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No, I put non-emergency in VFIAX. I have >6mo expenses in an Ally HYSA. That’s emergency. My current taxable brokerage has about $56k in VFIAX, if it shouldn’t be in the 2055 target date fund, maybe I’ll keep the stock money in Ally and save up for a house. Or I’ll review where to put it once I finish the book. Pollyanna fucked around with this message at 22:47 on Mar 2, 2020 |
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Mar 2, 2020 22:38
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Hey guys I was thinking I should buy now while the market is dow... oh wait, never mind [backs out of thread] Serious note, my friend who does my estate planning was saying I should go with pre-tax 401k first to lower my taxable income but I thought the order was Roth 401k first? I’ve been contributing to the Roth since they made it available a few years ago. Mixed the percentages at first, now putting 15% toward in the Roth. I’ve got about $420k in my pre-tax and $90k in the Roth. My wife does not have a Roth option and she has about $520k in her pre-tax.
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Mar 2, 2020 22:48
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Ah, my bad. Glad to be wrong, in that instance. Putting your stock money in Ally to save for a house isn't a bad idea, if a house is what you want. Other options could include putting it into your taxable brokerage in the form of more VFIAX or into an international stock index fund to complement your existing U.S. fund. Most people would recommend VTIAX but I have a bias against emerging markets so I use Vanguard's developed-markets fund, VTMGX (technically I use its ETF equivalent, VEA, but same thing).
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Mar 2, 2020 22:49
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tomapot posted:Hey guys I was thinking I should buy now while the market is dow... oh wait, never mind [backs out of thread] Pre-tax 401k is likely to be the better choice unless tax rates do really, really weird things going forward. You're dodging taxes now and paying them later, and you should reasonably be able to expect that the tax rate for your income bracket when you're withdrawing from your 401k will be lower than it is now. If the limit for deducting IRA contributions didn't exist, then people would likely say the same thing about your IRA, but they do and therefore typically a Roth IRA is recommended even if you're able to make traditional IRA contributions, just to avoid messing up the backdoor option later. quote:I’ve got about $420k in my pre-tax 
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Mar 2, 2020 22:54
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tomapot posted:Hey guys I was thinking I should buy now while the market is dow... oh wait, never mind [backs out of thread] Roth is a type of 401k or IRA, but colloquially refers to the Roth IRA. The order is usually regular 401k to the match, then Roth IRA, then regular 401k to cap, followed by Roth 401k to the cap. Someone else in the thread should probably confirm this though. Roth 401k is part of the backdoor roth (IRA) process though.
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Mar 2, 2020 22:56
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Kylaer posted:Pre-tax 401k is likely to be the better choice unless tax rates do really, really weird things going forward. You're dodging taxes now and paying them later, and you should reasonably be able to expect that the tax rate
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Mar 2, 2020 22:59
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Save what you can where you can worry about taxes later. I am really glad I set my order to Limit because I can't seem to cancel it.
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Mar 2, 2020 23:03
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moana posted:We are at historically low tax rates now, assuming your retirement rate to be lower is not a gimme by any means although this dude probably is at a high marginal rate given his savings. Whats your marginal rate, dude? And a Roth is a better thing to inherit if that's something under consideration. Marginal rate is 25%
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Mar 2, 2020 23:28
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dexter6 posted:I would like to start giving money to my nieces and nephews (currently age 3, 5, 7 & 9), on a monthly basis, invested in VTSAX. I want them to take over the account when they each turn 21, hopefully with a balance of $10k. Then I can talk to them about how much money I invested, how much it grew, and the value of saving, and compounded interest, etc. Why not 529s for them?
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Mar 2, 2020 23:29
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Kylaer posted:Ah, my bad. Glad to be wrong, in that instance. Sounds good. Lemme finish the book and think about goals before putting it in Vanguard.
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Mar 2, 2020 23:37
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Pollyanna posted:Sounds good. Lemme finish the book and think about goals before putting it in Vanguard. When people say that using a target date fund is not optimal for a taxable brokerage account, they do not mean "therefore you can't invest it in index funds." Only that you should use the component index funds that make up the target date fund, rather than the target date fund itself. You will pay slightly less taxes that way, because the target date fund's requirement of shifting money between the underlying component index funds annually creates a taxable transaction that you'll have to pay tax on. So your choice is not "cash, or VFIAX", it's "Cash, or <more tax-efficient index funds>". Or indeed something even less risky for shorter-term savings for like a house or whatever, like CDs.
