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lgcty5 posted:I had looked into this but got hung up on the fact that is reportable for the FAFSA as a child-owned asset, since those (non-retirement account) assets have a much higher contribution rate. That yearly 20% for kid owned money feels like it disincentives savings in their names. I may be particularly sensitive to this though as our current game plan is for us to be (mostly) retired before they go to college so we are trying to plan asset location for both retirement and college funding. Yeah if you are trying to qualify for need based scholarships and such they will disqualify you pretty quickly. They were originally meant to be used as a way to save for college. They just happen to not have any rules that require you to use them for that. I went with them because my kids aren't going to quality for any need based stuff already based on my assets alone.
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Oct 17, 2023 20:28
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I appreciate the rebalancing conversation here, this is yet another aspect of retirement investing I wasn't aware of. My 401K is in a target-date fund and I basically leave it on autopilot, my Roth is now set up as a 3-bucket portfolio but it sounds like I should consider an annual rebalance and be on the lookout for a sustained bear market. Great info.
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Oct 17, 2023 20:36
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your target date fund basically does the rebalancing for you, probably on a daily basis. Your three fund portfolio in your Roth probably should match the asset allocation in your 401k unless you have some specific reason to weight a different allocation (in which case I'd ask, are you in the right target date fund? because you can effectively choose a different balance by choosing a different target date, which does not have to actually match your planned retirement date), and you can rebalance it like, once or twice or even four times a year or do what we've been discussing and have some specific threshold of imbalance that triggers a rebalancing event. Or do what KYOON does and just adjust your purchases in your Roth to achieve an eventual rebalance when it gets out of whack, e.g. if your bond allocation gets low due to stocks outperforming, you just buy more bonds with your roth contributions for a while until it's back in line. None of these systems are bad per se, we're just kind of trying to seek some level of optimization that may be available without trying to fall into the folly of timing the market in the way that so-called "active investors" do.
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Oct 17, 2023 20:43
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Yeah I think it's probably worth at least getting a handle on what my 401K TDF looks like, it was a set-and-forget thing when I started my job last year. My preference is to maybe rebalance once per year on the buy side if I can manage it, and perhaps do the most morphing of my Roth allocation strategy in the first year or two if I decide I set my targets incorrectly since my buys will constitute 1/2 and 1/3 of my total Roth contributions in those first 2 years.
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Oct 17, 2023 20:47
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Huh, so if you were in a target date fund and retired around 2007, and half the fund was in bonds, the fund shuttled bond money into stocks daily while stocks lost almost half their value? That seems, less than optimal.
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Oct 17, 2023 20:57
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Antillie posted:Look into UTMA/UGMA accounts. (They both refer to the same thing, different states just use different names for them.) Not quite true. They're different laws. All 50 states have UGMA laws, and 48 states have UTMA laws as well. UTMA is the newer law and allows holding physical assets as well instead of just financial products. UTMA also allows you to set an age between 18 and 25 when the child will gain control, UGMA is only 18.
