Long Term Investing & Retirement: The second best time is now

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Long Term Investing & Retirement: The second best time is now

«‹›1211 »

H110Hawk: Dec 28, 2006

acidx posted:

401k varies from plan to plan.

It's shocking how much plans vary. Basically we can speak in general terms to the rules and regulations in place, and common features of various plans from various providers, but ultimately you MUST check your plan documents to see what they actually offer.

Thankfully Fidelity (and I presume Vanguard) seem to be trying to fit their plans into "model" language, but you're always going to have companies who insist on being difficult/behind the times. Or companies like Amazon, Disney, etc who have obscene amounts of money held in their plans who can basically dictate the terms. Thankfully that tends to work out well for the employees. Whomever landed the Amazon migration from Vanguard likely got "retire yesterday onto their new mega-yacht" money.

(For example, the Disney Savings Plan Master Trust has $7,611,604,334 in net assets as of Dec 31, 2018. I didn't look closely enough to see how much of that is Disney stock itself.)

# ? Mar 25, 2020 22:56

Adbot: ADBOT LOVES YOU

# ? May 29, 2024 19:23

crazypeltast52: May 5, 2010

Animal posted:

Check with your Benefits manager. My company uses Fidelity. I make a conservative guesstimate of what I�ll make for the year, and adjust the % accordingly. Contributions stop automatically when I hit the maximum, and the next year my company will True Up.

We are with Fidelity too and this is how we do it. Still waiting for mine but I don�t mind the delay as much now.

When we were with Bank of America they did it per check so you didn�t have to wait until the true-up.

# ? Mar 25, 2020 23:11

literally this big: Jan 10, 2007; Here comes
the Squirtle Squad!

So M1 just made two changes to their system in order to reduce costs on themselves, and one of them might just get me to transfer everything out.

The first, reasonably enough, is that they've raised their minimum buy amount from 1¢ to $1. Apparently >$1 buys we're 25% of their total buy orders. This seems totally reasonable, and I'd even be all for them raising it higher to $5 or so.

But the second is that they've raised the minimum amount for their auto-investing feature from $10 to $25, which is probably going to mess with a lot of people's investing strategies. I'm pretty sure they're doing it to have more cash for themselves, as it means you need to accrue 2.5x more cash in your zero-interest cash account before it gets invested for you.

It's a bummer because I invested some money with them in January, and I specifically set up a portfolio that used their auto-invest feature to automatically re-balance with and DCA ~$18 of dividends into the market consistently on a monthly basis. Now, with this policy change, I'll have to wait an extra month for my dividends to hit $25 and actually get invested, instead of immediately being auto-invested every month. At that point, it'd actually just be faster and easier for me to transfer to / self-manage with Vanguard. It's like they took their main feature, the convenience of automation, and actually made it less convenient for their customers in order to cut down on their costs. It seems like a poor way to raise cash.

It's a rather specific complaint, but I can't be the only person who was planning / investing around their auto-invest limit being $10. For them to just raise that minimum like that feels like a big gently caress you to their smaller customers, plus it doesn't even make business sense to me. Why do something that would make your convenient investing app *less* convenient? In this case, they've actually made their app less appealing than just self-managing.

literally this big fucked around with this message at 23:34 on Mar 25, 2020

# ? Mar 25, 2020 23:31

KS: Jun 10, 2003; Outrageous Lumpwad

MJP posted:

I've already got something like $78k+ in the trad (at least before stonks tanked, I have been avoiding Personal Capital for sanity lately). I'm converting it over at $5k/year to not have a giant amount of taxes to pay on it, at my accountant's advice.

If you're eligible for a 401k see if it allows reverse rollovers -- about half do. You can just dump the trad IRA into the 401k, wait a cal year, and start doing the backdoor roth.

# ? Mar 25, 2020 23:51

pmchem: Jan 22, 2010

https://twitter.com/HedgeyeDDale/status/1242978725567909889

# ? Mar 26, 2020 02:18

GoGoGadgetChris: Mar 18, 2010; i powder a
granite monument
in a soundless flash

showering the grass
with molten drops of
its gold inlay

sending smoking
chips of stone
skipping into the fog

Lollllllll, thank you for the much needed laugh

# ? Mar 26, 2020 02:24

Pollyanna: Mar 5, 2005; Milk's on them.