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Mar 2, 2020 23:42
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The best thing for nieces and nephews is to wait until they make a Good Life Decision (i.e. have put together a deposit for a mortage, are moving across the country to take up a good job) and then surprise them by either making life significantly easier at that moment or by providing them a foundation to save further on. They can only learn the value of saving by doing it themselves. Getting handed a large sum of money all at once for nothing is the exact opposite of that. Or you can play a game where every birthday they get to pick a stock and you buy $10 of it and you track it every year and then at 18 they get it and 'oh by the way I also invested a real portfolio for you along the way'.
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Mar 2, 2020 23:43
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Alchenar posted:Or you can play a game where every birthday they get to pick a stock and you buy $10 of it and you track it every year and then at 18 they get it and 'oh by the way I also invested a real portfolio for you along the way'. Don't do this game, though. There's a non-zero chance their picks actually outperform your index, and then they'll have learned exactly the wrong lesson.
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Mar 2, 2020 23:46
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My wife just discovered that when she went to max out her 403b contribution several years ago, it ended up set to 0 instead. She never noticed because her employer makes some level of non-match contributions. So yeah, it's been a great day! Is there anything she can do to still contribute for 2019 at least?
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Mar 2, 2020 23:49
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Just give them 4pillars  Speaking of, quote:Finally, in struts Trump Casinos. Phew! For the risk of lending this group my money, I’ll have to charge 12.5%, which means that The Donald’s perpetual $100 payment is worth only an $800 ($100/0.125) loan.  written in 2002 you sayLeperflesh posted:When people say that using a target date fund is not optimal for a taxable brokerage account, they do not mean "therefore you can't invest it in index funds." Only that you should use the component index funds that make up the target date fund, rather than the target date fund itself. You will pay slightly less taxes that way, because the target date fund's requirement of shifting money between the underlying component index funds annually creates a taxable transaction that you'll have to pay tax on. Yeah, I get that - it’s the potential house or other large purchase question, really, plus the fact that I’m not 100% what I want to do with it yet.
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Mar 2, 2020 23:50
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runawayturtles posted:My wife just discovered that when she went to max out her 403b contribution several years ago, it ended up set to 0 instead. She never noticed because her employer makes some level of non-match contributions. So yeah, it's been a great day! probably not, no. unlike IRAs most companies only let you contribute during the calendar year edit: she should ask anyway but i am trying to calibrate your expectations KYOON GRIFFEY JR fucked around with this message at 00:10 on Mar 3, 2020 |
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Mar 3, 2020 00:07
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Leperflesh posted:Don't do this game, though. There's a non-zero chance their picks actually outperform your index, and then they'll have learned exactly the wrong lesson. Oh gosh yes this.
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Mar 3, 2020 00:25
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Posting on behalf of my parents. Apparently most of their money is in a whole life insurance policy with Guardian, and I don't know nearly enough about whole life insurance to know if this bad, but I don't think it's optimal. Their rationale is that it's relatively well protected and accruing decent interest, and it very well may be, but I've dealt with their harebrained schemes enough to know when something smells. Is whole life insurance as a retirement vehicle a legit tactic, or some sorta fad?
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Mar 3, 2020 00:37
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moana posted:We are at historically low tax rates now, assuming your retirement rate to be lower is not a gimme by any means although this dude probably is at a high marginal rate given his savings. Whats your marginal rate, dude? And a Roth is a better thing to inherit if that's something under consideration. Tax rates in general are probably going to be higher in the future, but most people have less ordinary income in retirement. I don't think there's a universal right answer to the traditional vs Roth IRA question. Pollyanna posted:Posting on behalf of my parents. Apparently most of their money is in a whole life insurance policy with Guardian, and I don't know nearly enough about whole life insurance to know if this bad, but I don't think it's optimal. Their rationale is that it's relatively well protected and accruing decent interest, and it very well may be, but I've dealt with their harebrained schemes enough to know when something smells. Is whole life insurance as a retirement vehicle a legit tactic, or some sorta fad? They are almost certainly paying more in fees than they would be if they had term life insurance and a regular investment account. The investment account can be loaded with fixed income instruments if they want more stable returns. Other than some specific inheritance tax avoidance scenarios, whole life is mostly about putting money in brokers' and advisors' pockets. AreWeDrunkYet fucked around with this message at 00:40 on Mar 3, 2020 |
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Mar 3, 2020 00:37
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Leperflesh posted:When people say that using a target date fund is not optimal for a taxable brokerage account, they do not mean "therefore you can't invest it in index funds." Only that you should use the component index funds that make up the target date fund, rather than the target date fund itself. You will pay slightly less taxes that way, because the target date fund's requirement of shifting money between the underlying component index funds annually creates a taxable transaction that you'll have to pay tax on. I feel like the more I talk to people, the more I realize the optimal thing is a target date fund for everything, because the alternative is actually picking the stocks that make their favorite things. And selling at random times.
