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Red posted:Reading through a lot of articles, STAR consistently came up as well-rounded and reliable. I hadn't bought direct through Vanguard before, so I wanted to start with a simple fund (with a lower minimum) at first before adding more. STAR itself appears to be generally diversified, so I don't think anyone would suggest anything to "supplement" it with - but if you look into the underlying holdings you'll notice a large number of Windsor funds etc. These are actively managed - which goes somewhat against the spirit of this thread, which prefers a passive* and evidence-based approach. It is, in fact, the opposite of a "simple**" fund! *Within an arbitrary definition of passive. I think it's actually a pretty bad word to describe the philosophy, but whatever. e: ** Simple being defined as a low cost mutual fund/etf that closely replicates an index e3: Jeez this is disjointed. But this allows you to assess a product not on how "well rounded" it is, or what reviewers trying to sell ad space in their margins have to say about it, but instead can compare the fund's holdings and performance directly against the index itself, as well as against other products that follow the same index. e2: Apologies for not being somewhat more helpful with the specifics, if you lived in Canada I would suggest something along the lines of "Just by XBAL/XGRO and spend not one neuron more on the Dismal Science," but alas. Merci! Nofeed fucked around with this message at 05:51 on Feb 10, 2021 |
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Feb 10, 2021 05:31
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Nofeed posted:STAR itself appears to be generally diversified, so I don't think anyone would suggest anything to "supplement" it with - but if you look into the underlying holdings you'll notice a large number of Windsor funds etc. These are actively managed - which goes somewhat against the spirit of this thread, which prefers a passive* and evidence-based approach. Interesting! That's super helpful. I suppose I considered 'simple' to be that a managed fund has less risk.
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Feb 10, 2021 06:05
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Red posted:Interesting! That's super helpful. I suppose I considered 'simple' to be that a managed fund has less risk.
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Feb 10, 2021 06:07
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dublish posted:Trouble? Money in a tax advantaged account is money in a tax advantaged account. With only 14% instead of 20% going into your 401k, you're still looking at over $750 thousand for retirement. That's still a good chunk of change, and that assumes you only ever make $45k a year. That's good to know. I just keep hearing stories about how people fall behind this stuff and don't want to be another "victim" of modern capitalism's poor retirement planning.
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Feb 10, 2021 06:09
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moana posted:Where in the heck did you get that notion? Welllll, I'm still reading and relatively new to this sort of thing.
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Feb 10, 2021 06:19
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Red posted:Welllll, I'm still reading and relatively new to this sort of thing. So humans are terrible and...
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Feb 10, 2021 06:31
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Red posted:Welllll, I'm still reading and relatively new to this sort of thing. Get thee The Four Pillars of Investing by Dr. Bernstien!
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Feb 10, 2021 07:04
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Red posted:Welllll, I'm still reading and relatively new to this sort of thing.
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Feb 10, 2021 08:10
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runawayturtles posted:So, this is probably bad, would appreciate some advice: As mentioned above, there is a 6% tax on excess contributions to an IRA that are not returned before the filing date of the year for which they were made. The tax is reportable on Form 5329 and applies each year until the excess is removed. In that case, the amount of excess that needs to be removed is based on the original contribution amount, without adjustment for earnings. The recurring tax effectively confiscates the expected earnings. At a high level, I fixed the situation like this:
Since the form has a separate filing obligation, it also carries a failure-to-file penalty. Here is some good news about penalties and interest: The failure-to-file and failure-to-pay penalties both have upper limits based on the unpaid amount. Once they reach the limit they accrue interest, but do not increase in principal. The interest rate for underpaid taxes tracks the Treasury rate, which has been relatively low for years due to Fed policy. Most of the information about excess contributions is in Pub. 590A, here, and the instructions for Form 5329. And again, to report earnings on a returned contribution, see the Form 8606 instructions, even though that's not where you report it. 