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Oct 17, 2023 21:01
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For comparison, Epitope, here's the current asset allocation of Vanguard's target 2020 fund: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtwnx#portfolio-composition It's almost 60% bonds. The fund's asset allocation is a moving target: it is obligated to buy and sell within each asset class all the time, in order to hit those moving allocation percentages. This does mean potentially shuttling money into the asset that is declining most in value. But it also means enjoying the recovery of that asset having accumulated more shares of it in the future. Most retirees do not sell off all their assets at once, they need cash from their retirement fund for maybe 20 to over 30 years on average. That's long enough to take advantage of most typical recovery periods for a given asset class. The alternative is to try to time the market, e.g. deciding you can call the bottom or top for a given asset class and not aim for a specific asset allocation. One reason these target date funds are still very cheap in terms of ER is that they are not relying on a human to make such calls, they are following a beep boop computer instruction to just hit an allocation (and the underlying funds are in turn just index funds obeying a specific algorithm of market capitalization weighting). If we wanted to try to make judgement calls like "bonds are going down and not gonna go back up in the next ten years, so I'm not gonna buy any this time, unlike last time when they recovered in a year, and I'm gonna know if that forecast changes and react to it" we are going to both get it wrong a lot, and pay a fund manager extra fees to do it. e. one more detail folks might like to know: after 7 years past the target date, Vanguard target date funds are merged into VTINX, the "target date income fund": quote:The Vanguard Target Retirement Funds continue on their glidepath for seven years past the target date reflected in the fund’s name, at which point the glidepath investment allocation of the Target Retirement Fund coincides with the investment allocation of the Income Fund. VTINX is 70% bonds, 30% stocks, and something under 1% "short term reserves" e.g. cash for distributions. So that is the ultimate asset allocation all Vanguard target date retirement funds glide toward, to hit at 7 years after the fund's title date. Leperflesh fucked around with this message at 21:08 on Oct 17, 2023 |
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Oct 17, 2023 21:03
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Leperflesh posted:The alternative is to try to time the market, Na, the alternative is to roll your own and be able to have a bond floor or not re balance out of bonds. But of course this requires understanding enough to not make other dumb mistakes, which is why I'm here. Sugar cube is doing a "bond tent" or something. It's not rocket science, but it does take some study.
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Oct 17, 2023 21:10
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Epitope posted:So there IS a mechanical way to "buy the dip," nice. Serious_Cyclone posted:I appreciate the rebalancing conversation here, this is yet another aspect of retirement investing I wasn't aware of. My 401K is in a target-date fund and I basically leave it on autopilot, my Roth is now set up as a 3-bucket portfolio but it sounds like I should consider an annual rebalance and be on the lookout for a sustained bear market. Great info. Epitope posted:Huh, so if you were in a target date fund and retired around 2007, and half the fund was in bonds, the fund shuttled bond money into stocks daily while stocks lost almost half their value? That seems, less than optimal. Why would you not want to? That's what rebalancing is, forcing you to buy low and sell high.  Having a systematic approach is just a way to help you remove the emotion from the decision.It's like Warren Buffet's analogy: if your long-term strategy involves stockpiling burgers to eat, then you celebrate when burger prices go down, not up, because that lets you buy more burgers for your dollar. Even in that 2007 retiree example, you still wouldn't want to fall underweight in stocks, because you're presumably not about to liquidate your entire savings on day 1 of your retirement and shove it all in a mattress. You expect that money to last you through at least the rest of your life, and the only proven way to get a real return on a time horizon measured in decades is by keeping at least some of the portfolio in stocks.
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Oct 17, 2023 21:26
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I just finished the Second of the Merlin sextology of Amber stories. Almost all the same problems I increasingly had with the Corwin stories and more acutely felt with the first of Merlin's; the work is overlong with too many digressions and speculative politicking over having actual movement in the narrative, Merlin himself makes very few actual moves in the narrative besides roaming around and talking to people and with all the extra illegitimate children the Amberites have running around it's getting harder and harder to keep everyone's loyalties and lineages straight. It does end in a more interesting way then all the stories since the first of the Corwin saga though, I'm actually compelled to keep reading actively instead of as an intellectual exercise. It is funny though how much the raid on the enemy fortress Merlin goes on feels like an adventure book, I don't know if it was an active choice by Zelazny but he keeps mentioning having to take one of two paths, and trying to save his spells. It felt like a Lone Wolf gamebook. Anyways the real reason I'm writing the post is that Zelazny mentions Last Year at Marienbad my favorite film, so at least if the Amber saga isn't quite matching up to the vision in my head I'd formed in reading about the setting I do still know that the writer has good taste in films. (USER WAS PUT ON PROBATION FOR THIS POST)
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Oct 18, 2023 00:29
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Gaius Marius posted:I just finished the Second of the Merlin sextology of Amber stories. Almost all the same problems I increasingly had with the Corwin stories and more acutely felt with the first of Merlin's; the work is overlong with too many digressions and speculative politicking over having actual movement in the narrative, Merlin himself makes very few actual moves in the narrative besides roaming around and talking to people and with all the extra illegitimate children the Amberites have running around it's getting harder and harder to keep everyone's loyalties and lineages straight. It does end in a more interesting way then all the stories since the first of the Corwin saga though, I'm actually compelled to keep reading actively instead of as an intellectual exercise. Sounds like you're enjoying retirement!
