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Nephzinho posted:My employer just started a new 401k plan and sat through an hour long finance 101 lecture before finally getting to the funds. Thank god there are Vanguard funds nestled into the long list of backwater poo poo. Same except the fund choices were / are awful. The S&P 500 index fund is 0.85% ER. Sand Monster fucked around with this message at 16:24 on Apr 21, 2015 |
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Apr 21, 2015 15:37
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Sand Monster posted:Same except the fund choices were / are awful. The S&P 500 index fund is 0.85% ER. They didn't even mention the expense ratios when they did ours. They were not great, the S&P index fund is like .9%
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Apr 21, 2015 17:47
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Out of curiosity, what CAGR range do decent ETFs have? Should I expect like 9-10% over 3-5 years?
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Apr 21, 2015 17:51
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FreelanceSocialist posted:Out of curiosity, what CAGR range do decent ETFs have? Should I expect like 9-10% over 3-5 years? Somewhere around -25% to 40% over 3-5 years.
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Apr 21, 2015 18:00
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I finally looked in to my employer's benefits plan, and signed up for an HSA as well as their 401k. Unfortunately, there is no contribution match for either, and won't be for as long as I'm working there, so I kind of want to max the HSA first (after maxing my non-employer sponsored Roth IRA) then put the rest of the money into the 401k. From what I've read, I have those two out of order and that I should always fund the 401k first, but my reasoning is that I'll have medical expenses eventually, I'm sure, and it would be nice to have some pre-tax money set aside for them that's earning money. They offer a Roth 401k, which I'm happy about, because once I leave this job it will go straight into my Roth IRA. Is it possible to save too much for retirement? It's $27,300 to max those three haha. I doubt I'll get there. As far as what to invest within them, the HSA offers Vanguard Admiral Shares without the minimum $10,000 purchase, but does not seem to have a total index fund, unless I'm missing something.  401k has some terrible choices, which is why I wanted to max the IRA and HSA first. I'm looking at: FUSEX VSIAX (for the lower Admiral shares fees- is small cap worth investing in?) FSIIX For international. PDBZX For bonds? I don't know. Slim pickings.
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Apr 21, 2015 23:32
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Moneyball posted:...I should always fund the 401k first, but my reasoning is that I'll have medical expenses eventually, I'm sure... It's not really a big deal, especially if your 401k funds are awful and your HSA funds are awesome. But it's worth noting that you'll ALMOST definitely have medical expenses, and you'll DEFINITELY have expenses in general. Unrestricted money will be better to have than restricted money. Moneyball posted:
Saving $27,300 a year for 30 years will leave you with $1,531,119 in today's dollars (this assumes 7% growth - 3% inflation = 4% real growth). The idea of saving $27,300 a year may sound like total insanity, but that portfolio gives you a very normal-sounding $61,000/year (based on the 4% withdrawal rule) to live off of. It may be possible to save too much, but $27,300 isn't it!
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Apr 22, 2015 00:00
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All else being equal, HSA first makes a lot of sense. The money is not taxed at all if you use it for medical expenses (and you don't have to wait until retirement to use it this way). And if you are lucky and stay healthy you can still use it for retirement taxed no differently than a traditional 401k would have been. I think where the 401k first comes in is if there is an employer match to get that money before anything else.
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Apr 22, 2015 00:26
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So my employer's recently changed providers. The new place has access to Vanguard funds at good expense ratios, so I can approximate a whole-market fund pretty easily, but the bond funds (.51% ER) and international funds (.64% ER) aren't that great. I'm considering keeping what I have in the old 401k (which can be rolled into this, but doesn't have to) for their lower ER bond and international funds, and buy mainly US stock in the new one. Is .3% difference in about 30% of my portfolio really worth the hassle of keeping two 401ks, and having to buy more bonds than I would like in my Roth to keep my allocations right?
