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Serious_Cyclone posted: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. They can't be cashed out within one year, and cashing them out after one year but before five is subject to a 3 month interest penalty. There are also treasury inflation protected securities, which are more like traditional bonds - they have a maturity date and pay out interest until then and then you get your principle back. As treasury bonds you can sell them on the secondary market at any time, but that can be more complicated than just cashing out an I-bond. Like I-Bonds they have the official inflation rate added to their interest rate, and have a higher base rate than I-bonds, but are different in various ways too long for this post and somewhat more complicated in general. Another obstacle for I-bonds for you is every individual is limited to buying 10k worth every year, though if you have a spouse you could split it between you. Also I-bonds have their base interest rate recalculated every 6 months and the next one is November 1st, and I expect (but can't confidently predict) it will go up. Overall I'd say if you want inflation protection specifically and want to keep things simple you're best off with I-bonds, if you want inflation protection and care more about yield than simplicity you're currently better with TIPS, and if you just want the investment to grow independently of inflation I'd look for either CDs or a money market fund.
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Sep 26, 2023 15:46
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The reason I didnt mention TIPS is because of the vague timeframe. TIPS are guaranteed to return at least their face value at maturity, but if they are sold before maturity, they are subject to market pricing and potentially deflationary adjustments and therefore may have to be sold at a loss. I bonds are not traded on the secondary market and are not adjusted down during deflationary periods. They can only go up in value.
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Sep 26, 2023 15:56
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The difference between TIPS held through their entire duration and then redeemed and I-Bonds is that TIPS are better. Of course, that bolded bit is hardly a given. Maybe you need the money earlier. If that is the case, then redeeming I-Bonds early is a completely painless affair that is honestly not very different from transferring funds via a traditional bank. “Redeeming” TIPS is actually selling them on the secondary market and is subject to bond risk, current and future inflation expectations, current and future yield expectations, and more. You are not guaranteed to receive even your initial investment (although you will not lose a significant amount of money).
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Sep 26, 2023 15:59
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DNK posted:redeeming I-Bonds early is a completely painless affair that is honestly not very different from transferring funds via a traditional bank. This part is valuable to me, I'd prefer a solution where the money is accessible in a reasonable time-frame (I think 5 years should be fine, but I can eat a 3 mo interest penalty if it turns out not to be the case) and the process is simple.
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Sep 26, 2023 16:05
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DNK posted:The difference between TIPS held through their entire duration and then redeemed and I-Bonds [that are also held to maturity] is that TIPS are better. Yep, I agree. TIPS yield more than I Bonds currently (30 yr TIPS is 2.16% real today, 30 year I Bond is 0.9% real today). Over that 30 year time frame, thats a non-trivial amount of difference. Yields on 5 and 10 year TIPS are similar. The only slight negative of TIPS held to maturity is that if they are in a taxable account, you will have to pay taxes every year. I bonds are fully tax deferred. I suspect most folks who buy long TIPS are holding them in a tax advantaged retirement account though.
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Sep 26, 2023 16:07
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I heard some horror stories with some users of Treasury Direct and I Bonds though.
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Sep 26, 2023 16:12
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Busy Bee posted:I heard some horror stories with some users of Treasury Direct and I Bonds though. Such as?
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Sep 26, 2023 16:14
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Just an ancient website with terrible UI that occasionally locks users out of their accounts for extended periods of time.
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Sep 26, 2023 16:37
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Subvisual Haze posted:Just an ancient website with terrible UI that occasionally locks users out of their accounts for extended periods of time.
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Sep 26, 2023 16:49
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It's not a good website but it's perfectly adequate now that they got rid of the virtual keyboard. You're using it to buy and or sell bonds very occasionally. Who cares if the UI is any good as long as you can figure out what to do? edit: not buying I-Bonds because you don't like treasurydirect is silly if they are otherwise what you are looking for.
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Sep 26, 2023 17:36
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Busy Bee posted:I heard some horror stories with some users of Treasury Direct and I Bonds though. Never had an issue. Can use password manager now and the buy and sell process is very simple. Not sure what more people want.
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Sep 26, 2023 18:21
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Cugel the Clever posted:There's a revamp supposedly in the works and they've already done away with lovely on screen keyboard password entry. I haven't had those kind of issues yet, but knowing it could happen I tend to do almost all of my treasury trading via Fidelity with the exception of i-bonds which you can only do on TreasuryDirect.
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Sep 26, 2023 19:06
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I got locked out of my Treasury Direct account and had to call. It was a long wait time and I was expecting a real hassle to verify and get my account unlocked but it was easy. I don't remember what that was though.
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Sep 26, 2023 19:38
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The only issue I am aware of with treasury direct is that it is still a somewhat complex process to change your linked bank account. You need to submit paper documents with some fancy bank stamp that some people have issues getting, and then there is a few weeks processing time by the treasury. When I did it a few years ago getting the stamp was a 5 minute process at my credit union, so its certainly not always difficult.