Gazpacho fucked around with this message at 08:55 on Feb 10, 2021 |
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Feb 10, 2021 08:12
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So I’ve recently acquired $1.5 mil and a job that pays 160k a year. I’m 29 years old. I’ve never invested a dime in any rrsp or tax free savings or any financial mechanisms and currently it’s all sitting in my savings account. I’m planning on talking to an advisor of some kind, but what is the ideal strategy here? I own a home worth 500k, owing 220k on it. Own a 2015 Toyota Highlander. No other assets, no other debts, no kids. Im in Canada as well
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Feb 10, 2021 08:54
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Beer4TheBeerGod has no idea the grief he put me through.
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Feb 10, 2021 09:05
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KYOON GRIFFEY JR posted:Yield is 12-mo dividend+fixed income payout over current share price. So, over the last 12 months, VFIAX has paid out 1.86% of current share price in dividends. That sounds directionally correct. Thanks! My spreadsheets* are now automated! KYOON GRIFFEY JR posted:Just to put in perspective, average 401(k) balance in your 30s is something like 40k, so you're maybe a hair behind right now. But look at it this way - if you put in $4.5k/year of your own money every year, and your company keeps that match policy, by the end of the decade you'll be sitting on pretty close to $120k, assuming 5% growth. That puts you well above 40s averages (about $100k). So you're still going to be able to put yourself in a good spot relative to many. And that's assuming you don't get a new job or have any wage increases. This helps me feel a little better: at 35 I have just about 90% of my annual salary saved which puts me ahead of that average, though Mrs. Doctor started her retirement savings just a few years ago when she started working. We're both maxing our company matches. The Fidelity Roadmap Yond Cassius posted has me a few years behind pace which feels tough to hear every time I see it but based on its projections I appear to be gaining ground. I fret about how much divergence there is between savings goals/guidance and what is actually being saved. That feels like a time bomb, societally. *My "If I win the Powerball" planning sheets, my 401k is relatively boring and my 3p financial advisor checks the available funds and proportions annually
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Feb 10, 2021 13:31
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You're at a level of detail now that it's probably better to work backwards from your goals and estimate your retirement cashflow needs and then determine what you need to achieve those goals. The salary by age benchmarks are handy guideposts but not that useful in detail.
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Feb 10, 2021 13:50
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Does anyone else think those retirement calculators plan on you spending WAY more than you would think? Most of them calculate as if you need to spend like 90% of what you do now. Which I would think by the time I retire I have the house already paid off which is a huge chunk of expenses.
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Feb 10, 2021 14:11
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BaseballPCHiker posted:Does anyone else think those retirement calculators plan on you spending WAY more than you would think? Most of them calculate as if you need to spend like 90% of what you do now. Which I would think by the time I retire I have the house already paid off which is a huge chunk of expenses. Better to save more than you actually need than come up short. The US at least does not treat its poor people very well
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Feb 10, 2021 14:17
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I'd agree I just cant imagine spending as much as I do right now between housing and childcare as I would as a retiree. I suppose medical care is the big scary unknown there. Based on that calculator I am a bit behind which sucks. But my housing costs are super low since I saved up more to buy a house a few years ago and pulled away from housing. Should give me time to catch up.
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Feb 10, 2021 14:19
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I plug numbers into https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator. I conservatively set it to baseline 5% annual interest with +/- 3%. Then I add 4% draw down of total saved to whatever I think my annual pension will be.
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Feb 10, 2021 14:29
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The other thing to account for in retirement (especially the earlier side of retirement) is a vast expansion in your free time since you don't work anymore, which tends to lead to an expansion of hobbies, which tend to have associated costs. If you like to travel, you're probably going to travel quite a bit more. If you like to golf, you're going to play a loving poo poo ton of golf.
