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cheese eats mouse posted:Anyone have a good site to project your savings into retirement? I used to use Personal Capital's tool, but they've decided to not fix a bug that categorizes my 401k as cash (and I can't fix it manually) and not recognize my monthly contributions and it's all messy to use. Trying to figure out how on track I am. I do feel like I'm good or slightly ahead. We've talked about a house purchase in >5 years so I want to see if I can start allocating some or all of my taxable funds into down payment savings. I'll probably use the i-bonds as the "starter" fund as I bought in 21 and 22 so that maturity horizon fits for me. I'm maxing my Roth and 401k every year and doing about 20k a year to taxable. If you spend $37k / year, that's like $1.2m needed. Currently with like $230k? Rule of 72. $450k in 9 years, $900k in 18 years, $1.2m in I dunno like 22 years or something. If you're 35, that's 57. Assuming no lifestyle inflation (hah you said you want to buy a house so this is a bad assumption), you seem to be in okay shape.
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May 24, 2023 23:45
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cheese eats mouse posted:I'm maxing my Roth and 401k every year and doing about 20k a year to taxable. If you're doing this and you're 35, you're going to be fine. There are a million calculators online, but you're relatively far from retirement so small adjustments in expected annual returns are going to make a big difference in the final outcome. Also, you dont know what your expenses will be in 30+ years, what tax rates will be, etc, etc
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May 25, 2023 00:06
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cheese eats mouse posted:Anyone have a good site to project your savings into retirement? I used to use Personal Capital's tool, but they've decided to not fix a bug that categorizes my 401k as cash (and I can't fix it manually) and not recognize my monthly contributions and it's all messy to use. Trying to figure out how on track I am. I do feel like I'm good or slightly ahead. We've talked about a house purchase in >5 years so I want to see if I can start allocating some or all of my taxable funds into down payment savings. I'll probably use the i-bonds as the "starter" fund as I bought in 21 and 22 so that maturity horizon fits for me. I'm maxing my Roth and 401k every year and doing about 20k a year to taxable. I think I got this from someone in this thread: https://firecalc.com/. I can't vouch for its accuracy or anything, but maybe it'd help you. Note that it assumes you're retiring now I think unless you explicitly choose otherwise (since it's a FIRE thing after all). Edit: Actually I can't tell if this is working for a future retirement date now. I punched in my stuff and the starting balance on the graph seemed oddly low for a retirement so far off. Maybe I'm messing up somewhere though. incogneato fucked around with this message at 01:10 on May 25, 2023 |
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May 25, 2023 00:47
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Pollyanna posted:I still intend to buy a house, because I want one and really hate being constricted by renting and landlords and all that bullshit. Given the market ( This is the sort of thing that you really want to get a fiduciary to give you a real answer, because it's got so very many variables. I sold some of my stocks when buying my first house so I could cross a DTI threshold without dipping into my e-fund, but also I was able to sell some at a loss so I could offset capital gains on the rest. All of it was in individual stocks that I'd had since the 90s, and I was single and 20+ years from retirement. Those things added up to a good choice for me, then, and let me stabilize my housing costs while I also pulled my money out of some companies I no longer wanted to be invested in. I don't know if I'd do the same thing today because everything is so different now. In general, sinking some of a diversified portfolio into a house purchase is a concentration of risk. There is a greater chance of something bad happening to that money when it's locked up in your house than there would be as shares in a broad index fund. You are also reducing your liquidity because you can't get that money back until the house sells or you refinance into more debt. If the sale would provide a significant advantage, such as enabling a cash offer  or saving you significantly on the mortgage, it might be worthwhile, if you have recovery time before you plan to use that money to live on. At a 6% interest rate, a dollar you don't borrow now saves almost five dollars in interest by the end of the loan. At 8% it's almost 10 dollars saved. Would that dollar make you more money as an investment? Will you make more dollars in salary as time passes and be able to invest more as a result?I guess the heart of the matter is just what is the best thing for you to do with your windfall. Investments keep you flexible and might make your retirement better (or sooner). A better house might improve your standard of living. A house that you pay less of your paycheck to own might relieve a lot of stress. All of those things seem pretty good, but picking what's best for you depends on a lot more of your personal situation than we can/should discuss here. Having an advisor look at your finances and help define your goals will give you a better sense of where you want to go, and thus how you want to get there. The good news is that your conundrum comes from having extra money, so as long as you don't burn it for warmth, buy a bar, or dump it in a meme stock you're probably going to come out all right in the end.
