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Everyones Favorite Poster posted:Thanks so much for the advice! Can you elaborate on the advantages of rolling over from a traditional IRA into my Roth rather than doing a direct contribution to the Roth (or point me to a place where I can read up on this)? Is it mostly for the sake of simplicity for tracking my overall IRA contribution? Sorry for my ignorance on this. There's effectively no income restriction on Roth IRA contributions because if you run into it you just use a Backdoor Roth to get around it. It's dumb as hell but not doing it leaves money on the table.
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Feb 11, 2021 05:55
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Backdoor Roth is only necessary if you make too much to contribute directly to a Roth.
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Feb 11, 2021 07:03
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Everyones Favorite Poster posted:Thanks so much for the advice! Can you elaborate on the advantages of rolling over from a traditional IRA into my Roth rather than doing a direct contribution to the Roth (or point me to a place where I can read up on this)? Is it mostly for the sake of simplicity for tracking my overall IRA contribution? Sorry for my ignorance on this. You are at a point where you are phasing out of the ability to contribute to a Roth IRA, and only part of your IRA contributions can be directly contributed to a Roth IRA based on your income. This means that if your income varies at all, you have to make adjustments, and if you've already contributed then you have to go through the whole song and dance of calling your broker and getting poo poo moved around. "But I know my income, I'm on salary" Well no you don't really, what if you get a $500 bonus at the end of the year? What if you move a bit more money in to HYSA for your emergency fund and you earn more interest on a 1099-INT? What if you put a dumb prop bet on the superbowl and won a few hundred bucks? It's all taxable income. Once you're beyond the Roth direct contribution limits entirely, you can contribute to a traditional IRA, then mash a button to convert it to Roth. (You should do this with your traditional IRA contributions you've made thus far as well) But there's no reason that you can't do that today for your full contribution - contribute all to trad IRA, then mash button to convert to Roth IRA. This means you don't have to track your income as closely and derive a split between traditional and Roth based on income, and it also means that you can fund your IRA at the beginning of the year or throughout the year, rather than waiting until after you receive your tax information. You get two benefits - time in market, which helps returns, and simplicity, which is great for you. I think you should finish off your 2020 IRA space first by contributing the rest of your 2020 space to a traditional IRA, then converting to Roth. Then for all future contributions, including 2021, contribute fully to the traditional IRA, then convert to Roth. Schwab target date funds are very similar to and actually cheaper than their Vanguard equivalents (8 bps vs 15 bps). I personally don't think you need to move to Vanguard; Schwab is perfectly fine and you can always move your money if for some reason that changes in the future. withak posted:Backdoor Roth is only necessary if you make too much to contribute directly to a Roth. which the OP is, at least fully
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Feb 11, 2021 14:35
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On the topic of backdoor Roths, from what I've been able to find if I recharacterized an overcontribution from Roth to Traditional for 2020 I will still be good to convert that amount back in 2021? I had KYOON GRIFFEY JR posted:"But I know my income, I'm on salary" Well no you don't really, what if you get a $500 bonus at the end of the year? What if you move a bit more money in to HYSA for your emergency fund and you earn more interest on a 1099-INT? What if you put a dumb prop bet on the superbowl and won a few hundred bucks? It's all taxable income. Also, while I'm just gonna put it all in my Trad IRA and do the backdoor going forward, would it have been better to withdraw it + contribute manually rather than recharacterize this time around? Not like I was super on the ball anyway but seems like the main difference is it would have removed some time restrictions on being able to convert back.