My mother is still beating the "real estate investment is the best investment" drum, and is telling me to read a book on real estate investment. The reasons I don't want to invest in real estate (i.e. not REITs) is threefold:

1. A single piece of real estate concentrates all your wealth into one asset, and if it goes up in flames, so does all your money
2. Real estate takes upkeep and maintenance, and is ultimately a drain on your savings
3. The big reason she's recommending it, that it's "passive income", literally means playing slumlord - and I'm not going to do that

I have no intention of bothering to try and learn how to use real estate as a long-term investment. I need to figure out a way to deprogram her from getting caught up in this real estate bullshit, because if I don't stop her, they're gonna put our inheritances in like a loving dingy apartment building or some garbage. :sigh:

# ? Mar 26, 2020 02:34

Duckman2008: Jan 6, 2010; TFW you see Flyers goaltending.; Grimey Drawer

Pollyanna posted:

My mother is still beating the "real estate investment is the best investment" drum, and is telling me to read a book on real estate investment. The reasons I don't want to invest in real estate (i.e. not REITs) is threefold:

1. A single piece of real estate concentrates all your wealth into one asset, and if it goes up in flames, so does all your money
2. Real estate takes upkeep and maintenance, and is ultimately a drain on your savings
3. The big reason she's recommending it, that it's "passive income", literally means playing slumlord - and I'm not going to do that

I have no intention of bothering to try and learn how to use real estate as a long-term investment. I need to figure out a way to deprogram her from getting caught up in this real estate bullshit, because if I don't stop her, they're gonna put our inheritances in like a loving dingy apartment building or some garbage.

Just here to say points 1 and 2 is why I currently rent , have always rented, and plan on continuing to rent.

Nothing wrong with owning a home, but it isn�t a must do. It�s a life style choice , if you want to own, go for it. But it is def not the end all be all of retirement.

# ? Mar 26, 2020 03:00

FateFree: Nov 14, 2003

These past few weeks have killed any possible chance of me ever renting out property to people.

# ? Mar 26, 2020 04:01

Pollyanna: Mar 5, 2005; Milk's on them.

FateFree posted:

These past few weeks have killed any possible chance of me ever renting out property to people.

Just to confirm, is that due to the fact that a lot of people are now out of a job/unable to pay rent? Are there other factors at work?

# ? Mar 26, 2020 04:18

80k: Jul 3, 2004; careful!

literally this big posted:

So M1 just made two changes to their system in order to reduce costs on themselves, and one of them might just get me to transfer everything out.

The first, reasonably enough, is that they've raised their minimum buy amount from 1¢ to $1. Apparently >$1 buys we're 25% of their total buy orders. This seems totally reasonable, and I'd even be all for them raising it higher to $5 or so.

But the second is that they've raised the minimum amount for their auto-investing feature from $10 to $25, which is probably going to mess with a lot of people's investing strategies. I'm pretty sure they're doing it to have more cash for themselves, as it means you need to accrue 2.5x more cash in your zero-interest cash account before it gets invested for you.

It's a bummer because I invested some money with them in January, and I specifically set up a portfolio that used their auto-invest feature to automatically re-balance with and DCA ~$18 of dividends into the market consistently on a monthly basis. Now, with this policy change, I'll have to wait an extra month for my dividends to hit $25 and actually get invested, instead of immediately being auto-invested every month. At that point, it'd actually just be faster and easier for me to transfer to / self-manage with Vanguard. It's like they took their main feature, the convenience of automation, and actually made it less convenient for their customers in order to cut down on their costs. It seems like a poor way to raise cash.

It's a rather specific complaint, but I can't be the only person who was planning / investing around their auto-invest limit being $10. For them to just raise that minimum like that feels like a big gently caress you to their smaller customers, plus it doesn't even make business sense to me. Why do something that would make your convenient investing app *less* convenient? In this case, they've actually made their app less appealing than just self-managing.

Dude, you're probably going to have on average $15 in the sweep account throughout the year as a result of this. Sometimes closer to $25, sometimes less. You're forgoing a, what, 7% return on that $15 every year? That's $1 a year. It's pretty amazing that M1 can provide the service that they do... just throw them the $1.

I don't use M1 myself, but it's pretty much as good a platform as I could ask for. The only reason I don't move over there is that I do not know if they will stick around or get bought out by someone else, etc.

# ? Mar 26, 2020 04:59

drainpipe: May 17, 2004; AAHHHHHHH!!!!