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May 25, 2023 05:15
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), I’ve idly considered using the money in my taxable brokerage account alongside the 20%+ down payment I’ve already got. It would mean trading about 62% of my existing retirement nest egg as of mid-2023 (the rest is in my IRAs and 401k) in exchange for some extra purchasing power and a possible extra advantage in negotiating a home purchase.
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DACK FAYDEN posted:Anyone got recommendations for brokers in Europe? Moving at some point in the next couple years. Ideally one that specializes in dealing with needy expats who want to replicate Vanguard indices elsewhere and don't mind being US-heavy (if that's even legal, I have no idea) Degiro
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May 26, 2023 10:39
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Pearls of wisdom in the stock picking thread todayArtonos posted:Just don't sell at a loss over the next few weeks if anything goes wrong. It'll more than likely return to it's correct level eventually.
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May 26, 2023 22:13
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DACK FAYDEN posted:Buying BRK-B as an ersatz "entire market" is clever. That's on the short list now. Make up your mind, you plan on buying it, or shorting it? 
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May 27, 2023 18:38
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Money market account drama, from Vanguard of all places: https://www.investmentnews.com/finra-fines-vanguard-800000-for-misleading-information-on-money-market-accounts-238099 Relatively small fine for not acting on an automated error regarding money market yields. But still!
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May 27, 2023 20:04
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Hey all, I hope I'm not overstepping my bounds by asking all this but my wife and I are finding ourselves overwhelmed with investments and don't know what to do. When I was in undergraduate and post-graduate I taught Dave Ramsey's financial class thing at my church for a few years, so I at least had some knowledge about finances. I feel like through the story I'm about to tell that past experience was helpful at least to avoid some pitfalls, but at this point my knowledge base just isn't enough and that's why I feel lucky to have found this thread. About six years ago when I finally completed post-graduate training and got my real job I got connected with a financial advisor through a close friend. They were through Northwestern Mutual. He always felt to have our best interests at heart, never felt like he was forcing products on us or anything. Through him we got to a point (that we're at now) where we are maxing out our 401a and 401k employee plans, contributing to an additional 403b my job offers, also contributing to a brokerage account used to invest in low-moderate risk long term mutual funds (I believe through American Funds). We also both got term life insurance policies for 1 mil, disability for myself (as I'm the primary earner) that supplements my employee disability, and the last thing several months later he offered to us was a small whole life insurance policy to primarily use as an investment vehicle. This financial planner left NWM, and we just got connected with two others who took over our account. It has only been a few years we have been following our financial plan, so not that long. So we have met with these new NWM financial planners twice now, and they are suggesting that we did wrong by having Term life insurance, and should switch all that to Whole Life policies. One big reason for that is that we have term 80 insurance with premiums that increase with age, and by age 65 or so those premiums become kind of ridiculously high. I think I understand both schools of thought of a) have term and invest the difference or b) use whole life primarily as an investment vehicle so in retirement if the market is having a bad year you can pull from those policies instead, and not put undue losses on your primary nest egg; the death benefits are just an added nicety when we die. I also think I understand that the purpose of a term life insurance policy is to cover us until we get to the age where our retirement plans mature. I also feel like I am right in the idea that while our prior financial planner is making some money off the plans he sold us, these new planners don't make any money off of us until they sell us something new. So I am getting kind of concerned to hear the idea from these two new guys to change our term all over to whole. Like, I understand the premiums do eventually get very high, but by that time we would not need the policy, anyways. Their suggestion is that we need to get into whole life policies early so that they accrue enough cash value to be both a death benefit and an investment vehicle (for years w/ negative market activity, etc). I know any whole life policy with a million dollar death benefit will be stupidly expensive and I'll lose a lot of money to them in fees, as well. Are who totally screwed here? Is our current plan