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Feb 10, 2021 14:49
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BaseballPCHiker posted:Does anyone else think those retirement calculators plan on you spending WAY more than you would think? Most of them calculate as if you need to spend like 90% of what you do now. Which I would think by the time I retire I have the house already paid off which is a huge chunk of expenses. Yeah I remember looking at the Fidelity calc showing income multiples by age like 4 or 5 years ago, modeling things out on my spreadsheet, and realizing that according to their simplification, "getting promoted" meant it would take me longer to hit retirement. Which felt really wrong. Then I found ChooseFI, MMM, Bogleheads, this thread, ERN, and a bunch of other resources essentially saying "It's expenses that matter, you dolt." What an ah-hah moment. For the vast majority of folks, using income as a proxy for expenses and having your one-size-fits-all guideline err high seems reasonable, so I don't exactly fault Fidelity too much.
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Feb 10, 2021 14:59
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CaptainCanuck posted:So I’ve recently acquired $1.5 mil and a job that pays 160k a year. I’m 29 years old. I’ve never invested a dime in any rrsp or tax free savings or any financial mechanisms and currently it’s all sitting in my savings account. I want to say congrats, assuming that's not an insurance payout from an unfortunate event or something? Anyway, if it were me, I would probably hire an accountant to make sure I'm not about to destroy myself doing something dumb re: taxes. Then, assuming you want to preserve or grow your savings, I'd fill up tax-advantaged space (RRSP, TFSA) and buy something like VEQT/XEQT in them, then forget about that money until you stop working (other than topping then up each year as more contribution room appears). I'd probably do the same with most of what's left (anything you don't plan on spending for at least 10 years) in an unregistered account, invest it and let it ride. You could get more efficient and find some meaningful savings breaking that size of portfolio into separate funds, but it takes time and/or fees (though you may save/earn more than you spend hiring someone to run it for you). Cash you want to spend sooner than 10 years should go in a high-interest savings account, you can see current rates in this table. Big bank "savings" accounts pay very little interest. Assuming your interest rate is at all reasonable and you maintain an income, I'd just keep paying the mortgage down on schedule. You could pay it off today for a guaranteed 3-4% (?) return, but you'll almost certainly make more investing it. You might get potential advisors telling you there's a bunch of special things you can do with a portfolio that large, but really the same boring old index funds are the way to go. Also, if you like, there's a Canada-specific long-term investing thread that has more people who know about stuff like RRSPs and TFSAs, feel free to say hi there too!
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Feb 10, 2021 15:31
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CubicalSucrose posted:Yeah I remember looking at the Fidelity calc showing income multiples by age like 4 or 5 years ago, modeling things out on my spreadsheet, and realizing that according to their simplification, "getting promoted" meant it would take me longer to hit retirement. Which felt really wrong. I recently saw this blog post which nicely distilled the importance of expenses by pointing out that you more than double your runway by halving your expenses. I think I knew that intuitively, but seeing it written out with that handy interactive chart really drove it home.
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Feb 10, 2021 15:35
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pokeyman posted:I recently saw this blog post which nicely distilled the importance of expenses by pointing out that you more than double your runway by halving your expenses. I think I knew that intuitively, but seeing it written out with that handy interactive chart really drove it home. That is also MMM's one true insight.
