|
ntan1 posted:I think you might already know, but just to make sure, note that a majority of the long-timers for this thread will strongly recommend that you do not trade stocks in the short term, unless it's your job to do so and you have the ability to watch the market 24/7. Z 9000 -> 10500 gain over the last year would be about equal to the S&P 500. Yep, I'm well aware of this. I outpaced the market through good choices and a good market at the time, since I started the investments in late March. I had tons of extra money and the time to watch the markets closely (military deployment) so I wanted to test what I learned in all my college finance classes. The extra money and time has since ended, though, at the very least until I'm done with college in May. 80 to 90% of my income over the past year was untaxable, so my tax liability is negligible. Since I'm in the military reserves, my income from that job in the future is also negligible, which is why I'm considering other options. I can certainly set my contributions to 100% of my pay, but 100% of ~$400 a month is obviously not much. This is why I'm trying to differentiate between the potential lost income of waiting for the next Roth contribution year or dropping the remainder in a Vanguard IRA (or similar substitute). Any more thoughts with this additional information?
|
#
?
Sep 11, 2013 04:44
|
|
|
|
| # ? Jun 8, 2024 15:56 |
|
|
ryan_woody posted:Yep, I'm well aware of this. I outpaced the market through good choices and a good market at the time, since I started the investments in late March. I had tons of extra money and the time to watch the markets closely (military deployment) so I wanted to test what I learned in all my college finance classes. The extra money and time has since ended, though, at the very least until I'm done with college in May. 80 to 90% of my income over the past year was untaxable, so my tax liability is negligible. Historically, the market has had around an 8-9% annual return, so over the next four months, you can expect an opportunity cost of about 3% of whatever you don't invest right away (though since this is so short-term, reality may vary wildly from expectations). It really all seems kind of moot though since your ability to invest tax-advantaged this year is going to be limited to maxing out your IRA plus the ~$1600 in earned income you'll make through the rest of the year. Since you're already no stranger to a brokerage, what you may consider doing after maxing your Roth is buying some Vanguard index fund ETFs. Assuming you stay in the 15% income tax bracket or lower, you shouldn't have any capital gains tax when you sell them as long as you hold them for 366 days. Sell off enough to max out your Roth at the end of each year until they're gone, and it should be like they were in your Roth all along, minus brokerage fees. Assuming I'm reading these tax rules right, anyways, since I'm not speaking from experience here.
|
|
#
?
Sep 11, 2013 06:01
|
|
|
Are there any good centralized info posts about HSAs? I have a plan through work and thought I couldn't do it, but apparently can (it has a high deductible). I still get benefits even if I don't itemize, right? Basically, I need a cheat sheet to make sure I can use this , and initial googling is not providing one. But if this is a good idea for me, I want to figure it out and open ASAP--especially since apparently I can only use it for expenses after I open the account. Wish I had known more about this at start of year. edit: wait. looking into this further. I probably don't qualify, if I have a $0 deductible in-network and $2000 out of network. Even though most of my expenses are out of network and my copay is $60/month for my main prescription. Grr. But if I might be wrong, please let me know. onefish fucked around with this message at 17:16 on Sep 11, 2013 |
|
#
?