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Oct 18, 2023 00:33
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Gaius, I'm gonna give you a few minutes to see if you realize what you've done and edit it out before I immortalize it with a comedy probe
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Oct 18, 2023 00:34
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Fuschia tude posted:It's like Warren Buffet's analogy: if your long-term strategy involves stockpiling burgers to eat, then you celebrate when burger prices go down, not up, because that lets you buy more burgers for your dollar. Even in that 2007 retiree example, you still wouldn't want to fall underweight in stocks, because you're presumably not about to liquidate your entire savings on day 1 of your retirement and shove it all in a mattress. You expect that money to last you through at least the rest of your life, and the only proven way to get a real return on a time horizon measured in decades is by keeping at least some of the portfolio in stocks. I really don't care for that analogy because the burgers can go bad and you consume them. The burgers aren't very slowly multiplying, either, which fucks with the analogy. It would be better if it was apple trees or something
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Oct 18, 2023 00:38
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Gaius Marius posted:I just finished the Second of the Merlin sextology of Amber stories. Pretty sure it’s a pentalogy there are 5 Corwin books and 5 Merlin books. The 5 Merlin books largely retread the same ground as the Corwin books with a bit more digression and world building. If you want to go long on a Zelazny book read Lord of Light. It’s fun and punchy and is a great example of Zelazny at his best. Your investment will pay long term dividends in human capital. Lord of Light was almost adapted to film, when it wasn’t it was purchased by the CIA for the uses dramatized in the film Argo.
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Oct 18, 2023 01:10
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pmchem posted:Gaius, I'm gonna give you a few minutes to see if you realize what you've done and edit it out before I immortalize it with a comedy probe Absolutely not. It's staying pseudanonymous posted:Pretty sure it’s a pentalogy there are 5 Corwin books and 5 Merlin books. The 5 Merlin books largely retread the same ground as the Corwin books with a bit more digression and world building. Gaius Marius fucked around with this message at 01:18 on Oct 18, 2023 |
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Oct 18, 2023 01:12
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pseudanonymous posted:Pretty sure it’s a pentalogy there are 5 Corwin books and 5 Merlin books. The 5 Merlin books largely retread the same ground as the Corwin books with a bit more digression and world building. The first few Corwin books were good. Agree on Lord of Light.
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Oct 18, 2023 01:28
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I recently moved my 401k out of a target date fund. It wasn’t performing well, the allocations looked suspect, and it seemed better to just go with a 3 fund portfolio. Also I talked to my financial advisor about it and he expressed how much he dislikes target date funds in general.
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Oct 18, 2023 04:35
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Awkward Davies posted:I recently moved my 401k out of a target date fund. It wasn’t performing well, the allocations looked suspect, and it seemed better to just go with a 3 fund portfolio. Also I talked to my financial advisor about it and he expressed how much he dislikes target date funds in general. What was the fund? There are certainly some lousy target date funds out there, but in general they are pretty good as all-in-one funds for a retirement account that ideally shouldn't ever need to be touched. If your financial advisor dislikes them in general, its probably because target date funds are a threat to charging outrageous asset management fees. Are you paying a % AUM fee?
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Oct 18, 2023 05:58
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jokes posted:I really don't care for that analogy because the burgers can go bad and you consume them. The burgers aren't very slowly multiplying, either, which fucks with the analogy. You're supposed to consume your savings in retirement, yes.
