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Cheese Thief posted:So my plan here is to 1) move the rest of my Ed Jones money to Vanguard. 2) They want to keep it invested as is, but I need to submit to have the funds re-invested into VTSAX? 100% US stocks is fine if that’s what YOU want. It all depends on your risk profile and how long you have until retirement. If you have any doubts about 100% stocks then you should do a target date fund. If you want to micromanage it a bit more you can do a three fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio
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Jan 13, 2021 14:30
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Cheese Thief posted:I tried to read the Pillars of Investment, or whatever it's called, as suggested in the OP. But I just don't have time for all that, it's interesting though. the difference between you understanding this stuff and not understanding it is on the order of hundreds of thousands of dollars do you really not have time?
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Jan 13, 2021 14:35
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KYOON GRIFFEY JR posted:the difference between you understanding this stuff and not understanding it is on the order of hundreds of thousands of dollars Is it though, is that book gonna tell me something better than ‘park as much money as you can spare every month into a low ER index fund’?
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Jan 13, 2021 15:02
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please knock Mom! posted:Is it though, is that book gonna tell me something better than ‘park as much money as you can spare every month into a low ER index fund’? Ultimately, no, but it's gonna teach enough to avoid following other random internet strangers' advice to e.g. "get out now the market's in freefall!!!" in ten years. There's other ways to learn than that book, but knowing a bit about what you're doing with your life savings is worthwhile.
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Jan 13, 2021 16:32
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Cheese Thief posted:So my plan here is to 1) move the rest of my Ed Jones money to Vanguard. 2) They want to keep it invested as is, but I need to submit to have the funds re-invested into VTSAX? Yeah they're going to just transfer your assets as is because that's how they are currently setup. I would sell and reinvest in something Vanguard offers because God knows what Ed Jones is shilling.
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Jan 13, 2021 17:11
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please knock Mom! posted:Is it though, is that book gonna tell me something better than ‘park as much money as you can spare every month into a low ER index fund’? the fact that you know what a low ER index fund is means you are quite a bit ahead of that OP, who is still talking about being invested in mutual funds and is having a hard time with the mechanics of fund transfer because they don't know what their desired end result is. But even if you know what to do, I think it's good to know why you are doing it. And anyway if the lesson you've absorbed is just autopilot low ER index funds that's probably not the right lesson.
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Jan 13, 2021 17:25
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If Pillars of Investing is too long, there's a book called The Investment Answer that is very short and covers similar stuff, albeit in less depth.
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Jan 13, 2021 17:32
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the if you can PDF is like 16 pages and it's generally a good starting point as well
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Jan 13, 2021 17:36
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I think it was on the Bogleheads forum where someone expressed anxiety over their allocations because they seemed simultaneously too risky AND too safe. Someone else chimed in that that's when you know you've found the right ratio for you. Am I understanding REITs correctly in that they tend to pay healthy dividends but attract lots of tax (and are therefore ideal for a Roth IRA), while REIT ETFs offer greater diversity at the expense of lower payout? Similar question for bonds vs bond ETFs in America - government bonds don't take a hit from state nor federal taxes, right? It looks like (nearly all) bond ETFs don't get such a break.
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Jan 13, 2021 19:56
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Cheese Thief posted:So my plan here is to 1) move the rest of my Ed Jones money to Vanguard. 2) They want to keep it invested as is, but I need to submit to have the funds re-invested into VTSAX? If you don’t want to think or research at all, I would do a target date fund. That’s the least risk.
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Jan 13, 2021 20:33
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I'm back with more questions about the backdoor roth! If you saw what I posted last week, I indicated that I was doing a reverse rollover of my existing pretax traditional IRA funds into my work 401k. This is now complete. However, this happen during 2021 (meaning on 12/31/20, I had a positive traditional IRA balance) and I still want to make contributions to TY2020 which will eventually be converted to roth. I'm seeing that there's a prorata rule that specifies that the traditional IRA balance must not exceed $0 on 12/31 of the year that I execute the backdoor conversion. Does this mean that I can still contribute to TY2020 right now, then do a max contribution for TY2021, and do one big backdoor roth so the balance will be $0 on 12/31/21? Or did the balance need to be $0 on 12/31/20 if I want to convert the remaining TY2020 contributions? Also, if the conversion for the TY2020 contributions happens in TY2021, will I have to wait until next year's return to report the change (not sure how 2020's return will look given all these changes happened in 2021...)? UncleGuito fucked around with this message at 21:52 on Jan 13, 2021 |
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Jan 13, 2021 21:29
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Heads up, I'm in VTIAX now so it's sure to go down.