Pollyanna posted:

Just to confirm, is that due to the fact that a lot of people are now out of a job/unable to pay rent? Are there other factors at work?

That's kinda the big one. Troublesome tenants are another.

# ? Mar 26, 2020 13:19

jjack229: Feb 14, 2008; Articulate your needs. I'm here to listen.

pmchem posted:

https://twitter.com/HedgeyeDDale/status/1242978725567909889

My work wellness program includes modules that we can complete for $50. I took one on personal finance. It was mostly know where your money is going and develop short-term and long-term financial plans.

But there was also a section titled "How Debt Can be an Investment" and then this one:

Explore Help With Investing posted:

There's a lot to know when it comes to investing. And while anyone can learn, not everyone wants to. That's OK.

Two ways to get help:
1) Hire a financial advisor. This might make sense if you have a lot to invest, or complicated finances.
2) Buy shares of one or more mutual funds. This is a good way to diversify a smaller portfolio since each share is made up of many different investments.

Ask friends or family for recommendations.

Not explicitly saying actively managed is better, but going to a financial advisor or friends and family is probably bad for most people.

# ? Mar 26, 2020 14:35

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

KS posted:

If you're eligible for a 401k see if it allows reverse rollovers -- about half do. You can just dump the trad IRA into the 401k, wait a cal year, and start doing the backdoor roth.

My current 401k doesn't have any kind of target-date retirement funds or anything like that :-( Mix of offerings from Wellington, Prudential, a few Vanguard broad category funds, and a hodgepodge of others.

It's possible that my income will only allow a reduced Roth contribution - wouldn't that get in the way of backdooring?

# ? Mar 26, 2020 14:56

spwrozek: Sep 4, 2006; Sail when it's windy

MJP posted:

My current 401k doesn't have any kind of target-date retirement funds or anything like that :-( Mix of offerings from Wellington, Prudential, a few Vanguard broad category funds, and a hodgepodge of others.

It's possible that my income will only allow a reduced Roth contribution - wouldn't that get in the way of backdooring?

Rollovers are not contributions so nope. You could roll over $1M and still contribute $6k.

# ? Mar 26, 2020 14:58

LLCoolJD: Dec 8, 2007; Musk threatens the inorganic promotion of left-wing ideology that had been taking place on the platform

Block me for being an unironic DeSantis fan, too!

Duckman2008 posted:

Just here to say points 1 and 2 is why I currently rent , have always rented, and plan on continuing to rent.

Nothing wrong with owning a home, but it isn’t a must do. It’s a life style choice , if you want to own, go for it. But it is def not the end all be all of retirement.

I don't disagree. I think it very much depends on lifestyle, frequency of job changes, and location.

FateFree posted:

These past few weeks have killed any possible chance of me ever renting out property to people.

Same. In my case, the dividend stocks I've recently acquired at distressed prices will hopefully pay out double-digit returns in perpetuity. They're liquid and tax-friendly (for now), and don't involve the risk of bad tenants, geographical inflexibility, or maintenance/time drains. There are risks, obviously, but ones I am willing to take.

# ? Mar 26, 2020 15:14

Atahualpa: Aug 18, 2015; A lucky bird.

Sorry for the delay in responding, but I wanted to thank everyone who offered advice.

pmchem posted:

Good job on the move to G.

1 - don't forget the target date funds, if you don't want to rebalance things yourself.
2 - it depends?
3 - open a taxable vanguard brokerage account, buy something there (eventually). ask this question in the stock trading thread.

Thanks, I tend to avoid the target funds as at this point in my life I prefer to put more in the C and S funds and less in the G, F, and I funds than any of them allocate. (I'd like to have more in international stocks, but from what I've seen about the I fund it looks like there are better ways to do that than through the index the TSP uses.)

Hoodwinker posted:

1) Yes, this is ideal. Your asset allocation and investment schedule should be fixed, or at least only changing with changes in risk tolerance and not due to market conditions. You can dollar-cost average or lump sum, but either way you should bring your money back into the market at the asset allocation you've determined based on your timeline.

2) Your e-fund is crazy large. If you feel like you have good job security, you could even bring that down to 6-12 months. But that's entirely up to you. I'm personally happy to have a more robust e-fund at the moment (part of that is buying a house in the last month) but I don't think I would ever get as high as 3-4 years. Your own comfort level may be different. If you do want to reduce your e-fund, consider whether you would prefer to invest it for the long-term or if you have some shorter-term goals you'd like to hit and could put that extra money towards.

