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cowofwar posted:You guys are losing a lot of money on transaction fees if you're regularly making ETF purchases. And an assumption of 8% growth is insane. I actually just said gently caress it and stuck it in the company's "agressive fund" after reading that it contains mostly indexed poo poo, and having misread the expense ratio the first time, bc it's actually only .04% which is pretty great. No transaction fees for this guy.
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Dec 11, 2012 02:11
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So, I have a good job, I'm 24. And I just married into $200k in school loans. (Between 5-8.5% interest). My company matches 401k up to 4k at $.50 on the dollar. I hit the match point ($8k gets me $4k free (12k yr total)) but wondering what to do from here. My wife makes almost nothing and her pay goes to taxes, gas, and then about 1k left each month goes to loan interest. Should I cut off my investments at the 8k 401k and then pay loans down as fast as possible? We are planning to to use her total after tax income towards loans for the next few years. ( her income will increase by 50% next year and double the year after) I feel like for a 24yr old, 12k a yr invested isn't bad but for 2 people it seems a little low. After expenses we(my income alone) could have as much as 50k pretax for loans or investments (after 8k in 401k). Starting in sept, her loan payment will be around 2.7k/mo which worries me if I lose my job( it's very secure and I just got 2 LinkedIn messages while typing this from recruiters).
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Dec 12, 2012 00:46
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(Standard disclaimer applies, I am not an expert, seek other input before taking any action.) I think a Roth IRA would be a good option for you, you can contribute a total of $10K in 2012, $11K in 2013. This is the best option if you expect your tax rate will rise significantly with time. Given what you said, I would max out your contributions for 2012 (you have until tax day to do this), then max out your 2013 contributions. You may or may not want to keep contributing in 2014 based on your expected tax rates.
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Dec 12, 2012 01:20
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Alereon posted:(Standard disclaimer applies, I am not an expert, seek other input before taking any action.) I think a Roth IRA would be a good option for you, you can contribute a total of $10K in 2012, $11K in 2013. This is the best option if you expect your tax rate will rise significantly with time. Given what you said, I would max out your contributions for 2012 (you have until tax day to do this), then max out your 2013 contributions. You may or may not want to keep contributing in 2014 based on your expected tax rates.
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Dec 12, 2012 01:33
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nelson posted:If you're responding to the person with $200k in college loans, this is horrible advice. Paying off the loans is the best guaranteed rate of return you can ask for. It's also as tax efficient as a Roth because loan interest is paid with after tax money.
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Dec 12, 2012 02:35
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Jesus. 200k is small... for a college loan. In what world? That is a god damned mortgage where I live. Pay into the 401k to get the employer match, and then dump the rest of your money onto the debt. Forget the Roth or investing above 401k match until you've at least got the debt down to something sane, if not fully paid off. xgalaxy fucked around with this message at 03:44 on Dec 12, 2012 |
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Dec 12, 2012 03:27
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xgalaxy posted:Jesus. 200k is small... for a college loan. In what world? No its a poo poo ton of school debt but I'm hoping we can pay at least 30k after tax above the base payments each year. This would pay the loans off in about 4 years. But we would be broke for 4 years also... I have a call with my financial adviser, who is ripping me off, next week. I'll get his opinion also.
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Dec 12, 2012 03:51
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At those rates, I think you fund the 401k up to match, and then direct everything else to debt payment.
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Dec 12, 2012 04:10
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5-8.5% is banditry in this environment; especially for non-dischargeable(?) student loans. I dunno how they get away with that. I'd pay the gently caress out of at least the 7%+ loans. There's some advantage to IRAs outside of just taxes, like sometimes being sheltered in the case of bankruptcy/lawsuit, and it's tax-advantaged space you can never get back; so there's certainly a respectable argument for making the maximum possible contribution to tax-deferred retirement accounts before paying off the loans. I think you're going to be in good shape either way; either way you're doing a ridiculously good job of building net worth, and the the long-term differences in outcome between the two aren't really knowable, since it depends a lot on market returns on your retirement accounts, tax rates when you retire, if you get sued, etc; so I'd say just go with whatever makes you feel happiest, because it's hard to call financially, in my opinion. I'd say, given your cash-flow, to also save up a 6-to-12-months-of-expenses buffer of cash-like reserves (or other reasonably liquid taxable investments, depending on your risk tolerance) in addition to these options. It will take the edge off of all of life's little (financial) troubles in a way that's hard to put a value on. Unormal fucked around with this message at 16:20 on Dec 12, 2012 |
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Dec 12, 2012 06:30
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I'm 25, the 3 dividend paying stocks are in tax sheltered accounts, the e-series mutual funds are in a regular Canadian cash trading account. Does this seem reasonable? I know I could get more competitive MER rates for the funds but the convenience (i.e. no fees after holding for 90 days) of having access to everything through a single web portal & no fees for buying & selling along with the are attractive to me.
