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Pollyanna posted:All my budgeting and financial calculations are dependent on a maxed 401k, Roth IRA, and a 6-month salary emergency fund (already filled). That’s the baseline, since my current income is enough to justify it. The rest goes into an HYSA for eventual contributions to long-term investment/retirement. You're definitely doing everything right, and seem to only be having a bit of trouble in balancing savings versus quality of life. Pollyanna posted:Maybe I’m too paranoid about the future. I mean...you can’t blame me, right? Sure, but there's also a fear that people develop because they're not fully aware of the countermeasures in place or they just fixate on their negative perception. To that end, a tech bubble crashing looks like what, exactly? A buying opportunity for VCs/tech giants, a glut of out-of-work tech people who are now encouraged to start their own shop with way, way less overhead? We don't exactly know what will happen. But when the dot-com bubble popped, it was weird for a bit and then quickly got back to carrying the US economy. What happened to Palo Alto, SF, Seattle, etc., when that bubble popped? It was bleak for a bit, for sure, but ultimately it came back with vigor. Who's to say the pop won't be abrupt, and resolved even faster now that the government is more than willing to bail out the stock market-- and Tech is a HUGE aspect of people's retirement because of index funds overweighting FAANG and tech. If you're concerned about your own livelihood, maybe bank up a larger e-fund instead of doing non-IRA/401k savings? Alternatively, just be prepared to cannibalize your non-tax-advantaged brokerage in the event your e-fund proves insufficient? jokes fucked around with this message at 17:04 on Feb 4, 2021 |
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Feb 4, 2021 17:02
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I'm looking at the Vanguard Target Retirement 2055 Fund (VFFVX), and in the area where they usually list a fund's expense ratio it says "Acquired fund fees and expenses: 0.15%" Why is that terminology different, is this cost going to be applied some other way?
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Feb 4, 2021 17:07
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Pollyanna posted:I’ve officially hit ——$250,000—— in retirement savings \ Was digging backwards in the thread trying to find an old post I half-remembered about expense ratio math, to try and find out if that 0.15% was more than I should accept, and I just happened to see this from last quarter. Get out of the slums, my dude. 
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Feb 4, 2021 17:16
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Unsinkabear posted:I'm looking at the Vanguard Target Retirement 2055 Fund (VFFVX), and in the area where they usually list a fund's expense ratio it says "Acquired fund fees and expenses: 0.15%" No, but you can see their expense ratio elsewhere too.
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Feb 4, 2021 17:22
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I'm setting up the IRA now. If I set it to reinvest dividends and capital gains, that doesn't count against my contributions, right? Edit - Similarly dumb contribution question: I also have a regularly taxed brokerage account with them with about $200 sitting in it from the meme stock stuff last week. I'm not planning to use this account again (even if I one day have enough to max my IRA and also stock gamble, I would open an account somewhere else for that so I'm not looking at the IRA money with betting eyes) and will likely close it at some point. Can I move that balance over to the IRA as a 2020 contribution as well (I'm assuming transactions between Vanguard accounts are quicker than moving it into my checking account), or is it simpler for tax purposes if the contributions all come from my actual checking account where wages go? Unsinkabear fucked around with this message at 17:44 on Feb 4, 2021 |
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Feb 4, 2021 17:26
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thechosenone posted:I just put 15,000 that was languishing in a 'high yield' savings that kept dropping it's rates into VTSAX to grow with possible additions until I can either buy a small condo for cash or until I need it. I live with my parents and put 25% of my check into a IRA. Anything obviously wrong with this? Should I change to a roth? I've put money in it before, but thought it might be better to use the one that reduces current taxes due to thinking it might be more valuable now.
