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ButtHate posted:I'm about to come into some cash and wanted to invest it all in some long term All-World (MSCI or FT) ETF. If you're not feeling great about investing a lump all at once, you could do "dollar cost averaging". Basically, invest e.g. one twelfth of your lump sum each month for a year. If the market goes down, great: stocks are cheaper and you get more for your money next month. If the market goes up, that's ok too: everything you've bought so far just increased in value. You can fiddle with the fraction and timeline, but once you decide then stick to the plan. Dollar cost averaging is usually not optimal (the rational side of your brain is correct), but it's much better than trying to time the market and sitting on the sidelines. Your emotional side is part of you too, and it's ok to soothe it with slightly-not-optimal practices like dollar cost averaging.
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May 9, 2021 22:13
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lol internet. posted:With the impeding crash/correction coming at some point. What would a safe stock/ETF to dump my stuff into to try to time this? VTSAX
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May 9, 2021 22:15
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lol internet. posted:With the impeding crash/correction coming at some point. What would a safe stock/ETF to dump my stuff into to try to time this? VTI, Vanguard total U.S. market ETF  Edit: Missed the next page, but it bears repeating.
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May 9, 2021 23:00
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Someone is always crowing about how everything is going to come crashing down any day now. Some people never stopped crowing since the last crash. Sure would have sucked to sit on the sidelines just waiting for that correction that took years to come. Yeah it'll probably happen eventually but you have no idea when. And then even so, how do you know when to get in so you don't miss the bottom? That whole COVID crash only lasted like 2 months and a whole lot of doomers missed their opportunity.
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May 9, 2021 23:15
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pokeyman posted:If you're not feeling great about investing a lump all at once, you could do "dollar cost averaging". Basically, invest e.g. one twelfth of your lump sum each month for a year. If the market goes down, great: stocks are cheaper and you get more for your money next month. If the market goes up, that's ok too: everything you've bought so far just increased in value. You can fiddle with the fraction and timeline, but once you decide then stick to the plan. DCA is also only very slightly suboptimal, for the most part, so if it helps you sleep at night it's well worth it imo.
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May 9, 2021 23:21
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withak posted:VTSAX and some VTIAX if you want international balance.
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May 10, 2021 00:11
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Guinness posted:Sure would have sucked to sit on the sidelines just waiting for that correction that took years to come. Sure did suck, sitting on the sidelines waiting for the other shoe to drop, 2008 - 2015  (Granted I had almost no money that I could have invested during those years even if I'd wanted to, so in the long run it made little difference, but I learned my lesson: never don't invest) Edit: In all honesty, I think the market right now is insane, levitating against all reason on a combination of wishful thinking and a tsunami of government money. But the fact that I think it's insane does not change my plan, because what else can I do except ride the wave? The market can remain irrational longer than I can remain alive. Kylaer fucked around with this message at 00:37 on May 10, 2021 |
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May 10, 2021 00:27
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spf3million posted:Not especially. It gets you back to the age-old question of trad vs roth. If you are early in your career and can reasonably expect to see your salary increase over the next 10-20 years it might make sense to go with the Roth 401k for some or all of your contributions. Personally I contribute 6k to my Roth IRA and 19k to trad 401k because I expect to have less income during my retirement years than I do right now. Sorry, dumb question - you say "during" your retirement years, when presumably you wouldn't be working, so you'll be cashing out your IRA bit by bit and that income would therefore be less than what you make at your job now? And might as well be taxed then instead of now, as it would with a Roth?
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May 10, 2021 01:10
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A lot of money considerations are just psychology considerations and if you miss out on a comparatively extremely small amount of gains in order to DCA it is a billion times better than spooking yourself into losing a year of time in market or whatever.
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May 10, 2021 01:17
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I spent half my nest egg on a house down payment so time to start saving again
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May 10, 2021 01:51
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please knock Mom! posted:I spent half my nest egg on a house down payment so time to start saving again The second-worst time to invest in property is today. The worst time is tomorrow. But seriously, I hope you're happy with your place. Interest rates should be great currently, right?