OK with term and a small whole life policy? Is transitioning it all over to whole life actually a good idea in our situation because of how diversified we already are? Granted, after actually paying attention to all this stuff in every detail for once, I am definitely going to find us a second opinion ideally from a financial planner that's not affiliated with a product they can sell. I am worried that we got yoked to NWM through our brokerage account and other stuff, and if we wanted to completely leave them and transition all our investments over into some independent accounts it would be breaking some contract or just be impossible. People can do that, right? For instance, my wife and I are moving at the end of the month and got new jobs, and these two new NWM planners want to help us role over our previous employer's 401k and 401a into our IRAs. But the paperwork regarding it says there is a 1% annual fee that they keep as earnings on the money we roll over, annually. That blows me away. 1% of say $200k per year seems like a really great way of eating up our investment over the next 10 years. It's all freaking me out and makes me want to find a way to become independent from a planner trying to get us to enter into agreements like sooner than later. Maybe we are just freaking out for nothing though. We just don't know what standard looks like.
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May 27, 2023 21:43
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You don’t want/need whole life. You want term life for until such age as no one is dependent on your income. I told my family members to get term life until an age where their kids are grown up on their own.
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May 27, 2023 21:54
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FYI NWM "financial advisors" exist to sell you life insurance. Any other good advice they might give you during the process (which it sounds like the original guy did) is incidental. The new guys are just trying to upsell you. It's extremely unlikely that whole life insurance is something that you actually need. I don't know how their investment accounts work but you can very likely transfer your investments (retirement accounts and taxable) to another broker if you want. withak fucked around with this message at 21:58 on May 27, 2023 |
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May 27, 2023 21:54
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Whole life is a scam, and anyone who suggests it should be removed from your financial planning team immediately.
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May 27, 2023 21:56
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Run from NWM.
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May 27, 2023 21:57
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I can’t speak to the life insurance question but a 1% annual fee on an IRA is highway robbery and I wouldn’t trust a single word out of the mouth of anyone trying to sell me one. (For comparison, IRAs from Fidelity, Vanguard, and Schwab are completely free, and you can open one right now yourself in five minutes online.)
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May 27, 2023 21:58
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Also Dave Ramsey serves a target audience of people who really don’t know anything about anything. You’ve clearly grown past that now and should consider forgetting a non-zero percentage of what he says and using other sources now (if you haven’t already!)
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May 27, 2023 21:59
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American Funds are utter trash, as well as whole life insurance policies. You are correct that advisors/managed funds that are charging 1% assets under management fees are crazy (if sadly commonplace for places that prey on the unaware). If your assets grow at ~5% a year, they are taking 20% of your growth! Your first advisor may have been shielding you from some of NWM's scumminess and was good to direct you to term life insurance. Definitely don't move your 401k/IRAs there or switch to whole life insurance. You are correct that its much better to invest now vs buying whole life insurance. Whole life insurance is essential just normal investing with extra fees added on. And if you invest now, you don't need life insurance when you are 65+ since you've been investing for the past 30 years. The point of life insurance is to not leave your family in the lurch if you die and they loose your income, especially if you have kids. We would generally recommend moving to a low cost self directed brokerage like Vanguard or Fidelity. There may be NWM fees, and there will certainly be taxes, owed to make the move, but they will pay themselves back very quickly on a retirement horizon. If you look up the load fees of the funds you are in and your cost basis we can help estimate those. A fiduciary fee-only financial advisor is also a good idea. They have both a duty to act in your interest and are paid a flat hourly rate not based on what you buy or have invested with their company. You would get broadly the same advice here, but not from random strangers on the internet.