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Dec 12, 2012 07:51
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Pieces posted:I'm 25, the 3 dividend paying stocks are in tax sheltered accounts, the e-series mutual funds are in a regular Canadian cash trading account. I really don't think you should be holding individual stocks, especially worth ~30% of your portfolio. Remember high dividend yields does not equal safe. Diversify, diversify, diversify.
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Dec 12, 2012 07:53
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Not to get all pessimistic on a happy 24 year old newlywed, but you should consider at least the possibility of a divorce. I wouldnt spend the next five years completely concentrating on just paying off her debt, not saving anything, and living like a bum. Cus you might really be resenting that at 30. At least you'll keep half the money you save. Or if you put half into savings, half her debt, your lawyer might be able to argue she already got her half? Depends on the state I think...
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Dec 12, 2012 07:56
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Swingline posted:I really don't think you should be holding individual stocks, especially worth ~30% of your portfolio. Remember high dividend yields does not equal safe. Diversify, diversify, diversify. All 3 are large cap stocks in different sectors (financial, oil & gas, communications) respectively. I feel like I'm young enough that even something catastrophic like a 50% drop wouldn't be too damaging. I'm not looking to buy a house anytime in the next 5 years and I (well... I think I do) have a high risk tolerance. How would you recommend I rebalance if I were to have less individual stock holdings?
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Dec 12, 2012 08:09
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Pieces posted:How would you recommend I rebalance if I were to have less individual stock holdings? Replace the individual company stocks with funds for each sector. The returns are likely to be similar because the fortunes of one bank/drilling and exploration/telecom company rise and fall with its peers, but you'll immediately eliminate the risk to your portfolio of an accounting scandal, office fire, PR snafu, executive turnover, et al. That said, if those stocks are your play money, then don't worry about it. I personally I would choose growth stocks rather than value for that segment of my portfolio.
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Dec 12, 2012 15:20
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Pieces posted:All 3 are large cap stocks in different sectors (financial, oil & gas, communications) respectively. I feel like I'm young enough that even something catastrophic like a 50% drop wouldn't be too damaging. I'm not looking to buy a house anytime in the next 5 years and I (well... I think I do) have a high risk tolerance. Just because you could theoretically handle a 50% drop doesn't mean you should expose yourself to it. Individual companies have company-specific risk such as lawsuits, lovely management, coming up dry looking for oil type poo poo, etc that can be diversified away through indexing. If you're not indexing then you're not maximizing your risk adjusted returns. Its portfolio theory 101. To sort of illustrate the point imagine you decided you wanted exposure to the American financial system pre-crisis which was a completely fine thing to do. You could choose one or two large cap banks or buy an index. If you happened to have chosen Lehman, Merrill, or Bear Sterns which all looked like fairly safe large-cap banks representative of the financial system as a whole at the time you would have lost 100% of your investment instead of losing 50% or whatever amount financials as a whole dropped. Swingline fucked around with this message at 18:15 on Dec 12, 2012 |
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Dec 12, 2012 18:11
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I'm wondering if/when/how I should re balance my investments. I was recently "given" a Wells Fargo account with ~60k by my father. The account had always been in my name, but I've recently graduated and am now controlling my own finances. I didn't really know too much about what I was doing when I set up my 401k and Roth 1.5 years ago, so they are a little weird. I'm saving ~30k a year, filling up tax advantaged accounts taking up 25k of that. I only have a 3 month, 10k, emergency fund, but I live with my parents but they would stop charging rent and I would have virtually no expenses if I lost my job. I have no plans for anything big ticket like a house for at least 10 years. My investments: 60k at Wells Fargo a taxable account. 95% GROWTH FUND AMERICA CLASS C. GFACX 11k at Wells Fargo in Roth IRA. 33% SMALLCAP WORLD FUND CLASS A. SMCWX 33% EUROPACIFIC GROWTH FD CLASS A. AEPGX 33% AMCAP FUNDS CLASS A. AMCPX 23k in my traditional 401k. 16% (election: 30%) VANGUARD TARGET RETIRE. 