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Dum Cumpster posted:Wouldn't I be paying the same gains taxes by selling and then buying index funds for whatever I chose? Maybe I'm missing something important here. Sorry, my response wasn't super clear. I mean that rather than sell your stock to get cash, using said cash as a down payment, then buy what you wanted after the dust settled, why not just rebalance into your desired portfolio? Yes, you'd pay the capital gains regardless, but then you wouldn't be out of the market for however long and you wouldn't be tempted to "oh, look at all this cash I have, time to go furniture shopping for my new home" or whatever.
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Jun 10, 2015 18:34
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Barry posted:Sorry, my response wasn't super clear. I mean that rather than sell your stock to get cash, using said cash as a down payment, then buy what you wanted after the dust settled, why not just rebalance into your desired portfolio? Makes sense. Thanks for your help.
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Jun 10, 2015 18:45
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25 year old just getting focused on my personal finance. I had a 401(k) from a previous employer that I did nothing about, so it was rolled over into a traditional IRA with Great-West Retirement Services, now Empower Retirement. It's $2K in pre-tax contributions currently in a 2055 target fund. Because I'm young and an engineer with a long career ahead of me, it would make more sense to have a Roth IRA, which I could make more contributions to once I get out of all this student loan debt. Rolling over the traditional IRA from what seems like a bad company to a Vanguard Roth IRA seems like a smart move, but is this a complicated thing to do, particularly from the tax side of things? Do I need some sort of accountant or is this something that can be easily taken care of with TurboTax next February?
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Jun 10, 2015 20:03
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Dum Cumpster posted:About to buy a house. I have enough in individual stocks to cover the down payment. Would selling those be a smart move to then free up the cash I'd otherwise use for the down payment? I could then put the cash in more diversified investments.
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Jun 10, 2015 21:26
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SiGmA_X posted:I would liquidate the single stocks regardless of house or not. Providing you have a fully funded emergency fund, and a cash downpayment, I would sell off the single stocks and buy index funds. Deepening, maybe hold until you hit LTCG, but meh. That's what I was thinking. I have the emergency fund and the down payment and enough to cover whatever we're going to spend on the house after purchase. The stocks are all at highs but not in companies or industries I feel have a great future. And they're all long term gains at this point.
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Jun 10, 2015 21:36
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Neptr posted:25 year old just getting focused on my personal finance. I had a 401(k) from a previous employer that I did nothing about, so it was rolled over into a traditional IRA with Great-West Retirement Services, now Empower Retirement. It's $2K in pre-tax contributions currently in a 2055 target fund. You could always just not convert from traditional to roth when you roll it over to Vanguard, and then start a new roth for future contributions. I think you have to pay taxes if you convert from roth to traditional but I don't know exactly how it works.
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Jun 10, 2015 21:47
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warderenator posted:You could always just not convert from traditional to roth when you roll it over to Vanguard, and then start a new roth for future contributions. I think you have to pay taxes if you convert from roth to traditional but I don't know exactly how it works. You mean traditional to Roth? I'm not sure why you would ever go the other way unless you're using that "lol I hosed up" rule. Traditional to Roth could make sense if you filled the traditional when you had a lot of income, then had a low income year when the taxes would be less.
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Jun 10, 2015 21:55
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Dum Cumpster posted:That's what I was thinking. I have the emergency fund and the down payment and enough to cover whatever we're going to spend on the house after purchase. Sell and put some into a Roth IRA at Vanguard. Backdoor it if you can/want.
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Jun 10, 2015 22:11
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ETB posted:Sell and put some into a Roth IRA at Vanguard. Backdoor it if you can/want. Dum Cumpster posted:I'll probably be maxing out my 401k and IRA this year regardless.
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Jun 10, 2015 22:44
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Oops! Swim in a pool of money like Scrooge McDuck, in that case!
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Jun 10, 2015 22:47
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warderenator posted:You could always just not convert from traditional to roth when you roll it over to Vanguard, and then start a new roth for future contributions. I think you have to pay taxes if you convert from roth to traditional but I don't know exactly how it works. I would have to pay taxes for traditional to Roth conversion, I'm guessing around 30% for my tax bracket for federal and state income taxes. I hadn't considered going traditional to Vanguard traditional, but that should save me the tax headache while giving me access to good funds. Since it's only $2K, I probably won't be kicking myself in 40 years for choosing traditional over Roth. To answer my other question, is a Roth conversion from a traditional IRA with 100% pretax contributions difficult or straightforward for the DIY tax preparer?