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Sep 26, 2023 19:55
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KYOON GRIFFEY JR posted:It's not a good website but it's perfectly adequate now that they got rid of the virtual keyboard. I login around quarterly to update the values in Mint and that's about it -- tolerable for that.
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Sep 26, 2023 20:31
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How often do you guys rebalance your 401k? I’m poking around at my options right now and there’s an automatic rebalance every 4/6/12 months. I guess the default is 6 months. Not sure if I want to change it I guess. E: oops meant to say 3/6/12 months. Boris Galerkin fucked around with this message at 13:45 on Sep 27, 2023 |
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Sep 27, 2023 12:22
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Boris Galerkin posted:How often do you guys rebalance your 401k? I’m poking around at my options right now and there’s an automatic rebalance every 4/6/12 months. I guess the default is 6 months. Not sure if I want to change it I guess. Most of the research seems to say it doesn’t really matter. Every 6 months is fine. I do it once a year around the holidays when I have some downtime. It takes me about an hour and I don’t touch until next year.
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Sep 27, 2023 13:23
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Boris Galerkin posted:How often do you guys rebalance your 401k? I’m poking around at my options right now and there’s an automatic rebalance every 4/6/12 months. I guess the default is 6 months. Not sure if I want to change it I guess. If you do know the target percentages you want though, every 12 months is probably fine. Another alternative would be setting variance levels, so like if one of your asset percentages drift over 10% from target you could take that as impetus to do a rebalance.
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Sep 27, 2023 14:55
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raminasi posted: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? Just FYI: https://keilfp.com/blogpodcast/when-to-cash-out-i-bonds/. Discussed on reddit here: https://www.reddit.com/r/personalfinance/comments/14d0dml/when_to_sell_i_bonds/.
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Sep 27, 2023 15:42
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Boris Galerkin posted:How often do you guys rebalance your 401k? I’m poking around at my options right now and there’s an automatic rebalance every 4/6/12 months. I guess the default is 6 months. Not sure if I want to change it I guess. Never, in part because my 401(k) has cheap domestic equities and relatively expensive everything else. You're not obligated to balance within a specific account type, you just need to maintain a desired balance across all your long term positions. So I hold domestic equities in 401(k) and a Roth IRA, and international equities in a taxable brokerage account, and treasuries in taxable brokerage accounts that are designated for long-term hold. I'll "rebalance" by buying relatively more international equities or treasuries that are designated for long term hold if I get really out of whack. I look at it about once a year right before bonus time because at that point I have a decent chunk of money I need to place and can make decisions on.
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Sep 27, 2023 15:57
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I have to start a Roth IRA this year, which will be the first time I've had to directly interact with this space (my previous investment vehicles were a state pension system and 401k set up by my employers, for public and private sector work respectively). Is there a known preferable provider for a Roth IRA, particularly for someone who is not interested in micromanaging their investment details?
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Sep 27, 2023 16:44
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Serious_Cyclone posted:I have to start a Roth IRA this year, which will be the first time I've had to directly interact with this space (my previous investment vehicles were a state pension system and 401k set up by my employers, for public and private sector work respectively). Is there a known preferable provider for a Roth IRA, particularly for someone who is not interested in micromanaging their investment details? I think the general consensus is just pick one of the big providers: Fidelity / Vanguard / Schwab. Mine is at Vanguard since I wanted Vanguard mutual funds (my Roth IRA is ~100% in a target date fund since I also do not want to micromanage it). I think it would probably be useful to ensure the Roth IRA account is also a brokerage account, in case you want to buy ETFs and/or treasuries now or in the future.
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Sep 27, 2023 16:59
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The provider of your IRA doesn't matter much as long as it's a brokerage. You can buy whatever you want in it, you don't need to for instance have an IRA with Vanguard to buy Vanguard funds and ETFs. The level of management of investment details is up to you and is dependent on how you contribute to your IRA and the investments you select. It has nothing to do with the provider. If you already have some kind of brokerage account just set up your IRA there. Otherwise, pick one of the big boys drk listed and go with them.
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Sep 27, 2023 17:18
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Serious_Cyclone posted:I have to start a Roth IRA this year, which will be the first time I've had to directly interact with this space (my previous investment vehicles were a state pension system and 401k set up by my employers, for public and private sector work respectively). Is there a known preferable provider for a Roth IRA, particularly for someone who is not interested in micromanaging their investment details? Fidelity makes it easy to backdoor, pretty sure Vanguard too. Unsure about Schwab, but they're probably fine.
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Sep 27, 2023 19:01
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CubicalSucrose posted:Fidelity makes it easy to backdoor, pretty sure Vanguard too. Unsure about Schwab, but they're probably fine. Can you elaborate on the term 'backdoor' in this context?
