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I appreciate pointing me over to the flowchart. Mostly just curious on the IRA being pushed by Robinhood and since google results don't really show results for my question. I'm definitely bookmarking that thread. But yeah, mostly just wondering if the $5 amount was ridiculous.
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Aug 9, 2023 23:28
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Robinhood wants to make money off you, that's all. Any amount you can save and invest (responsibly, within a sensible financial plan) is good. Anyone who sneers at you for it being $5 is a dick.
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Aug 9, 2023 23:35
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Everyone starts saving somewhere. When I worked retail it was $5 here and there into an old fashioned savings account because no one had ever told me to do anything better than that. My two years of retail savings ultimately didn't add up to much except a small emergency fund, but it was something and more importantly it helped to get me in the right state of mind to continue saving as my earnings increased and I had more money available to invest. I'm in my mid 30's now and I'm still not where I want to be but I seem to be ahead of most people in my bracket.
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Aug 10, 2023 00:13
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jokes posted:If you can get the minimum deposit in a vanguard mutual fund you can invest any amount after that-- even $5/mo Or just buy an ETF for the cost of 1 share. If the account is at Vanguard you can also buy fractional shares of Vanguard ETFs in dollars (at least you can once you have 1+ shares already). Not all Vanguard mutual funds have corresponding ETFs, but inside an IRA there are no tax consequences or other expenses to changing your asset allocation, so you can always change your investments later at no cost. If you have less than $1000 or so to start, you could certainly do worse than starting with a share of VTI.
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Aug 10, 2023 03:19
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Subvisual Haze posted:Nothing mandatory. You can leave it with the old company, or roll it into a new company's 401k if you get hired somewhere else, or open a new IRA wherever (Fidelity, Vanguard etc) you want and roll it there. Or some combo of above. Thanks. Saw this and started to worry a bit https://www.annuityexpertadvice.com/401k-when-you-quit-or-fired/#:~:text=If%20you%20don%27t%20roll,taxes%20or%20debts%20you%20owe. Brain Curry posted:Other people have answered most of this. How are the fees on your 401k, and the expense ratios on your fund choices? Current 401k is Fidelity, with very good funds. I'd like to just hold it there.
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Aug 10, 2023 04:55
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Don't know if this was discussed yet, but starting in 2024 you can rollover unused 529 funds into an IRA. May be good for those who started a fund for their kids and don't use it all. https://www.smart529.com/smart529-d...t%20beneficiary
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Aug 10, 2023 06:15
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Evil SpongeBob posted:Don't know if this was discussed yet, but starting in 2024 you can rollover unused 529 funds into an IRA. May be good for those who started a fund for their kids and don't use it all. Yeah, it's a nice way to start funding the kid's IRA before they have the income level to fund it by themselves. It does notably have to be an IRA for the kid.
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Aug 10, 2023 06:26
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I guess if you're really patient there's nothing in 529 -> IRA rollover rules that would prevent you from funding a 529 for yourself now with the plan to use it to fund up to $35k of Roth IRA rollovers for yourself 15 years in the future.
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Aug 10, 2023 10:53
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are there any general heuristics about Foreign Currency exposure? I'm a US citizen in Switzerland earning exclusively in CHF. My tax-advantaged private retirement account (Pillar 3a) allows for access to some generic low fee ETFs, but nothing Vanguard and no Target Date funds. So I'm rebalancing manually as I get closer to 65. I'm required to keep 40% in CHF and can invest up to 34% in USD and/or EUR. Emerging markets/currencies max 8%. Over a 30-year horizon I'm wondering if I should worry about my USD exposure. Like the USD peaked against the CHF in 1973 and fell dramatically until 2011, when the currencies narrowed within generally 10%, and the CHF more often being stronger. right now 30% of my retirement fund is in US dollar denominated EFTs (SPX).
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Aug 10, 2023 14:46
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Are you planning to retire in the US or Switzerland?
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Aug 10, 2023 16:48
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Hard to say! Neither my wife nor I have made enough contributions to qualify for social security, and I'm pretty sure we'd have to pay income tax on our foreign pensions if we retired in the USA. So we're leaning strongly towards Europe at least. Seriously considering Croatia or Slovenia if we're able to learn the language adequately in time. If we end up with grandkids, we'd also probably want to be close to wherever they end up, but they'd be dual citizens.