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Apr 22, 2015 07:26
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I asked in the stock trading thread but didn't get much of a response. Does anyone know if dividends paid by Canadian stocks held in a US Roth IRA are subject to the usual 15% Canadian withholding? There are a few articles online which seem to indicate that the US-Canada Tax Convention protects Canadian dividends in retirement accounts, but the wording in the actual document is unclear. Then I found this document which seems to agree. I'm just surprised this hasn't come up before and at the relative lack of information out there. Anyone else hold Canadian dividend paying stock in an IRA?
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Apr 22, 2015 13:26
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Tricky Ed posted:So my employer's recently changed providers. The new place has access to Vanguard funds at good expense ratios, so I can approximate a whole-market fund pretty easily, but the bond funds (.51% ER) and international funds (.64% ER) aren't that great. I'm considering keeping what I have in the old 401k (which can be rolled into this, but doesn't have to) for their lower ER bond and international funds, and buy mainly US stock in the new one. You can roll your old 401k to a traditional IRA. The only downside is that it would make doing backdoor Roth contributions more expensive but that's somewhat of an edge case.
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Apr 22, 2015 14:53
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Hey guys, a while back I asked about what to do with my Roth 401k that I get through work (but that has absolutely no matching) and you guys suggested that I stop contributing to it and pour all my money into paying down my loans - about $7k in student loan debt remains and about $18k of car. They're both on track to be paid off a few years early, so that's good, but I got a couple of questions: I still have about $9k sitting in the 401k that doesn't seem to be doing much except accruing fees and under-performing, should I do something with that? I've heard a lot of "Convert it to an IRA and invest in index funds" but is that even worth doing until I start contributing to it again? Should I start contributing to it again before my loans are gone? I guess it's an optimization problem: would the $xx I contribute to it make me more money than not paying $xx to my loans will cost me, plus the added cost of delaying the additional money I'll invest once my loans are gone completely? I'm 23 now (turn 24 in July), for reference. My retirement goal is ALL THE MONEY if that makes a difference. Thanks 
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Apr 22, 2015 15:24
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you cannot roll over a 401k unless you leave your job. can you quantify "underperforming"? does your plan not have a low-cost stock index fund available?
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Apr 22, 2015 15:30
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Mr. Glass posted:you cannot roll over a 401k unless you leave your job. can you quantify "underperforming"? does your plan not have a low-cost stock index fund available? Leaving my job is something I've been planning to do for a while since I'm making about half the market rate for what I do, so that's definitely a possibility. By "Underperforming" I mean that for the entire time I've had it it's growth has tracked consistently lower than the S&P and the difference between the two has pretty much only increased with time. If it has a stock index fund I'll go ahead and grab that, I don't remember seeing one when I was first going over it though. Right now I'm in some automatic management thing that supposedly has people look at it and rearrange it periodically for me, though clearly that hasn't helped. Part of the problem is that I haven't paid attention to it since I stopped putting money in it.
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Apr 22, 2015 15:37
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FreelanceSocialist posted:Out of curiosity, what CAGR range do decent ETFs have? Should I expect like 9-10% over 3-5 years? I'm not sure if you're being facetious but anyway, 10.77% CAGR (6.91 real). Since that number out of context is pretty much meaningless I doubt if it's going to help you very much but since your question seems, um, naive I'm going to assume it really doesn't make any difference. Edit: Okay, a little effort so as not to be quite as much a dick. 10.77 CAGR is the CAGR of the S&P 500 (using back filled data to 1871). Since the S&P 500 is ubiquitous and cheap and easy to invest in (Thanks Bogle!) any investment you make that is not the S&P 500 or does not beat the S&P 500 over time is a poor investment (more risk for less return). Since the number of funds (and etf's) that can show that they have beaten the S&P 500 (or total US market) over any reasonable time frame is, uh, not very large then your choices as to 'decent' etfs is pretty small and mostly comes down to cost (or FF factor weighting) unless you are looking for diversification benefits. Murgos fucked around with this message at 18:22 on Apr 22, 2015 |
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Apr 22, 2015 15:42
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Saint Fu posted:I asked in the stock trading thread but didn't get much of a response. No idea. Try emailing/calling your brokerage.