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May 27, 2023 22:04
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Term life is for when you have dependents and what you want it to do is prevent your untimely (pre-retirement) death from ruining their financial security. It gets crazy expensive as you get old you're not supposed to ride it until it pays out. Ideally what happens is you just stop wasting money on life insurance once you know your family is set up fine even if you die tomorrow. Having the life insurance is good, being dependent on a payout for your financial plan to work is... not good. Best case scenario is you secure your retirement, cancel the policy, and live to a ripe old age.
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May 27, 2023 22:06
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I would run, not walk, from those guys for the reasons people listed above, but also: check the fees on those American Funds you're in. If you're paying 5.75% load fees in the year of our lord 2023 (as it appears some of these funds charge), you are being absolutely fleeced.
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May 27, 2023 22:21
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This is all helpful and what my insides were telling me. So what about this school of thought that whole life used as an investment in retirement so if the market has a bad year you can draw from it instead of from your primary retirement plan? Why is that incorrect? I have seen that written, shown in video form, in multiple places. On the other hand the vitriol towards whole life everywhere else on the internet is huge lol. What am I missing about this theory or use case? Is there a different investment with similar tax benefits that people generally use like this instead?
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May 27, 2023 22:57
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Just gonna go ahead and quote this here, it's linked in the OP and I'm proud of myself so you have to tolerate my self-congratulatory attitude. Leperflesh posted:Here's the thing. Everyone is guaranteed to die. Imagine you're an insurance company. Why would you want to sell an insurance policy that 100% of your policy holders will end up making claims against? Blind Rasputin posted:This is all helpful and what my insides were telling me. So what about this school of thought that whole life used as an investment in retirement so if the market has a bad year you can draw from it instead of from your primary retirement plan? Why is that incorrect? I have seen that written, shown in video form, in multiple places. On the other hand the vitriol towards whole life everywhere else on the internet is huge lol. What am I missing about this theory or use case? Is there a different investment with similar tax benefits that people generally use like this instead? You can do this with an annuity, but those are also expensive. The reality is that you should be saving enough for retirement that even if there's a sequence of years of bad return (this is called "sequence of returns risk") there's still enough money to see yourself through. When you're near retirement, a larger percentage of your investments should be in lower risk options like bonds or CDs, and when you are actually retired you should have at least a year or two of your needed income in cash or cash-equivalents (in your investment accounts). The idea that you'll face a huge recession and be wiped out right when you need money is the reason for saving up lots of money for retirement. The idea that a whole life insurance program will save you from that is fearmongering. You'll have your social security, you'll have your nest eggs, you'll have a big chunk of your money stored in ways that aren't overexposed to near-term risk, and you'll be fine. Remember, the money you're investing instead of whole life is your insurance. And that money doesn't magically automatically go poof if there's a recession, it only does that if you unwisely had all of it in risky investments like stock funds at age 65. Just... don't do that. Leperflesh fucked around with this message at 23:03 on May 27, 2023 |
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May 27, 2023 22:57
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Blind Rasputin posted:This is all helpful and what my insides were telling me. So what about this school of thought that whole life used as an investment in retirement so if the market has a bad year you can draw from it instead of from your primary retirement plan? Why is that incorrect? I have seen that written, shown in video form, in multiple places. On the other hand the vitriol towards whole life everywhere else on the internet is huge lol. What am I missing about this theory or use case? Is there a different investment with similar tax benefits that people generally use like this instead? I’ll give you a story I have posted here before. Preface: I came from middle class background, not rich but certainly fortunate. I was born in 1986. My grandfather at the time decided to take out about $6,000 in whole life insurance for me as a gift. FYI there was no further contributions whatsoever, but Great gesture right ? Fast forward , it’s 2013 and I finally get the details on this policy. Ok cool. I check in on where it’s at. It’s at about $7500ish. The reason is that the fees for whole life were something like $500 a year (I think that’s what I remember). If my grandfather (not that he knew it’s all good) had just put it in general index funds, as an example S&P 500, instead of $7500, I would have had about $35,000 if I remember the math right. Whole life insurance is a scam. It’s literally just investing but they charge a high fee because it’s also life insurance.