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Feb 11, 2021 16:42
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KYOON GRIFFEY JR posted:You are at a point where you are phasing out of the ability to contribute to a Roth IRA, and only part of your IRA contributions can be directly contributed to a Roth IRA based on your income. This means that if your income varies at all, you have to make adjustments, and if you've already contributed then you have to go through the whole song and dance of calling your broker and getting poo poo moved around. "But I know my income, I'm on salary" Well no you don't really, what if you get a $500 bonus at the end of the year? What if you move a bit more money in to HYSA for your emergency fund and you earn more interest on a 1099-INT? What if you put a dumb prop bet on the superbowl and won a few hundred bucks? It's all taxable income. This is an excellent point that I definitely overlooked. Given that the money sitting in my Roth IRA for tax 2021 is not currently invested, is it safe for me to withdraw that money back into a regular checkings/savings account, and then transfer those funds again back into a Roth and/or traditional IRA but classified under tax year 2020 (for which I already know my final MAGI)? Or did I screw up and the initial $1800 deposit into the Roth for 2021 would still count against my overall $6,000 IRA limit/$2,000 Roth limit for 2021 regardless of whether I withdraw it prior to making any actual gains/investments with it? In the case that my income goes over $140,000 at some point this year, how would I otherwise go about rectifying the fact that I then had technically put too much into the Roth? Thanks for the thorough response and advice here, you're a lifesaver. KYOON GRIFFEY JR posted:Schwab target date funds are very similar to and actually cheaper than their Vanguard equivalents (8 bps vs 15 bps). I personally don't think you need to move to Vanguard; Schwab is perfectly fine and you can always move your money if for some reason that changes in the future. Noted, thanks!
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Feb 11, 2021 17:16
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you can probably call Schwab and get them to give your money back. I've never tried to do it though.
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Feb 11, 2021 17:22
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I went all last year without looking at these numbers, but I logged in today for some tax stuff  I know better, but my gut keeps telling me to take this money and run because this is scam level returns:  Their year starts at a low point. 
CopperHound fucked around with this message at 19:18 on Feb 11, 2021 |
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Feb 11, 2021 19:05
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I can still do a backdoor roth IRA for 2020 between now and tax day, right?
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Feb 11, 2021 19:22
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alnilam posted:I can still do a backdoor roth IRA for 2020 between now and tax day, right? Yes, it will just take you time to google and figure out how to do the tax forms the right way.
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Feb 11, 2021 19:26
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Residency Evil posted:Yes, it will just take you time to google and figure out how to do the tax forms the right way. Cool as long as the procedure for doing the contribution and conversion is the same then I should be good. We're getting professional help for taxes this year cause of other complicated stuff 
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Feb 11, 2021 19:31
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I'm sitting on a lot of cash that I guess I should start investing. My retirement stuff is all maxed out into targeted retirement funds so I'm not worried about that. I've been thinking that electrical utilities / renewables will probably be seeing a lot of growth over the coming decades and want to buy in. Can anyone point me to some ETFs that track these? The vanguard utility ETF is one I'm looking at, but I'd also like to hit specifically renewables as well.
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Feb 11, 2021 19:44
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Why are you looking to invest non-retirement stuff differently? Your retirement funds are likely going to be the best reasonable investment available (probably).
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Feb 11, 2021 19:47
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PIZZA.BAT posted:I'm sitting on a lot of cash that I guess I should start investing. My retirement stuff is all maxed out into targeted retirement funds so I'm not worried about that. I've been thinking that electrical utilities / renewables will probably be seeing a lot of growth over the coming decades and want to buy in. Can anyone point me to some ETFs that track these? The vanguard utility ETF is one I'm looking at, but I'd also like to hit specifically renewables as well. Utilities aren't really that great for taxable accounts because their returns are generally in the form of large dividends. I guess that's mitigated because you think they will see a lot of growth in the coming decades. If this is serious investing for serious long term goals then you should keep the same allocation that you are using in your retirement accounts (eg. VTI/VXUS/BND). If you're speculating or gambling then utility ETFs seem like the most boring way to do that.
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Feb 11, 2021 20:12
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I’m planning on making the first Roth IRA investment today. I need to do it a bit piecemeal at first though if I want to do Admiral shares. Does this seem reasonable? This month: $3000 VEMAX Emerging market international index Next month: $3000 VTSAX domestic index Starting in April with 2021 contributions: Buy some bonds and rebalance. I was reading that Jim Cramer said the domestic market is “frothy” right now, and a bit of a crash might be incoming. https://apple.news/AhVAA4LMeRlmxEZCxKtkyXA I was wondering if waiting a month investing in domestic index might be a good idea since I can’t do everything at once anyway. I’m still tempted by the ESG funds to be honest. It’s less about “feeling good about my investments”, and more about having more of a slant toward technology companies. Valicious fucked around with this message at 20:47 on Feb 11, 2021 |
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Feb 11, 2021 20:43
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Valicious posted:I’m planning on making the first Roth IRA investment today. I need to do it a bit piecemeal at first though if I want to do Admiral shares. Does this seem reasonable? Never listen to any thing Jim Cramer says. Or really, anyone that is not like, Warren Buffett. Having a broad mixture of accounts is the best way to lower risk. No one can predict was will or will not be turbulent.
