going about 85% back toward replenishing my taxable and 15% to fun travel/hobby/pet things or home improvement projects. So obviously I'm being non-optimal on the replenishment side as well. But since I'm still maxing my tax averaged retirement accounts and adding to my taxable investments at a decent pace (albeit slightly slowed), I'm loosening up a little more and sweating my exact financial efficiency/fitness a little less. I suspect the same would be for you regardless of what you do with the mortgage.
|
|
#
?
Aug 25, 2018 14:27
|
|
|
Fidelity "upgraded" their full view service recently so it is now complete garbage that doesn't work at all. I have used Mint in the past but also found it to be pretty terrible, does anyone have any recommendations? I have read good things about Quicken but I have no other ideas. All I'm actually looking for is a simple screen that shows me the total account value of each account so that I can check every day to see if any money is missing, but maybe it's just time to give up on anything like Mint because computer people nowadays aren't capable of tasks like that.
|
|
#
?
Aug 27, 2018 15:45
|
|
|
I like personal capital. It does a lot better job of tracking my investments than mint ever did and even gives you your overall expense ratios, allocations, and quite a few useful tools. A lot lower maintenance to use than mint too in my experience with a cleaner app and website. The one disclaimer I have about it is the way they make money is getting people to use their financial planners or other services. They will call you soon after you sign up and try to sell you on it. If you're very direct that you're not interested whatsoever and won't be in the future (don't call again), they'll leave you alone. Or at least they've never called me a second time.
|
|
#
?
Aug 27, 2018 16:11
|
|
|
If you have the inclination, creating your own spreadsheets that you can tweak and track more granular data on are eminently doable. I created a google form that I dump my account values into and it propagates all of that down through my spreadsheets into the relevant cells. It's more work, but I don't have to deal with Mint yelling at me that it can't update an account because it got a 500 error and it's a pile of rancid dicks or - similarly - it double counts an account and then my historical net worth shows an erroneous spike somewhere randomly forever. I plug my data into the form once every week or two.
|
|
#
?
Aug 27, 2018 16:41
|
|
|
Certain actions trigger their calls too. Like I think whenever you run a retirement check-up they'll call. It's pretty straightforward and tbh I feel kind of bad getting such a nice app for free. I don't want their management service but I'd throw a few bucks at them for the tools. I'm guessing they have some other ways to monetize so maybe in a few years there will be a scandal around their use of people's data.
|
|
#
?
Aug 27, 2018 16:42
|
|
|
Droo posted:Fidelity "upgraded" their full view service recently so it is now complete garbage that doesn't work at all. I have used Mint in the past but also found it to be pretty terrible, does anyone have any recommendations? I have read good things about Quicken but I have no other ideas.  So far the only thing not working for me is Capital One 360 which is ironic given that's the one company who offers an API for this stuff. (And has since I signed up in 2005.) I found it easier to delete everything rather than play "link account" roulette. I could even add my spouses Fidelity account, which is new. (This let's me see her company retirement account. I can already see her IRA's directly in mine.)It's definitely a traditional bank "upgrade" where half the features are just missing, another 25% are broken or misleading, and the baseline landing page technically renders. I'm looking at you Capital One 360 and your new website of shame. Way to be slower AND have way fewer features.
|
|
#
?
Aug 27, 2018 17:24
|
|
|
Basically, the one thing I'm still paranoid about it giving one company access to all my financials. Who I bank with, what my total income is, what my assets and retirement savings are and etc... Even assuming their protections are sufficient that no disgruntled employee is going to empty my accounts one day it's just too on the nose.
|
|
#
?
Aug 27, 2018 18:39
|
|
|
Are we calling the CEOs "disgruntled employees" now? Also I wouldn't be surprised if all the companies have that info about what other companies you have accounts with, what your income is, what you buy, etc. That stuff is generally compiled and sold by marketing companies that the banks already use to target mail you new offers.
|
|
#
?
Aug 27, 2018 18:59
|
|
|
I work for a FinTech company, we do.
|
|
#
?
Aug 27, 2018 19:08
|
|
|
Does anyone have experience with cashing out a 529 prior to rolling it over? Vanguard customer service are being annoying and unhelpful, since my financial advisor set them up in my wife’s name despite it being a joint account and my having sent in transfer paperwork she filled out. I’m inclined to just cash them out and reinvest in two months, but Vanguard cautions of a need for more paperwork which given my experience so far is worrisome.
|
|
#
?
Aug 27, 2018 21:28
|
|
|
Droo posted:Fidelity "upgraded" their full view service recently so it is now complete garbage that doesn't work at all. I have used Mint in the past but also found it to be pretty terrible, does anyone have any recommendations? I have read good things about Quicken but I have no other ideas. What issue are you having with the upgraded full view? It seems like a substantial improvement. I can finally delete my savings account that was showing up 3 times on it.
|
|
#
?
Aug 27, 2018 22:19
|
|
|
Harry posted:What issue are you having with the upgraded full view? It seems like a substantial improvement. I can finally delete my savings account that was showing up 3 times on it. The first account I tried to add wasn't even in the list, the second account was an option but failed to work. Both of these accounts worked fine before. I didn't bother trying any more. The layout is made bigger and dumber for people who use tablets - less information, giant font with hilariously sized graphics. Accounts are hard-grouped and the groups appeared to be collapsed by default so I would have to expand them every time I load the page instead of just... having them expanded by default. As usual they have removed any customizable options for the pages. So as usual with any website upgrade after like 2014, giant fonts, giant useless graphics, and nothing works.
|
|
#
?