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Apr 22, 2015 18:53
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Murgos posted:any investment you make that is not the S&P 500 or does not beat the S&P 500 over time is a poor investment (more risk for less return). This is not necessarily true. There are investments that are less risky than the S&P 500.
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Apr 22, 2015 19:22
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Parallel Paraplegic posted:Leaving my job is something I've been planning to do for a while since I'm making about half the market rate for what I do, so that's definitely a possibility. Over the last few years the S&P 500 has done absolutely gangbusters while international stock markets and bonds have stagnated so it's not surprising that a diversified target retirement (or any other type of automatic asset allocation) fund underperformed the S&P 500. If you plug your fund in to Morningstar's Instant X-Ray it will give you a breakdown of where your money is actually being invested. So far this year the international stock markets are doing slightly better than the S&P 500 so your diversified automatic asset allocation fund may outperform a straight S&P index fund. Or it might not; with the stock markets there's not real way to predict (which is why you diversify in the first place).
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Apr 22, 2015 19:25
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What should I be looking at doing if my 401k options are miserable? I started a new job a couple weeks ago, and the salary + equity increase was huge but now the lowest expense ratio fund I have access to in my 401k is 1.2%, and there is no 401k match of any type. Should I just not contribute?
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Apr 22, 2015 19:29
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Twerk from Home posted:What should I be looking at doing if my 401k options are miserable? I started a new job a couple weeks ago, and the salary + equity increase was huge but now the lowest expense ratio fund I have access to in my 401k is 1.2%, and there is no 401k match of any type. Should I just not contribute? quote:1) Contribute to 401(k) up to employer match. Always get the free money! Since your employer match is 0%, contribute 0% and move on to step 2. After that, I think you can contribute to an individual 401k with lower ER can't you? Maybe someone can correct me on this?
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Apr 22, 2015 19:32
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Blinky2099 posted:Since your employer match is 0%, contribute 0% and move on to step 2. After that, I think you can contribute to an individual 401k with lower ER can't you? Maybe someone can correct me on this? The last time I looked into this, Solo-401(k)s were for business owners. I'm just a W2 employee, so I was hoping that there was some other vessel I could use for retirement savings.
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Apr 22, 2015 19:38
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Are you eligible for an HSA?
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Apr 22, 2015 19:43
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Twerk from Home posted:What should I be looking at doing if my 401k options are miserable? I started a new job a couple weeks ago, and the salary + equity increase was huge but now the lowest expense ratio fund I have access to in my 401k is 1.2%, and there is no 401k match of any type. Should I just not contribute? My preference if I were in your shoes would be: 0) Talk to HR about getting not lovely funds. Meanwhile: 1) Max Roth IRA - $5.5k 2) Look in to an HSA - $3k 3) Contribute to lovely 401k.
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Apr 22, 2015 19:44
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Saint Fu posted:Are you eligible for an HSA? I'm not sure, I'll check into this. Aren't the limits much lower? At my last job I was maxing out a Roth 401k.
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Apr 22, 2015 19:45
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What's the consensus on the US Government's TSP funds? It's my understanding that they have some of the lowest expense ratios anywhere. My current retirement savings plan looks like: 1) Max Roth IRA contributions to Vanguard's targeted 2045 retirement fund 2) 8% of gross pay goes into Roth TSP in these funds: F (Fixed Income Index) - 10% C (Common Stock Index) - 30% S (Small Cap Stock Index) - 20% I (International Stock Index) - 40% Looking for opinions on whether this is a solid allocation or if I should consider their target 2040 or 2050 retirement fund instead. I'm 32 years old, 0% effective tax rate for the past 3 years, and very risk tolerant. Gray Matter fucked around with this message at 20:35 on Apr 22, 2015 |
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Apr 22, 2015 20:14
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Gray Matter posted:What's the consensus on the US Government's TSP funds? It's my understanding that they have some of the lowest expense ratios anywhere. My current retirement savings plan looks like: No one can give an opinion on the allocation as the amount of money in each account and being contributed to each account is unknown. Overall allocation is what matters and if you didn't pick Vanguard 2045 plus the funds in the TSP to achieve a specific overall allocation then I think you should do so. Choosing 2 target funds is perfectly fine or you could match the Vaguard 2045 fund with TSP funds if you like that allocation.
