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Atahualpa posted:Hm, interesting. So if I'm reading this correctly, if I sold this set of I bonds on September 1 then I would end up with $11,208? I've been using them plus some I bought the next month to supplement my emergency fund and originally planned to just hold them until at least the five-year mark unless I needed to dip into them, but looking at the numbers it seems like it would make a lot more sense to re-evaluate in September/October and possibly pick up some T-bills or CDs instead if rates on those remain close to where they are now. (This is all money in the "back end" of my emergency fund, so it's okay if I can't liquidate it for 6-12 months.) I think (I'm not sure I'm looking at the site correctly) that it isn't including losing the last 3 months interest. So if you bought the bond in March 2022 and sold it in December 2023, then I think you'd get $11,208. As far as if it's a good idea, honestly, with inflation rates dropping, interest rates on most fixed income investments quite high, and the new i-bond fixed rate at .9%, I'd probably be cashing in any i-bonds with a 0% fixed rate just to convert to other, higher return investments the moment they've earned 3 months of the new 3.38% rate (or the moment they dropped off the 6.48% rate if they're at least 5 years old). If I needed money for other expenses they'd definitely be the first thing I sold.
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Jun 10, 2023 04:26
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Does anyone know much about cash balance pensions? At my first job at IBM, they were switching over from a traditional pension to 401k and did this cash balance thing to convert people. I was only under the old pension for a few years maybe so I ended up with $35k in a cash balance pension which only grows at inflation rate and can’t be withdrawn until retirement age. Given inflation over the last twenty years it’s barely grown at all compared to my 401k. Is that expected?
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Jun 11, 2023 19:19
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smackfu posted:Does anyone know much about cash balance pensions? At my first job at IBM, they were switching over from a traditional pension to 401k and did this cash balance thing to convert people. I was only under the old pension for a few years maybe so I ended up with $35k in a cash balance pension which only grows at inflation rate and can’t be withdrawn until retirement age. Given inflation over the last twenty years it’s barely grown at all compared to my 401k. Is that expected?
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Jun 12, 2023 01:12
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smackfu posted:Does anyone know much about cash balance pensions? At my first job at IBM, they were switching over from a traditional pension to 401k and did this cash balance thing to convert people. I was only under the old pension for a few years maybe so I ended up with $35k in a cash balance pension which only grows at inflation rate and can’t be withdrawn until retirement age. Given inflation over the last twenty years it’s barely grown at all compared to my 401k. Is that expected? Have you called them and made sure that a lump sum payment is not available?
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Jun 12, 2023 01:37
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smackfu posted:Given inflation over the last twenty years it’s barely grown at all compared to my 401k. Is that expected? This is how the cash balance plan at my current job works. They put in a % of my salary into the plan, and then I get annual interest credits (capped at 3% for my plan). I don't even think about it as part of my retirement plan to be honest. If I work here to retirement age it'll just be a little bonus money during retirement I guess. If I separate before retirement age though, I can take the lump sum or leave it in the plan to start paying out at 65. When did cash balance plan start? There might have been a window where you could have taken a lump sum instead. I would contact them.
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Jun 12, 2023 01:58
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daslog posted:Have you called them and made sure that a lump sum payment is not available? (Maybe I could have moved it to my 401k but I don’t see that option anywhere.)
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Jun 12, 2023 02:21
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smackfu posted:And I don’t want any money in an IRA. Why? Are you trying to avoid the pro rata for the backdoor Roth?
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Jun 12, 2023 02:28
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CubicalSucrose posted:Why? Are you trying to avoid the pro rata for the backdoor Roth? Yeah. Don’t want to mess that up.
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Jun 12, 2023 02:45
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You could roll it into an IRA and immediately convert it to a Roth. You'd pay taxes on the conversion, but you'd have control of the money and could invest it.
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Jun 12, 2023 02:50
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smackfu posted:Yeah. Don’t want to mess that up. Does your 401(k) accept IRA roll-ins?
