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mekyabetsu posted:I finally have a good job and (relatively) stable career in my 40s, and I can max out my Roth IRA and 401k contributions. Is that still the best course of action for most people? Also, I have 3 401k accounts from previous employers with a few thousand in them. Can I roll those over into my current 401k at any time, and does that count toward my yearly contribution limit? Thanks, everyone! If you can do more, that's great, but without any more details that's a decent path forward. You should be able to roll old 401ks into new one, but depending on the fund options and fees it might make sense to leave them as-is. Rollovers would not count against contribution limits.
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May 27, 2022 14:09
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Questions about a Roth. I’m above the MFJ income limit to contribute ($0 allowed according to Schwab) to a Roth IRA. 1) Does this impact a Roth 401k (I assume not, but just verifying)? 2) What should I do with an old, existing Roth IRA? Just leave it? 3) If I have a Roth 401k and switch jobs (assuming income still above limits), can I still roll it into a Roth IRA, or is there something else I should do? PRADA SLUT fucked around with this message at 15:42 on May 27, 2022 |
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May 27, 2022 15:37
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PRADA SLUT posted:Questions about a Roth. 1) It does not. 2) You can leave it. You can also still contribute to it via the backdoor, i.e. contribute to a traditional IRA and then convert it to Roth. But that is only really an option if you otherwise have no money in a traditional IRA. 3) Yes, you can roll it.
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May 27, 2022 18:35
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Jows posted:Oh homey, you gotta fix that. They ditched their separate money market and trad savings accounts a few years ago and now just offer a "performance savings" account or something similar in wording. I can't believe I didn't find out about this before now. Motherfuckers.
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May 27, 2022 19:34
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PRADA SLUT posted:3) If I have a Roth 401k and switch jobs (assuming income still above limits), can I still roll it into a Roth IRA, or is there something else I should do? You can leave it in the old Roth 401(k), you can roll it over into a new employer's Roth 401(k), or you can roll it over into a Roth IRA. You would typically make this decision based on where you would be getting the best investment options at lowest cost, but there are distribution differences that could matter to you: https://www.investopedia.com/articles/retirement/09/roth-401k-rollover.asp
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May 27, 2022 19:41
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PRADA SLUT posted:I have my cash accounts at Ally. Is there any reason to not use them for "boring" long-term investment accounts, like a brokerage or IRA? Think like Vanguard mutual funds/ETFs and things. They're fine, but unless they changed things the UI is pretty primitive. IIRC they're using the old TradeKing frontend. It's fine for boring stuff that you intend to buy and hold or whatever but I wouldn't want to use it for active trading.
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May 28, 2022 16:44
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I'm likely changing jobs soon and while the new job has a pension it's not the same pension as the job I'm leaving. I am tempted to leave that pension and associated individual account program alone but the pension formula is heavily tied to years of service. This means I'm vested with my 5+ years but wouldn't earn much at all from the actualization of that pension at retirement. Does anyone know anything about pension payouts, rollovers, etc.?
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May 28, 2022 17:51
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Eric Cantonese posted:I can't believe I didn't find out about this before now. Motherfuckers. I've found its nearly impossible to find a savings account that actually offers market leading rates for any substantial period of time (like more than a couple years). Banks dont like paying interest. I decided to just say gently caress it and keep my savings-like funds in short term bond funds. Some years they will do worse than the best savings accounts but at least you dont have to constantly open new accounts to chase rates.
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May 28, 2022 18:45
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drk posted:I've found its nearly impossible to find a savings account that actually offers market leading rates for any substantial period of time (like more than a couple years). Banks dont like paying interest. This is what I did and then I discovered that the Feds raising interest rates makes the value of bond funds plummet. Which I probably should have been able to see coming, admittedly.
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May 28, 2022 18:56
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Bremen posted:This is what I did and then I discovered that the Feds raising interest rates makes the value of bond funds plummet. Which I probably should have been able to see coming, admittedly. Sure, but like VGSH (short term treasury ETF) "plummeted" by 3% over the past year and is currently yielding 2.5%. This is probably the worst possible year for these kind of funds. If the thought of losing a few% doesnt work for you (like, if you need the money for a imminent house down payment), its not for you. I'm also not suggesting putting short term savings into intermediate or longer term bond funds, which obviously have larger draw downs during rising rate environments.
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May 28, 2022 19:05
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The Puppy Bowl posted:I'm likely changing jobs soon and while the new job has a pension it's not the same pension as the job I'm leaving. I am tempted to leave that pension and associated individual account program alone but the pension formula is heavily tied to years of service. This means I'm vested with my 5+ years but wouldn't earn much at all from the actualization of that pension at retirement. Does anyone know anything about pension payouts, rollovers, etc.?