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Jun 10, 2015 23:30
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Neptr posted:To answer my other question, is a Roth conversion from a traditional IRA with 100% pretax contributions difficult or straightforward for the DIY tax preparer? I just found out my husband's Roth 401k actually also has some pretax money involved (from employer contributions I guess?), and today's his last day at that job... so I also want to know the answer to this. We'll almost certainly be in the middle of the 15% bracket this year, so it seems like a good idea to go ahead and convert it. Also, do you pay state taxes on a traditional -> Roth conversation? We're moving to a state with no income tax in about a month, so it would be easy to wait a bit to convert if there was a benefit to doing so.
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Jun 11, 2015 14:25
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T. J. Eckleburg posted:I just found out my husband's Roth 401k actually also has some pretax money involved (from employer contributions I guess?), and today's his last day at that job... so I also want to know the answer to this. We'll almost certainly be in the middle of the 15% bracket this year, so it seems like a good idea to go ahead and convert it. Probably depends on the state, but my guess is the answer will probably be yes. AFAIK the amount you converted is added to your MAGI for that year and the usual tax calculations go from there.
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Jun 11, 2015 14:32
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Question: Can I ask my employer for a copy of the IRS 401k discrimination test if i'm not a HCE?
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Jun 12, 2015 06:08
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24 y.o No 401k match Roth IRA maxed for 2014 and 2015 This is my first year depositing into a 401k. Currently at ~$6,800 contributed, on track to hit very close to the $18k limit by the end of my internship I'm currently contributing 100% into: (FSEVX) SPTN EXT MKT IDX ADV (mid cap) - 0.07% Expense ratio (gross and net) through Fidelity. Here are my investment options. Large cap options are 0.64% expense ratio, 0.84% expense ratio, and for Spartan 500 index fund FUSVX, 0.07% expense ratio gross, 0.05% expense ratio net. I have high risk tolerance and want to put my money in the highest reward option possible regardless of risk. I didn't see the SPTN 500 INDEX ADV (FUSVX) fund when I first setup my 401k - must have missed it. - Should I start depositing to this fund instead since it's "large cap" and more in line with my goals? - Net expense ratio of 0.05% means it's (slightly) a better deal than the mid cap option, correct? - Should I be doing anything to diversify, or are these funds sufficient diversification? How about in the future when I have $50k, or $100k into my 401k? Blinky2099 fucked around with this message at 17:29 on Jun 12, 2015 |
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Jun 12, 2015 17:24
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"Extended Market" means it holds every publicly traded US stock that is NOT in the S&P 500 index. The ratio of S&P 500 to the extended market is about 80%/20%, so you're all-in on about a fifth of the actual US stock market. You will probably want to hold 4 things in your 401k: (all of the following are Fidelity Spartan funds from your list) 1. SP 500 2. Extended Market 3. International (FSIVX) 4. US Bond index (FSITX) The total allocations are up to you. Some people will likely even say you should have 0% of #4, but I personally feel that bonds should never be less than 10% of a portfolio. Young people with a "high risk tolerance" typically started investing in 2011 or later, so their only experience has been watching their bonds dwindle and their stocks shoot up 20% a year. I personally keep 70% of my portfolio in US Stocks (using 80% SP500 and 20% Extended Market), 20% in International Stocks, and 10% in US Bonds. Your allocation should change as you get older as you gradually transition toward more bonds.
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Jun 12, 2015 18:02
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GoGoGadgetChris posted:"Extended Market" means it holds every publicly traded US stock that is NOT in the S&P 500 index. The ratio of S&P 500 to the extended market is about 80%/20%, so you're all-in on about a fifth of the actual US stock market. I made adjustments to temporarily stop extended market contributions entirely and am working on contributions to rebalance into SP500, International stocks, and US bonds. Thanks for the help.
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Jun 12, 2015 18:15
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Blinky2099 posted:Whoops, I did not realize this. Just you can understand better the Extended market funds covers mid and small caps stocks. So combine SP500 with the extended fund for a do it yourself total US stock allocation strategy if you don't have access to something like VTI. Spartan funds are good since they are low expensive ratio passive index tracker type funds.
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Jun 12, 2015 23:10
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Other than telling them to read the books in the OP, are there any good online resources I could show my parents to convince them that a "financial advisor" charging them 1% is not worth it? Also, my dad is 65 and retired last year. He has a state pension and my mom will still work for a few more years. Would it be a decent idea to create an account at Vanguard and just put whatever 401k/IRA funds he has into a 2015 Target Retirement fund?