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Aug 10, 2023 20:12
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I'm relatively new to investment and retirement, and I'm curious if there's a smarter way to handle my situation. I moved from public-sector work to private-sector work at around the age of 40. I left a job with about 11 years in a state pension system which will continue to accrue interest and provide an annuity upon retirement, it's currently at around $160K. I am starting a 401K for the first time and I'm leaning hard on it, about $22K/yr, since these funds have less time to accumulate interest over the remainder of my career. The situation: I am coming into a post-tax $50K windfall of sorts, paid out over the next 2 years. It's a once-in-a-lifetime infusion of funds and I'd prefer to handle it as responsibly as possible. A combination of home repair and savings for future repairs (a new roof being the big one, probably in the next 5-10 years), emergency funds, and investment. The primary investment vehicle would probably be a Roth IRA, which I can top off each year and reach $13K. Ideally I would like to have at least half of this money end up in investment. I can shove it into a high yield savings account and spread the IRA contributions over 4 years, but otherwise I'm not sure what a reasonable strategy might be. Any advice is welcome.
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Aug 11, 2023 16:46
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nelson posted:It’s less paperwork and better for cashflow to use it for expenses but if you are already maxing out your other tax advantaged accounts and have money left over it is better to pay cash and save receipts to take out the money later. What's the advantage of waiting, vs taking it out now (tax-free) and then re-investing it somewhere else? Maybe it's just me, but I worry about remembering expenses and still having legible receipts for them many years down the line -- plus possible changes to tax/health law.
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Aug 11, 2023 19:21
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Serious_Cyclone posted:I'm relatively new to investment and retirement, and I'm curious if there's a smarter way to handle my situation. I moved from public-sector work to private-sector work at around the age of 40. I left a job with about 11 years in a state pension system which will continue to accrue interest and provide an annuity upon retirement, it's currently at around $160K. I am starting a 401K for the first time and I'm leaning hard on it, about $22K/yr, since these funds have less time to accumulate interest over the remainder of my career. Funding a Roth IRA for a few years is a good idea. Ideally you would make it a habit and keep it up beyond your windfall. Totally get it if you can’t fully fund that and a 401K every year, but any bit helps. Just keep socking away what you can. Ah, and if you don’t happen to have a decent amount of savings already, I would prioritize that. General rule of thumb for that is 6-9 months of expenses in a HYSA. Probably factor in any repairs that need to be done now in addition to that figure.
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Aug 11, 2023 19:36
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nitsuga posted:Funding a Roth IRA for a few years is a good idea. Ideally you would make it a habit and keep it up beyond your windfall. Totally get it if you can’t fully fund that and a 401K every year, but any bit helps. Just keep socking away what you can. Alright, so this doesn't sound too complicated, glad to hear it and I appreciate the advice. I didn't know if it made sense to opt for a brokerage account or something similar but all of that space is completely unfamiliar to me. 6 mos in HYSA is probably doable without too much hassle, I have about 3 mos in an account right now. If I break it down to $20K to HYSA, $13K to Roth IRA, $7K for immediate home repair needs, and $10K to HYSA for a future roof it would spend me out and I could hit the 9 mos emergency fund mark (not including the funds set aside for a roof). I have a side business that doesn't make a tremendous amount of money but it's all supplemental, so ideally I would put everything I earn from it into the Roth IRA going forward unless I somehow made more than ~$8500 in a year with it.
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Aug 11, 2023 19:58
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yeah that's a point actually, you can only put money into an IRA if you have earned income, so if you're planning to like not work other than your side business all year, your side business income is going to set the limit of how much you can contribute. e. on reflection that's obviously not the case for you, since you're putting money into a 401k via a job. So yeah you should be good to max out contributions to your IRA annually and that's a great way to get that cash into tax-advantaged retirement savings. Leperflesh fucked around with this message at 20:59 on Aug 11, 2023 |
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Aug 11, 2023 20:11
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Serious_Cyclone posted:Alright, so this doesn't sound too complicated, glad to hear it and I appreciate the advice. I didn't know if it made sense to opt for a brokerage account or something similar but all of that space is completely unfamiliar to me. 6 mos in HYSA is probably doable without too much hassle, I have about 3 mos in an account right now. If I break it down to $20K to HYSA, $13K to Roth IRA, $7K for immediate home repair needs, and $10K to HYSA for a future roof it would spend me out and I could hit the 9 mos emergency fund mark (not including the funds set aside for a roof). Re: your 5-10 year roof fund, a HYSA is certainly not a bad option, but if you think it will almost certainly be at least 5 years and possibly even 10, you could also consider a 5 year treasury or a 5 year CD with a good early redemption policy. 5 year treasuries are at 4.3% or so today. At $10k invested, thats $430/year * 5 years - a decent amount. The risk of staying in a HYSA account is that short terms rates are currently at 10+ year highs and absolutely will get cut when the Fed lowers rates. A treasury or CD would let you lock in a good rate for 5 years. The risk of a treasury is if rates go up from here and you need to cash it out before it matures in 5 years, you would lose some amount of value that you wouldnt in a savings account. If all this sounds like too much math, just stick it in a savings account (or a money market, or SGOV, or XHLF, all of which are currently yielding over 5%)
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Aug 11, 2023 21:57
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drk posted:Re: your 5-10 year roof fund, a HYSA is certainly not a bad option, but if you think it will almost certainly be at least 5 years and possibly even 10, you could also consider a 5 year treasury or a 5 year CD with a good early redemption policy. This makes sense, I was considering an I-bond but it looks like the fixed rate is sub 1%. Would a CD generally have a more stable rate?
