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Leperflesh posted:Just to be clear, you're talking about doing short-term, tax-free investments in your cash emergency fund, not in your Roth IRA, right? Because your Roth IRA is tax-advantaged, there is no taxes on the earnings from the stuff you buy in your IRA. Correct. To elaborate a bit, I have 0% APR on the card until next February, and I've done the budgeting to ensure I'll have enough to pay it off outright when that rolls around. I plan to spend the next year building savings and then transition into maxing out my Roth contributions as much as possible. My state tax is a flat 4.4% if that matters.
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Sep 18, 2023 17:27
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Jabarto posted:I'm new to investing but getting more serious about it because both my fiance and I got into significantly higher paying jobs this year. I have a Roth IRA at Fidelity that I'm tossing small amounts at, but I'm mostly looking at money market funds since we're focused on paying off a modest credit card debt and establishing an emergency fund before anything else. Since you have state income tax SGOV might be a good place to keep your efund as it is exempt from state taxes since its all US treasuries. Since the yield on SGOV is higher than SPAXX at the moment there isn't much reason to stay in SPAXX right now imo. Once the yield curve returns to normal (who knows when that will be) you can always move back over to SPAXX. Personally I don't feel municipal bonds are worth it unless you are in a very high federal tax bracket and you just really really need bonds outside of your retirement accounts. If I was going to own bonds I would own them in an IRA or 401k and be done with it. Taxable accounts are better suited to long term capital gains and qualified dividends imo. I wouldn't worry about muni's in the 22% bracket. But that's just me. Antillie fucked around with this message at 23:12 on Sep 18, 2023 |
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Sep 18, 2023 22:55
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Antillie posted:Since you have state income tax SGOV might be a good place to keep your efund as it is exempt from state taxes since its all US treasuries. Since the yield on SGOV is higher than SPAXX at the moment there isn't much reason to stay in SPAXX right now imo. Once the yield curve returns to normal (who knows when that will be) you can always move back over to SPAXX. I've been reading up on SGOV and it looks great, but I've recently learned that it's subject to wash sales, a concept so utterly baffling to me that I'm not sure it's worth the trouble trying to figure it out as opposed to just figuring out how to buy treasuries directly.
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Sep 20, 2023 16:33
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Jabarto posted:I've been reading up on SGOV and it looks great, but I've recently learned that it's subject to wash sales, a concept so utterly baffling to me that I'm not sure it's worth the trouble trying to figure it out as opposed to just figuring out how to buy treasuries directly. It's not that hard. You just can't claim any losses on your taxes from selling and rebuying SGOV within 30 days. SGOV has relatively minor intra-month price fluctuations (basically reflecting the projected monthly dividend payment), so you are unlikely to incur significant gains(losses) on sale. And wash sale rules don't prevent you from selling or buying, they just prevent you from using the losses to offset capital gains taxes. Hypothetically you park money in SGOV. You buy at $100.32. It functions as your emergency fund and your car breaks and you want to buy a new one, so you sell 100 shares at the beginning of the month at $100.12. You lost 20 cents a share, so you have a loss of $20. If you were then gifted a car by grandma, and you re-buy 100 shares of SGOV within 30 days, you can't claim this $20 to offset other capital gains taxes. If you bought another asset class instead, you can use the loss to offset current or future capital gains taxes. Buying treasuries directly is dead easy through any major brokerage. edit: fixed order of magnitude error KYOON GRIFFEY JR fucked around with this message at 19:16 on Sep 20, 2023 |
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Sep 20, 2023 16:49
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Jabarto posted:I've been reading up on SGOV and it looks great, but I've recently learned that it's subject to wash sales, a concept so utterly baffling to me that I'm not sure it's worth the trouble trying to figure it out as opposed to just figuring out how to buy treasuries directly. So in theory you could buy SGOV at $100.60 per share, but then later sell it at like $100 a share (that decrease in share price corresponding to a interest payout you received). That $0.60 difference per share between your buying and selling price would be a capital loss which you could write off from your income to save a little in taxes. Meanwhile the interest you received would be taxed as income. However if after selling SGOV for the above loss you then bought SGOV back within 30 days you would trigger the wash sale rule, and you would no longer be able to claim the above capital loss for tax reduction purposes. The amount of tax loss harvesting you would lose out on by triggering the wash sale rule would be minimal, as the difference between SGOV's high and low share price is itself very small. Also you can avoid the wash sale rule entirely by just waiting 30 days after selling SGOV at a loss before buying more of it again.