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Jun 14, 2015 10:17
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Got couple of investor baby questions. Currently my investment plan is pretty much putting quarter of the money in NA, Europe, Asia, and emerging markets index funds each. Is that completely stupid? Also can someone explain how bonds work. I got pretty small amount in European corp and goverment bonds, but read somewhere that now is a bad time to invest in bonds since the interest might rise soon. I thought bonds are basically loans and shouldn't higher interest rates be a good thing for bonds then?
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Jun 14, 2015 10:46
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Zilkin posted:Got couple of investor baby questions. Currently my investment plan is pretty much putting quarter of the money in NA, Europe, Asia, and emerging markets index funds each. Is that completely stupid? Ultra simple version is bonds have a price and a rate of return. If you buy a one year bond for $100 with a 50% interest rate the company will pay you $150 at the end of the year. If interest rates go up the value of that bond shrinks. If you buy it for $100 when interest rates are 50% and then interest rates double to 100%, the value of that bond drops to $75 so that the effective interest rate matches the market rate. This isn't much of a problem if you and the fund holding the bonds (don't hold individual bonds, same deal as with stocks) hold to maturity, but if you wanted to sell them now it'd be a problem. Also it means that the money you put into the bonds now would be earning you the current interest rate instead of a theoretical higher interest rate, but that's market timing. You will not lose money on bonds, long term, unless you're buying all junk bonds for lovely companies that default a lot. Just set your allocation and forget it, except for your regular rebalancing. If interest rates go up, well, it's like the stock market going down - you rebalance and buy tons of "cheap" bonds with higher returns.
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Jun 14, 2015 11:59
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Desuwa posted:Ultra simple version is bonds have a price and a rate of return. If you buy a one year bond for $100 with a 50% interest rate the company will pay you $150 at the end of the year. Thanks for the really clear explanation.
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Jun 14, 2015 12:11
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Actually I just came back to edit it because I thought I made a mess of it. What I said wasn't wrong, per se, but I think it's clearer to look at bonds as having a payout and the interest rate is "set" per entity. So bonds from Company A will all have the same interest rate, and the value of the bond is <payout>/(1+<interest rate>)^<years to maturity>. If company A is doing well they can lower their interest rates because they're less risky which raises the value of existing bonds. Likewise if they're struggling they're more risky and will be forced to pay more interest, lowering the value of existing bonds. Like how people with bad credit get shittier rates on their loans because they're more risky. So the payout at the end of it will be the same but the value of it - what people would be willing to pay for it - will fluctuate based on the interest rate. The point of it is that both old and new bonds have the same interest rate, so both old and new bonds have the same rate of return if you're buying or selling them today. Desuwa fucked around with this message at 12:24 on Jun 14, 2015 |
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Jun 14, 2015 12:19
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GoGoGadgetChris posted:"Extended Market" means it holds every publicly traded US stock that is NOT in the S&P 500 index. The ratio of S&P 500 to the extended market is about 80%/20%, so you're all-in on about a fifth of the actual US stock market. Those funds comprise my entire 401k portfolio and I'm glad to see someone else advocating them.
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Jun 14, 2015 14:35
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Zilkin posted:Got couple of investor baby questions. Currently my investment plan is pretty much putting quarter of the money in NA, Europe, Asia, and emerging markets index funds each. Is that completely stupid? Since Desuwa answered your second question, I'll answer your first. I won't say it's stupid but it is a bit unusual. Since you didn't mention the specific funds you are investing in I'll use VTI, VGK, VPL, and VWO as analogs. Using the Morningstar Instant X-Ray tool we can compare your investment strategy to other strategies: your strategy, VT (total world stock fund, allocated proportionally to market cap), Vanguard target retirement stock allocation (60% US total stock, 40% non-US total stock). Compared to both other strategies you are invested significantly less in North American stocks and significantly more in Asian and emerging market stocks (categories which have quite a lot of overlap). Is there a reason you decided on this strategy? If you don't have a good one you might want to simplify your stock funds to mirror the Vanguard target retirement allocation which is pretty close to the standard recommendation.
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Jun 14, 2015 17:59
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Gold and a Pager posted:Also, my dad is 65 and retired last year. He has a state pension and my mom will still work for a few more years. Would it be a decent idea to create an account at Vanguard and just put whatever 401k/IRA funds he has into a 2015 Target Retirement fund? It's one option since it does a 50% bond-stock split. If they have more risk tolerance you could also use Lifestrategy Conservative/Moderate funds for higher long term rate of return but with more risk. Vanguard also does have some other balanced type funds like Wellington but they only have US stock allocations.