Sep 11, 2013 16:45
|
|
|
Okay, so here's my story and solicitation for advice: I'm 38. For pretty much all of my adult life I've had low-paying jobs, either as an enlisted sailor in the Navy (for a few years) or as a bartender/server/restaurant manager. That latter series of positions I held for over a decade, and when I got into a job that was actually paying me decently, I diverted a good chunk of my income to contributing toward the completion of my bachelors degree, because I was sick of the restaurant business. So long story short, I have $50k or so in student debt (some a holdover from when I attempted college previously and did poorly. Yeah, I know forbearance screwed me with interest, but (a) young and stupid, and (b) low-paying jobs...), but the good news is that the investment in a degree paid off. I'm approaching my six-month mark at a top ten consulting firm, where I'm making a pretty great entry level salary, and assuming my performance stays as good as it's been so far, I will continue to grow that salary. The other thing that I'm brand-new to are the financial planning benefits that comes from working for a large firm. For the most part, I'd worked for individually-owned restaurants prior to this, so the benefits were thin (I rejoiced that I was literally getting employer-provided health insurance for the first time in a decade when I got my offer). As such, I'm taking full advantage of those opportunities. Here's what I'm doing: - Roth 401k: 6% gross income (employer will begin matching on $.50 for every $1 up to 3% on my one-year anniversary) with the following asset allocation: -- 20% in a Money Market fund as a risk hedge (I had it in a fixed income bond fund, but it was racking up significantly negative returns, so I put it in something neutral for the time being) -- 60% in growth/income equity mix: Vanguard S&P index, Vanguard Value Index, and Vanguard Small Cap index -- 10% in growth equity: Vanguard Growth index -- 10% in international equity: Fidelity Diversified Intl. -- my net expense ratio is ~.15%, thanks to all those index funds. I targeted a low expense ratio as a means of keeping the "management fee parasitism" at bay. -- It's weighted a little risk-heavy, but I'm justifying that in that I'm getting started a little older, so I'd like to have a more aggressive risk profile initially. -Roth IRA: I scraped out $4000 prior to the 2012 cutoff date, and am going to contribute $5500 this year as well. -- Right now it's all in a USAA money market fund. I haven't allocated it out yet. -Employee share purchase plan: I'd be a stone-cold idiot not to max this out. 10% of gross income, with a no-fee share purchase twice per year at a 15% discount on market price. No vesting period. -Savings: I'm building up a savings cushion for myself based on the "6 months living expenses" plan. At present, I'm looking at around 60% of my gross income going towards investment/savings, and if I hold to my present rate of savings, should have ~$40k of financial assets by my one-year mark. That's the goal, anyway. I earned a total of $15,700 in 2011 and 2012 combined, so I'm working hard at continuing to "think poor" to keep my expenditures as low as possible. So my questions are: 1) Is there anything that I'm doing wrong, at first glance? (ignore the money market accounts, I'll get to those) 2) Talk to me about risk hedging in a unified portfolio. I had put some of my Roth 401k in fixed income, but that was getting shellacked, and given that it's expected that the Fed is going to start winding down their bond-buying program (with potential interest rate increases down the road as the economy hopefully improves), doesn't that mean that it's the expectation that bond prices will be soft for a while? Where's a good place to hedge against equities and reduce portfolio risk, in this case? 3) I'm contemplating using some of my surplus income to work out a deal with my parents to start contributing to prepaying their mortgage, in exchange for an equity stake in their house (commensurate with the value of the contribution I'm making, plus/minus home value movements). They're not in bad shape, but they could use the assistance. Is this a good idea? Bad? Thoughts/considerations? 4) What's a good method to retain good diversification across multiple investment accounts? My Roth 401k is with my employer's vendor, my Roth IRA is with USAA, and my Employee Share Purchase Plan holdings will be with a third party as well (don't know which one yet). Hopefully this isn't too crazy of a post to lead off with. I'm brand-new to this, so I want to make sure I'm doing it properly. CarterUSM fucked around with this message at 03:07 on Sep 12, 2013 |
|
#
?
Sep 12, 2013 03:04
|
|
|
The equity stake in the house is really stupid. Don't bother with the Roth 401k until they start matching. Focus on paying down your student loans. I'd still do the the roth ira contributions though.
|
|
#
?
Sep 12, 2013 03:33
|
|
|
CarterUSM posted:
You have a lot going on here but I will take a shot  First off it seems like you have a plan and congrats on the job ! if you keep your cost of living down the savings will grow fast. 1) Money market ! that is a lot for your age, I feel like you are trying to time the market a bit, which can be a risky proposition. I like loq cost funds but watch out for overlaping holdings (see question 2 below) the fund mix could use 5-10% more Intl funds since you have a large exposure to US markets by living and working here.. Also what is the story on the student loan debt? Rate, how long will it take to pay down etc.. I don't think you are too risky you have a >20yr time horizon so if you can handle the ups and downs of stock historically you will do best in equities over the long haul. (no guarantee for the future of course) 2. (Question 2 and 4 ) Plug your holdings into morningstar portfolio xray a free tool see what you actually own with your fund mix (looks overwhelmingly large cap domestic US) http://portfolio.morningstar.com/Rtport/Free/InstantXRayDEntry.aspx?ChangeMode=P&entrynum=10&productcode= 3. This isn't really an investment decision more a good son decision I'm sure there can be whole threads on helping family out. Personally I am in a similar boat helping out mom, but I don't look at it in investment, it is purely emotional and doing the right thing in my personal view. From a pure logic point of view money and family don't mix, so it isn't an investment in my mind just helping at, maybe I make something back on the house down the road but that isn't the real reason. 4. Take a look at the tool above and read up on what funds you want to hold in what type of account. Someone posted a good article on this a few pages back http://www.bogleheads.org/wiki/Prin..._Fund_Placement Just my take on your situation
|
|
#
?