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Aug 11, 2023 22:02
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Treasuries and CDs are fixed rate for their entire duration. For better or worse depending on which way rates go, but it certainly seems like rates are at or near their peak.
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Aug 11, 2023 22:36
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Serious_Cyclone posted:This makes sense, I was considering an I-bond but it looks like the fixed rate is sub 1%. Would a CD generally have a more stable rate? The lack of rate stability is a feature of I-Bonds. You’re guaranteed a return that approximately tracks inflation. As inflation changes the interest rate changes to match. If you want something fixed, various shorter duration (like up to 52 week t-bills) are good right now. non-callable CDs are also good.
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Aug 11, 2023 23:08
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Right the difference between normal treasuries and TIPS is the former has a fixed nominal rate and the latter has a fixed real (inflation adjusted) rate. Which one ends up earning you more depends on inflation rates. Normal/nominal treasuries you will know exactly what you will earn at the time of purchase, TIPS you won't know. I Bonds and TIPS are similar in that both are inflation adjusted. They aren't exactly the same though, TIPS are slightly riskier and (usually) slightly higher yielding.
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Aug 12, 2023 00:03
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Can someone post a general explanation on how SGOV works again ? Also, I have a bit of surplus extra savings, right now I am just parking it in my HYSA. For a short term savings, what are the up’s and downs on keeping it in savings vs a short term T Bill (6 months).
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Aug 12, 2023 15:59
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Duckman2008 posted:Can someone post a general explanation on how SGOV works again ? It's an ETF that's exclusively US Treasury bills of 3 months or less. That's all it is. The sawtooth price graph is entirely a byproduct of how ETFs work and the fact that they pay out accumulated interest on the first of each month. The price is very unlikely to go below 100 so long as the United States government credit remains good. You can buy it and earn the current yield on 0-3 month bills without having to muck about with the T-Bills screen of your brokerage account.
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Aug 12, 2023 16:16
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mrmcd posted:It's an ETF that's exclusively US Treasury bills of 3 months or less. That's all it is. The sawtooth price graph is entirely a byproduct of how ETFs work and the fact that they pay out accumulated interest on the first of each month. The price is very unlikely to go below 100 so long as the United States government credit remains good. You can buy it and earn the current yield on 0-3 month bills without having to muck about with the T-Bills screen of your brokerage account. This may sound dumb, so basically you get the yield through dividend payouts ?
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Aug 12, 2023 16:49
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Duckman2008 posted:Can someone post a general explanation on how SGOV works again ? A fund is a basically a company that is set up where all they ever do is buy stocks and bonds (and pay a management fee to someone to do that). By purchasing a share of the fund you get ownership of that company and by extension ownership of all the bonds they buy, and your share of all the dividends and interest and bond yield they receive. It's an exchange traded fund so it can be traded on an exchange, just like a stock. SGOV only really buys treasuries that mature in under a few months. It's much easier on your time and effort to buy some shares of SGOV than to buy the actual underlying bonds every week, but is generally pretty much the same. It pays out the money they make via monthly dividends. The main advantage of something like SGOV instead of a savings account is that interest rates are determined by the market so you'll always get the best one. With a bank account the bank doesn't necessarily increase interest when market rates do, but the bank will lower it when they decide to according to the terms and conditions.
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Aug 12, 2023 17:08
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Duckman2008 posted:This may sound dumb, so basically you get the yield through dividend payouts ? Yes. Each share is basically $100 of principal except when a bill matures the fund reinvests it into a new bill instead of cashing out a share. The interest accumulates and is paid out monthly.
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Aug 12, 2023 17:25
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Duckman2008 posted:This may sound dumb, so basically you get the yield through dividend payouts ?