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Jun 12, 2023 03:16
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smackfu posted:Ah yes, I was confused. I can take a lump sum but unless it goes into an IRA it counts as an early distribution and gets taxed and penalized. And I don’t want any money in an IRA. Fidelity is the pension agent for IBM. You should be able to call up customer service and request to roll your money over to a fidelity IRA if you think that's the right thing for you to do. Edit: if you don't like IRAs for some reason (I've no idea why, but whatever) your 401k may accept a roll in. You will need to call the 401k provider to find out if they do. daslog fucked around with this message at 12:47 on Jun 12, 2023 |
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Jun 12, 2023 11:58
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So the market is doing pretty good right now, but I'm very uh, concerned about the real estate crash. When would be a good time to move my brokerage account over to bonds?
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Jun 12, 2023 18:10
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Automata 10 Pack posted:So the market is doing pretty good right now, but I'm very uh, concerned about the real estate crash. When would be a good time to move my brokerage account over to bonds? When you figure this out please LMK, TIA.
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Jun 12, 2023 18:12
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Usually people start transitioning to bonds near retirement.
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Jun 12, 2023 18:12
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I’m just pretending that cash at 5% interest is good enough for my bond allocation.
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Jun 12, 2023 18:18
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smackfu posted:I’m just pretending that cash at 5% interest is good enough for my bond allocation. Are you operating under the assumption the yield curve will always be inverted? Or just far enough away from retirement that you want a 90% equity allocation or whatever and dont care about long term returns on the other 10%.
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Jun 12, 2023 18:33
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Automata 10 Pack posted:So the market is doing pretty good right now, but I'm very uh, concerned about the real estate crash. When would be a good time to move my brokerage account over to bonds? https://earlyretirementnow.com/2021/03/02/pre-retirement-glidepaths-swr-series-part-43/ Very heavy math post, but the copy/paste from the conclusion section is: "It’s not crazy at all to keep 100% equities right until you retire! At least if you’re planning an early retirement with 1) high contribution rates and 2) some flexibility about your retirement date. The 100% equities throughout would certainly be defensible if you find yourself in the middle of a bear market a few years before retirement. Then just keep the 100% equities and ride the subsequent bull market until you retire! Even if you apply some more risk aversion, you will certainly still start with a 100% equity allocation, but you’d likely walk that down over the last 5 or at least 2.5 years before retirement. Also quite intriguing is that the high initial equity weight is defensible even when considering that the S&P 500 is at or close to its all-time-high. "
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Jun 12, 2023 19:00
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For long term go stocks, for short term cash/money market/t-bills seems perfectly reasonable.
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Jun 12, 2023 19:00
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I've been sitting on a house fund of about 140k for a couple years now and I don't know what to do with it because I do not think it makes financial sense for me to buy*. It's currently sitting in a HYSA earning 4%. I realize cash is a big drag, but the conventional "keep any money needed in the next 3-5 years liquid" advice keeps me from investing it. I drew down the account a lot by purchasing 20k in iBonds over the last couple years but that's not a good strategy over all. It's a big chunk of money, and so every time I think about what to do I get nervous I'm loving up. Yes, I should have bought a house when rates were low, but my wife had cancer at the time so I wasn't really thinking about it. Any advice? Things I've considered: Transfer some into a money market (like SWVXX) in order to eke out an extra percent. 1 year T-Bill ladder for an extra 1.3% DCA into SWTSX Keeping it in cash because maybe I will want to buy something in the next 3-5 years? Other details: Age: 37 Married. No kids, but hoping to have one within a year or two. Retirement: Currently sitting at just under 6x yearly salary in non-taxable/taxable accounts. No debt, outside of monthly credit card bills (everything goes on the credit card, then it gets paid off) *Something priced around the median price in my area - $965k - would eat up 100% of my current take home pay in monthly mortgage payments (after retirement contributions). I contribute about 19% of my pay to 401k/ESPP and then max out my IRA each year. I could stop contributions and just pay my mortgage, but that seems stupid. My rent is low enough that the NYT rent or buy calculator says I'd need to buy a house that costs 350k or less for it to make sense. My current rental situation will not last forever, but I should get a year of notice before having to move. Awkward Davies fucked around with this message at 19:09 on Jun 12, 2023 |
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Jun 12, 2023 19:04
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Awkward Davies posted:I've been sitting on a house fund of about 140k for a couple years now and I don't know what to do with it because I do not think it makes financial sense for me to buy*. Have you considered moving somewhere else? Given what you've said, seems like you're probably fine as-is. HYSA isn't the worst place for (what I assume to be less than 20% of your net worth). And if renting continues to make sense, then renting continues to make sense. If you had more flexibility in your post-buy disposable income and timeline, you could shove that 140k somewhere more aggressive, but it doesn't seem like that's the case here.