Sep 12, 2013 03:41
|
|
|
What's the interest rate on that student debt? Interest is like a negative investment, and money put towards paying off your debt is equivalent to getting a guaranteed return on it equal to the interest. Student loans are also the worst form of debt because you have less rights as a debtor if things go south than with any other loan. Unless you have a low interest rate from a bygone era on it you will likely want to pay that off first. A quick look at USAA's fund choices isn't impressing me. I'd roll that account over to Vanguard, and put it in an appropriate target year fund to start rather than just a money market fund. As for the 401k, second on using Morningstar's Instant X-ray to show us a clearer picture of your allocation there. Also a list of other low-ER fund options that are available if any might help. If you have some money you can spare to help your parents out, go ahead if you want, but definitely don't count it as an investment. I don't know your parents, but verbal agreements have a tendency to turn to poo poo quickly when you try to call them in, even with family. Especially with family. Drawing up a written agreement transferring equity in the house to you may come across as kind of dickish as well, plus you'd want to double check any possibly applicable tax regs before you did anything official on paper. In short, don't count on actually getting that equity until you inherit it.
|
|
#
?
Sep 12, 2013 04:08
|
|
|
J4Gently posted:You have a lot going on here but I will take a shot Student loans are split from several different periods, all with different interest rates. I have ~$8k at 3.15%, ~$11k at 2.35%, ~$4k at 4.5%, and ~25k at 6.0-6.8% Obviously, I'd want to pay down the higher interest rate loans first. However, here's my thoughts on this, so see what you think: with the student loan interest tax deduction, I should be able to deduct all of my interest payments (my Modified AGI won't fall in the IRS's phase-out range, I don't think). As I'm in the 25% marginal bracket, that means that my net interest payments will be, naturally, effectively 25% lower than the nominal. So my effective rates will be ~1.76% to 5.1%. I would expect that a diversified investment portfolio should be able to get an excess return of more than 5%, so does it make sense to prepay the student loans (even the high interest ones) by diverting money that could be earning returns? Admitted, the difference might not be that much, but if there's one thing I've been learning, it's that single percentage point differences in rates of return can add up over 20+ years. quote:2. (Question 2 and 4 ) Plug your holdings into morningstar portfolio xray a free tool see what you actually own with your fund mix (looks overwhelmingly large cap domestic US) quote:3. This isn't really an investment decision more a good son decision I'm sure there can be whole threads on helping family out. Personally I am in a similar boat helping out mom, but I don't look at it in investment, it is purely emotional and doing the right thing in my personal view. From a pure logic point of view money and family don't mix, so it isn't an investment in my mind just helping at, maybe I make something back on the house down the road but that isn't the real reason. quote:4. Take a look at the tool above and read up on what funds you want to hold in what type of account. Someone posted a good article on this a few pages back I'll take a look. I also ordered a few of the books recommended in the OP in the Personal Finance thread (though used, natch. Gotta keep the "I'm poor" mentality!) Thanks again! CarterUSM fucked around with this message at 04:12 on Sep 12, 2013 |
|
#
?
Sep 12, 2013 04:09
|
|
|
Do I have an unusually lovely choice of funds in my 401k? American Funds Europacific Growth R4-REREX Blackrock Equity Dividend A-MDDVX Blackrock Inflation Protected Bond A-BPRAX Eaton Vance Atlanta Capital Small Mid-Cap A-EAASX Fidelity Advisor Small Cap A-FSCDX Fidelity Prime Fund; Daily Money Class-FDAXX Ivy Cundill Global Value Y-ICDYX Jp Morgan Investor Growth A-ONGAX Jp Morgan Mortgage Backed Securities A-OMBAX Mfs Mass Investors Trust R3-MITHX Nuveen Tradewinds Value Opportunities A-NVOAX Oppenheimer Developing Market A-ODMAX Pimco Total Return A-PTTAX Pioneer Fundamental Growth A-PIGFX Principal High Yield Fund A-CPHYX If I understand right, the "Maximum Sales Charge" is taken out of my investment - so if the max sales charge is 5.75%, I only get 94.25% of my money invested every time? All of these have high fees and/or a strange combination of allocations. I've already asked if we could have any, say, Vanguard funds - no dice.
|
|
#
?