3) Taxable brokerage account, or an HSA if you have access to it. Otherwise it's just putting it into a taxable brokerage account and investing according to your asset allocation.

Okay, that's pretty much in line with what I was thinking. Thanks for the advice! Yeah, my e-fund is way larger than it needs to be. There are many reasons for that, but a major one is that I never feel like I have the time to sit down and really consider where my money is to the extent that is warranted. With everything that's going on right now, that just might change.

WithoutTheFezOn posted:

Atahualpa, there is a small detail to keep in mind whatever you decide to do. With the TSP, during any month you�re only allowed to make two interfund transfers. After that, the only transfer you can make is into the G fund.

Thank you, I was not aware of that.

# ? Mar 26, 2020 15:45

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

spwrozek posted:

Rollovers are not contributions so nope. You could roll over $1M and still contribute $6k.

Gotcha. Now the only issue is how the heck I work out my trad IRA funds into the 401k. It's all VFIFX and I'd really like to maintain something that I touch as little as possible.

I'm 37, would like to retire at 67. I don't mind never touching my 401k investment percentages until it comes time to rebalance with future contributions. I'm open to feedback on this possible mix:
70% IncomeFlex 2050
20% VEMRX
10% VFSIX

I have the following investment options in my 401k:

%jobcompanyname% Fixed Rate Fund (I couldn't find a ticker symbol but it's "stable, competitive interest rate" and all about safety of principal, so probably not what I want)
VFSIX
VIIGX
PQCNX
PGTQX
%jobcompanyname% various target date funds, all are 0.35% vs. VFIFX's .15%
DGSIX
ADGAX
PQBMX
DCCIX
VSCPX
Wellington CIF II International Opportunities Portfolio (no ticker symbol)
PQDMX
VEMRX
WEDINBU

MJP fucked around with this message at 16:30 on Mar 26, 2020

# ? Mar 26, 2020 16:20

H110Hawk: Dec 28, 2006

MJP posted:

Prudential IncomeFlex Target Balanced (there are various target date funds, all are 0.35% vs. VFIFX's .15%)

The tax benefit on the growth of the Roth funds is 15% on the upside (assuming you have a low marginal rate in retirement.) don't throw away 15% to save 0.20% in fund fees. You will need to run the math on your IRA balance to gross up the fee and make sure it doesn't hit that 15% but I doubt it will.

I'm low on coffee this morning and phone posting but slap it into a basic spreadsheet and make sure what I said makes sense for your balances.

# ? Mar 26, 2020 16:30

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

H110Hawk posted:

The tax benefit on the growth of the Roth funds is 15% on the upside (assuming you have a low marginal rate in retirement.) don't throw away 15% to save 0.20% in fund fees. You will need to run the math on your IRA balance to gross up the fee and make sure it doesn't hit that 15% but I doubt it will.

I'm low on coffee this morning and phone posting but slap it into a basic spreadsheet and make sure what I said makes sense for your balances.

You mean I stop getting tax benefits at on the Roth if I'm taxed at or below 15%?

# ? Mar 26, 2020 16:32

dexter6: Sep 22, 2003

Can someone give me the pros and cons of this approach?

I�m currently in the following 4 funds, with allocations stollen from the Vanguard Target Date Funds for my age:

code:

Vanguard Total Stock Market Index Fund Admiral Shares           (VTSAX/VTI)     53.6%
Vanguard Total International Stock Index Fund Admiral Shares    (VTIAX/VXUS)    35.9%
Vanguard Total Bond Market Index Fund Admiral Shares            (VBTLX/BND)      7.5%
Vanguard Total International Bond Index Fund Admiral Shares     (VTABX/BNDX)     3.0%

I've been wanting to simplify the rebalancing process, while still maintaining tax efficiency. Is there any reason I shouldn't adjust my 4 funds down to 2 funds:

code:

Vanguard Total World Stock Index Fund Admiral Shares              (VTWAX/VT)    89.5%
Vanguard Total World Bond ETF                                     (BNDW)        10.5%

As far as I can tell, one thing I notice is that the world fund is constantly updating the balance of US to international stock to reflect the actual make up of the world, where as my current allocation over weights the US. I think that might be a good thing? If buying the entire US stock market is good, why not buy the entire world? Also, the World Bond is only available as an ETF but not as an admiral shares fund but that's not a problem since I buy bonds in my 401k and have to buy ETFs there anyway. What else am I missing?