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Apr 22, 2015 20:42
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Gray Matter posted:What's the consensus on the US Government's TSP funds? It's my understanding that they have some of the lowest expense ratios anywhere. My current retirement savings plan looks like: As far as the TSP, either method is good. When I first started, I was mostly in TSP stock funds. Now that I'm less than 8 from being retirement eligible, I switched to a life cycle fund mix so I don't have to worry about reallocating as I get closer. I'm at a 65/35 split on 2040/2050 as I have a higher risk tolerance. There are some sites dedicated to TSP trading too if that's your thing.
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Apr 22, 2015 21:00
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Gray Matter posted:What's the consensus on the US Government's TSP funds? It's my understanding that they have some of the lowest expense ratios anywhere. My current retirement savings plan looks like: I consider target fund to be the best option since for the other options you have to be rigorous about things like rebalancing especially when there's a big stock crash.
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Apr 23, 2015 00:33
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I'm reading the OP but am a bit confused. I'm interested in setting up an IRA but I'm not sure with who. Do the different institutions offer different benefits? Is there an easy comparison chart of the different institutions and their IRA plans? Can you get a match of your investment with IRAs like in a 401k? What if that institution goes bankrupt? Can I then move that money? Is there a cost? Do I lose everything? I'm a 23 year old second year business student working a min wage job to pay for school if it's relevant. Also this might not be the appropriate place to ask, but the stock market. Worth looking into? I've read about half of The Neatest Little Guide and I want to throw all the money I can into savings and making me more money. I'm still super early in the learning process so I'm not going to do anything for awhile but I am dead set on gathering information.
rizuhbull fucked around with this message at 01:05 on Apr 23, 2015 |
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Apr 23, 2015 00:40
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rizuhbull posted:I'm reading the OP but am a bit confused. I'm interested in setting up an IRA but I'm not sure with who. Do the different institutions offer different benefits? Is there an easy comparison chart of the different institutions and their IRA plans? Most places are lovely, fewer are not. You should probably choose Vanguard, maybe the Spartan funds at Fidelity. quote:Can you get a match of your investment with IRAs like in a 401k? No. quote:What if that institution goes bankrupt? Can I then move that money? Is there a cost? Do I lose everything? I don't have an answer for this. quote:I'm a 23 year old second year business student working a min wage job to pay for school if it's relevant. Also this might not be the appropriate place to ask, but the stock market. Worth looking into? I've read about half of The Neatest Little Guide and I want to throw all the money I can into savings and making me more money. I'm still super early in the learning process so I'm not going to do anything for awhile but I am dead set on gathering information. Read this.
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Apr 23, 2015 01:16
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Leperflesh posted:This is not necessarily true. There are investments that are less risky than the S&P 500. Sorry, you're right. I should have said something like "equity investment not focused on income or hedging a specific risk or etc..." I'm sure there are more exceptions but for most people the most reward for the least risk in equities is a broad market index fund. Which the S&P is. See CAPM research for the formal definition.
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Apr 23, 2015 01:31
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I still don't understand why I should open an IRA over a generic savings account with my bank? Most give an interest rate of .25%, which would be a meager 13k in one lifetime if I'm doing 5,500 a year contribution.
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Apr 23, 2015 01:36
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rizuhbull posted:I still don't understand why I should open an IRA over a generic savings account with my bank? Most give an interest rate of .25%, which would be a meager 13k in one lifetime if I'm doing 5,500 a year contribution. Where are you getting this number from?