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Feb 11, 2021 21:07
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Duckman2008 posted:Never listen to any thing Jim Cramer says. Don't listen to CNBC at all, while you're at it.
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Feb 11, 2021 21:27
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If you think you can accurately time the market, congrats on your future billions skimming percentages as a hedge fund manager. If you don't think that's the case, the best time to invest is ten years ago. The second best time is today. Any other aphorisms I should be cramming in here?
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Feb 11, 2021 22:11
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Cormack posted:If you think you can accurately time the market, congrats on your future billions skimming percentages as a hedge fund manager. If you don't think that's the case, the best time to invest is ten years ago. The second best time is today. If you ever travel back in time, don't step on anything, because even the tiniest change can alter the future in ways you can't imagine.
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Feb 11, 2021 22:17
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Cormack posted:If you think you can accurately time the market, congrats on your future billions skimming percentages as a hedge fund manager. If you don't think that's the case, the best time to invest is ten years ago. The second best time is today. A brokerage analyzed their most successful longtime clients and found that [a surprising percentage] were dead, and another [similarly surprising percentage] had forgotten they had an account.
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Feb 11, 2021 22:23
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Cormack posted:Any other aphorisms I should be cramming in here? Market Timing is for entertainment purposes only.
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Feb 11, 2021 22:25
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Cormack posted:If you think you can accurately time the market, congrats on your future billions skimming percentages as a hedge fund manager. If you don't think that's the case, the best time to invest is ten years ago. The second best time is today. Peter Lynch: "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves."
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Feb 11, 2021 22:34
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What does market timing then say for things like March 2020, when we have sudden large shifts in the market? Obviously no one knew what the bottom was, but if investing for the long term, doesn’t it make sense to put more than my regular allocation (obviously only if my own finances allow it) into VTSAX and the like when drops of that magnitude happen? If I’ve got a few thousand extra sitting around and the market drops 25% in a day, seems like a good time to put more money in
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Feb 11, 2021 23:49
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laxbro posted:Utilities aren't really that great for taxable accounts because their returns are generally in the form of large dividends. I guess that's mitigated because you think they will see a lot of growth in the coming decades. If this is serious investing for serious long term goals then you should keep the same allocation that you are using in your retirement accounts (eg. VTI/VXUS/BND). If you're speculating or gambling then utility ETFs seem like the most boring way to do that. A big reason I was looking at utilities was because you tax-advantaged qualified dividends. I'm mostly looking for something that can reliably generate money* while not being as susceptible to shocks should the market take a dump. I guess this is more a medium-term investment rather than a long-term. This may be the wrong thread to ask this in. *better than whatever Marcus is offering me right now which isn't much
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Feb 11, 2021 23:52
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King of all Machines Operate posted:What does market timing then say for things like March 2020, when we have sudden large shifts in the market? Obviously no one knew what the bottom was, but if investing for the long term, doesn’t it make sense to put more than my regular allocation (obviously only if my own finances allow it) into VTSAX and the like when drops of that magnitude happen? If I’ve got a few thousand extra sitting around and the market drops 25% in a day, seems like a good time to put more money in It’s a hard question to answer because when wild fluctuations happen, it’s usually around a time of extreme uncertainty so it’s when you are least likely to throw extra money in investing versus emergency savings. My reaction in March of 2020 was to work towards increasing my savings because “holy poo poo, the job market may not be as stable as it was a month ago.” Now, what can be said for sure: is at the most you should look at it as a bonus and don’t necessarily change your behaviors. So if the question is “should I wait to invest?” The answer is no. If you are doing the same investing you always planned to, and a huge dip happens so you decide to throw all your planned investing in early, that’s probably fine because earlier is better than later with the market anyway.