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Sep 27, 2023 19:08
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Serious_Cyclone posted:Can you elaborate on the term 'backdoor' in this context? https://investor.vanguard.com/investor-resources-education/article/how-to-set-up-backdoor-ira
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Sep 27, 2023 19:08
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Serious_Cyclone posted:Can you elaborate on the term 'backdoor' in this context? If you are over the typical Roth IRA contribution income limit, you can still contribute but there are some wrinkles. This is typically called a "Backdoor Roth IRA" contribution. Confusingly, there's a very separate thing known as a "Mega backdoor Roth" which makes searching pretty awkward.
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Sep 27, 2023 19:14
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CubicalSucrose posted:If you are over the typical Roth IRA contribution income limit, you can still contribute but there are some wrinkles. This is typically called a "Backdoor Roth IRA" contribution. Ah, thanks for the summary. I don't think I will have this problem based on a quick Google search, the joint filing income of the household is probably just over $200k
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Sep 27, 2023 19:28
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drk posted:Yep, I agree. TIPS yield more than I Bonds currently (30 yr TIPS is 2.16% real today, 30 year I Bond is 0.9% real today). Over that 30 year time frame, thats a non-trivial amount of difference. Yields on 5 and 10 year TIPS are similar. The rate is up to 2.35% now - big increases in the 30yr rate for both treasuries and TIPS in the past few days, which is pretty interesting. The long end of the yield curve is finally inching up. There are two other advantages to I Bonds besides the tax thing:
code:
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Sep 28, 2023 02:02
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Small stupid victory I'm sharing here because my friends don't care: I finally took the time and got 2 old HSA accounts merged into my current employer's. Not only that, we're switching our provider over to Fidelity in January, which is where my 401(k) is sitting. Now I can use one app to obsessively stare at both numbers instead of having multiple links to obscure banking websites. Also also, our new contract went into effect and my company is contributing 16% to my retirement without me having to match anything. Going up to 18 over the next 2 years.
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Sep 28, 2023 16:21
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Rolo posted:Also also, our new contract went into effect and my company is contributing 16% to my retirement without me having to match anything. Going up to 18 over the next 2 years. Dang, in my current applications to jobs, I've seen as high as 12% without doing anything, but never as high as 16% (or 18%!!!)
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Sep 28, 2023 16:36
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Dang that is a sick perk. I sort of get 14% (at least that is the number I use when considering another job). 4% match on my 401k (have to put in 8%) and then 10% put into my pension (no match required). I don't control the pension funds though and if the company goes bust... that would suck. I do just ignore it right now in my retirement planning.
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Sep 28, 2023 17:27
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I keep getting emailed by a guy from Masterworks. His email signature says he's the "SVP, Investor Relations". Imagine being an SVP and putting your name on cold emails. Obviously there's no way in hell I'm investing in this poo poo, but I'm morbidly curious how much of a scam it is.
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Sep 28, 2023 17:59
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Awkward Davies posted:I keep getting emailed by a guy from Masterworks. His email signature says he's the "SVP, Investor Relations". Imagine being an SVP and putting your name on cold emails. The Plain Bagel did a pretty good video about Masterworks here: https://www.youtube.com/watch?v=6ojOkPmm8lw
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Sep 28, 2023 18:26
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I have yet to see any compelling data suggesting that art is somehow a better long term investment than a simple total stock market index fund. In fact I haven't seen any data suggesting that it even works as an uncorrelated asset like bonds. It feels like they are trying to solve a problem that doesn't exist. While collecting plenty of fees of course.
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Sep 28, 2023 22:21
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I’d rather invest in those whisky casks that showed up on my Instagram ads than invest in art for the purpose of making money number go up. At least with the whisky casks I could “cash out” in booze and drink it when money number goes down.
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Sep 28, 2023 22:32
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If you just invest in index funds you don't get to feel like you are the kind of person who values fine art.
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Sep 28, 2023 22:49
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Antillie posted:I have yet to see any compelling data suggesting that art is somehow a better long term investment than a simple total stock market index fund. In fact I haven't seen any data suggesting that it even works as an uncorrelated asset like bonds. There's "Art as an Investment and the Underperformance of Masterpieces" from Mei and Moses, but it's a twenty year old paper and things might've changed:  quote:While collecting plenty of fees of course. But this is where it falls down for me, along with these things never throwing off cashflow.
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Sep 29, 2023 00:37
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I thought the trick with art was keeping it in those weird stateless warehouses so you never pay taxes as you and your other ultra rich friends launder your money through various auction houses.
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Sep 29, 2023 00:45
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Art as an investment doesn't make any sense because it, like cryptocurrency, is just a way to commit tax evasion and money laundering
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