Aug 27, 2018 22:25
|
|
|
Droo posted:The first account I tried to add wasn't even in the list, the second account was an option but failed to work. Both of these accounts worked fine before. I didn't bother trying any more. It's layout is almost identical to Mint's, with no ads. The accounts are hard groups but you can change what kind of account each one is. Mine is expanded by default as well. It's pretty much far superior in every way. It's even accurately pulling my stock investments and saying what my allocation is. It's pretty much far superior in every way. I would try to link your accounts again, I had no problem with the 9 different accounts I have. Harry fucked around with this message at 23:03 on Aug 27, 2018 |
|
#
?
Aug 27, 2018 23:01
|
|
|
Harry posted:It's layout is almost identical to Mint's, with no ads. The accounts are hard groups but you can change what kind of account each one is. Mine is expanded by default as well. It's pretty much far superior in every way. It's even accurately pulling my stock investments and saying what my allocation is. It's pretty much far superior in every way. I am not quite sure how "at least 2 accounts that used to work now do not" fits into your assertion that it is far superior in every way, and since you didn't address it perhaps you didn't see that part? You seem to be taking this very personally, did you write the software personally? If so I would be happy to provide a lot more detailed feedback about why it is bad. Also, I forgot to add that the real estate function used to track something like Zillow and automatically updated the "value" of your property. Now it no longer does that and just asks you to type in a current value. So really, it was 3 out of the 3 accounts that I tried which no longer functioned.
|
|
#
?
Aug 27, 2018 23:06
|
|
|
Velius posted:Does anyone have experience with cashing out a 529 prior to rolling it over? Vanguard customer service are being annoying and unhelpful, since my financial advisor set them up in my wife’s name despite it being a joint account and my having sent in transfer paperwork she filled out. I’m inclined to just cash them out and reinvest in two months, but Vanguard cautions of a need for more paperwork which given my experience so far is worrisome. I have zero experience with 529s but I've rolled over a few retirement accounts. I don't think the rules are identical, but a quick google says they're pretty similar. ASSUMING the rules are the same: if you simply cash it out, the current company may be required to withhold the taxes. You'll see why this is lovely in a minute. So with a direct rollover, the old company will write a check directly to the new company (For Benefit Of [FBO] "your name/account # here"). Generally they'll send this directly to the new company, but even if one of the companies is low-tech and you have to physically handle the check, you can't do squat with it because it's not made out to you. Therefore, there's a guarantee that you aren't using the money inappropriately. However, if you just cash it out with the intent of re-depositing it somewhere, that's an indirect rollover. The old company will write the check directly to YOU, and honestly you can do whatever the hell you want with it. But, since there's no guarantee that it's being used properly, they have no choice but to treat this as a unqualified distribution. Therefore, the IRS will probably require them to withhold the appropriate taxes. Why this is lovely: So what this means is that the old company sends the taxes to the IRS, and then they send you a check for the remainder. However, you need to send the NEW company a check for ALL the money, including the taxes that the IRS is holding on to. So this means you are paying the taxes out of pocket in the short term. I don't know if you can get the IRS to cough it up sooner by proving you funded the new account as required, or if you have to wait until you do your taxes next year. Also, you'll only have like 60 days or something to deposit it in to a new 529 account. Even if you can make up the cash to fully fund the new account, if you wait 61 days to do it then the IRS will consider it an unqualified distribution and it's game over. You lose all the taxes and also pay the penalties. So cashing it out is a hassle and will tie up a pile of cash for a while. Your best bet is to follow the new and old company's instructions and make sure they do all the proper paperwork. Basically you need to work with the new company (not sure if Vanguard is the old or the new company?) and make them tell you how to do it. Then you need to work with the OLD company and tell them what the new company wants. You'll fill out some forms, then generally they'll work together and move the money on your behalf. Worst case, the old company sends you a check (made out to the new company) and you have to mail it to the new company yourself. This is a very routine process so it really shouldn't be a big deal, but there will be some paperwork involved.
|
|
#
?
Aug 28, 2018 14:32
|
|
|
Velius posted:Does anyone have experience with cashing out a 529 prior to rolling it over? Vanguard customer service are being annoying and unhelpful, since my financial advisor set them up in my wife’s name despite it being a joint account and my having sent in transfer paperwork she filled out. I’m inclined to just cash them out and reinvest in two months, but Vanguard cautions of a need for more paperwork which given my experience so far is worrisome. Are you (the not wife) trying to do this? Why not do it all as your wife? What specifically are they rebuking you on? Make the destination account in your wife's name, roll it over as your wife, then amend the destination account to be joint.
|
|
#
?
Aug 28, 2018 15:11
|
|
|
H110Hawk posted:Are you (the not wife) trying to do this? Why not do it all as your wife? What specifically are they rebuking you on? Make the destination account in your wife's name, roll it over as your wife, then amend the destination account to be joint. The trouble is my wife is utterly disinterested in doing this stuff - and when I talk to Vanguard customer service I’m explicit about not being her. For 529s it’s worse since they don’t directly run it, it’s via some third party, so their support weren’t even able to tell me if the paperwork had actually arrived yet, much less if they’ve had any issues. Unfortunately American Funds doesn’t seem to have their own paperwork to initiate a rollover to elsewhere (I wonder why) so I wanted to evaluate the option of just cashing out and writing a check, since it would be much more straightforward to do. It’s just also much less straightforward to document for the IRS. I’ll try and get my wife to call sometime, but it’s like pulling teeth.
|
|
#
?
Aug 28, 2018 15:28
|
|
|
|
| # ? Jun 4, 2024 15:04 |
|
|
529s are like IRAs - there is no joint form of this account type.
|
|
#
?
Aug 28, 2018 15:30
|
|