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Feb 10, 2021 15:41
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BaseballPCHiker posted:Does anyone else think those retirement calculators plan on you spending WAY more than you would think? Most of them calculate as if you need to spend like 90% of what you do now. Which I would think by the time I retire I have the house already paid off which is a huge chunk of expenses. Retirement calculators make a lot of assumptions about age and your expenses/cost of living based on your salary, which is annoying -- I've found stuff on the FI/RE side of things to be more flexible, which... makes sense. This is what I've been using for working through retirement/drawdown thoughts: https://cfiresim.com/ It basically checks against how your criteria would have performed given you started each year in the stock market, and shows you neat graphs and tables about the range + gives you a % chance of (historical) success with your planned savings and withdrawls. Even allows for you to set Social Security + any other adjustments where you'd still have money coming in. E: Or going out. surc fucked around with this message at 16:49 on Feb 10, 2021 |
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Feb 10, 2021 16:29
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H110Hawk posted:If you're going to need the money sooner than you can withdraw it penalty free from your IRA/401k then it would matter, otherwise it shouldn't for long term retirement savings. The reason bonds are inefficient is by definition they pay out out periodically, a taxable event. This means all other things being equal, say you have $100k trad ira, $100k roth ira, and $100k taxable, and a 33/33/33% blend, you should put your Bonds somewhere that isn't taxable so those taxes are either deferred (Trad) or not paid (Roth.) You would put your international in the Taxable. Maybe you get a tax credit for foreign taxes paid. Interesting. The grand majority of my retirement savings are actually in what is technically a taxable account in Vanguard (i.e. it’s not in an IRA or 401k). I’m still following the 90/10 stock/bond split, progressively moving from stocks to bonds as I get older. Does the taxable state of that account affect my strategy?
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Feb 10, 2021 16:52
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Is there some catch to the Connexus high yield checking account? 1.75% up to $25000 in a checking account as long as you spend $400/mo seems like a much better deal than I’ve seen anywhere else, and donating $5 to join the credit union isn’t onerous.
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Feb 10, 2021 16:54
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raminasi posted:Is there some catch to the Connexus high yield checking account? 1.75% up to $25000 in a checking account as long as you spend $400/mo seems like a much better deal than I’ve seen anywhere else, and donating $5 to join the credit union isn’t onerous. The catch is using a debit card. No thanks.
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Feb 10, 2021 17:02
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If you have T-Mobile (US) postpaid cell service you can get 4% interest on $3000 and 1% for excess balance above that on the T-Mobile Money checking account. The only thing you have to do is deposit at least $200 per month, and you can set up recurring ACH transfers to cycle $200 in and out of the account from/to your main checking account to satisfy this requirement. This beats regular savings accounts and is automatable.
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Feb 10, 2021 17:14
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spwrozek posted:The catch is using a debit card. No thanks. Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile.
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Feb 10, 2021 17:43
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raminasi posted:Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile. Debit card authorizations tie up your own funds rather than the bank's. Credit cards have less risk for the user.
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Feb 10, 2021 17:45
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If someone steals your credit card and spends a shitload of money then it is the bank’s problem. If someone steals your debit card and spends a shitload of money then you are out that much money until the bank decides to give it back to you (if they decide to give it back to you).
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Feb 10, 2021 17:49
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raminasi posted:Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile. Sure you are aware that cards are getting compromised all the time. When it's a credit card it's your credit card company's problem. You contest the charge and don't pay for it. When it's a debit card the money is already gone and its' YOUR problem and now YOU have to follow the entire process through with the bank and be on top of it to get your drat money back.
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Feb 10, 2021 17:49
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Pollyanna posted:Interesting. The grand majority of my retirement savings are actually in what is technically a taxable account in Vanguard (i.e. it’s not in an IRA or 401k). I’m still following the 90/10 stock/bond split, progressively moving from stocks to bonds as I get older. Does the taxable state of that account affect my strategy? This is covered in the post you quoted, literally. But - No, it is better to save than not save. In the laziest sense bonds typically out-tax stocks which means if you're ignoring your portfolio aggressively weight those into accounts that will wash those taxes away.
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Feb 10, 2021 18:05
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raminasi posted:Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile. Motronic posted:Sure you are aware that cards are getting compromised all the time. This, but also (as you mentioned), credit cards reward you for spending money on them at a rate that Unsinkabear fucked around with this message at 18:51 on Feb 10, 2021 |
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Feb 10, 2021 18:46
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Man I am getting a huge kick out of the newly-cemented mindset that index funds are the "low risk" strategy Gamestop did a number on a whole generation of investors
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Feb 10, 2021 19:05
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So long as indexers have a far-off time horizon for retirement, yeah, they can most likely weather market corrections and crashes and ultimately come out ahead. How is that not low-risk? A question about bonds: if rising interest rates cut down bonds' payouts, and the interest rate is already near zero, and bonds are already paying pretty low... what would happen if rates started going up now? Would bond returns become 0.01% crumbs? And how would they bounce back?