Sep 13, 2013 00:08
|
|
|
Normally when you see the term "Maximum sales charge" it's a deferred load - if you keep the funds in your account for 6-7 years you don't pay any sales charges. If you keep it there for a shorter period of time you pay a decreasing sales charge based on how long it's been there. It's worth clarifying, though. 5.75% seems like a ludicrously high amount for a front-end load.
|
|
#
?
Sep 13, 2013 00:41
|
|
|
kaishek posted:Do I have an unusually lovely choice of funds in my 401k? All of those funds look like Active funds. Is there a single thing there that is an index fund?
|
|
#
?
Sep 13, 2013 03:28
|
|
|
Hello, thread. I'm 25 and have been working at my company for almost 3 years. Since I knew nothing about investing when I started, my father helped me pick funds without any research on my part. Also, my employer match is in company stock (100% immediately vested). It wasn't until starting to follow this thread a month ago that I learned about re-balancing, index funds, and not keeping half of my 401k in company stock. Before I explain what I've done so far, here are my options: pre:Fund Category Fee Elections MY COMPANY STOCK *AF GRTH FUND AMER R6 (RGAGX) Large Cap 0.34% *CALAMOS GROWTH INST (CGRIX) Large Cap 1.04% DAVIS NY VENTURE Y (DNVYX) Large Cap 0.64% DODGE & COX STOCK (DODGX) Large Cap 0.52% *FID MAGELLAN K (FMGKX) Large Cap 0.39% SPTN 500 INDEX INST (FXSIX) Large Cap 0.05% 40% SPTN MID CAP IDX ADV (FSCKX) Mid-Cap 0.22% 10% VICTORY SPL VALUE I (VSPIX) Mid-Cap 0.95% SPTN SM CAP IDX ADV (FSSVX) Small Cap 0.33% 10% *TRP SM CAP STOCK (OTCFX) Small Cap 0.92% *FID DIVERSIFD INTL K (FDIKX) International 0.84% SPTN GLB XUS IDX ADV (FSGDX) International 0.28% 20% FID BALANCED K (FBAKX) Large Cap 0.48% FID FREEDOM K 2050 (FFKHX) N/A 0.68% MIP II CL 3 Stable Value 0.28% BLKRK HIGH YLD BD BR (BRHYX) Income 0.58% DODGE & COX INCOME (DODIX) Income 0.43% 10% FID GNMA (FGMNX) Income 0.45% 10% VANG INFL PROT ADM (VAIPX) Other 0.10% (I omitted most of the target date funds) A few weeks ago I changed my investment elections to what is shown. I left my original investments alone (except for CGRIX, since the ER is definitely too high) and moved my company stock into the elected index funds and bonds in a way that gave me an overall 60/20/20 balance. Hopefully that makes sense; now for questions: 1) Should I keep my original investments (RGAGX,FMGKX,OTCFX,FDIKX)? Maybe just the two with lower expense ratios? 2) Do I have the right type of bonds? I used Fidelity's online tool to select them. 3) I'm a little to young for the 2050 target fund. If I decided that I want to go hands off, would it be crazy to put everything into the 2050 fund and move it into the 2055 fund when it becomes available? 4) Is there anything else I'm completely overlooking? I would appreciate any insight. Captain Jizneep fucked around with this message at 13:13 on Sep 13, 2013 |
|
#
?
Sep 13, 2013 05:20
|
|
|
Captain Jizneep posted:I would appreciate any insight. Congrats on fixing your makeup! For domestic stocks, you have the right three selections of spartan funds, but your percentages are slightly off. If you want to capture the US stock market and its makeup, then the correct ratio is 81% 500 index, 6% mid cap, 13% small cap. That being said, some people like to focus more on mid cap stocks. For international stocks, you have the right selection of spartan fund, but you should probably increase your percentage out of all stocks allocated it. you want your global/full stock makeup to be 70% US, 30% international as a guideline (numbers differ by +-10% depending on person, but most will say about 30%). I do not like the bond selection you have in your 401k. If at all possible, assuming you're putting money into a Roth IRA, use the Roth IRA to select bonds instead. A 20% allocation into bonds is acceptable, but given age, it isn't wrong to put 10% or even 0% into bonds. It depends on your attitude toward risk, and the decision will vary on person. As an example, the 2050/2055 retirement funds put 10% into bonds. No on the Freedom K 2050 fund. It's composition and indexing are fine, but the expense ratios are high, and you can emulate the market in a similar way with what you already have, with a rebalance every 2 years. ntan1 fucked around with this message at 06:33 on Sep 13, 2013 |
|
#
?