2050 9% (election: 0%) VANGUARD TOTAL BOND MKT INDEX 20% (election: 20%) VANGUARD INDEX 500 30% (election: 20%) FIDELITY SPARTAN EXT MKT ADV 25% (election: 30%) VANGUARD TOTAL INTNL SIGNAL 13k at Vanguard, taxable account. 25% Vanguard European Stock Index Fund Investor Shares. VEURX 25% Vanguard Emerging Markets Stock Index Fund Investor Shares. VEIEX 25% Vanguard Mid-Cap Index Fund Investor Shares. VIMSX 25% VANGUARD MATERIALS ETFVAW 2k in my HSA 33% NUVEEN MID CAP INDEX A 33% NUVEEN MID CAP GROWTH OPP A 33% NUVEEN SMALL CAP GROWTH OPP A After that lengthy buildup, the questions: 1) I'm roughly 70% bonds now. Should I sell them and buy something else? 2) I have the option of doing Roth 401k next year I think I should do it, since I'm paying 15% marginal tax. 3) I'm about to put 5.5k for 2013 in my Roth IRA, what should I put it in? I've seen arguments for putting the most risk/reward things in your Roth for the long term and that sounds good, should I convert the bonds in it too? 4) Are the elections listed for my 401k and HSA good going forward? 5) What should future investments be in? Should I do them through Vanguard or through Wells Fargo. As far as I know, WF isn't charging me any fees, at least I don't see anything on the monthly statements.
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Dec 12, 2012 18:13
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I have a question for you dudes. I'm 25 and working two jobs which come out to full time while I wait to go to graduate school next fall. I have a decent emergency fund, very low expenses, and I'd like to keep my extra money in a place where it doesn't lose -3% per year due to inflation and get an upper hand on retiring since I'll be making crap wages as a graduate student. Plus, compound interest owns. As far as what to invest in, I've been looking at all the Vanguard blend funds, in particular VGSTX and VWELX. As far as I can tell these have low expense ratios, will allow me to invest in one fund and be diversified, and will pay an okay dividend that I'm just going to reinvest. I also will be investing about $500ish or so a month. I don't plan on selling it as it will be in a taxable account. So my question is, would this be a sound strategy? I like the thought of these low expense vanguard blend funds since I'm not going to be able to invest much initially. dudemanbudguy fucked around with this message at 03:01 on Dec 13, 2012 |
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Dec 13, 2012 02:58
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dudemanbudguy posted:I have a question for you dudes. When do you see yourself needing the money? If you're looking to fund retirement, you should look at an IRA (probably Roth for you) and avoid a taxable account (and those funds are fine, but you may want to look at something along the lines of a target date retirement fund), if you expect to need the money in the foreseeable future, your fund choice is probably somewhat aggressive and you should look at some bond funds.
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Dec 13, 2012 03:03
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AreWeDrunkYet posted:When do you see yourself needing the money? If you're looking to fund retirement, you should look at an IRA (probably Roth for you) and avoid a taxable account (and those funds are fine, but you may want to look at something along the lines of a target date retirement fund), if you expect to need the money in the foreseeable future, your fund choice is probably somewhat aggressive and you should look at some bond funds. Nah, I won't need the money for years and years. I want to invest it in a fund, add a little money each paycheck, and let it sit for the long haul. I see that I worded that weird, but I have a large emergency fund (about 10 months of my living expenses) that is actually separate from the extra money I'd like to invest. I just really want to put money away that I don't need and let it just accumulate. I plan to open an IRA when I go to school in the fall. But I'd like to have a taxable account of index funds as well because I plan on retiring before I can withdraw from an IRA.
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Dec 13, 2012 03:20
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dudemanbudguy posted:I plan to open an IRA when I go to school in the fall. But I'd like to have a taxable account of index funds as well because I plan on retiring before I can withdraw from an IRA. I wouldn't worry about it too much, if you can retire before the allowable age for withdrawals, you will likely be either past the income limits for an IRA or past the contribution limits most years(or more likely, both). And you can withdraw Roth contributions penalty free anyway if it comes to it. Take the tax savings, open an IRA.