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Sep 20, 2023 17:17
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I got an email from Fidelity the other day that while I am contributing >6% to get the full match (75% of 6%, so 4.5%) on my base pay 401k, I'm leaving money on the table by not contributing at least 6% of my AIP/SIP. I didn't know what that was, so I chatted with Fidelity about it. I told the rep that within my Fidelity account, it says that: quote:Your employer matches up to 6% of your eligible compensation. I told the rep that I'm already contributing >6% to my before-tax base pay 401k and asked if I contributed 6% to each of those accounts, whether my employer would match 4.5% on that 6% in each. The rep confirmed that my employer does provide 4.5% for each 6% in every one of those accounts. While I would love that to be true, that sounds crazy to me. I'd absolutely save that much if I was able to for my employer to give me an extra $40,000 per year, but again, that sounds like it can't be right, can it? I'd confirm with more reps before I start opening other accounts, but has anyone ever heard of a plan like that before? I called Fidelity and the call rep confirmed what the chat rep said, but said to check with my employer's benefit department to confirm. If that's true, I'd be stupid not to contribute at least 6% to each of those to get the match, correct?
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Sep 22, 2023 20:34
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E: nevermind I've confused myself now E2: I think the employer probably caps their match to 6% total across all of them and the reps were trying to say that the 6% is applicable for each. My employer has a pretax and Roth contribution option and it does not provide me any additional match. SpartanIvy fucked around with this message at 21:10 on Sep 22, 2023 |
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Sep 22, 2023 20:42
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You'll still be limited by the total annual contribution you can make in 2023 which is $22,500. e: with the exception of after-tax which has a higher annual limit of $66,000 combined between all employee and employer contributions, traditional/Roth/after-tax. spf3million fucked around with this message at 21:12 on Sep 22, 2023 |
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Sep 22, 2023 21:10
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SpartanIvy posted:E: nevermind I've confused myself now This is what I would suspect as well, I can’t imagine they’d pay out that much match, but I’ll try it and see what happens. spf3million posted:You'll still be limited by the total annual contribution you can make in 2023 which is $22,500. Yep, that’s my understanding of it too, however, it says once the $22,500 cap, it would go over into a spillover after-tax account. I think what I’ll try doing is setting it to 6% of my annual bonus (AIP/SIP) into pre-tax, after tax and Roth accounts. Then I’ll keep my pre-tax base pay at 15% and when it hits $22,500, it’ll go into the spillover. I’ll also set 6% to an after tax (which I assume will be the same as the spillover account) and another 6% of base to Roth. If I don’t get the 4.5% on any of them, I’ll scale back and keep it at maxing my 401k and putting my savings into a HYSA as I currently do. If it does provide the match to each account, I’ll keep it set up like that and collect free retirement money!
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Sep 22, 2023 21:46
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I think you should ask your employer/plan administrator, because you maybe don't want a situation where they decide months later that this is a mistake and try to claw back the money?
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Sep 22, 2023 22:04
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Leperflesh posted:I think you should ask your employer/plan administrator, because you maybe don't want a situation where they decide months later that this is a mistake and try to claw back the money? The Fidelity benefits guy suggested calling my benefits dept as well, so I looked up their number. It was the number I had called to speak to fidelity, so I don’t understand. Apparently fidelity handles all of our benefits stuff (401k/savings plan, pension and medical). Either way, I’ll check with them. Annual bonus is only in March, so I’ve got time. In any case, if they do claw it back, it’s contributions to retirement accounts, I’m not planning on spending it in the next 20 years. Or do you mean that they might withhold extra from my paycheck to account for it instead of taking it directly out of Fidelity?
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Sep 22, 2023 22:07
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I dunno what would be legal or what a company might try, really, but it sounds a lot more like an unintentional thing than something your company actually meant to do, and exploiting loopholes to get thousands of dollars for free from your employer can have negative consequences, one way or another.
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Sep 22, 2023 22:10
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It is easy guys https://x.com/ramit/status/1705034479197360343?s=20 Best active manager in the business. Easy peasy.
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Sep 23, 2023 01:51
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spwrozek posted:It is easy guys Run, don't walk. On a related but actual serious note, there's this good blog post - https://earlyretirementnow.com/2020/12/09/how-to-beat-the-stock-market/
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Sep 23, 2023 05:45
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interesting episode of rational reminder where Haghani and White discuss portfolio construction based on some academic models of peoples' personal risk tolerance (thus lowering the odds of people panicking and leaving the market): https://www.youtube.com/watch?v=0Mlb_iHAugM&t=1s key quote near the end was where White is saying people should spend more time thinking about how much to invest, as opposed to being obsessed with what to invest in. they recommend generic index funds. they were also there to discuss their new book which apparently is the current #1 bestseller on amazon in the investment portfolio mgmt subsection: "The Missing Billionaires: A Guide to Better Financial Decisions" https://www.amazon.com/Missing-Billionaires-Better-Financial-Decisions/dp/1119747910 if anyone takes a crack at the book I'd be curious to read a goon review of it
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Sep 23, 2023 17:11
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Thanks for the book rec, I've added it to my wish list and will try to get my public library to pick up a copy. Will review if I can.