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Jan 13, 2021 21:50
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I'm a fan of the IfYouCan.pdf but I don't plan to ever rebalance. I'm just going to keep buying mutual funds and never sell until I die.
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Jan 14, 2021 01:08
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Are there any reasons NOT to rebalance 401k at least annually? Any advantages/disadvantages to rebalancing quarterly vs annually?
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Jan 14, 2021 02:40
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what about monthly or daily so you can keep your leverage ratios from drifting too much?
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Jan 14, 2021 03:45
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fart simpson posted:what about monthly or daily so you can keep your leverage ratios from drifting too much? I'm not smart enough about this subject to know if this is sarcasm.
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Jan 14, 2021 03:53
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Cheese Thief posted:I tried to read the Pillars of Investment, or whatever it's called, as suggested in the OP. But I just don't have time for all that, it's interesting though. Can I buy the book from you if you're done with it?
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Jan 14, 2021 04:00
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zaurg posted:I'm not smart enough about this subject to know if this is sarcasm. daily rebalancing is how they maintain constant leverage in funds like sso or tmf
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Jan 14, 2021 04:23
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zaurg posted:I'm not smart enough about this subject to know if this is sarcasm. You're not smart enough to own anything other than a target date fund that tases your balls on withdrawal. Buy the correct Vanguard one and stop posting.
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Jan 14, 2021 04:47
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Motronic posted:You're not smart enough to own anything other than a target date fund that tases your balls on withdrawal. Buy the correct Vanguard one and stop posting. Settle your nuts I've been in VTIVX for a couple years but I'm not gonna stop learning. Question was about 401k rebalancing, I currently have it set to automatically rebalance 2x per year, the next one is June 2021. So currently: sp500 index fund is at 69.93% international index fund is at 20.44% bonds index fund is at 9.63% In June it'll rebalance to 70/20/10 I get it. I just don't understand if this is strategically a good thing to do or not. Am I spending money just to maintain the 70/20/10 ratios? Do I really care if over the years it slowly transforms to 71/21/8 or something? Tax-advantaged accounts: 401k: Max contribution $19,000 per year completed in 2019 and 2020 and in progress for 2021. Employer 2% match. 70% in iShares S&P 500 Index Fund (WFSPX) - Expense Ratio: 0.03% 20% in iShares MSCI Total International Index Fund (BDOKX) - Expense Ratio: 0.11% 10% in iShares U.S. Aggregate Bond Index Fund (WFBIX) - Expense Ratio: 0.06% Roth IRA: Max contribution $6,000 per year was completed in 2019 and 2020. In 2021, automatic $500 monthly contribution enabled to reach $6k limit in December 2021. 100% in Vanguard Target Retirement 2045 (VTIVX) - Expense ratio: 0.15% Taxable accounts: Brokerage account with Vanguard: Monthly automatic transfer of $250 to VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) - Expense ratio 0.04% Monthly automatic transfer of $50 to VTIAX - Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) - Expense ratio 0.11% High-yield savings account: Ally Financial Automatic transfer of $470 per month from checking to this account. Contains 10 month emergency fund, car savings, general savings. Interest rate has dropped to 0.5%, but it’s still a lot better than a local bank savings account or keeping cash under the mattress. Other: Home mortgage: In process of refinance from 4.25% to 2.75% 30-year fixed, should be done in February 2021. Once done, automatic minimum payment every month. No longer paying extra towards principal, I was paying $100 per month, but that will go to Vanguard accounts. (USER WAS PUT ON PROBATION FOR THIS POST)
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Jan 14, 2021 05:03
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Bitcoin.