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Feb 12, 2021 00:27
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When the market booms or busts it shouldn’t affect your overall strategy because the 8% annualized return or whatever is inclusive of booms and busts. That being said, when you see the market taking a poo poo if you can invest intending to get returns in the far future you should invest heavily if it fits into your overall retirement strategy. Buffett_Burger_Quote.txt or whatever is my take, but strictly speaking it’s bad financial advice for retirement planning by the numbers to try to time the market. Time in market > timing market. When the market took a dump in March I got a cool 80% return in my brokerage account by investing it all into the same funds my retirement account is invested in and waiting a few months. It ruled so much I took that 80% return and turned it into a 20% return thinking I could do it again. Timing the market is a bad idea, even if you end up making money.
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Feb 12, 2021 06:16
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King of all Machines Operate posted:What does market timing then say for things like March 2020, when we have sudden large shifts in the market? Obviously no one knew what the bottom was, but if investing for the long term, doesn’t it make sense to put more than my regular allocation (obviously only if my own finances allow it) into VTSAX and the like when drops of that magnitude happen? If I’ve got a few thousand extra sitting around and the market drops 25% in a day, seems like a good time to put more money in in general terms, yes of course it's a cardinal rule to buy low, and a weak market represents the best chance for large gains. but even setting aside the loss of potential gains when you sideline your money waiting for some future crash, how can you ensure that you're going to catch that falling knife? the short duration of the crash last year is an aberration, brought on by a historically fast reaction from congress and the fed. very many bearish investors were caught flatfooted by the quick recovery in prices and lost money trying to time the crash how do you tell if the market is going to have a 2020 style crash that turns around in one month, a 2008 crash that turns around in one year, a 1973-74 crash that bottoms out after two years, or a great depression crash that doesn't hit rock bottom for a full four years? or you could be a japanese investor looking to pick up gains when the market was already one year into a crash, and 38% off of the peak in the winter of 1990. and in that case you'd barely be digging out of the hole on that move today, 30 years later sorry if i'm harping on this, but it's a recent revelation to me from the reading i've been doing, that avoiding the peak is not synonymous with finding the bottom, even if that's something that's easy to take away if you just look at the last 20 years of american markets
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Feb 12, 2021 08:03
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If you’re concerned about peaks/valleys you can always spread your investment over a long period of time. It’s not financially prudent but it’s psychologically helpful.
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Feb 12, 2021 08:07
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the nature of a generally rising market is that it is frequently at all-time highs there's also no guarantee whatever the next crash is drops us below our current prices, ever again if the market rises another 50% before crashing 30% that just puts us back where we started, and you would have missed dividends on the sidelines and that's assuming you time the bottom (you won't) and don't miss it entirely (you will) like so many bears in march/april
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Feb 12, 2021 08:10
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King of all Machines Operate posted:What does market timing then say for things like March 2020, when we have sudden large shifts in the market? Obviously no one knew what the bottom was, but if investing for the long term, doesn’t it make sense to put more than my regular allocation (obviously only if my own finances allow it) into VTSAX and the like when drops of that magnitude happen? If I’ve got a few thousand extra sitting around and the market drops 25% in a day, seems like a good time to put more money in It looks like every other time people time the market: some get lucky and some don't. It's nice to get lucky and catch the bottom or near-bottom but that's all it was, lucky.
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Feb 12, 2021 17:16
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Any here that was in a target date fund and rolled out into the individual funds? Was it worth it for you? My Vanguard accounts are now above 10k, so I can definitely move some stuff around to get into even lower fee funds.
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Feb 12, 2021 17:55
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I got riled up and timed the market once with my retirement accounts. I wound up being one of the lucky ones only because covid came out of left field and smashed the market in half. It wasn't at all because of the reasons I thought the market was sure to crash soon. If that hadn't happened I would have missed out on a shitload of growth. I learned my lesson; don't do what I did.
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Feb 12, 2021 18:05
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I timed the market last March-May and that money has grown 35-50% since then.