Sep 13, 2013 06:27
|
|
|
CarterUSM posted:Student loans are split from several different periods, all with different interest rates. I have ~$8k at 3.15%, ~$11k at 2.35%, ~$4k at 4.5%, and ~25k at 6.0-6.8% Two things: first, the "return" on paying your student loans is guaranteed, while the return on your investments is not. And second, in the US, student loans are non-dischargeable in a bankruptcy. Between these two factors, I'd be in favor of paying down the loans as fast as possible. Suppose your great job disappeared in six months. Not even being your fault, just something happened and you were unemployed. You might be able to place your loan payments into forebearance (but they'd continue to accumulate interest) or you might not, depending on what the lending bank allows you to do... but it's a risk. I'd say for sure pay into the tax-advantaged retirement accounts as much as you can, because you only have a certain amount per year you can put in and you are already 38, so you want to get every year's contribution in there if at all possible. Beyond that, I'd say put large payments into the highest-interest student loan and minimum payments into the others. Maybe put some more into investment if you're happy with the rate at which you're paying down loans, but do it in some kind of measured way. Paying off your loans will have the added benefit of reducing your debt-to-income ratio, which is a factor in your credit rating and your ability to borrow (such as for a house). For context, I tend to be on the conservative side of things compared to the average opinion of BFCers in this thread.
|
|
#
?
Sep 13, 2013 06:31
|
|
|
Leperflesh posted:Two things: first, the "return" on paying your student loans is guaranteed, while the return on your investments is not. And second, in the US, student loans are non-dischargeable in a bankruptcy. Between these two factors, I'd be in favor of paying down the loans as fast as possible. Strong agreement on this one for the 6% loans. The only place where I might differ is that the 2-4% loans. From a base money generating standpoint, you may easily be able to exceed the interest rate. However, based on your age and risk, I do say that paying off even the 2-4% loans may be a good idea.
|
|
#
?
Sep 13, 2013 06:38
|
|
|
Captain Jizneep posted:1) Should I keep my original investments (RGAGX,FMGKX,OTCFX,FDIKX)? Maybe just the two with lower expense ratios? You had the right idea moving to the Spartan index funds. They're not a perfect representation of the total market, but they'll do for getting your match. Once your match is maxed out though, it'd be better to put any further investments in a Roth IRA with Vanguard. If your question about target date funds is about Vanguard's funds, then yes, 2050 is fine, though I think they have 2055 and 2060 available already. Their target date funds that are more than 20 years away from target are all currently identical, though, it's just a matter of when the manager will adjust the allocation to be more conservative. Most other companies charge too much for their target date funds to be worth it. Once you have your mix defined, all you're going to have to do is an annual rebalance for the next 20 years. Your balance isn't too far off the mark (aside from only adding up to 90%) but could use some adjusting. I'd go with: 50% FXSIX 8% FSCKX 5% FSSVX 27% FSGDX 5% DODIX 5% FGMNX The bonds aren't great, but they're the best you can do. Alternatively, you could forgo bonds in your 401k entirely, and in a Vanguard Roth IRA, invest in an appropriate LifeStrategy fund to compensate. Or go with your normal target date fund in the Roth and just be okay with having less bonds, if you don't mind carrying some extra risk (justifiable at your age). e: beaten. That's what I get for leaving a half-written post sitting for a while and coming back later to finish it. Listen to ntan1, I learned from him. Kilty Monroe fucked around with this message at 06:47 on Sep 13, 2013 |
|
#
?
Sep 13, 2013 06:40
|
|
|
ntan1 posted:Good Advice Kilty Monroe posted:Good Advice Thanks! And whoops, the international index fund was supposed to be 20%. I will decrease the amount of bonds, but I do not have a Roth IRA. I have a large pile of student loans that I'm aggressively paying off, so I'm just taking advantage of the full 5% employer match for now.
|
|
#
?