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Mar 3, 2020 00:40
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Residency Evil posted:I feel like the more I talk to people, the more I realize the optimal thing is a target date fund for everything, because the alternative is actually picking the stocks that make their favorite things. And selling at random times. I may or may not have bought a couple shares of NTDOY for that exact reason, minus the selling part  It's really just an adult Amiibo, when you think about it.
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Mar 3, 2020 00:41
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Residency Evil posted:I feel like the more I talk to people, the more I realize the optimal thing is a target date fund for everything, because the alternative is actually picking the stocks that make their favorite things. And selling at random times. No he's saying that there is an alternative between those two, being the funds that make up the target date fund (us total, us bonds, intl total, intl bonds)
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Mar 3, 2020 00:46
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Pollyanna posted:Posting on behalf of my parents. Apparently most of their money is in a whole life insurance policy with Guardian, and I don't know nearly enough about whole life insurance to know if this bad, but I don't think it's optimal. Their rationale is that it's relatively well protected and accruing decent interest, and it very well may be, but I've dealt with their harebrained schemes enough to know when something smells. Is whole life insurance as a retirement vehicle a legit tactic, or some sorta fad? based on what you've told us of your parents money habits this is not too horrible and is certainly better than their other stupid real estate plan and their other stupid stock picking failures
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Mar 3, 2020 00:57
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The Big Jesus posted:No he's saying that there is an alternative between those two, being the funds that make up the target date fund (us total, us bonds, intl total, intl bonds) No I get that, but I don’t think that’s really practical for most people. Which is why pensions should be a thing. Or pay me 1%!
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Mar 3, 2020 01:19
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Residency Evil posted:Or pay me 1%! Wrong way around Mr. 1%.  Edit: Blanket statements about what will and will not ruin children are about as useful as flipping a coin to know. As they grow up you will get a feel for which ones are going to do well and which are going to blow it all. All you can do is hope and adjust and hopefully guide them along the way through good life choices and being transparent about money.
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Mar 3, 2020 01:25
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It is possible to lever up on the S&P effectively, not using the leveraged ETFs that don't work for time scales much longer than a day, but using multi-year-expiry-period, deep-in-the-money call options, known as LEAPs, on SPY*. When the option is sufficiently deep in the money, the premium that you pay for optionality becomes negligible, and the remaining premium comprises an implied interest rate, since it is leverage. (It also includes the market-maker's spread, which for this purpose can be lumped in as part of the implied interest rate.) But too deep in the money, and the lack of liquidity makes for too big of a spread. SPY LEAPs tend to have a sweet spot where the implied interest rate is around 4%, which is a lot more reasonable than margin rates (and terms!). (It's probably a bit more right now with the frothy market, I'd guess maybe around 6%. (I can't check now because the market is closed.)) When I was reading about this a few months ago, the sweet spot was around the strike price of $200, and SPY was at around $320**, so the leverage was $320/(320 − 200) = 320/120 = 2.666. You can read about someone levering up and getting wiped out in 2008 at https://www.bogleheads.org/forum/viewtopic.php?t=5934 *SPY is a S&P 500 index fund ETF that, unlike Vanguard ETFs, happens to have market makers for LEAPs. SPY is the new symbol for what used to be SPDR. **SPY tracks the index at a 1/10 price ratio, so the index was at around $3200.
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Mar 3, 2020 01:57
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Wow, people who panicked ("revised their risk tolerance" or whatever) and sold last week officially missed out on the largest single day gain in history? That's brutal. The last 10 days have been an exceptional learning opportunity for newbie investors.