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Jun 12, 2023 19:26
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CubicalSucrose posted:Have you considered moving somewhere else? At least once a week. My wife doesn't want to move until after we have a child. Her parents are here, she's familiar with the medical system, has all the doctors, etc. I don't think she's wrong, and as long as we have cheap rent we can afford it. CubicalSucrose posted:Given what you've said, seems like you're probably fine as-is. HYSA isn't the worst place for (what I assume to be less than 20% of your net worth). And if renting continues to make sense, then renting continues to make sense. Okay, thank you. I revisit this question every few months on my own and can never figure it out. I appreciate the advice.
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Jun 12, 2023 19:36
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Awkward Davies posted:At least once a week. I cant think of a compelling reason not to put at least some of it into T-bills. The 6 month I bought over the weekend had a tax equivalent yield of just shy of 6% (the investment rate was 5.38%). Multiplied by 100k, thats a non trivial difference over a 4% savings account even if you have no state income tax. Its also very easy to find 1 year CDs yielding over 5%, if you prefer that route..
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Jun 12, 2023 19:43
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Awkward Davies posted:At least once a week. Just adding: there is nothing wrong with renting , especially if this is a case where it comes out ahead financially.
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Jun 12, 2023 20:46
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No kids but might have kids in a short number of years is a fantastic reason not to buy, because four or five years after you have your first kid you're suddenly going to care a lot about school districts, where your local playgrounds are, etc. and if you're not sure how many kids you'll have, it's hard to know how many bedrooms to buy, etc. etc. If you're not buying this year or next year I would not keep the potential down payment in cash. I agree with drk's recommendation of treasuries for medium-term low-risk returns above what you can get in a money market account or CDs.
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Jun 12, 2023 20:58
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drk posted:I cant think of a compelling reason not to put at least some of it into T-bills. The 6 month I bought over the weekend had a tax equivalent yield of just shy of 6% (the investment rate was 5.38%). Multiplied by 100k, thats a non trivial difference over a 4% savings account even if you have no state income tax. Its also very easy to find 1 year CDs yielding over 5%, if you prefer that route.. Leperflesh posted:No kids but might have kids in a short number of years is a fantastic reason not to buy, because four or five years after you have your first kid you're suddenly going to care a lot about school districts, where your local playgrounds are, etc. and if you're not sure how many kids you'll have, it's hard to know how many bedrooms to buy, etc. etc. Duckman2008 posted:Just adding: there is nothing wrong with renting , especially if this is a case where it comes out ahead financially. All great points. It's too scary for me to do something with all 140k, so I think I'm going to take half and buy a 1 year treasury bond ladder and then we'll see how that goes. Thank you all for the advice.
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Jun 12, 2023 21:34
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Residency Evil posted:When you figure this out please LMK, TIA. I'm just going to do it now because earning 5% when I could've earned 10-15% during one or two of it's 30 years of growth is better than losing half of it because the property market is obviously hosed and it's a matter of time before it crashes the economy. Automata 10 Pack fucked around with this message at 21:39 on Jun 12, 2023 |
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Jun 12, 2023 21:34
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Leperflesh posted:There is no such thing as a completely risk free choice.
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Jun 12, 2023 21:41
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Automata 10 Pack posted:I'm just going to do it now because earning 5% when I could've earned 10-15% during one or two of it's 30 years of growth is better than losing half of it because the property market is obviously hosed and it's a matter of time before it crashes the economy. The SP500 is growing at an annualized rate of roughly 29% YTD. No one knows what will happen the rest of the year, but calling the top today because housing is too expensive? This is potentially exactly the type of year long term investors dont want to miss out on.