Sep 13, 2013 13:20
|
|
|
grack posted:Normally when you see the term "Maximum sales charge" it's a deferred load - if you keep the funds in your account for 6-7 years you don't pay any sales charges. If you keep it there for a shorter period of time you pay a decreasing sales charge based on how long it's been there. There is a separate entry for "Maximum Deferred Sales Charge" - that says N/A. ICDYX has no charges, deferred or otherwise, but a 1.4% net expense ratio. REREX is focused in Europe, and has no sales charges and .85% expense ratio, and MITHX has 0.77%. If I don't plan to stay at this employer long term, should I just dump everything in the stuff that has no sales charges and diversify my portfolio with my Vanguard account?
|
|
#
?
Sep 13, 2013 19:30
|
|
|
I asked a few weeks ago and got some good input about how to diversify my funds in my 457b, but I have a followup now. My Deferred Comp plan is through GreatWest Retirement, and I currently contribute around 8% of my gross monthly. I've got the money going into both a T Rowe Price 2030 and Lazard Emerging Markets. There is no employer match in this Deferred Comp, (which is fine, since I put in my max 7% gross into a great pension plan that has 2.25:1 matching), so I look at this plan as potential 'bonus/trip' income for a few years post-retirement. The issue is the expense ratios we are charged with GWRS. My target date fund is .75%, and the Lazard is at 1.1%. Looking at a Roth through Vanguard, the equivalant target date fund is .17% and the Emerging Markets is .92%. I was advised by our HR folks that all of our GWRS options are actively managed, thus the higher expense ratios. But when looking at the returns that the Vanguard Target Date funds get, they are on par with the GWRS options. Since I only contribute 3k/year to my deferred comp, I'm thinking I may be better off in the long-run ceasing contributions and just putting it into a Roth IRA with Vanguard. The only benefit I see to my 457b is being able to draw with no penalties when I retire, versus having to wait till 59 1/2 with a Roth IRA. I can retire at 47, but I have no intention of actually doing so. A Roth has the tax benefits, but my pension alone will be bumping me up to a higher bracket anyway, (I currently gross 37k, retiring at 60 would put my pension at 118k/year), so I think that's a wash. Any advice? I'm leaning towards the Roth, (just wish I could roll over the 11k I have in my 457b into it, but without leaving my employer, I don't think I'm allowed....).
|
|
#
?
Sep 13, 2013 20:09
|
|
|
kaishek posted:There is a separate entry for "Maximum Deferred Sales Charge" - that says N/A. ICDYX has no charges, deferred or otherwise, but a 1.4% net expense ratio. REREX is focused in Europe, and has no sales charges and .85% expense ratio, and MITHX has 0.77%. You should contact your hr to see if you really are going to be charged sales loads. Most of the time you aren't going to be paying sales loads in a 401k, despite what the generic fact sheet may tell you. 5.75% is a front load, it's the most common front load before you reach the first breakpoint with a mutual fund when you are working with a financial advisor. However, if you are at a large company you are probably not going to pay a sales load on any of the funds offered.
|
|
#
?
Sep 13, 2013 21:52
|
|
|
mike- posted:You should contact your hr to see if you really are going to be charged sales loads. Most of the time you aren't going to be paying sales loads in a 401k, despite what the generic fact sheet may tell you. Email sent to HR, thanks - our HR guy is almost comically clueless though, and this is administered through Paychex. Maybe I'll have more luck calling them! Otherwise I'm tempted to put it all into FSCDX (Fidelity small-cap), REREX (foreign), and MITHX (mostly domestic blend), as the lowest fee options.
|
|
#
?
Sep 13, 2013 22:04
|
|
|
I'm a first-year college student (freshman, ripe age of eighteen years old) and I currently don't have any sort of job (I was employed through a church for singing but recently left), but I have a fairly disposable income at the moment that I want to be proactive with instead of wasting it on useless things like a lot of people I know. I'm planning on getting a part-time job in the very near future (two months, tops). I have a close friend who is a financial adviser for Scottrade (he's very experienced and has been working in the field for more years than I've been alive) who I've been casually speaking to about finances and etc. and various options of what I can do in the future to begin saving my money and what not, and I plan on reading a lot of the books suggested in this thread (partly because I've gained a fascination with this sort of thing now, partly because of the aforementioned proactive-money attitude I have). Is there anything else I should know or any options I should consider? I figured I might as well ask as I continue to quietly lurk and learn.
|
|
#
?