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Feb 12, 2021 18:10
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Yeah how can something be a bad idea if it worked out??
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Feb 12, 2021 18:12
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cheese eats mouse posted:Any here that was in a target date fund and rolled out into the individual funds? Was it worth it for you? My Vanguard accounts are now above 10k, so I can definitely move some stuff around to get into even lower fee funds. The benefit of target date funds is that it helps keep you from micromanaging/timing/being an idiot with your retirement account. Set it and forget it for 30 years or whatever. Paying a bit more for that convenience is fine if it keeps you from doing something dumb with your account. Then you can focus on living your life or trying to fine ways to save/earn more for retirement.
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Feb 12, 2021 18:22
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Does anybody have any opinions about TIAA? I work in higher ed so my 403b contributions + university match go towards an account there. Things seem to be performing well enough, though the expense ratios are definitely not as low as Vanguard's. Probably not worth it to go through the trouble of trying to consolidate it, if that's even possible?
Sardonik fucked around with this message at 22:40 on Feb 12, 2021 |
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Feb 12, 2021 18:23
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withak posted:I timed the market last March-May and that money has grown 35-50% since then. I'm going to quote myself from just a few posts up: totalnewbie posted:It's nice to get lucky and catch the bottom or near-bottom but that's all it was, lucky.
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Feb 12, 2021 18:39
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I was doing my taxes at the end of March 2020, and realized I hadn't made my 2019 Roth IRA contribution yet. It was a great stroke of luck, since I was able to make my 2019 contribution during a big dip in the market. I could have made my 2020 Roth IRA contribution at the time too. I didn't though, because I thought "the pandemic is going to get worse before it gets better, and there's good reason to believe the worst won't come until winter rolls around again." That prediction was exactly correct, as it turns out. But it also turned out that the market didn't give much of a poo poo about the winter pandemic surge. I would eventually make my 2020 Roth IRA contribution in January of 2021, after losing out on like $2000 in potential growth from it. But at least this experience taught me to not try and time the market. I made my 2021 contribution on the same day, without any attempt at market analysis.
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Feb 12, 2021 20:05
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King of all Machines Operate posted:What does market timing then say for things like March 2020, when we have sudden large shifts in the market? Obviously no one knew what the bottom was, but if investing for the long term, doesn’t it make sense to put more than my regular allocation (obviously only if my own finances allow it) into VTSAX and the like when drops of that magnitude happen? If I’ve got a few thousand extra sitting around and the market drops 25% in a day, seems like a good time to put more money in You can react to what the market does, but you shouldn't do in anything in anticipation of what you think the market is going to do. In March, I tightened my spending, scraped together some money, figured out how much I realistically needed for my emergency fund, and dumped as much as I could into VTSAX. The market could've gone down another 20% and it wouldn't have changed the fact that buying what I did when I did drove down my average share price because I'd been buying VTSAX at higher prices just a couple weeks earlier. Obviously these crashes tend to coincide with hard economic times, so it's when the market is down that your emergency fund can be the most important. You definitely don't want to end up running out of money and then having to sell at the lower prices, so it's something that you have to analyze on a case by case basis to make sure you don't end up getting caught with your pants down. These principles are important when you're retired as well, because reacting to what the market is doing is a great way to combat sequence of return risk. If you robotically withdraw 4% of your principal every year and the market crashes early, it can seriously hurt your retirement plan. But if you're flexible to what the market is doing, you can cut your expenses during those market crashes, and then increase your spending later when the market is high, and get the most bang for your buck.
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Feb 12, 2021 20:51
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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. As a follow-up, I'm thinking of simply buying shares of VOO - https://investor.vanguard.com/etf/profile/VOO. Super low expense ratio; I'm thinking of starting with 10 shares for now.
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Feb 12, 2021 22:58
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Red posted:As a follow-up, I'm thinking of simply buying shares of VOO - https://investor.vanguard.com/etf/profile/VOO. Super low expense ratio; I'm thinking of starting with 10 shares for now. If you're looking at ETFs is there a reason you chose VOO instead of VTI or VTSAX?
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Feb 12, 2021 23:05
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