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Dec 13, 2012 03:26
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Pieces posted:All 3 are large cap stocks in different sectors (financial, oil & gas, communications) respectively. I feel like I'm young enough that even something catastrophic like a 50% drop wouldn't be too damaging. I'm not looking to buy a house anytime in the next 5 years and I (well... I think I do) have a high risk tolerance. Risk and return are highly correlated. However it is a huge mistake to assume that taking on a greater risk automatically means there will be a higher rate of return. Buying individual companies increases your risk without a corresponding increase in returns. This lowers your risk-adjusted rate of return (sharpe ratio). Modern portfolio theory is the idea that unsystemic risk cannot be diversified away (examples would be interest rate changes, global economic slowdown, worldwide health pandemic, etc). No matter how many stocks you own these events impact everyone. Systemic risk which impacts one company or tiny piece of the market (company cooked the books, invests all money in a bad product, plane with all executives goes down). There is no advantage to taking on this kind of risk.
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Dec 13, 2012 03:50
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AreWeDrunkYet posted:And you can withdraw Roth contributions penalty free anyway if it comes to it. Thirding (or whatever) the Roth IRA, for this reason and the fact that your contribution opportunities are quite limited. It really sounds like that's the perfect thing for what you want.
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Dec 13, 2012 03:55
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slap me silly posted:Thirding (or whatever) the Roth IRA, for this reason and the fact that your contribution opportunities are quite limited. It really sounds like that's the perfect thing for what you want. Thanks guys, I will look into a Roth IRA 
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Dec 13, 2012 04:05
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I just started working full time and subsequently opened a Roth IRA at vanguard. I put cash into the Money market fund VMMXX and could not find the option to just leave it as cash. While this isn't all that troublesome, since they're supposed to be equivalent, I nevertheless worry about these kinds of things, especially since the SEC is looking into money market funds like these. Does anyone with a vanguard Roth IRA know how to just leave your money as cash? I'd like to hold cash until I've put some more money in there.
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Dec 13, 2012 05:24
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You might be overthinking this... what you should do is get your retirement money out of the money market fund and into something riskier post haste. Are you waiting until you meet a minimum to invest in a new fund? If so, VMMXX will be just fine.
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Dec 13, 2012 05:34
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slap me silly posted:You might be overthinking this... what you should do is get your retirement money out of the money market fund and into something riskier post haste. Are you waiting until you meet a minimum to invest in a new fund? If so, VMMXX will be just fine. Well, that, and I'd like to wait to buy until this fiscal cliff stuff sorts itself out. I think between the selloffs due to cap gains going up and the uncertainty, there isn't much that I'd like to buy right now. I'm thinking long term, so I'd rather buy when poo poo hits the fan, as opposed to right before it.
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Dec 13, 2012 06:48
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With that being true or not, you really are being excessively paranoid by insisting on cash instead of a money market fund. Your money market fund is 99.99% secure as cash at Vanguard.
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Dec 13, 2012 07:43
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Longshot question here, but has anyone moved their Roth from USAA to vanguard? In my younger days since I already had a USAA account, I opened a Roth with them, and I've had it for probably 6 years. I pretty much bought a bunch of stupid mutual funds and stocks, then eventually I discovered the lazy portfolio stuff, and most of them recommend Vanguard for the low fees. The problem is, it costs me like 75 bucks to buy vanguard funds under my USAA account. It seems really easy to move it on Vanguard's website. The only thing is I'm out of the country currently, and if they need something signed and mailed back, I don't have access to a mailbox right now.
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Dec 13, 2012 11:30
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I originally opened my Roth IRA with USAA, and put in their S&P500 index fund which is cheap enough. Then I opened another one with Vanguard so I could get Vanguard's cheap bond index fund. Can you do it that way? No need to roll over then.
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Dec 13, 2012 17:20
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So I have my picks for rebalancing my Fidelity Roth (I'm sticking to their no commission ETFs for now): IVV S&P Large Cap 40% IJH S&P Medium Cap 15% IJR S&P Small Cap 5% EFA or ACWX or ACWI International 20% TIP Fixed Income 20% Any suggestions? Which international ETF from those looks like the best long term pick? I was leaning towards EFA.