# ? Mar 26, 2020 17:16

H110Hawk: Dec 28, 2006

MJP posted:

You mean I stop getting tax benefits at on the Roth if I'm taxed at or below 15%?

No I just made that number up. You deposit $6k into your TradIRA post-tax. This all assumes you are beyond the Roth phaseout / Traditional deduction limit. If you backdoor that money, the 6% annual gains on it is tax free forever. That's a YourMarginalRateInRetirement% improvement over non-deductible traditional ira deposit. I assume you won't be living below the poverty line in retirement but in the regular bracket most of america is in, which I guess right now is 12%?

Say you earn 6% ($360) on that $6000. That's $43 in future-dollars taxes. Is your (401k balance + IRA rollover balance)*6%*0.20% greater than that? (It's a drag on your gains, you pay a fee in your IRA as well) Let's say you have $100k in each. (100k+100k)*0.06*0.0020 = $24. If I'm thinking this through correctly, you're "throwing away" $43-$24 ~= $19. This is today absolute dollars vs future tax dollars though, and I'm too tired to think this through further. Am I way off here?

# ? Mar 26, 2020 18:16

Happiness Commando: Feb 1, 2002; $$ joy at gunpoint $$

I accidentally timed the market :agesilaus:

About two months ago, I moved some cash in my HSA into VFIFX. I just went to look at it and it was actually in a money market fund and had appreciated by $6 instead of dropping 20+% with the rest of the market. I guess I clicked the wrong checkbox when I selected funds. So I transferred it into VFIFX

# ? Mar 26, 2020 18:32

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

H110Hawk posted:

No I just made that number up. You deposit $6k into your TradIRA post-tax. This all assumes you are beyond the Roth phaseout / Traditional deduction limit. If you backdoor that money, the 6% annual gains on it is tax free forever. That's a YourMarginalRateInRetirement% improvement over non-deductible traditional ira deposit. I assume you won't be living below the poverty line in retirement but in the regular bracket most of america is in, which I guess right now is 12%?

Say you earn 6% ($360) on that $6000. That's $43 in future-dollars taxes. Is your (401k balance + IRA rollover balance)*6%*0.20% greater than that? (It's a drag on your gains, you pay a fee in your IRA as well) Let's say you have $100k in each. (100k+100k)*0.06*0.0020 = $24. If I'm thinking this through correctly, you're "throwing away" $43-$24 ~= $19. This is today absolute dollars vs future tax dollars though, and I'm too tired to think this through further. Am I way off here?

I'm utterly lost. I thought I was supposed to be putting the trad IRA into the 401k and then next year start contributing to the Roth from the 401k?

# ? Mar 26, 2020 18:34

huhu: Feb 24, 2006

I've been paying into a stock purchase program through work since November and will continue to do so until the end of May. The money sits in a bank account until May. In May, that money will be used to buy stock. The perk we get is that we get to buy the stock price at whichever is lower - the price in November or May. Then we get a 15% discount on that price. Then the stock can be sold almost immediately - it'll probably take about a day or two to sell. I've watched the stock fluctuate up or down by about 10% each day over the past few weeks. Assuming the market continues to be this volatile - I'm guessing it's probably best to withdraw myself from this program and not gamble on the stock fluctuating wildly between the time I buy and the time I sell - even if it is only a ~2 day window?

# ? Mar 26, 2020 18:44

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

huhu posted:

I've been paying into a stock purchase program through work since November and will continue to do so until the end of May. The money sits in a bank account until May. In May, that money will be used to buy stock. The perk we get is that we get to buy the stock price at whichever is lower - the price in November or May. Then we get a 15% discount on that price. Then the stock can be sold almost immediately - it'll probably take about a day or two to sell. I've watched the stock fluctuate up or down by about 10% each day over the past few weeks. Assuming the market continues to be this volatile - I'm guessing it's probably best to withdraw myself from this program and not gamble on the stock fluctuating wildly between the time I buy and the time I sell - even if it is only a ~2 day window?