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Apr 23, 2015 01:39
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rizuhbull posted:I'm reading the OP but am a bit confused. I'm interested in setting up an IRA but I'm not sure with who. Do the different institutions offer different benefits? Is there an easy comparison chart of the different institutions and their IRA plans? Can you get a match of your investment with IRAs like in a 401k? What if that institution goes bankrupt? Can I then move that money? Is there a cost? Do I lose everything? I'm a 23 year old second year business student working a min wage job to pay for school if it's relevant. Also this might not be the appropriate place to ask, but the stock market. Worth looking into? I've read about half of The Neatest Little Guide and I want to throw all the money I can into savings and making me more money. I'm still super early in the learning process so I'm not going to do anything for awhile but I am dead set on gathering information. If the company managing the mutual fund goes bankrupt your assets are protected. The mutual fund is a separate legal entity from the management company and the assets are held by a custodian. Most of us like Vanguard around here, but you can do fine with pretty much any company as long as you don't choose bad funds. Vanguard is actually owned by the investors in their funds. The OP has some really good books to read about investing and portfolio construction if you're interested.
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Apr 23, 2015 01:42
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rizuhbull posted:I still don't understand why I should open an IRA over a generic savings account with my bank? Most give an interest rate of .25%, which would be a meager 13k in one lifetime if I'm doing 5,500 a year contribution. Sounds like you are looking at an IRA at a bank which puts the money in a savings account. For long term investments you would want an IRA at an investment firm that lets you put the money in mutual funds which invest in the stock market.
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Apr 23, 2015 01:44
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warderenator posted:If the company managing the mutual fund goes bankrupt your assets are protected. The mutual fund is a separate legal entity from the management company and the assets are held by a custodian. To add to this point, rizuhbull, I'd suggest reading this article: What if Vanguard gets nuked?
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Apr 23, 2015 01:45
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pig slut lisa posted:Where are you getting this number from? Current age 23 Years until retirement 42 Age of retirement 65 Expected rate of return 0.25% Current tax rate 25% Retirement tax rate 15% Adjusted gross income $50,000 Are you married? no Employer plan? no Deductible percent* 100% Total non-deductible contributions* $0 http://www.bankrate.com/calculators/retirement/traditional-ira-plan-calculator.aspx Am I doing it wrong? warderenator posted:Sounds like you are looking at an IRA at a bank which puts the money in a savings account. For long term investments you would want an IRA at an investment firm that lets you put the money in mutual funds which invest in the stock market.
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Apr 23, 2015 01:49
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rizuhbull posted:Am I doing it wrong? An IRA is just a type of investment account, you can hold whatever investments you please in it. You can hold a mix of stocks, or put it all in Blackberry, or whatever the heck you want. Your rate of return is whatever the investments you choose to hold in it.
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Apr 23, 2015 01:53
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Twerk from Home posted:An IRA is just a type of investment account, you can hold whatever investments you please in it. You can hold a mix of stocks, or put it all in Blackberry, or whatever the heck you want. Your rate of return is whatever the investments you choose to hold in it.
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Apr 23, 2015 01:55
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rizuhbull posted:Annual contribution $5,500 I was asking about where you got the .25%, but I think warderenator correctly identified the reason. Your Roth IRA can hold $5,500 per year of all sorts of assets, from stocks to bonds to savings accounts to CDs to gold to etc etc etc. The term "Roth IRA" just refers to the special tax treatment that you're able to apply to a portion of your savings. The typical recommendation for someone in their 20s like you is to invest in mostly stocks and a few bonds for your Roth IRA. You could buy individual stocks and bonds, but a much safer and smarter method is to buy stock and bond mutual funds (or ETFs). A proper allocation should give you an average annual return of 6-8% over a long timeframe. I realize that may be kind of jargon heavy. You're in a similar situation to where I was last year. Don't worry, keep being patient and asking questions and it will begin to click.
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Apr 23, 2015 01:58
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rizuhbull posted:ah, ok. So aside from the difference in that your employer is also putting money in, can you invest with a 401k like you can with an IRA? And you can lose everything in an IRA if you invest poorly with it, right? Why invest with an IRA account versus using ameritrade or something similar? With a Roth IRA, you put in after-tax dollars now and pay no tax of any type on any gains. With a taxable investment account you both pay capital gains tax on any value gains, and you get to deal with income taxes on dividends, which is annoying to track.
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Apr 23, 2015 01:59
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