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Feb 4, 2021 17:27
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this thread made me 10k so far in pure gains since oct 2018. it also made me spend less on beer, though covid has had some influence on that as well
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Feb 4, 2021 17:46
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Investing in (comparative) sobriety
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Feb 4, 2021 17:55
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Bad with malt
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Feb 4, 2021 17:59
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Unsinkabear posted:I'm setting up the IRA now. If I set it to reinvest dividends and capital gains, that doesn't count against my contributions, right? The only time you get taxed in an IRA is either when you put money in (Roth IRA) or take money out (Traditional). Contributions are money going into the account, and dividends/gains are separate. jokes fucked around with this message at 18:04 on Feb 4, 2021 |
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Feb 4, 2021 18:01
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jokes posted:The only time you get taxed in an IRA is either when you put money in (Roth IRA) or take money out (Traditional). Right. It's a Roth, so I'd be getting taxed on this money I'm putting in, and I'm just wanting to keep the paperwork on that simple. Having not done it before, I'm wondering if they care where the contributions come from at tax time. Does that make sense?
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Feb 4, 2021 18:04
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Unsinkabear posted:Right. It's a Roth, so I'd be getting taxed on this money I'm putting in, and I'm just wanting to keep the paperwork on that simple. Having not done it before, I'm wondering if they care where the contributions come from at tax time. Does that make sense? No problem A contribution is money you’re putting into it from outside the account. You could put dividends and gains from a brokerage account into an IRA as a normal contribution but if they’re earned inside the IRA it’s not a contribution. The money you make in dividends or gains from within the account isn’t taxed and isn’t going “into” the account so it doesn’t count as a contribution. E: conceptualize it like a walled garden if you’d like. Does the money cross the wall? If not, it’s not a withdrawal or contribution. jokes fucked around with this message at 18:11 on Feb 4, 2021 |
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Feb 4, 2021 18:08
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jokes posted:No problem Ah, whoops, I mixed up which question you were answering. That makes sense and was my assumption, but I figured it was worth double-checking. Thanks!
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Feb 4, 2021 18:10
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Unsinkabear posted:Ah, whoops, I mixed up which question you were answering. That makes sense and was my assumption, but I figured it was worth double-checking. Thanks! No problem! This stuff is relatively esoteric, the hardest part is the first step. Once you figure it out, you’ll think it’s simple stuff!
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Feb 4, 2021 18:12
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Residency Evil posted:There's a chance my wife and I may be taking new jobs, and we'd have to figure out what to do with her non-governmental 457. Here are the options: So confirmed. We could take distributions annually over up to 30 years (leaving the funds invested), or we could wait up to 30 years and take a lump sum at that point. We're currently in a very high tax bracket, so taking any distribution right now would not be optimal, especially since we have so much time left until retirement. If our goal is to minimize taxes and maximize potential investment gains, it probably makes the most sense to spread the distribution out over as long a period as possible, versus taking it all out in 30 years, with the caveat that we have no idea what's going to happen to tax policy in 30 years, or what our financial situation will be like in 30 years.
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Feb 4, 2021 19:50
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Wow, thanks for all the input everyone. I think understand this a lot better. But I also think I’m still sticking to my initial goal of getting that 1k in there and starting a target date fund. Then I need to move money from my checking account to my savings account, there’s no reason (I think?) to have all my money sitting in checking.
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Feb 4, 2021 21:03
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i'm looking for some reading material on what the next step for stable long-term investing is after maxing out contributions to retirement accounts and paying down debt. I max out my contributions to my 401k and my IRA every year, and for a while was putting the rest into my student loans and to save for a downpayment for a home. But now i've paid off my student loans and closed on my home and so i've got too much sitting liquid in checking/savings accounts. I am not super interested in trading individual securities other than small amounts for loving around. I understand that further investments beyond the 401k/IRA will not have the same tax advantages as those accounts. I guess the answer is probably "put your money in a mix of Vanguard index funds"?
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Feb 4, 2021 21:41
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get me HQ! posted:i'm looking for some reading material on what the next step for stable long-term investing is after maxing out contributions to retirement accounts and paying down debt. I max out my contributions to my 401k and my IRA every year, and for a while was putting the rest into my student loans and to save for a downpayment for a home. But now i've paid off my student loans and closed on my home and so i've got too much sitting liquid in checking/savings accounts. I am not super interested in trading individual securities other than small amounts for loving around. I understand that further investments beyond the 401k/IRA will not have the same tax advantages as those accounts. I guess the answer is probably "put your money in a mix of Vanguard index funds"? Yes, invest in similar passive index funds in a taxable brokerage account, assuming that aligns with your goals and time horizon. It's functionally the same, it's just not tax-advantaged. If you've already filled up your tax-advantaged space then having to start filling up a taxable brokerage is a Good Problem™.