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Jun 12, 2023 22:03
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To expand on this a bit, I think a lot of investors suffer from recency bias. Most of us here are old enough to have been adults in 2008 and housing was obviously a major, if not the major cause of much of the collapse. The housing market is currently not great in a bunch of US markets - you wont get much argument on this. Assuming that a collapse is thus imminent and will trigger a 2008 style recession just seems wrong though (at least, much less than certain).
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Jun 12, 2023 22:13
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Automata 10 Pack posted:I'm just going to do it now because earning 5% when I could've earned 10-15% during one or two of it's 30 years of growth is better than losing half of it because the property market is obviously hosed and it's a matter of time before it crashes the economy. You only lose it if you sell. If you would've just kept an index fund through any crash you always come out better on the other end. As long as this is long term money >10 years before you want it you shouldn't try and time the market with it.
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Jun 14, 2023 13:42
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Thinking about what I may do with my savings if I end up not purchasing a house. I’ve been considering, as an alternative, expediting my retirement from 2055 (~65 years old) to 2045 (~55 years old). Reasoning being that I’m not going to have kids, I’m not going to start a business or take on major debts, and I am expecting to make most of my money in my 30s rather than my 40s and 50s anyway. My tax-advantaged savings are in 2055 target funds and my brokerage account is 90/10 stocks/bonds, so it’s just a matter of exchanging 2055s for 2045s and balancing towards bonds earlier than expected. Is there a method or calculator out there that can help put numbers to the tradeoffs involved?
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Jun 14, 2023 16:22
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There’s a fair amount of early retirement theory that advocates for heavy equities weighting. I would start reading up on FIRE stuff and reasonable rates of return.
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Jun 14, 2023 17:18
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Yeah part of that asset allocation for a target date fund is an assumption that you're following a more traditional retirement path. Of course, if your projections of returns with a 2045 fund are that you'll still have enough money to retire on, that may be OK anyway - but there is a sort of glide path of reducing equities and increasing bonds that carries through the retirement date, because you still need earnings on your money through a couple decades of retirement. If you extend those decades, you probably want to have a larger percentage in higher-return investments (and have more time for them to recover from short-term market downturns) compared to a retiree aged 65. Another assumption that isn't always made but quite often is that a person's cost of living is lower in retirement because they bought a house and have a fixed housing cost, so pay attention to your projected costs too.
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Jun 14, 2023 17:28
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ESPP buy was today, and boy was it a nice one. Remember, always contribute to your ESPP in the hopes that there's a once in a century pandemic that tanks the stock market but isn't so bad as to destroy it entirely so that the value recovers significantly, making the "lookback" function of your ESPP really sweet.
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Jun 16, 2023 15:30
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Many ESPP programs have no lookback. Always evaluate your ESPP's specifics before deciding to participate, because each one can be different and unique and particularly good or crappy.
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Jun 16, 2023 18:33
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I've been both lucky and unlucky with my ESPP and the ultimate outcome is basically a wash, despite the 15% discount and lookback. It's no sure bet.
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Jun 16, 2023 18:41
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Guinness posted:I've been both lucky and unlucky with my ESPP and the ultimate outcome is basically a wash, despite the 15% discount and lookback. It's no sure bet. With discount and lookback, how can it be a wash unless you hang onto it instead of immediately selling?
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Jun 16, 2023 19:20
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Muir posted:With discount and lookback, how can it be a wash unless you hang onto it instead of immediately selling? Maybe their company's stock always nosedives to 15% below the lookback price between when the purchase happens and when the stock is available to unload.
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Jun 16, 2023 19:29
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Muir posted:With discount and lookback, how can it be a wash unless you hang onto it instead of immediately selling? Trading window restrictions mean I have to hold it for up to a few months from when the purchase happens. Plenty of time to swing the value more than the discount. It has cut both ways in the past. Our default is trading blackout, and can only trade for about 3 weeks after each quarterly earnings report. Guinness fucked around with this message at 19:34 on Jun 16, 2023 |
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Jun 16, 2023 19:30
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Mine is a 10% discount on lowest close of first or last day of the quarter. No hold requirements. I made out like a bandit 3Q last year. Price went from the $50s on July 1 to the $90s Sept 30. This quarter gonna be good too, was in the low 70s in April, back up to the 90s now, just need it to hold for a couple more weeks.
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Jun 16, 2023 19:41
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