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Oct 18, 2023 06:11
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Awkward Davies posted:I recently moved my 401k out of a target date fund. It wasn’t performing well, the allocations looked suspect, and it seemed better to just go with a 3 fund portfolio. Also I talked to my financial advisor about it and he expressed how much he dislikes target date funds in general. This is raising some yellow flags.
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Oct 18, 2023 06:28
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Not sure if that's at all related to me pointing out one edge case minor weakness, but for the record I think target date funds are cool and good. I dont have a 401k so I can't rely on them as much
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Oct 18, 2023 09:53
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Muir posted:Not quite true. They're different laws. All 50 states have UGMA laws, and 48 states have UTMA laws as well. UTMA is the newer law and allows holding physical assets as well instead of just financial products. UTMA also allows you to set an age between 18 and 25 when the child will gain control, UGMA is only 18. Learn something new every day.
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Oct 18, 2023 14:24
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drk posted:What was the fund? There are certainly some lousy target date funds out there, but in general they are pretty good as all-in-one funds for a retirement account that ideally shouldn't ever need to be touched. IIRC his issue was that had worked on a target date fund, and had issues with the way that allocations worked within the fund, and within target date funds in general. I understand the issues with AUM. Awkward Davies fucked around with this message at 16:15 on Oct 18, 2023 |
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Oct 18, 2023 15:09
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I will preface this by saying I am not interested in market-timing, just in case the question comes off that way. Is there any cost/benefit to how often and when in the year you contribute to a Roth IRA? I dropped $6500 into a new Roth account this year all at once, but next year I will probably not have $6500 ready to go on Jan 1. My gut says that doing only a few contributions per year (like maybe half of the max annual contribution every 6 months) would make buy-side rebalancing easier and make sure I'm not over-correcting by trying to make those decisions on a monthly basis. But I lose time in the market in-between those contributions compared to doing them monthly. Is there anything else to consider?
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Oct 18, 2023 16:44
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Well the best time to invest is yesterday so you'll want to put a lump sum of the maximum contribution possible as early as possible to maximize time in the market. That's not timing the market. Also be mindful you can only contribute to an IRA with money earned in that tax year, so a Jan 1st contribution might be, um, "bold" from a tax perspective.
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Oct 18, 2023 16:49
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jokes posted:Also be mindful you can only contribute to an IRA with money earned in that tax year, so a Jan 1st contribution might be, um, "bold" from a tax perspective. This part is very good to know, I appreciate that. I had no idea about this restriction but I guess it makes sense based on how Roth taxes work.
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Oct 18, 2023 16:52
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Serious_Cyclone posted:I will preface this by saying I am not interested in market-timing, just in case the question comes off that way. How would it be overcorrecting? You just buy whatever you're most underweight in, every buy period. If it's because you have a tiny target allocation class or something, you could split your buy instead of only buying one thing in a given month, or just not worry about it and continually rebalance on the buy-side as you're doing already anyway. jokes posted:Well the best time to invest is yesterday so you'll want to put a lump sum of the maximum contribution possible as early as possible to maximize time in the market. That's not timing the market. Pretty sure the IRS is not tracking your IRA contributions on a daily basis rather than annually. Isn't the only "risk" here that you might lose your job and not actually end up earning the entire amount you contributed that year? Also the contribution limit is $7000 next year 
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Oct 18, 2023 17:02
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I have definitely funded my IRA on January 1/2 and the IRS has not (yet) carted me off to jail for it.
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Oct 18, 2023 17:04
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Fuschia tude posted:How would it be overcorrecting? You just buy whatever you're most underweight in, every buy period. If it's because you have a tiny target allocation class or something, you could split your buy instead of only buying one thing in a given month, or just not worry about it and continually rebalance on the buy-side as you're doing already anyway. I guess my concern would be that monthly contributions with regular rebalancing would be chasing short-term noisy fluctuations in the market rather than actual trends.