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Jan 14, 2021 07:40
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zaurg posted:Settle your nuts I've been in VTIVX for a couple years but I'm not gonna stop learning. this is fine but your only leverage is the mortgage. look into interactive brokers, they have very low rates which will allow you to affordably lever up on the rest of your portfolio for mathematically optimal returns
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Jan 14, 2021 09:15
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fart simpson posted:this is fine but your only leverage is the mortgage. look into interactive brokers, they have very low rates which will allow you to affordably lever up on the rest of your portfolio for mathematically optimal returns Wait.. what? Are you saying people investing for retirement should be using more leverage? Like using margin from a broker? That seems (a) risky and (b) like something you'd do as a short-term trader. Do you have any links that can help support this claim of optimality for retirement planning? I'm always open to changing my view if there is evidence for it.
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Jan 14, 2021 09:29
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You pick your asset allocation to match your ideal risk profile. If you don't rebalance you're then in a different risk profile than you planned. Rebalancing in good years means you're talking your unexpected profit from over performing assets and putting those profits into (generally) less volatile assets, where the money will be safer. Rebalancing in bad years means you're using your savings from one asset to "buy the dip" in an underperforming asset, and (generally) repaying yourself when that sector recovers and you rebalance again. In both cases you're aiming for a consistent risk profile, which is the second most important part of long term investing (The most important part is saving as much as you can for as long as you can).
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Jan 14, 2021 09:43
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KYOON GRIFFEY JR posted:the difference between you understanding this stuff and not understanding it is on the order of hundreds of thousands of dollars good point. I guess you are right. I'll allocate some time to my day to research. Is there a time management thread?
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Jan 14, 2021 10:14
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CompeAnansi posted:Wait.. what? Are you saying people investing for retirement should be using more leverage? Like using margin from a broker? That seems (a) risky and (b) like something you'd do as a short-term trader. Do you have any links that can help support this claim of optimality for retirement planning? I'm always open to changing my view if there is evidence for it. https://earlyretirementnow.com/2016/07/20/lower-risk-through-leverage/ here’s a good primer on it, and this is interesting too: https://earlyretirementnow.com/2016/06/07/synthetic-roth-ira/ fart simpson fucked around with this message at 10:17 on Jan 14, 2021 |
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Jan 14, 2021 10:15
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I'm likely about to accept a position that includes a public pension, which is offering two alternatives: The first is I make a 7.9% contribution (that could fluxuate some year-to-year) and get vested in a pension scheme that will pay me 2% * service years of my average compensation of my last five years of employment (AFC) if I retire at 65 (I intend to retire at 65, and am 39 years old now, so ideally this will be 52% of my salary). Option two is similar, but is instead a 1% * service years of my AFC, plus a member contribution rate of my choosing (the money would be invested, similar to a 401k). I'd have five options for this: 5% of my salary 7% of my salary 10% of my salary 15% of my salary 6% of my salary until I'm 45, 7.5% thereafter 7.5% of my salary until I'm 45, 8.5% thereafter I really like the idea of a public pension, and am a fan of just going with option one, and not having to think about it, however mathematically option 2 seems strictly better, doubly so since I don't take great care of myself so making it much past 65 doesn't seem tremendously likely. Additionally, I'm not sure how social security interacts with PERS (definitely something I'm going to ask about), and if I wouldn't get more out of Social Security by going with option two. I'm definitely not doing great on retirement right now, though; between two different 401k plans, I've got ~$80,000, and then another $20,000 in a Vanguard target date Roth IRA, and I'm currently a renter. New job is going to pay substantially more, though, so I'm hoping to do better going forward. EDIT: I have $27,000 currently sitting in an HYSA, I may kick $6,000 into the Roth for 2020.
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Jan 14, 2021 10:17
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Best Practices for Portfolio Rebalancing, a paper put out by Vanguard Research, has a pretty good analysis of different rebalancing strategies, with specifics to implementation by the DIY investor. https://indexacapital.com/bundles/unaiadvisor/docs/papers/2010-Vanguard-Best-practices-for-portfolio-rebalancing.pdf?v=44 The cats over at PWL Capital looked at the effects of different rebalancing strategies in Canadian portfolios. A great read even if you don’t hail from the great white north. https://www.pwlcapital.com/resources/a-rebalancing-act-estimating-value-added-through-portfolio-rebalancing/
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Jan 14, 2021 10:24
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CompeAnansi posted:Wait.. what? Are you saying people investing for retirement should be using more leverage? Like using margin from a broker? That seems (a) risky and (b) like something you'd do as a short-term trader. Do you have any links that can help support this claim of optimality for retirement planning? I'm always open to changing my view if there is evidence for it. Heads up. There are some arguments to be made for time diversification, but they are extremely controversial and you end up falling down rabbit holes of how academics measure risk and whether those measures work across time as well as space and it all gets pretty murky. There’s a fair but of writing indicating that it’s a good idea and a fair bit of writing indicating that it’s not.