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Aug 12, 2023 18:02
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Serious_Cyclone posted:I'm relatively new to investment and retirement, and I'm curious if there's a smarter way to handle my situation. I moved from public-sector work to private-sector work at around the age of 40. I left a job with about 11 years in a state pension system which will continue to accrue interest and provide an annuity upon retirement, it's currently at around $160K. I am starting a 401K for the first time and I'm leaning hard on it, about $22K/yr, since these funds have less time to accumulate interest over the remainder of my career. Is your 401k Mega-backdoor eligible?
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Aug 12, 2023 22:27
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SlapActionJackson posted:Is your 401k Mega-backdoor eligible? Hey, this isn't PYF pick up lines.
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Aug 13, 2023 02:33
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webcams for christ posted:Pillar 3a Are you sure the IRS does not consider investments in a Pillar 3a account to be a PFIC? Because if so, that is...not good.
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Aug 13, 2023 19:52
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Evil SpongeBob posted:Hey, this isn't PYF pick up lines.
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Aug 13, 2023 20:07
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Magic City Monday posted:Are you sure the IRS does not consider investments in a Pillar 3a account to be a PFIC? Maria Hernandez, EA, CFP posted:What’s the big deal with PFICs? cool looks like I need to file amended tax returns for 2021 and 2022 and uh figure some poo poo out in the long run it may be cheaper to renounce citizenship lmao
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Aug 14, 2023 09:11
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SlapActionJackson posted:Is your 401k Mega-backdoor eligible? Based on a google search for the term I don't think so, I don't believe it is a Roth and I don't believe my household would meet the income eligibility requirements.
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Aug 14, 2023 15:32
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Serious_Cyclone posted:Based on a google search for the term I don't think so, I don't believe it is a Roth and I don't believe my household would meet the income eligibility requirements. Your google search has misled you, because there's no income eligibility consideration. What you're looking for is a pair of 401k plan features that combine to substantially increase your tax-deferred savings space. The necessary features and process are described in this nerdwallet article.
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Aug 14, 2023 15:46
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Serious_Cyclone posted:Based on a google search for the term I don't think so, I don't believe it is a Roth and I don't believe my household would meet the income eligibility requirements. What you're looking for is "after tax roth in plan conversion." Breaking it down: After tax: a specific type of deferral that is neither Traditional (regular 401k, top line reduction in income for your taxes) nor Roth (post tax money you never pay tax on again.) Roth Conversion: converting those after tax dollars into roth dollars. In plan: it never leaves your corporate sponsored 401k - such as to roll it out into a ira. Why? Because after tax dollars you owe income tax on all gains above your basis at withdrawal time. This is how it works for Traditional accounts too with the fundamental difference of traditional accounts the basis is $0 because you haven't paid taxes on ANY of the money. Convert it to Roth and through magic you don't owe any further income tax again, just like those Roth deferrals.
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Aug 14, 2023 15:51
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raminasi posted:Your google search has misled you, because there's no income eligibility consideration. What you're looking for is a pair of 401k plan features that combine to substantially increase your tax-deferred savings space. The necessary features and process are described in this nerdwallet article. Appreciate the direction, whatever I was looking at was giving hard numbers for minimum income for eligibility. I see a lot of references to this being specific to 2023, any idea if this option will be available next year? I have traditionally done my own taxes but things have gotten sufficiently complex that I am going to have a CPA take a look at my stuff in the early spring, and I could discuss this option for 2024 (if it's available) while we're untangling my '23 taxes.
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Aug 14, 2023 15:54
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Serious_Cyclone posted:Appreciate the direction, whatever I was looking at was giving hard numbers for minimum income for eligibility. I see a lot of references to this being specific to 2023, any idea if this option will be available next year? I have traditionally done my own taxes but things have gotten sufficiently complex that I am going to have a CPA take a look at my stuff in the early spring, and I could discuss this option for 2024 (if it's available) while we're untangling my '23 taxes. Congress can always change tax law at any time, but right now there is nothing on the horizon that would stop it in '24.
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Aug 14, 2023 16:22
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Serious_Cyclone posted:Appreciate the direction, whatever I was looking at was giving hard numbers for minimum income for eligibility. I see a lot of references to this being specific to 2023, any idea if this option will be available next year? I have traditionally done my own taxes but things have gotten sufficiently complex that I am going to have a CPA take a look at my stuff in the early spring, and I could discuss this option for 2024 (if it's available) while we're untangling my '23 taxes. Early spring is the worst possible time to find a CPA. Now is much, much better.
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Aug 14, 2023 16:43
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CubicalSucrose posted:Early spring is the worst possible time to find a CPA. Now is much, much better. I already have a CPA I'm just talking to them in early spring about my taxes
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Aug 14, 2023 16:44
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Any reason not to roll an old solo 401k into the 401k of a new job?
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Aug 15, 2023 03:25
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