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Jun 14, 2015 22:44
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Time to stop my 457(b) contributions? http://www.alternet.org/tea-party-and-right/montana-republican-noah-was-600-years-old-when-he-built-ark-so-why-do-americans
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Jun 15, 2015 00:28
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I have a dilemma - I think. I want to protect our investments when I retire? I will retire at 55-62 years of age depending on work. I like my job and may work longer or shorter depending on opportunities. My wife who is 12 years younger than me doesn't work. Obviously I don't want to spend all our savings on my bad heart, but will walk away from work with no medical. I will not draw social security or pension benefits until I am 65. Heart conditions run in the family and it's coming so insurance may be unaffordable, I'm guessing as I haven't looked yet.
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Jun 15, 2015 01:43
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pig slut lisa posted:Time to stop my 457(b) contributions? Here's some bad advice for this thread: https://www.youtube.com/watch?v=vHMw3_I6FC0
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Jun 15, 2015 02:32
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etalian posted:Here's some bad advice for this thread: loving hell, really? I know we'll sometimes say it's okay not to go past the company matching for bad 401(k) plans but even that's always with the caveat that you can put the money in anyway and roll it into an IRA later. Also what kind of lovely 401(k) plan doesn't let you see where the investments are or give you some kind of control? I wasn't aware any like that existed and I'm not going to start believing it now unless someone in the thread corrects me. Like your 401(k) has to be amazingly bad, even worse than the predatory 401(k)s that come up in this thread every now and then, for it to truly be useless.
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Jun 15, 2015 03:20
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etalian posted:Here's some bad advice for this thread: Which was rebutted the next day by this article: http://www.marketwatch.com/story/5-reasons-you-should-ignore-james-altuchers-401k-advice-2015-05-07
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Jun 15, 2015 03:38
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JohnnyPalace posted:Which was rebutted the next day by this article: My favorite bit was how he said you just save cash for retirement since 401ks only yield 0.5% growth each year.
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Jun 15, 2015 04:01
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I thought the rebuttal was pointing out that a multi-millionaire is telling be they don't need to save for retirement. Of course you should never retire and keep working, which I tend to agree with why stop working? However his "plan" would have you working when you poo poo yourself because you can't control your bodily functions, or have you operating heavy machinery if you have dementia. All of this up until you die at age 600. General rule of thumb is to not take financial advice from people who appear to be completely insane.
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Jun 15, 2015 04:02
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I watched a couple more videos with him, and it's just bad advice every single time. The sad thing is his advice is probably attractive to idiots who don't know better.
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Jun 15, 2015 04:43
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ohgodwhat posted:I watched a couple more videos with him, and it's just bad advice every single time. The sad thing is his advice is probably attractive to idiots who don't know better. This is the real challenge with offering our perspectives to friends, family, etc. How is someone who's new to investing to know that Altucher is bad and Bernstein is good? What if they're both idiots? If I don't know anything about investing, who's to say I shouldn't just listen to the first guy I hear, and maybe anyone who disagrees with him is just a jealous huckster? I get why people prefer the mattress method, as irrational as that choice is.
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Jun 15, 2015 04:48
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I take all my financial advice from people who take fashion advice from Phil Spector.
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Jun 15, 2015 04:50
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ohgodwhat posted:I watched a couple more videos with him, and it's just bad advice every single time. The sad thing is his advice is probably attractive to idiots who don't know better. To think he actually ran a hedge fund and had rich people pay him 2/20 for his amazing advice.
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Jun 15, 2015 06:52
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Ropes4u posted:I have a dilemma - I think. Assuming healthcare stays the same as it is now, and the Supreme Court and/or Republican Congress doesn't burn down Obamacare, you'd pay these insurance rates as anyone else without a heart condition. You'd basically buy insurance on the state exchange and if your income was too low you'd get part of that premium subsidized. One of the changes in the ACA was they can only base your insurance rates on where you live and if your a smoker or not. Age, sex, and preexisting conditions discriminations aren't allowed. You can use Health Sherpa to get an idea of what it would cost but unless you're gonna do this in the next year or so its not going to be terribly informative premium wise.
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Jun 15, 2015 13:16
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mrmcd posted:One of the changes in the ACA was they can only base your insurance rates on where you live and if your a smoker or not. Age, sex, and preexisting conditions discriminations aren't allowed. They can still use age as a factor, but they are limited to charging an old person at most 3x as much as a young person.
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Jun 15, 2015 15:17
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etalian posted:Here's some bad advice for this thread: Holy moly. No need to further comment, except that he also has a video arguing against home ownership, and the fact that I agree with him on that point is making me rethink it.
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Jun 15, 2015 15:27
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