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Feb 4, 2021 21:45
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If your health allows it and your company offers it, consider a high deductible health plan and an HSA for more tax advantaged space.
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Feb 4, 2021 21:48
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I didn't see this answered recently, and sorry if I missed it. My 401k site doesn't have the answer in an obvious place. My 401k has the option of pre-tax or Roth contributions. Do you know if Roth contributions are separate from IRA contributions? Example: could I contribute 19,500 in Roth 401k contributions, and 6000 in a separate Roth IRA? I'm thinking of doing pre-tax in the 401k anyway, but just trying to figure out how it all shakes out.
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Feb 4, 2021 21:48
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Captain Lavender posted:I didn't see this answered recently, and sorry if I missed it. My 401k site doesn't have the answer in an obvious place. 401(k) and IRA contributions are subject to completely separate limits. Maxing out an IRA has no impact on how much you can contribute to a 401(k) plan, and vice versa. Roth and traditional contributions don't matter from a limit standpoint. For IRA contributions, you could put $6000 into a Roth IRA, or $6000 into a traditional IRA, or $3000 into each, or even $2000 into Roth IRA A, $3000 into Roth IRA B, $500 into traditional IRA C, and another $500 into traditional IRA D (there wouldn't be any good reason to do that last one, but it's perfectly legal). What you can't do is put $6000 into a Roth IRA and even one single dollar into a traditional IRA in the same year, because that would mean you put $6001 into all your IRAs for the year and that's over the limit. Space Gopher fucked around with this message at 21:55 on Feb 4, 2021 |
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Feb 4, 2021 21:52
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Space Gopher posted:401(k) and IRA contributions are subject to completely separate limits. Maxing out an IRA has no impact on how much you can contribute to a 401(k) plan, and vice versa. Thank you very much. I think was getting caught up on the worth Roth, more than anything.
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Feb 4, 2021 21:54
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bawfuls posted:The max annual IRA contribution is $6000. If you are putting 25% of your paycheck into an IRA and not going over the annual limit then you are presumably making less than $24k/yr. Your present tax rate is thus quite low and you should absolutely put it into a Roth instead of traditional IRA. Congratulations on being able to contribute to a tax advantaged account while making so little, that’s not easy. If you are really funding an IRA with that low of an income, do make sure to claim the Savers Credit.
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Feb 4, 2021 22:13
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Jose Valasquez posted:Huh... I wonder why the expense ratio for VTSAX (0.04%) is higher than VTI (0.03%)? It's similar for VBILX (0.07%) and BIV (0.05%) which is where I keep my medium term stuff. In that case is there any reason to use the mutual funds over the ETFs if you've got the option for both? Looping back to this, because I looked into it for my own curiosity: if you invested the current limit of $6k every year for the past twenty years, the difference between your results with VTI or VTSAX would have been around $200. I'd say that's a cheap price to pay for being able to auto-invest a monthly dollar amount instead of having to buy whole shares manually (which I will guaranteed either forget to do or obsessively overthink my options each time). In contrast, here is the ten-year difference between VFFVX and VTSAX gently caress.
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Feb 4, 2021 22:45
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Unsinkabear posted:In contrast, here is the ten-year difference between VFFVX and VTSAX This is not a fair comparison, VFFVX and VTSAX have different compositions and different goals. VFFVX is a balanced fund with bonds and international exposure. VTSAX is just US-domestic equities. The past 10 years have been a historic run-up in US-domestic equities, so VTSAX and similar US indices have done quite well, some may say even outperformed. But there is zero guarantee that it continues. It could very well do the inverse for the next 10 years.
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Feb 4, 2021 23:02
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Guinness posted:This is not a fair comparison, VFFVX and VTSAX have different compositions and different goals. Thanks, that's good context to have. It means I'm back to square one on deciding which (or what else) to buy into, though.