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May 27, 2023 23:06
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dexter6 posted:Also Dave Ramsey serves a target audience of people who really don’t know anything about anything. You’ve clearly grown past that now and should consider forgetting a non-zero percentage of what he says and using other sources now (if you haven’t already!) I listen to his radio show for entertainment but he really loathes whole life insurance and rants about it occasionally. He also recommends term life instead.
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May 27, 2023 23:15
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Blind Rasputin posted:This is all helpful and what my insides were telling me. So what about this school of thought that whole life used as an investment in retirement so if the market has a bad year you can draw from it instead of from your primary retirement plan? Why is that incorrect? I have seen that written, shown in video form, in multiple places. On the other hand the vitriol towards whole life everywhere else on the internet is huge lol. What am I missing about this theory or use case? Is there a different investment with similar tax benefits that people generally use like this instead? You CAN do this with whole life, but anything that your whole life funds are invested in, you could invest in directly without the dragging fees (sometimes over 50% of your growth). One of the points of diversified investing in general and retirement planning in particular is to have the right asset mix for the situation. Stocks may poo poo the bed while you are retired, if you live to 80+ they almost certainly will, but those periods are when you draw from your bonds or other stable investments instead.
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May 27, 2023 23:26
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drat wow. Well I’m really glad I came to this realization before doing the roll over of my current employer’s 401a. That’s our current “nest egg” and it’s been growing real well. I saw the rollover paperwork and it just slammed the brakes on this whole thing so fast. I can roll it over into a far better system that’s not loving us. We only have about $20k in the American funds brokerage account and yeah I guess we will lose some in fees and taxes to move it out to something better but now is the time. I guess if it’s some insane exhorbitant fee we could just let it alone but never deposit money into it again, forget about it and let it grow. Man, I just knew there was something somewhere that was going to allow them to leech off our investments for the rest of our lives. I kept asking these guys how they got paid and they finally said “well it’s 1% of your investments so… whatever that is..” and my brain was doing math, having trouble believing the math could be right. Then that same night when I read the paper language and did the math again I couldn’t f’ing believe it. You guys are awesome. Thank you. Worst thing we could do is squander the next 30 years of hard work. And that stuff about structuring retirement years with emergency cash and bonds, etc, makes a lot more sense than using a whole life policy now that I hear it.
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May 28, 2023 00:40
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Rollovers (to Vanguard at least) are super easy - the worst you have to do is get mailed a check if the previous provider won't cut it straight to Vanguard. And if that's the case you can cash it with the Vanguard mobile app!
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May 28, 2023 01:11
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Be careful if there are any taxable investments with them. You need to transfer the actual assets to another broker, not cash out and reinvest elsewhere. You will have to pay taxes if you sell anything in the process.
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May 28, 2023 01:25
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withak posted:Be careful if there are any taxable investments with them. You need to transfer the actual assets to another broker, not cash out and reinvest elsewhere. You will have to pay taxes if you sell anything in the process. Yeah, but probably worth taking the tax hit to get out of the expensive funds, as long as it's not a surprise. Wouldn't be particularly excited about transferring American funds to Vanguard in-kind. All depends on how bad they are I guess. runawayturtles fucked around with this message at 02:14 on May 28, 2023 |
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May 28, 2023 02:12
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Duckman2008 posted:I’ll give you a story I have posted here before. Yeah sure if you do the math that way it looks bad but what if you died five years ago then what do the numbers look like
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May 28, 2023 05:28
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Blind Rasputin posted:Man, I just knew there was something somewhere that was going to allow them to leech off our investments for the rest of our lives. I kept asking these guys how they got paid and they finally said “well it’s 1% of your investments so… whatever that is..” and my brain was doing math, having trouble believing the math could be right. Then that same night when I read the paper language and did the math again I couldn’t f’ing believe it. Yeah. There's a fun little sleight-of-hand with some of these guys. "I'm paying 1% of AUM for financial advice." That's actually not bad, or at least not crazy. This stuff is complicated and I don't blame anyone for wanting someone to hold their hand along the way. It makes you think you're getting a fair deal. But the fair deal turns into highway robbery when they're also getting commissions on insurance and load fees on mutual funds.