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Sep 23, 2023 17:33
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I’ve long held the opinion that WHAT to invest in is the easiest part of modern investing. At its simplest, a target date fund. You can get more complicated, but you really, really don’t have to. Most everything past TD fund investing is splitting hairs between “good returns” and “gooder returns”. The hardest part is having income to invest.
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Sep 23, 2023 17:53
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Also difficult: sticking to your investments even when they are doing bad. This is also a reason why I like broad index funds because it's far easier for me to believe that the market will recover from a slump than an active manager.
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Sep 23, 2023 18:50
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Cacafuego posted:I got an email from Fidelity the other day that while I am contributing >6% to get the full match (75% of 6%, so 4.5%) on my base pay 401k, I'm leaving money on the table by not contributing at least 6% of my AIP/SIP. I didn't know what that was, so I chatted with Fidelity about it. I've been thinking about this the last couple of days and mine kind of works the same way. Also Fidelity, might not matter. quote:Your employer matches up to 6% of your eligible compensation that you elect as Pre-tax, After-tax or Roth contributions. quote:PRE-TAX
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Sep 23, 2023 21:42
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spf3million posted:I've been thinking about this the last couple of days and mine kind of works the same way. Also Fidelity, might not matter. Yeah, that’s pretty much what mine looks like. Ok, maybe it’s just pre-tax for everything. I’ll ask our benefits people and see what they say, I definitely don’t want to be accused of trying to take advantage of it inappropriately.
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Sep 23, 2023 23:07
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spwrozek posted:It is easy guys Consistently missing from claims of beating the S&P500 (or any other benchmark) is the qualifier "...on a risk-adjusted basis."
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Sep 24, 2023 00:31
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Leperflesh posted:Consistently missing from claims of beating the S&P500 (or any other benchmark) is the qualifier "...on a risk-adjusted basis." Sure, but that's assuming many investors don't inherently love gambling.
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Sep 24, 2023 01:09
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Leperflesh posted:Consistently missing from claims of beating the S&P500 (or any other benchmark) is the qualifier "...on a risk-adjusted basis." And also if he's actually doing it. The guy doesn't exactly come across as honest.
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Sep 24, 2023 01:32
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spf3million posted:I've been thinking about this the last couple of days and mine kind of works the same way. Also Fidelity, might not matter. Disclaimer: Not providing financial advice. All those income buckets on your list look separate and it's very normal for plan sponsors to give employees the option to defer different types of income at different rates. For example, sometimes people get bonuses that are paid in December and are 50% percent of their pay. So if I'm making $200,000 and have a $100,000 bonus I might want to elect to defer 15% of my pay and none of my bonus so my contributions are spread out evenly over the course of year and they don't have problems with match. (If you are going to defer near the limit ($ 22,500 this year) you will need to find out of your employer will do a true-up contribution because once you hit that limit you contribs should automatically stop and you will miss on out match. More on that here https://www.nextgen-wealth.com/blog/max-out-401k-employer-match ) So unless you have some special circumstance it's ok to do them all the same. And finally, almost all employers will match your Roth 401k contributions with pretax match.
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Sep 24, 2023 01:50
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It's been annoying watching my 401k lose value since I maxed out my contribution a few months ago. It's pretty diversified, but more stocks than bonds, so I guess that's to be expected. Wishing I could have told start-of-year me that I should just spread it throughout the year instead of being paranoid about layoffs, as then this would basically be more of a fire sale on these same stocks. Oh, well. Better luck next year.
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Sep 24, 2023 01:53
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Perspective: if you're able to max out your 401k in September, market ups and downs on a monthly timeframe is just noise on your retirement timeline and you'll be fine.
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Sep 24, 2023 02:28
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Absurd Alhazred posted:It's been annoying watching my 401k lose value since I maxed out my contribution a few months ago. It's pretty diversified, but more stocks than bonds, so I guess that's to be expected. Wishing I could have told start-of-year me that I should just spread it throughout the year instead of being paranoid about layoffs, as then this would basically be more of a fire sale on these same stocks. Oh, well. Better luck next year. I maxed out our Roth for the year last year…..less than 2 weeks before Russia invaded Ukraine and everything went super down. It sucked, I think the same thing, but also end of the day only so much you can do. It’s mostly recovered by this point (I think I haven’t exactly tracked it closely).
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Sep 24, 2023 14:31
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DNK posted:I’ve long held the opinion that WHAT to invest in is the easiest part of modern investing. At its simplest, a target date fund. You can get more complicated, but you really, really don’t have to. Most everything past TD fund investing is splitting hairs between “good returns” and “gooder returns”. Whats annoying is 401k plans like the one my rather big employer offers. They have relatively simple options, target date plans plus the standard large cap / small cap / international funds. They also offer index versions of the individual funds, but not of the target date ones. As a result, target date fees are 0.4% and individual index funds are 0.05%. Big spread.