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May 28, 2022 19:30
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Full control does seem much better. The pension's IAP fund has consistently underperformed some typical index funds and it's a public employer so the it's always subject one poo poo law or another coming out of the statehouse. The only thing leaning me towards leaving it alone is the notion that I may one day rejoin the public sector in Oregon. If that happens it'd be nice to have the 5 years added to whatever else I accumulate for the purpose of that pension calculation. Of course if I never rejoin the public sector it will be a formula based on a 30 year old salary that has been neutered by inflation.
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May 28, 2022 20:43
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Rolling it to a 401k would let you avoid taxes on the distribution. Just make sure your 401k administration allows pension->401k rollovers. You also obviously need to have a lump sum distribution option.
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May 29, 2022 00:14
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Ally just went from 0.6 to 0.75%. It’ll keep climbing (under current conditions).
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May 29, 2022 03:51
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Duckman2008 posted:Ally just went from 0.6 to 0.75%. It’ll keep climbing (under current conditions). Savings accounts to the mooooooooon
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May 29, 2022 04:05
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Question on on I-Bonds: The current rate is 9.62%. I know the rate will readjust in six months, but that seems like a really good current rate to throw some money at. Thoughts?
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May 29, 2022 04:20
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PRADA SLUT posted:Question on on I-Bonds: I agree that is a good current rate. I think you should scroll back about 10 pages and read and you'll get some good feedback on this topic.
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May 29, 2022 06:35
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PRADA SLUT posted:Question on on I-Bonds: It's good. If you can spare the money for a year and 3 months, go for it.
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May 29, 2022 08:01
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The Puppy Bowl posted:It's good. If you can spare the money for a year and 3 months, go for it. Somewhat related. Sitting on a small amount of money for kids. Currently in an ally account, but looking at perhaps I bonds or some other lower risk investment. Trying not to gamble the money and happy paying taxes until gifted to kids in twenty years. Thoughts?
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May 29, 2022 13:27
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I-bonds are a max 10 k annually, 15 if you buy a five thousand dollar paper version with your tax rebate. They're incredibly safe guaranteed return on an interest rate that changes every 6 months but they're also designed as inflation protection. Meaning you're not really making money so much as you're not losing it to inflation. Have to hold for a year to vest your interest and hold for 5 years to avoid paying a penalty of the latest 3 months of interest when cashing out. A very nice place for your money in this period of high inflation and poor market returns. Not really the long term investment to hand down to your kids.
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May 29, 2022 14:17
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I bought 3k in I-Bonds late last year, and then I've bought another 8k or so this year. I'll probably to put the other 2k at the current rate to hit my yearly max. But then I realized that as I let them ride being their 1 year lock in, they serve as a cash-like instrument in my portfolio. If that's true, it means my overall emergency fund / cash allocation would now be too large. I already keep ~9 months of expenses in checking + savings, and then the I-Bonds effectively add many more months on top of that. How are y'all handling that overweighting in your allocations? At my current savings rate I could keep buying $5-10k of I-Bonds every year on top of all my maxed retirement contributions, but I'm wondering how much sense that actually makes vs. just keeping what I've got and putting that money into my taxable investments instead.
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May 29, 2022 14:50
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Just replace most of your emergency fund with the I Bonds after the year waiting period is up.
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May 29, 2022 15:04
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Do note there is often some friction in transforming a I-Bond into cash. Archaic government bureaucracy password resets, waiting for a business day, etc. So it's not really a one to one replacement for an emergency fund.
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May 29, 2022 15:09
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I-Bonds are, without a doubt, a fantastic asset to have purchased towards the end of last year or start of this year. But do you all regularly max out I-Bonds purchases every year as part of your long-term investment policy, perhaps as a rolling supplement to a cash e-fund? And if not, how do you square purchasing them right now with the conventional wisdom in this thread "not to time the market"?
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May 29, 2022 15:17
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The Puppy Bowl posted:Do note there is often some friction in transforming a I-Bond into cash. Archaic government bureaucracy password resets, waiting for a business day, etc. So it's not really a one to one replacement for an emergency fund. Do one month of expenses in a normal savings account and the rest in ibonds.