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Feb 10, 2021 19:40
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Space Fish posted:So long as indexers have a far-off time horizon for retirement, yeah, they can most likely weather market corrections and crashes and ultimately come out ahead. How is that not low-risk? Who knows. Maybe 100% stock holders will all be lucky that we get to ride a 30-year bull market through our professional careers and laugh at those that stupidly held bonds. But 100% stock holders could also get stuck in 10 year bear market that starts exactly 10-years before they want to retire. So Berstein's quote is a good one: William J. Bernstein, The Four Pillars of Investing posted:In short, during the next 20 or 30 years, there will be a single, best allocation that in retrospect we will have wished we have owned. The only problem is that we haven't a clue what that portfolio will be. So, the safest course is to own as many asset classes as you can; that way you can be sure of avoiding the catastrophe of holding a portfolio concentrated in the worst ones. There's also the idea of the Efficient Frontier in developing your portfolio. I'm terrible at economics but based on my understanding it says that there is a sweet spot of risk vs return and that taking on more risk doesn't necessarily justify the return that you may or may not receive: https://www.investopedia.com/terms/e/efficientfrontier.asp
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Feb 10, 2021 19:59
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The big thing is that as investors we don't use risk to mean "chance you might lose all your money". Meme speculators, on the other hand,
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Feb 10, 2021 20:01
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Can someone clear something up for me regarding 401k in-plan conversions to Roth? My 401k is through fidelity, and I have already been maxing out a $19.5k Roth contribution, and get a 10% company match, and am fully-vested in everything. It turns out that our plan recently enabled you to choose automatic, daily, in-plan conversions to Roth for after-tax contributions if I want. I guess what I struggle with, is why is this allowed, or what am I missing? It seems to be a direct and automatic bypass of the 19.5k limit for Roth contributions. If I read things right, I can just continue to contribute after-tax contributions past the $19.5k limit (subject to the total $57k limit for employer/employee contributions), and they will immediately be converted to Roth prior to accruing any taxable earnings, and will then grow tax free. I could then (if I choose), take an in-service distribution and move things to my Roth IRA. This seems like a giant loop-hole, so I'm not sure what I'm missing. It would appear Fidelity and my plan have effectively weaponized/automated a mega-backdoor Roth 401k/IRA? Does anyone else have a 401k through Fidelity and see similar features on their account?
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Feb 10, 2021 20:19
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I'm a dumb dumb who doesn't know the answer to this. If 401ks are so good, then why doesn't the government issue everyone 401ks instead of social security payments?raminasi posted:Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile. Just use your debit card for smaller purchases that aren't going to have foul play and you can't refund if you want to like weekly grocery shopping. Credit card should be used for everything else. I have Consumer's Credit Union which gives me up to 4% a month. GoGoGadgetChris posted:The big thing is that as investors we don't use risk to mean "chance you might lose all your money". Meme speculators, on the other hand, I'm very green to this investing stuff. But to me "risk" means "potential to lose my profits over the past month" rather than all of my money.
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Feb 10, 2021 20:21
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ROJO posted:Can someone clear something up for me regarding 401k in-plan conversions to Roth? My 401k is through fidelity, and I have already been maxing out a $19.5k Roth contribution, and get a 10% company match, and am fully-vested in everything. It turns out that our plan recently enabled you to choose automatic, daily, in-plan conversions to Roth for after-tax contributions if I want. Congrats! Look up "megabackdoor Roth." It's as good as it sounds. Depending on your plan details, you may be limited in the # of times you can move funds from one bucket to another (1 per year is one of the most restrictive I've seen), or you might not.
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Feb 10, 2021 20:27
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