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Feb 4, 2021 23:05
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When deciding whether you want to include international, check out figure 6 of https://personal.vanguard.com/pdf/ISGGEB.pdf. Don't let the recency bias of the last 12 years color your views too much. I personally go with 2:1 US:International equity ratio. It has a sizable international exposure, but it definitely also has home country bias, which I view as ok since the US is where I live. I definitely want to be doing well if US is doing well, but am also ok with underperforming if the US is also.
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Feb 4, 2021 23:12
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Unsinkabear posted:Thanks, that's good context to have. It means I'm back to square one on deciding which (or what else) to buy into, though. I understand, it can be overwhelming to take it all in at first. If it helps at all, something like VFFVX or other target-date funds are the defacto standard recommendation for someone just starting out with retirement savings. They are good "average long-term investor" profile funds that do some of the thinking and mechanics for you, for a very slight fund fee premium (but still insanely cheap). Doing this would in no way be the wrong choice. Investing 100% into VTSAX is heavily overweighting yourself in US stocks, which is higher risk than a balanced fund. But yes, looking at the past 5-10 years of data it looks like the better investment, but past returns are not guarantee of future performance. In and of itself it's not a bad thing to invest in VTSAX but you have to acknowledge the decision you're making and risks you're taking on. As you learn more you can always change up and rebalance your investments over time. This is one of the huge advantages of things like 401ks and IRAs because you can do exchanges and rebalancing without any tax considerations. Investing in either VFFVX or VTSAX now and changing your mind later is better than sitting in cash for an extended period of time. Guinness fucked around with this message at 23:17 on Feb 4, 2021 |
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Feb 4, 2021 23:14
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Guinness posted:Yes, invest in similar passive index funds in a taxable brokerage account, assuming that aligns with your goals and time horizon. Thank you this makes sense, I already have a Vanguard account for my 410k so I will do work on figuring out what funds of theirs to invest in and I see you've offered some advice on that in your other posts recently. One question: for taxable brokerages are there tax considerations for changing investments from one fundd to another (e.g. if i start with 2050 target retirement but then decide I want to do a mix of VTSAX and whatever else) without actually cashing anything out? Grumpwagon posted:If your health allows it and your company offers it, consider a high deductible health plan and an HSA for more tax advantaged space. i do have an HDHP but I'll admit I have no idea how an HSA works, is there a good source to read up on it/strategies for it.
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Feb 4, 2021 23:42
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So, this is probably bad, would appreciate some advice: I have an old Roth IRA I haven't touched in a while that I'm looking to move to Vanguard for future backdoor contributions. I contributed the max amount to this IRA in 2010, 2011, 2012, 2014, and 2015, and haven't touched it since. However, I got married in 2015 and filed jointly for the first time, and my wife's income at the time was much higher than mine, such that it seems we were over the limit for me to contribute at all ($216k adjusted gross income when the limit was $193k). How bad is this for me? Is anyone ever likely to find out if I just pretend I never noticed? Assuming the answer is "doesn't matter, don't be an idiot, fix it ASAP", what do I actually need to do now? Thanks. 
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Feb 4, 2021 23:44
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get me HQ! posted:i do have an HDHP but I'll admit I have no idea how an HSA works, is there a good source to read up on it/strategies for it. https://www.madfientist.com/ultimate-retirement-account/ Even if you don't take it to the extremes that he does, just using one for health costs saves your tax rate on out of pocket expenditures.
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Feb 4, 2021 23:53
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runawayturtles posted:So, this is probably bad, would appreciate some advice: You will have to file an amended tax return for that year. It is easy and if you do it before the IRS comes looking for you, it won't be a painful experience.