Sep 14, 2013 21:47
|
|
|
Read OP, read the books in the OP, and invest in Index funds. Don't gamble on individual stocks, and most financial advisers are ripping you off.
|
|
#
?
Sep 15, 2013 03:12
|
|
|
ntan1 posted:Read OP, read the books in the OP, and invest in Index funds. Don't gamble on individual stocks, and most financial advisers are ripping you off. This specific financial adviser isn't charging me anything (he's a good friend), he just likes talking about the business and explaining things concerning it because it's pretty much his life outside of working in community theatre here in town. But thank you for the other advice, I'm definitely going to be acquiring most if not all of the books in the OP.
|
|
#
?
Sep 15, 2013 03:52
|
|
|
ntan1 posted:Read OP, read the books in the OP, and invest in Index funds. Don't gamble on individual stocks, and most financial advisers are ripping you off. Hey, I'm a professional advisor! ...and unfortunately it's mostly true. You can't imagine how many portfolios I've seen churned on a yearly basis to generate new commissions. It's disgusting.
|
|
#
?
Sep 15, 2013 05:17
|
|
|
After I max out my Roth, what do I do with the rest of the money earmarked for retirement? My employer doesn't offer a 401(k) (yay small startups). Should I just grab some index funds like the Vanguard 500? I won't have the $3,000 minimum buy-in until the end of next month, so should I just park my money in my savings account (0.85%) until I have enough to hit the minimum?
|
|
#
?
Sep 15, 2013 16:04
|
|
|
If you don't have an emergency fund, then work on that. You could consider contributing to an HSA, though I'm not sure if they provide those outside of work.
|
|
#
?
Sep 15, 2013 18:32
|
|
|
Sorry, should have included that. I have a 4 month emergency fund set up sitting in that same savings account. I'll look into the HSA, that's definitely not something that I considered. Edit: Does anybody know if setting up a 401(k) system is a huge pain in the rear end for small companies? I only work with 10 other people, and the "HR department" is also the lead mechanical engineer, so I don't want to ask him to set up a retirement plan if it's a gigantic headache (he's got enough on his plate). If it's relatively simple, I would feel comfortable asking for that, because I definitely want it. Low-Pass Filter fucked around with this message at 18:54 on Sep 15, 2013 |
|
#
?
Sep 15, 2013 18:51
|
|
|
Low-Pass Filter posted:Sorry, should have included that. I have a 4 month emergency fund set up sitting in that same savings account. I'll look into the HSA, that's definitely not something that I considered. Ideally an emergency fund covers at least six months, so you could pad that a bit more. I honestly couldn't tell you what the process of setting up a 401k is like, but it couldn't hurt to respectfully point him to https://institutional.vanguard.com/ to find out what it involves.
|
|
#
?
Sep 16, 2013 03:25
|
|
|
Like y'all have already said, it's not smart to be heavily invested in your own company's stock while you're working there, since it's a double whammy if things go south. So now I'm looking for some advice on what to do with the remaining company stock I have through our Employee Stock Purchase Plan (ESPP) program. Right now I've got 15% of my income (max allowed contribution) going toward the ESPP for all 6 years of my employment, which is structured like this: Purchases are made every quarter in Feb/May/Aug/Nov 1, using the closing value from the previous purchase date (e.g. Feb 1) and the current date (e.g. May 1), taking the lower of two, and discounting that by 15% as the new purchase price. It's like free money if you can afford to be lighter on your net after-tax paycheck. As for the state of my other finances, the big picture is that I have -About 10-14 months in cash savings -Have 6% of my income going toward my 401(k), which gives me the maximum company match of 3%. That's been true since I started out of college at the company 6 years ago -I've already maxed my Roth IRA contribution this year at $5500, although I hadn't contributed to it at all since two jobs ago (8 years?). Last week my company's stock was very close to a high (it's very cyclical), and I sold the last of my qualifying disposition stock for long-term gains -- that is, ESPP stock that I had held for > 2 years. Earlier this year after reading The Millionaire Teacher, I took a lot of what I had saved for a down payment on a second/upgrade house and instead opened up some Vanguard index accounts instead since I don't want to make a jump to more real estate. I can always take money out of here to buy if I want. But what should I do with the seven lots (quarterly ESPP purchases) of stock I have left that have been held for under two years? Those lots add up to about 3/4 of what I already have in Vanguard. Do I -Liquidate all 7 lots now that we're near a cyclical high and take the tax hit, and put most or all of the balance into my Vanguard accounts? -Continue to sell them off as each quarter rolls around and the oldest lot moves to a qualifying disposition, and put that into my Vanguard? I'm not sure if my ESPP question is boiling down to whether it's better to take the tax hit now of selling on disqualified disposition in order to make it up with earlier compounding on taxable retirement savings. I'm also not sure whether I should up my 401(k) contribution at the expense of my ESPP contribution, if I were to make the immature assumption that I couldn't otherwise reduce my spending enough to make up that difference... my gut tells that this wouldn't be a good decision either (and that the optimal solution is to spend less and save more on the 401(k)).