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Dec 13, 2012 20:12
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I realize my last post was completely TLDR, so heres a smaller question: Ive heard 80/20 is a good stock/bond split for someone young looking for mainly growth, but what about splits for the other categories? Type Bonds 12.3% Stocks 85.0% ETF 2.8% Region US 67.1% EU 13.8% Emerging 19.1% Style Value 12.3% Blend 18.9% Growth 68.8% Cap Small 12.3% Mid 10.2% Large 77.5%
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Dec 14, 2012 16:28
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If you're happy with your stock/bond weighting, reducing fees is probably the most helpful thing you could do next. Half your money is in relatively expensive funds whose performance relative to the market is unlikely to justify their cost. Also double check whether you're paying a front load on the funds in your IRA. Something else - if you do want to buy a house or car or take a trip or get married or any other expensive thing in the next 5-15 years, the stock market is probably not a great place to have the money you'll need. That time horizon is pretty short in stock market terms. So you might consider having a savings account or money market fund for stuff like "fun" and "life" in the next decade. And regarding the details of your allocation - at some point you're just micromanaging things. For instance I've never been able to convince myself from data that a specific value or cap weighting was likely to be worth the trouble. Not that I've tried super hard, but ... a lot of the analyses arguing for various ratios don't try very hard either. Everyone has a different threshold for how much they're going to get into all that, of course. Just don't lose sight of the forest for the trees. It doesn't sound like you have a clear mind about the stock/bond decision yet - you've heard 80/20, ok, but you can hear any advice from 90/10 to 60/40 for your situation depending who you ask, even if all of them know what they're talking about. So maybe think about that decision a little more first.
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Dec 14, 2012 18:37
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slap me silly posted:I originally opened my Roth IRA with USAA, and put in their S&P500 index fund which is cheap enough. Then I opened another one with Vanguard so I could get Vanguard's cheap bond index fund. Can you do it that way? No need to roll over then. This sounds very reasonable. I'll wait till Jan and open a Vanguard account.
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Dec 15, 2012 19:46
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Normally I don't try and time my investments, and just let cost averaging and compound interest do its thing, but I'm just about to fund my Roth IRA for 2013, and I'm wondering if this whole fiscal cliff thing should have any bearing on it. I haven't been following too closely, and I just want to make sure it isn't blatantly better to wait and see or just go ahead and buy in on Jan 2nd. Does the answer change at all if I'm planning to do a 1/3 split between US, EU and World funds?
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Dec 17, 2012 17:54
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Hey guys, just prefacing this with 'I'm kind of dumb about investments'. Given this whole fiscal cliff nonsense in the states and predictions that it'll tank our economy when we inevitably ramp off it at top speed, would it be advisable to take my current investments, dump them into something that should remain stable, and then redistribute the money back into stocks at the peak of the crash? Is this something I can do? Would there be repercussions to my retirement funds as a result? I don't have a lot of money tied up in my 401k right now anyway, so I'm not terribly worried about losing it all, but if I could grow my investments when everything is cheap it'd be awfully nice.
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Dec 17, 2012 19:02
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No one will be able to predict the peak of the crash or whether there even will be a sell off. You're just as likely to miss out on some big gains if they come to a miracle surprise agreement if you take your money out now.
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Dec 17, 2012 19:33
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My boss told me the other day that he's selling off $30k of investments due to the fiscal cliff. I'd tell him that he sounds crazy, but I'd rather not get him too agitated right before I take a holiday. Plus the whole 'fiscal cliff' thing is far too politicized for me to even consider discussing it at work.
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Dec 18, 2012 15:22
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Initio posted:My boss told me the other day that he's selling off $30k of investments due to the fiscal cliff. I'd tell him that he sounds crazy, but I'd rather not get him too agitated right before I take a holiday. It could be valid if he is just taking his gains and then reinvesting in other stocks.
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Dec 19, 2012 06:34
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So... I'm trying to plan out my retirement savings at least for 2013, and I'd like some brief advice on what to do. I suspect it may be wise to talk to a financial adviser, but some of this stuff has been discussed a bit before. From what I understand, this is the right general plan for saving up lots of money is: 1) Max out 401k to 17.5k (I think that's the max this year?), either pre-tax or Roth. For me this will trigger an employer match, up until I hit the max. 2) Contribute to 401k and immediately do a backdoor conversion to hit the maximum Roth IRA limit. 3) Contribute as much as desired post-tax to an IRA until the limit. Does this make sense, given that I predict that I will likely be over the Roth limit next year? The other question I have is, which actually ends up better, assuming that I will definitely max out the 401k either way, Pre-Tax or Roth?
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Dec 21, 2012 08:33
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ntan1 posted:So...
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Dec 21, 2012 10:34
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