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Mar 3, 2020 02:04
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Residency Evil posted:No I get that, but I don’t think that’s really practical for most people. Which is why pensions should be a thing. I think it is actually reasonably practical. We ought to be teaching this poo poo in high school, it's really not any more challenging than the standard stuff that already gets taught in school; hell, I'm pretty sure an average 12 year old can understand this stuff given a couple of days of teaching. That said, yes, pensions should be a thing... although to some degree, social security is supposed to be there so that people don't have to rely on a pension from one employer where they worked their whole career.
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Mar 3, 2020 02:04
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GoGoGadgetChris posted:Wow, people who panicked ("revised their risk tolerance" or whatever) and sold last week officially missed out on the largest single day gain in history? That's brutal. Ayo it's ya boi whose purchase of $10k in VTSAX went through end of day Friday checking in. Timing the market owns!!!
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Mar 3, 2020 02:10
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The Big Jesus posted:Ayo it's ya boi whose purchase of $10k in VTSAX went through end of day Friday checking in. How much should I expect to pay for access to future investing advice?
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Mar 3, 2020 02:13
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Pollyanna posted:Posting on behalf of my parents. Apparently most of their money is in a whole life insurance policy with Guardian, and I don't know nearly enough about whole life insurance to know if this bad, but I don't think it's optimal. IT'S BAD. The only person who ever benefits from whole-life insurance is the person selling it.
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Mar 3, 2020 02:42
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The Big Jesus posted:Ayo it's ya boi whose purchase of $10k in VTSAX went through end of day Friday checking in. Friday was payday and my VTI/VEA purchases in my taxable brokerage went through but my 401k contribution still hasn't become visible yet and I think I missed the gains 
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Mar 3, 2020 02:45
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I tried to shut off my mega backdoor Roth contributions because I need the extra $700 while we stabilize after this housing purchase but it didn't shut off for this last paycheck and honestly I'm kind of glad.
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Mar 3, 2020 03:30
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Kylaer posted:IT'S BAD. There are situations where whole life policies make sense for inheritance tax avoidance. But anything like that should be run by a financial planner and tax attorney before you even start talking to insurance brokers.
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Mar 3, 2020 03:54
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crazypeltast52 posted:Roth is a type of 401k or IRA, but colloquially refers to the Roth IRA. The order is usually regular 401k to the match, then Roth IRA, then regular 401k to cap, followed by Roth 401k to the cap. Someone else in the thread should probably confirm this though.
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Mar 3, 2020 04:41
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This post of mine is linked in the OP but it'd be really easy to miss, so here it is again, it's been a few hundred pages so why not?Leperflesh posted:Here's the thing. Everyone is guaranteed to die. Imagine you're an insurance company. Why would you want to sell an insurance policy that 100% of your policy holders will end up making claims against?
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Mar 3, 2020 05:18
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The Big Jesus posted:Ayo it's ya boi whose purchase of $10k in VTSAX went through end of day Friday checking in. I was totally thinking of putting more than the $500 I put into my new Roth because of the slump but I knew throwing all the money I just saved into a long term account was a boneheaded move when I don't have a ton of savings so I'm sticking to the plan and not timing the market, damnit.
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Mar 3, 2020 05:26
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Leperflesh posted:This post of mine is linked in the OP but it'd be really easy to miss, so here it is again, it's been a few hundred pages so why not? I feel like a broken record here, but if your estate will deal with inheritance taxes there may be a role for whole life insurance in your portfolio.
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Mar 3, 2020 06:36
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AreWeDrunkYet posted:I feel like a broken record here, but if your estate will deal with inheritance taxes there may be a role for whole life insurance in your portfolio. *disregard my last post I have no idea what I'm talking about* AreWeDrunkYet posted:Whole life may have some benefits for estate tax avoidance if you've got a few million in assets you didn't mention, but thats a conversation to have with an accountant and tax lawyer, not an insurance salesman. (USER WAS PUT ON PROBATION FOR THIS POST)
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Mar 3, 2020 06:57
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zaurg posted:*disregard my last post I have no idea what I'm talking about* Shut the gently caress up and stick to proving that in your own thread.
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Mar 3, 2020 09:09
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