I've got an option like that at my current work but I gotta pass X time before I'm eligible, alas. I'd say buy and hold. Not to give a Time The Market example but during the 2008 crisis my financial advisor at the time recommended I buy Citibank. It was at something like $15/share. I did pretty well on it - I think I sold it at like $40ish a share, which was a few years later, when I started rolling stuff into a four-fund portfolio.

Hopefully in May we'll be doing a little better economy-wise but if not, and your company's stock is still low, you'd have a pretty good chance to get a bargain on already low prices.

# ? Mar 26, 2020 18:49

huhu: Feb 24, 2006

MJP posted:

I've got an option like that at my current work but I gotta pass X time before I'm eligible, alas. I'd say buy and hold. Not to give a Time The Market example but during the 2008 crisis my financial advisor at the time recommended I buy Citibank. It was at something like $15/share. I did pretty well on it - I think I sold it at like $40ish a share, which was a few years later, when I started rolling stuff into a four-fund portfolio.

Hopefully in May we'll be doing a little better economy-wise but if not, and your company's stock is still low, you'd have a pretty good chance to get a bargain on already low prices.

I don't think holding is an option I'd consider. All the eggs in one basket thing.

I'm trying to decide whether I should even try and get the 15% discount and gamble the stock potentially fluctuating 20% or more between the day I buy and the day I sell. Or if I should just hoard that cash into my savings account for now.

# ? Mar 26, 2020 18:58

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

huhu posted:

I don't think holding is an option I'd consider. All the eggs in one basket thing.

I'm trying to decide whether I should even try and get the 15% discount and gamble the stock potentially fluctuating 20% or more between the day I buy and the day I sell. Or if I should just hoard that cash into my savings account for now.

If that'd be your sole investment anything in your portfolio, then yeah, maybe consider just doing the May buy and sell ASAP. If you don't have your 6 months of savings, then definitely fill that first, then put it into your 401k and then the rest of the sequence.

# ? Mar 26, 2020 19:06

KYOON GRIFFEY JR: Apr 12, 2010; Runner-up, TRP Sack Race 2021/22

MJP posted:

I'm utterly lost. I thought I was supposed to be putting the trad IRA into the 401k and then next year start contributing to the Roth from the 401k?

no, what? does your company offer a Roth 401(k)? They are not very common.

you're supposed to be contributing to your trad IRA and then immediately backdooring that to a Roth IRA, assuming that you are above income limits for Roth IRA.

# ? Mar 26, 2020 19:23

withak: Jan 15, 2003; Fun Shoe

huhu posted:

I've been paying into a stock purchase program through work since November and will continue to do so until the end of May. The money sits in a bank account until May. In May, that money will be used to buy stock. The perk we get is that we get to buy the stock price at whichever is lower - the price in November or May. Then we get a 15% discount on that price. Then the stock can be sold almost immediately - it'll probably take about a day or two to sell. I've watched the stock fluctuate up or down by about 10% each day over the past few weeks. Assuming the market continues to be this volatile - I'm guessing it's probably best to withdraw myself from this program and not gamble on the stock fluctuating wildly between the time I buy and the time I sell - even if it is only a ~2 day window?

It depends on your personal risk tolerance. If you feel like it is too volatile over a 1-2 day timeframe to get the potential free money that the discount represents then cash out and sign up again when things are more stable. Don't forget you have to pay a commission on the sale regardless of what the stock does in that day or two.

withak fucked around with this message at 19:57 on Mar 26, 2020

# ? Mar 26, 2020 19:49

H110Hawk: Dec 28, 2006

MJP posted:

I'm utterly lost. I thought I was supposed to be putting the trad IRA into the 401k and then next year start contributing to the Roth from the 401k?

Let's step back. Start over.

You have a Trad 401k with some options that are fine. They're not best in the industry but they aren't any reason not to contribute to your 401k.
You have a Trad IRA balance of >$0.
You wish to save more than $19,500 a year for retirement.
You are Income limited from deducting your new Trad IRA contributions and are beyond the Roth IRA phaseout: True or False.

# ? Mar 26, 2020 19:53

MJP: Jun 17, 2007; Are you looking at me Senpai?; Grimey Drawer

H110Hawk posted:

Let's step back. Start over.

You have a Trad 401k with some options that are fine. They're not best in the industry but they aren't any reason not to contribute to your 401k.
You have a Trad IRA balance of >$0.
You wish to save more than $19,500 a year for retirement.
You are Income limited from deducting your new Trad IRA contributions and are beyond the Roth IRA phaseout: True or False.