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Sep 24, 2023 15:18
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Absurd Alhazred posted:It's been annoying watching my 401k lose value since I maxed out my contribution a few months ago. It's pretty diversified, but more stocks than bonds, so I guess that's to be expected. Wishing I could have told start-of-year me that I should just spread it throughout the year instead of being paranoid about layoffs, as then this would basically be more of a fire sale on these same stocks. Oh, well. Better luck next year. Reminder about Bob the world's worst market timer - https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
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Sep 24, 2023 15:45
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Yeah, I'm not cashing out or otherwise touching it, and when I made the decision to be paranoid I had good reasons for it which I will not get into.
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Sep 24, 2023 17:33
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I've got $20,000 in I bonds, all with a fixed rate of 0% and purchased between 1 and 5 years ago. This money will eventually be down payment money, with an emphasis on "eventually" - my fiancee and I definitely won't have enough cash accumulated within the next two years, and after that, who knows. (We're comfortable renting beyond our financial planning horizon - we'd just like to own eventually.) I'm trying to decide whether to dump the I bonds and put the money into Treasurys, roll some of them into the current rate, or buy more. (Or I guess just do nothing, but that seems like the worst option - resetting the sale penalty clock in exchange for getting a positive fixed rate on half of my holdings seems worth it.) What's making this difficult for me is not being able to really answer the "when will you need the money?" question - I know what I'd do if I needed it in one year, or two, or twenty, but I'm having difficulty accounting for the variable middle bit of that range. Anyone have any words of wisdom?
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Sep 24, 2023 18:44
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Sell $10,000 and roll that into a new I Bond so you get the fixed interest rate. Use the other $10,000 and get a 6 month treasury.
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Sep 24, 2023 18:55
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Mu Zeta posted:Sell $10,000 and roll that into a new I Bond so you get the fixed interest rate. Use the other $10,000 and get a 6 month treasury. I think this is good advice since OP said fiancee. If they were married I would lean towards rolling all $20k into the new fixed rate (assuming here this isnt their entire net worth or something and the 1 year lockup is OK). If a 6 mo treasury is bought soonish, that would align well with potentially putting that money back into another I bond next year before the rate change in May.
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Sep 24, 2023 20:58
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I have about $12k I would like to put aside for reroofing my house, which is an amount that is probably high-end or overestimating the cost for the size and type of roof replacement, providing a little bit of buffer space if it turns out there's a snag that drives the cost upward. I probably don't need a roof for another 5 years, maybe 10 years, but I would like to have the money set aside and keeping up with inflation now so I'm not caught flat-footed by the cost down the line. What investment vehicle do you think would be appropriate for this kind of saving? It seems like I have to trade-off between higher yield and lower risk of the money being behind a penalty wall when I need to access it. The recent conversation about T-bills made me think this might be a good option, but are there other things to consider?
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Sep 25, 2023 23:24
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If your primary concern is inflation and your time frame is 5-10 years, I Bonds are probably preferable to T bills. The inflation adjusted rate earned by I Bonds is known for their full 30 year term. T bills are currently earning higher interest than newly issued I Bonds, but as 0-12 month securities, how T Bills will do on a 5-10 year timeframe is unknowable. They are also not inflation adjusted - this doesn't necessarily mean they will earn less than inflation, but they can and frequently have.
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Sep 26, 2023 05:22
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I put my emergency fund amount in I Bonds and plan on just keeping it there for inflation protection.
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Sep 26, 2023 14:19
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I have my emergency fund in Ally, same with my down payment savings and closing/maintenance cost savings. Those funds may or may not be used within a year or so, but definitely not within the next three months, so they get to grow for now. Payouts from stock options and RSUs n poo poo go in a Vanguard non-retirement account with a 90:10 stock:bond split, same with my retirement accounts (401k, rollover IRA, Roth). That money’s for when I’m old(-er) and useless(-er), so it goes in the market and doesn’t get touched until like 2050~2055. It better fuckin grow. Whatever money I’ve budgeted out for the next three months stays in checking because YNAB.
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Sep 26, 2023 15:09
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Don’t be like me, put your emergency funds in a HYSA at minimum. One month of interest at Ally would take ~15 years to match in my traditional savings account.
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Sep 26, 2023 15:13
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drk posted:If your primary concern is inflation and your time frame is 5-10 years, I Bonds are probably preferable to T bills. The inflation adjusted rate earned by I Bonds is known for their full 30 year term. Excellent, I appreciate the advice! Are I Bonds subject to a strict lock-out period? I don't want to get stuck with the funds locked up at the time in the future when they are needed.
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Sep 26, 2023 15:27
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Not locked but it can take time to access the funds. The big issue is that when you pull the funds before the bond matures you lose the last 3 months of interest.
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Sep 26, 2023 15:32
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