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Feb 4, 2021 23:54
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get me HQ! posted:Thank you this makes sense, I already have a Vanguard account for my 410k so I will do work on figuring out what funds of theirs to invest in and I see you've offered some advice on that in your other posts recently. One question: for taxable brokerages are there tax considerations for changing investments from one fundd to another (e.g. if i start with 2050 target retirement but then decide I want to do a mix of VTSAX and whatever else) without actually cashing anything out? Yeah, it's one of the downsides to a taxable brokerage, but it's an easy thing to deal with. Your portfolio generates taxable events when you sell a holding and when your holdings make cash distributions (dividends). Your 401k, IRA, HSA, etc. all do this too but part of the tax advantage is that you don't have to care. Your broker keeps track of all this for you and sends you a 1099 tax form each year with your realized gains, losses, and distributions. So it does introduce some need for tax situational awareness, but for the buy-and-hold long term investor you'll mostly just be receiving dividends and doing occasional rebalancing. For "rebalancing" a taxable account it can preferable to adjust your new contributions to adjust your allocation gradually without generating taxable events. And as a minor point, some mutual funds also generate minor taxable events when the funds themselves do internal rebalances. This is usually very small amounts, pennies per thousand. However, Vanguard funds avoid this through some patented fund structure trickery where the mutual fund is share class of the exchange traded fund. Don't worry you don't have to know or care about what any of that means, but if you're interested. Guinness fucked around with this message at 00:01 on Feb 5, 2021 |
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Feb 4, 2021 23:55
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get me HQ! posted:i do have an HDHP but I'll admit I have no idea how an HSA works, is there a good source to read up on it/strategies for it. HSAs are triple tax advantaged and essentially turn into an extra retirement account at age 65. Max that HSA to the gills and don’t drawdown from it unless absolutely necessary. Some people save receipts to use in the future but I don’t think it’s worth it. You’ll fine plenty of things to spend it on when you’re old. The math in HDHPs only really works if you max out the HSA. Otherwise you’re probably better off with a PPO. But I realize that this depends on what your employer offers.
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Feb 5, 2021 00:01
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I'm not sure where else to ask this, but are there any savings accounts you all would recommend? The one I get from my bank, Wells Fargo, seems pretty paltry with a 0.01% APY.
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Feb 5, 2021 00:22
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drainpipe posted:When deciding whether you want to include international, check out figure 6 of https://personal.vanguard.com/pdf/ISGGEB.pdf. Don't let the recency bias of the last 12 years color your views too much. Guinness posted:I understand, it can be overwhelming to take it all in at first. Thank you both for this. Right now I can't hit the minimum for VTSAX without digging into my 3-month fund a little anyway, so VFFVX wins by default for the moment. I'll start there as soon as that first $1k clears. Now that you mention it I'm definitely not comfortable being 100% siloed in the US, though, so VTSAX by itself will stay a no-go long-term. But as someone only in my early thirties, I'm still not sure about VFFVX already putting 9% in bonds. I've seen people mention VTSAX + VTIAX before, what about eventually doing that combo instead? I'm thinking I'll start ASAP with VFFVX, and then as funds become available throughout the year I'll move to VTWAX, and then to VTSAX + VTIAX to get the same thing with a lower expense ratio. Thoughts?
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Feb 5, 2021 00:25
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Unsinkabear posted:Thank you both for this. Right now I can't hit the minimum for VTSAX without digging into my 3-month fund a little anyway, so VFFVX wins by default for the moment. I'll start there as soon as that first $1k clears. Just regarding your first point: VTI is the ETF of VTSAX, has a lower ER, and a share is only around $200 or so last time I looked. ETFs are very nice that way.
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Feb 5, 2021 01:26
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laxbro posted:HSAs are triple tax advantaged and essentially turn into an extra retirement account at age 65. You only the triple tax advantage if you save those medical receipts.
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Feb 5, 2021 01:57
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Heroic Yoshimitsu posted:I'm not sure where else to ask this, but are there any savings accounts you all would recommend? The one I get from my bank, Wells Fargo, seems pretty paltry with a 0.01% APY. I think they cap out at like 0.5% from nationals. Ally is usually the highest of the bunch, which is 5x your interest rate!!!
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Feb 5, 2021 02:50
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Grumpwagon posted:You will have to file an amended tax return for that year. It is easy and if you do it before the IRS comes looking for you, it won't be a painful experience. Wouldn't I have to remove the money (and earnings?) from the IRA and maybe pay an early withdrawal fee also? And it sounds like there's a tax penalty every year, would that all have to be paid on the amended 2015 return or something?
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Feb 5, 2021 03:21
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