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May 29, 2022 15:21
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The Puppy Bowl posted:Do note there is often some friction in transforming a I-Bond into cash. Archaic government bureaucracy password resets, waiting for a business day, etc. So it's not really a one to one replacement for an emergency fund. That is true but I think most of us using I Bonds are able to float most/all emergencies on credit cards until getting the cash out. pmchem posted:I-Bonds are, without a doubt, a fantastic asset to have purchased towards the end of last year or start of this year. I honestly had no idea about them. Looking back when my Ally and HMB were getting ~3% my emergency cash was doing as well/better than I bonds. Going forward I will consider them as part of my strategy for my cash savings. I probably will put ~50% of my cash in them at most though.
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May 29, 2022 15:33
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The Puppy Bowl posted:I-bonds are a max 10 k annually, 15 if you buy a five thousand dollar paper version with your tax rebate. They're incredibly safe guaranteed return on an interest rate that changes every 6 months but they're also designed as inflation protection. Meaning you're not really making money so much as you're not losing it to inflation. Have to hold for a year to vest your interest and hold for 5 years to avoid paying a penalty of the latest 3 months of interest when cashing out. I just decided I am going to pull the trigger on i-bonds as a way to set aside money for the additional taxes I’m expecting to pay next year. (It’s going to be due before a full year has passed, technically, so I am going to use another bucket of set-aside cash for the actual payment, but am justifying it in my head as at least protecting most of that money from inflation through i-bonds…).
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May 29, 2022 15:48
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SpelledBackwards posted:I bought 3k in I-Bonds late last year, and then I've bought another 8k or so this year. I'll probably to put the other 2k at the current rate to hit my yearly max. But then I realized that as I let them ride being their 1 year lock in, they serve as a cash-like instrument in my portfolio. I know that’s not the right way to think about it, but I am basically assuming at this point that my money in stocks is unlikely to go up more than 10% over the next year, so the stocks vs. cash or ibonds really doesn’t feel overweight. Of course that may change by this time next year - it’s just this year (hopefully!) that seems particularly super unstable. I never would have even considered ibonds at any time over the last ten years.
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May 29, 2022 15:50
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beefnchedda posted:Somewhat related. Sitting on a small amount of money for kids. Currently in an ally account, but looking at perhaps I bonds or some other lower risk investment. Trying not to gamble the money and happy paying taxes until gifted to kids in twenty years. Thoughts? Conversely, I just don’t see ibonds as being any kind of a good long-term investment. The 9.6% they are giving this year are a huge aberration, and they are not designed to produce returns - they are designed to offset inflation. If you have a twenty-year horizon, do a 60-40 or 70-30 allocation to a US all-stock-market ETF vs. non-US-all-stock-market ETF, and call it a day. Don’t leave it in an ally account or any cash equivalent.
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May 29, 2022 15:53
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tpink posted:Conversely, I just don’t see ibonds as being any kind of a good long-term investment. The 9.6% they are giving this year are a huge aberration, and they are not designed to produce returns - they are designed to offset inflation. If you have a twenty-year horizon, do a 60-40 or 70-30 allocation to a US all-stock-market ETF vs. non-US-all-stock-market ETF, and call it a day. Don’t leave it in an ally account or any cash equivalent. Agreed. We're in an extreme outlier moment where high inflation and reasonable expectation of poor market returns make I-Bonds a fantastic place to put your money shortterm, after you get any employer contribution, and probably after you invest to you max contribution in a Roth IRA.
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May 29, 2022 16:00
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pmchem posted:And if not, how do you square purchasing them right now with the conventional wisdom in this thread "not to time the market"? I-Bonds are not “the market” though. Market forces impact the fixed rate that the treasury assigns to current available bonds, but from a market perspective, they have been mispriced for years. If institutional investors could load up on I-Bonds and they were sold at auction and secondary markets, the fixed rate would have been bid way down years ago. And those types of inflation protected bonds exist… they are called TIPS and their real rates have been substantially worse than I-Bonds with more risk (I-Bond has very low duration risk due to cheap put option in initial years after a very short holding period). Loading up on TIPS beyond your designated asset allocation due to sudden fear of inflation is market timing. I-Bonds are different as long as you are not replacing equities with them. In answer to your question though, I have been buying max $10k for myself and my wife every year for around 6 years now.
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May 29, 2022 16:23
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pmchem posted:I-Bonds are, without a doubt, a fantastic asset to have purchased towards the end of last year or start of this year. Also it’s not really “timing the market” if they literally tell you what you’re going to earn if you buy today. Maybe in the most technical of senses, but literally every time you put money somewhere you are making a decision that you think this is going to be the best option for that money relative to other investments, which you actually have no way of knowing.