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May 28, 2023 13:32
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bird with big dick posted:Yeah sure if you do the math that way it looks bad but what if you died five years ago then what do the numbers look like I can’t tell if this is sarcastic or not , but 1.5 times my salary to my wife from my work provided life insurance ?
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May 28, 2023 14:00
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Also, 1% AUM means you pay more and more over time, but I doubt anyone actually does any more work for you.
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May 28, 2023 14:03
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Are there any non-529 tax-advantaged custodial accounts for kids that can be created without child labor? I've got a baby and a 4 year old, and I'd like to invest in custodial accounts for each of them, and allow compounding gains to work their magic for several decades, toward whatever they ultimately need that money for (housing down payment, retirement, etc.) Roth IRAs would obviously be ideal, but it's going to be a long time before either of them are earning income. That being the case, are there better options than opening custodial brokerage accounts for the kids? The administrative burden of doing that seems high (tax returns for each kid on dividends?), compared to just setting aside in my mind a current portion of my money and its gains, for gifting to them down the line. I realize there are such things as trust funds, but we're not crazy wealthy, and I'd rather avoid the complexity of that considering the amounts of the initial investments that I'm considering. Ersatz fucked around with this message at 14:44 on May 29, 2023 |
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May 29, 2023 14:40
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In a regular UTMA account, the first $1250 in earnings is exempt. After that the next $1250 is taxed at the child’s tax rate, which will be low unless they’re a child actor or something. Above that it’s at the parents’ rate. So there is some tax savings. If you assume a 10% income from dividends and capital gains, that’s a balance of $25000 before it will get the parents tax rate. Plus there are no penalties for withdrawal for any reason.
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May 29, 2023 14:58
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I'll look into that - thanks!
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May 29, 2023 15:11
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Ersatz posted:Are there any non-529 tax-advantaged custodial accounts for kids that can be created without child labor? I know you said non-529, but in case you don't already know, they would be able to roll $35k from a 529 into a Roth IRA (over several years).
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May 29, 2023 15:14
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Do UTMA accounts count against FAFSA? That's another thing to consider
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May 29, 2023 17:13
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Jows posted:Do UTMA accounts count against FAFSA? That's another thing to consider
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May 29, 2023 17:19
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You're almost certainly better off just funding your own life rather than trying to give it to your kids now. They get all the growth tax free when you die anyway. (current estate tax exemption is $25m for a married couple.) Let grandparents gift money to the kids, you gift them your own stable retirement and fun while you're alive.
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May 29, 2023 17:32
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Another log on the whole life trash fire: my parents have a whole life policy as the main method of transferring wealth to their children. I expect to see exactly $0 from them. Which is darkly hilarious because my mom got hosed out of her inheritance by some company who played real estate gambling with grandpa’s money, so no lessons were learned at all 
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May 30, 2023 20:12
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Tricky Ed posted:This is the sort of thing that you really want to get a fiduciary to give you a real answer, because it's got so very many variables. I sold some of my stocks when buying my first house so I could cross a DTI threshold without dipping into my e-fund, but also I was able to sell some at a loss so I could offset capital gains on the rest. All of it was in individual stocks that I'd had since the 90s, and I was single and 20+ years from retirement. Those things added up to a good choice for me, then, and let me stabilize my housing costs while I also pulled my money out of some companies I no longer wanted to be invested in. I don't know if I'd do the same thing today because everything is so different now. Thank you so much for the reply! You’re correct, this all boils down to what my priorities are. I personally see a house as a purchase, not an investment, so to me it doesn’t make a difference if it grows or shrinks or not - I just want a drat place to live. And I’ll only buy if it makes financial sense for me. A fiduciary is a good idea, maybe I’ll put out feelers before I ever commit to house hunting again!
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May 30, 2023 20:18
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