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Oct 18, 2023 17:04
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Serious question - why are people so hung up on sell side rebalancing in a tax-advantaged account? Are you all just afraid of accidentally doing a wash sale? I generally buy side rebalance because it's less effort, but it's really not a big deal AFAIK.
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Oct 18, 2023 17:22
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It's technically illegal/improper/whatever to use anything other than earned income in a tax year to contribute to an IRA, and I'm fairly certain the IRS doesn't track that poo poo to the day or even to the pay period. That being said, why risk it-- money is fungible so you can just wait until you've earned the appropriate amount to make your contribution feeling 100% certain you didn't do anything wrong (I have always been terrified of the IRS).
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Oct 18, 2023 17:48
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jokes posted:It's technically illegal/improper/whatever to use anything other than earned income in a tax year to contribute to an IRA, and I'm fairly certain the IRS doesn't track that poo poo to the day or even to the pay period. That being said, why risk it-- money is fungible so you can just wait until you've earned the appropriate amount to make your contribution feeling 100% certain you didn't do anything wrong (I have always been terrified of the IRS). I feel like it's a bench warrant sort of situation, they won't put effort into going after you about it but if you're already under scrutiny it will catch their eye?
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Oct 18, 2023 17:50
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jokes posted:It's technically illegal/improper/whatever to use anything other than earned income in a tax year to contribute to an IRA, and I'm fairly certain the IRS doesn't track that poo poo to the day or even to the pay period. That being said, why risk it-- money is fungible so you can just wait until you've earned the appropriate amount to make your contribution feeling 100% certain you didn't do anything wrong (I have always been terrified of the IRS). Do you have a source on this? Most investor sources (non-legal) say you can contribute as early as Jan 1 and don't point out any issues with doing so.
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Oct 18, 2023 17:52
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My understanding is that you can only contribute if you have earned income for that year - your max is either the max for that tax year or your earned income, whichever is lower (ignoring income limits for contribution in this scenario). if you somehow ended up with no income you would need to withdraw your contributions (which you can already do anyway)
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Oct 18, 2023 17:57
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Right but you don't have to use the specific dollars you earn. There's nothing I can find in the regulations that say (e.g.) that seasonal workers must wait to contribute.
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Oct 18, 2023 18:00
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esquilax posted:Right but you don't have to use the specific dollars you earn. There's nothing I can find in the regulations that say (e.g.) that seasonal workers must wait to contribute. correct, that'd be a wild mess of tracking. dollars are dollars.
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Oct 18, 2023 18:02
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In answer to the question "When can I contribute?", IRS Publication 590-A states:For IRAs posted:"Contributions can be made to your traditional IRA for each year that you receive compensation. [...] For Roth IRAs posted:"You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions)."
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Oct 18, 2023 18:04
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plan for next year max out Roth contribution if possible max out 403b at 23k (I think that's the max) For whatever is left, I would like to put some money from my checking into a high yield savings account. Is there one you would recommend? Not one that requires direct deposits of X amount per time period. this one was recommended online https://www.secure.citizensaccess.com/Citizens/savings doing the math, if I just had 5K in this one it would gain $225 in a year. nothing crazy but better than nothing! edit: this one looks good also https://www.discover.com/online-banking/savings-account/ actionjackson fucked around with this message at 18:33 on Oct 18, 2023 |
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Oct 18, 2023 18:26
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Poque posted:My understanding is that you can only contribute if you have earned income for that year - your max is either the max for that tax year or your earned income, whichever is lower (ignoring income limits for contribution in this scenario). if you somehow ended up with no income you would need to withdraw your contributions (which you can already do anyway)
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Oct 18, 2023 18:27
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The IRS only cares about the whole tax year after it closes. You can absolutely max out an IRA on Jan 1 without any fear of wrongdoing. Dollars are fungible. The only risk is that somehow you don’t have $6500 of earned income by December 31 and you’d have to undo it.
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Oct 18, 2023 18:29
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