|
|
#
?
Sep 16, 2013 20:16
|
|
|
ESPP is probably the best investment in terms of ROI when you sell it immediately, something like 90% ROI (more if you sell at an opportune time). I would continue using your ESPP, sell immediately/when appropriate, and move it into a Vanguard index fund. You should ultimately put more toward your 401k, so maybe you can shift whatever you are putting toward your Roth IRA into 401k and use your ESPP money toward the Roth IRA. Win win? ETB fucked around with this message at 00:49 on Sep 17, 2013 |
|
#
?
Sep 17, 2013 00:46
|
|
|
Babby's first retirement question: My husband and I are looking into opening a Roth IRA. Is there any advantage in using the credit union that does our checking/savings and our mortgage, or should we be shopping around a bunch? Does it even matter?
|
|
#
?
Sep 17, 2013 18:16
|
|
|
One of the main goals with your IRA is to avoid fees/expense ratios. Thus, it's probably not a good idea to open an IRA with a credit union or bank, who probably has to pay additional money to the fee owner just to hold their mutual fund. Go with a Vanguard IRA. It's a safe bet which almost everyone here agrees with, and you have really good investment choices with them.
|
|
#
?
Sep 17, 2013 18:18
|
|
|
Go with a real investment company, Vanguard/Fidelity being two of the top two.
|
|
#
?
Sep 17, 2013 18:19
|
|
|
I love my CU for their low mortgage rates and checking APY, but not for credit cards and other matters. Go for Vanguard.
|
|
#
?
Sep 17, 2013 19:07
|
|
|
SpelledBackwards posted:
I have been in a similar ESOP position and because of the double whammy I did not consider the stock as a long term investment, but I did take advantage of the 15% discount. I just promised myself I would sell it every quarter so it didn't start building up.
|
|
#
?
Sep 17, 2013 21:15
|
|
|
This is slightly off-focus, but after moving to Vanguard, I'm super happy about it. I have no complaints so far... but my father is like "have you looked into this, are you sure there's no catch", et cetera. I have, and there isn't, but how do I prove that to an old man? I can't exactly point him to fee structures that don't exist, you know?
|
|
#
?
Sep 18, 2013 03:04
|
|
|
Why do you need to prove anything to your dad? I'm assuming you're an independent adult. Tell him you spoke with a financial advisor who told you that Vanguard is the a good option for low-fee accounts.
|
|
#
?
Sep 18, 2013 03:19
|
|
|
moana posted:Why do you need to prove anything to your dad? I'm assuming you're an independent adult.
|
|
#
?
Sep 18, 2013 14:33
|
|
|
|
| # ? Jun 8, 2024 15:56 |
|
|
J4Gently posted:I have been in a similar ESOP position and because of the double whammy I did not consider the stock as a long term investment, but I did take advantage of the 15% discount. I just promised myself I would sell it every quarter so it didn't start building up. Given that we're now back to a bifurcated long-term/short-term capital gains tax rate, does it make sense to sell each quarter? Wouldn't it be better to build the holdings into your overall portfolio risk profile and sell it just after the one-year anniversary of its purchase? I ask 'cause I'm about to ding on my first six months of ESPP in November, and I'd like to have a strategy for holding/divesting.
|
|
#
?
Sep 18, 2013 15:04
|
|