Possibly true; my wife might get a raise this year that pushes us over the Roth limit. For now, false.

# ? Mar 26, 2020 19:59

Hoodwinker: Nov 7, 2005

MJP posted:

Possibly true; my wife might get a raise this year that pushes us over the Roth limit. For now, false.

There's no income limit on doing the backdoor Roth though. As long as you meet the conditions for doing it in the first place, it's always safe to do. Something to consider.

# ? Mar 26, 2020 20:03

CubicalSucrose: Jan 1, 2013; Phantom my Opera and call me South Park: Bigger, Longer, & Uncut

huhu posted:

I've been paying into a stock purchase program through work since November and will continue to do so until the end of May. The money sits in a bank account until May. In May, that money will be used to buy stock. The perk we get is that we get to buy the stock price at whichever is lower - the price in November or May. Then we get a 15% discount on that price. Then the stock can be sold almost immediately - it'll probably take about a day or two to sell. I've watched the stock fluctuate up or down by about 10% each day over the past few weeks. Assuming the market continues to be this volatile - I'm guessing it's probably best to withdraw myself from this program and not gamble on the stock fluctuating wildly between the time I buy and the time I sell - even if it is only a ~2 day window?

In the case where you don't get this 15% discount, what would you do with the money? Throw it in an index fund and watch that fluctuate up or down by 10% each day, but without the 15% discount?

Let's say it goes down 10% then down 10% again, you're at -5% if you can liquidate in two days. That doesn't seem awful for a pretty-bad-case outcome.

# ? Mar 26, 2020 20:16

KS: Jun 10, 2003; Outrageous Lumpwad

MJP posted:

I'm utterly lost. I thought I was supposed to be putting the trad IRA into the 401k and then next year start contributing to the Roth from the 401k?

It's a multi part issue.

You can contribute $6k to a roth IRA at any income level. if you're over a certain income level, you do what's known as a backdoor contribution.

If you need to do a backdoor contribution, they don't work if you have trad IRA balances. If you need to use the backdoor method, you want to get rid of your trad IRA.

You can get rid of your trad IRA two ways:

1) convert to a roth and pay taxes on money converted. Sounds like you're doing this over time. It's questionable if there's a benefit to doing it in small chunks if you can afford it -- I mean, you wouldn't want to go into the next marginal tax bracket here, but otherwise you can go as fast as you can afford.
2) reverse rollover to a 401k if your plan allows it. What I suggested instead as it's quicker and no tax implications.

# ? Mar 26, 2020 20:17

H110Hawk: Dec 28, 2006

huhu posted:

I don't think holding is an option I'd consider. All the eggs in one basket thing.

I'm trying to decide whether I should even try and get the 15% discount and gamble the stock potentially fluctuating 20% or more between the day I buy and the day I sell. Or if I should just hoard that cash into my savings account for now.

Let it ride. You're not going to find a better deal on stock. The instability in the market is something which should settle out. I'm generally a :f5:

sell kinda person but unless you are at risk of losing your job to this I would give it a quarter. Use limit orders for your sale to protect yourself from flashes down.

# ? Mar 26, 2020 20:36

literally this big: Jan 10, 2007; Here comes
the Squirtle Squad!

80k posted:

Dude, you're probably going to have on average $15 in the sweep account throughout the year as a result of this. Sometimes closer to $25, sometimes less. You're forgoing a, what, 7% return on that $15 every year? That's $1 a year. It's pretty amazing that M1 can provide the service that they do... just throw them the $1.

It's not about the money, it's about the principle. Times got tough, so they made a small but very anti-consumer change to get a little more cash on hand. That's a huge red flag to me. The whole point of M1 is their convenience and automation, and in this particular instance they've reduced their convenience and sabotaged their automation just to get a little more cash out of me. It's not a good look, no matter how small.

I'm already a very happy investor with Vanguard, but M1 seemed really neat so I wanted to give them a shot. I set up a portfolio, with a specific amount of money, for a specific savings goal, with the intention of never having to add any more to it, and setting-and-forgetting until the target date. I even made sure to have more than enough to cover the $10 auto-buy minimum on a monthly basis, and now I can't count on that because they raised the minimum 2.5x. It's so stupid and arbitrary. It's like, what if Vanguard raised their mutual fund minimums 2.5x, with less than a month's notice? It wouldn't affect everyone, but it would be kind of a dick move.

quote:

The only reason I don't move over there is that I do not know if they will stick around or get bought out by someone else, etc.