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May 29, 2022 16:45
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The common comparison for the role of bonds in one's portfolio is ballast. Bonds are supposed to (but don't always!) sit fairly still and generate a small yield, not outperforming equities but not wobbling around and crashing, either. A 100% equities portfolio that grows quickly can also crash quickly. Looking at the performance of BND, Vanguard's total bond market ETF, we see the following average annual returns based on NAV: 1 year -8.57% 3 year 0.38% 5 year 1.19% 10 year 1.69% Since April 2007 3.24% After taxes on distributions and sales of fund shares: 1 year -2.38% 3 year 0.92% 5 year 1.21% 10 year 1.22% Since April 2007 2.26% Not amazing returns, but still a relatively safe vehicle to stash part of one's portfolio and probably get a little over one percent back per year (no doubt higher if accounting for compounding). Turning to the topic of I Bonds, which have recently offered six-month returns of 1.77% starting May 2021, 3.56% starting November 2021, and 4.81% starting May 2022. Each of these amounts is superior to the NAV and after-tax average returns* of BND for over the past decade. If I Bonds barely keep up with inflation, then bond indexes and high yield savings accounts are falling way behind. Also consider the "ballast" effect applies to one's own dumbassery and prevents fiddling with allocation amounts, falling prey to overconfidence, or being fooled by the latest guaranteed ten-bagger that shits the bed. *Returns on I Bonds are subject to federal income tax but not state. Federal I Bond income tax can be paid regularly or all at once upon cashing out, so comparing the after-tax returns to BND is too variable to estimate. FWIW, I Bonds weren't on my radar until October 2021 when goons here started ringing the bell about them. Since I Bonds must be purchased directly from the US Government and have no secondary market, they tend to be fairly obscure except for "what are I Bonds?" fluff pieces responding to upticks in searches/purchases. Space Fish fucked around with this message at 17:30 on May 29, 2022 |
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May 29, 2022 17:26
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I, for one, can't wait for all of the confused people asking questions on the internet the next time I Bond rates go back to literally zero.
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May 29, 2022 17:32
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I'm treating I-bonds as pseudo cash and am slowly converting half of my cash (short/medium term savings) to them. I'm keeping my e-fund in a HYSA until my first I-bonds pass the 5 year mark, then I'll probably start converting half of that to I-bonds too. Eating the inflation loss in a HYSA is preferable to not having my e-fund available in an emergency, so I'm using the bonds for the roof replacement/next car fund until they're freely available. I-bonds don't take the place of standard bonds in my retirement portfolio. They're cash, but slower.
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May 29, 2022 17:58
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withak posted:I, for one, can't wait for all of the confused people asking questions on the internet the next time I Bond rates go back to literally zero. Yup. Imagine it’ll be well within five years. But who knows.
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May 29, 2022 19:01
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withak posted:Just replace most of your emergency fund with the I Bonds after the year waiting period is up. Aside from the process of getting your money back - is there any downside to putting your 6 months savings into nearly entirely I-Bonds? Granted, it'd probably take me a few years and if the rates do go down there's nothing stopping me from simply transferring it to a High Interest Savings account.
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May 29, 2022 20:37
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Crosby B. Alfred posted:Aside from the process of getting your money back - is there any downside to putting your 6 months savings into nearly entirely I-Bonds? Granted, it'd probably take me a few years and if the rates do go down there's nothing stopping me from simply transferring it to a High Interest Savings account. Compared to a HYSA, the only downside is it will probably take you a week to transfer your money out, you need to deal with the first 12mo issue, and your rate is reduced a bit if you withdraw before 5 years. Personally, I've replaced 80% of my e-fund with ibonds, the remaining 20% stays in synchrony since I don't envision needing more than that without at least a little notice. Like you say, if ibond rates drop down below HYSA rates then I'll consider moving it back, but even that isn't a slam dunk; even before all this it was pretty rare for HYSA rates to beat inflation by any significant margin, and switching back to ibonds again takes time due to the limit. Speaking of, does anyone else find it deeply ironic that the limit itself isn't indexed to CPI? The effective limit is like 25% less than it was 10 years ago.
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May 29, 2022 20:54
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Eyes Only posted:Speaking of, does anyone else find it deeply ironic that the limit itself isn't indexed to CPI? The effective limit is like 25% less than it was 10 years ago. Very few govt things are indexed to inflation. Dependent care flex accounts have been stuck at $5k since the loving 80s.
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May 29, 2022 21:33
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Eyes Only posted:Compared to a HYSA, the only downside is it will probably take you a week to transfer your money out, you need to deal with the first 12mo issue, and your rate is reduced a bit if you withdraw before 5 years. I would think your credit limit would also affect how you plan your emergency fund. Mine is equal to about 6 months' living expenses so I would have no problem putting almost all my cash in I bonds.
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