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Jan 14, 2021 11:21
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Nofeed posted:Best Practices for Portfolio Rebalancing, a paper put out by Vanguard Research, has a pretty good analysis of different rebalancing strategies, with specifics to implementation by the DIY investor. useful links that directly address the original question posed by someone else, thank you. I'll quote the Vanguard paper's conclusion for the lazy: quote:Just as there is no universally optimal asset allocation, there is no universally optimal rebalancing strategy. The only clear advantage as far as maintaining a portfolio’s risk-and-return characteristics is that a rebalanced portfolio more closely aligns with the characteristics of the target asset allocation than with a never-rebalanced portfolio. As our analysis shows, the risk-adjusted returns are not meaningfully different whether a portfolio is rebalanced monthly, quarterly, or annually; however, the number of rebalancing events and resulting costs increase significantly. As a result, we conclude that a rebalancing strategy based on reasonable monitoring frequencies (such as annual or semiannual) and reasonable allocation thresholds (variations of 5% or so) is likely to provide sufficient risk control relative to the target asset allocation for most portfolios with broadly diversified stock and bond holdings.
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Jan 14, 2021 13:38
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pmchem posted:useful links that directly address the original question posed by someone else, thank you. I'll quote the Vanguard paper's conclusion for the lazy: My take home from reading about rebalancing is that my lazy strategy of doing it once a year when I'm off for Christmas is probably fine.
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Jan 14, 2021 13:52
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My 401K and HSA provide an auto rebalancing feature and I'm happy to let it rebalance quarterly since there's no cost to it or effort required on my part.
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Jan 14, 2021 13:58
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fart simpson posted:here’s a good primer on it, and this is interesting too: I’ve read this twice now and it still seems like “if you make more money, that’s effectively like not paying taxes!” which can’t be right.
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Jan 14, 2021 15:37
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raminasi posted:I’ve read this twice now and it still seems like “if you make more money, that’s effectively like not paying taxes!” which can’t be right. what’s wrong with that idea? more specifically, it’s “if you make exactly as much more money as you would pay in taxes, then it’s equivalent to not paying those taxes”
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Jan 14, 2021 16:14
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fart simpson posted:what’s wrong with that idea? more specifically, it’s “if you make exactly as much more money as you would pay in taxes, then it’s equivalent to not paying those taxes” Why only make that much more? Why not double it? Triple it?
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Jan 14, 2021 16:15
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raminasi posted:Why only make that much more? Why not double it? Triple it? because the goal there is to offset taxes. also the key to it all is understanding this chart 
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Jan 14, 2021 16:35
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fart simpson posted:because the goal there is to offset taxes. also the key to it all is understanding this chart Why is offsetting taxes the goal, though, when the method is just “make more money?” That chart doesn’t even have tax rates on it, which is my point.
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Jan 14, 2021 17:01
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I am a couple months to three years away from pulling the plug on work and was wondering how much risk everyone thinks they will be willing to accept in retirement? It is probably a pointless amount of debate but I’m leaning towards a 70/30 mix or possibly 60/40 mix through a vanguard fund or the three fund mix.
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Jan 14, 2021 17:11
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I plan on having enough money and living below my means enough that I plan to keep my 90% stocks allocation forever. Edit: but now that I think about it, I might start keeping 5+ years expenses in cash or bonds once I actually stop working.
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Jan 14, 2021 17:26
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Would like to thank this thread's education and my partner's support as I crack 50k in retirement savings tomorrow. It's a big milestone for me. I've been saving even a little bit since I started working post college and I think even the little $100 a month back when I was making 30k a year helped give me a headstart.
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Jan 14, 2021 17:32
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