That's one of my qualms about this change. M1 is a new company, and they're going to be hard hit by this down market. If this is one of the changes they're making during the crash, what else might they change later if things don't get better? Customers are going to be more cash-strapped than ever, and dividends are going to get cut, so they should be lowering their minimums instead of raising them.

# ? Mar 26, 2020 21:18

spwrozek: Sep 4, 2006; Sail when it's windy

Although I can understand what you are saying I am not sure you are going to get much sympathy.

# ? Mar 26, 2020 21:28

H110Hawk: Dec 28, 2006

literally this big posted:

It's not about the money, it's about the principle. Times got tough, so they made a small but very anti-consumer change to get a little more cash on hand. That's a huge red flag to me. The whole point of M1 is their convenience and automation, and in this particular instance they've reduced their convenience and sabotaged their automation just to get a little more cash out of me. It's not a good look, no matter how small.

I'm already a very happy investor with Vanguard, but M1 seemed really neat so I wanted to give them a shot. I set up a portfolio, with a specific amount of money, for a specific savings goal, with the intention of never having to add any more to it, and setting-and-forgetting until the target date. I even made sure to have more than enough to cover the $10 auto-buy minimum on a monthly basis, and now I can't count on that because they raised the minimum 2.5x. It's so stupid and arbitrary. It's like, what if Vanguard raised their mutual fund minimums 2.5x, with less than a month's notice? It wouldn't affect everyone, but it would be kind of a dick move.

That's one of my qualms about this change. M1 is a new company, and they're going to be hard hit by this down market. If this is one of the changes they're making during the crash, what else might they change later if things don't get better? Customers are going to be more cash-strapped than ever, and dividends are going to get cut, so they should be lowering their minimums instead of raising them.

I gotta say I read your other post and now this post and basically thought "ok what's the problem?"

If you want them to be solvent to do your penny-stock stakes "investments" you're going to have to agree to a certain amount of squeeze somewhere. They are at least being up front about it. There is a reason mutual funds historically had minimums for manual investments and lower, but still not $1 or $10 for automatic periodic purchases.

# ? Mar 26, 2020 21:40

Adbot: ADBOT LOVES YOU

# ? May 29, 2024 19:23

80k: Jul 3, 2004; careful!

literally this big posted:

It's not about the money, it's about the principle. Times got tough, so they made a small but very anti-consumer change to get a little more cash on hand. That's a huge red flag to me. The whole point of M1 is their convenience and automation, and in this particular instance they've reduced their convenience and sabotaged their automation just to get a little more cash out of me. It's not a good look, no matter how small.

I'm already a very happy investor with Vanguard, but M1 seemed really neat so I wanted to give them a shot. I set up a portfolio, with a specific amount of money, for a specific savings goal, with the intention of never having to add any more to it, and setting-and-forgetting until the target date. I even made sure to have more than enough to cover the $10 auto-buy minimum on a monthly basis, and now I can't count on that because they raised the minimum 2.5x. It's so stupid and arbitrary. It's like, what if Vanguard raised their mutual fund minimums 2.5x, with less than a month's notice? It wouldn't affect everyone, but it would be kind of a dick move.

That's one of my qualms about this change. M1 is a new company, and they're going to be hard hit by this down market. If this is one of the changes they're making during the crash, what else might they change later if things don't get better? Customers are going to be more cash-strapped than ever, and dividends are going to get cut, so they should be lowering their minimums instead of raising them.

If you want to do ETF investing, you're always going to have some amount of money that you can't invest because the minimum share price of your securities is too big. The fact that M1 lets you do fractional shares and autoinvests and rebalances is already such a huge benefit. The $25 is SUCH a reasonable amount that it's preposterous that they ever set it to 1�/$10 minimum.

You do have a point, but being someone who has done ETF investing with a traditional broker for over a decade, I drool over the capabilities of M1 and would still find it extraordinarily valuable even if their minimum was $100. I rarely have less than that in my sweep account, and the cash drag on that amount (let alone $25) is really nothing to get upset about. Remember, that M1 used to charge based on AUM and it's now completely free (mostly).

# ? Mar 26, 2020 22:20

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Long Term Investing & Retirement: The second best time is now

«‹›1211 »