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May 10, 2021 02:00
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Kylaer posted:The second-worst time to invest in property is today. The worst time is tomorrow. European (NL). 1.42% 30y fixed on ~220k. They’re as low as 0.99% but that’s just 5-10y fixed Extremely risky compared to index funds but tax benefits and the insanely low interest make it a not completely stupid move imo. My financial advisor (fixed fee, independent) agrees (mortgage interest is tax deductible here)
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May 10, 2021 02:09
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I've read the house-buying thread OP about how home ownership is more expensive than renting in the short term and the "renting is throwing away money" thing is real estate propaganda, but is that really still true in the long term life plan sense? I don't feel like what I save by renting vs owning from now to retirement could possibly add up to a larger pile of money than I will lose by continuing to pay rent without earning income all the way from retirement to death.
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May 10, 2021 02:18
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Well I want to live in a city just like millions of other people and buying a house lets me lock in an amount per month it’ll cost me to do that. No loving with rent contracts, evictions, rent increases, etc. Plus I get to paint my walls and have a cat now. GWM (good with meow)
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May 10, 2021 02:22
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It varies significantly, but generally a house can cause a lot of volatility in budgeting as things break down or need to be fixed or whatever. With rent it's way more consistent which makes it infinitely easier for low-income/fixed-income people with little savings. When you buy, you have to choose between spending $10,000 on a new A/C unit or going without A/C when (not if) your entire A/C system breaks down after you just spent $20,000 fixing the roof. That's an easy decision for a guy making $200k/year but for a guy making $50k/year it ruins your year.
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May 10, 2021 02:31
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It’s a condo so not really a house tbh but there’s a lot of euro-weirdness there like hoas being not dogshit
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May 10, 2021 02:41
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I was asking in a much more general sense, for my own benefit. (Congrats on the cat, though, that rules!) I also get the budgeting concern; I was looking for how the two options compare in total over the course of an average life, not one year. The Big Napkin Math reality. But if details help avoid the "it depends," I'm asking as someone who lives in the Florida suburbs on a lower-bracket income and would like to at some point move to the 'burbs of another place that isn't Hurricane Hell, while also avoiding late life homelessness. Unsinkabear fucked around with this message at 02:49 on May 10, 2021 |
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May 10, 2021 02:46
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Unsinkabear posted:I've read the house-buying thread OP about how home ownership is more expensive than renting in the short term and the "renting is throwing away money" thing is real estate propaganda, but is that really still true in the long term life plan sense? I don't feel like what I save by renting vs owning from now to retirement could possibly add up to a larger pile of money than I will lose by continuing to pay rent without earning income all the way from retirement to death. The typical "wrong" thing I've seen from rent-advocates is apples-to-oranges comparisons between (something like renting 800 sqft) vs (something like buying 1800 sqft). The typical "wrong" things I've seen from buy-advocates is not accounting for large CapEx (roofs, HVAC, etc) and/or not accounting for property taxes & interest. You can (probably) either buy or rent a small place (condo vs. apartment) and you can (probably) either buy or rent a big place (i.e. own vs. rent a single-family house). Consuming the smallest amount of living space you need is generally lower-cost, the specific rent vs. buy decision is less clear. Some folks will say that the "breakeven crossover point" (based on things like ownership transaction costs and guesses at appreciation and such) hits somewhere between 3-7 years of living at the same place. But it'd all depend on the specific alternatives in your area that you're deciding between.
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May 10, 2021 03:10
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Unsinkabear posted:I've read the house-buying thread OP about how home ownership is more expensive than renting in the short term and the "renting is throwing away money" thing is real estate propaganda, but is that really still true in the long term life plan sense? I don't feel like what I save by renting vs owning from now to retirement could possibly add up to a larger pile of money than I will lose by continuing to pay rent without earning income all the way from retirement to death. In the long term, housing appreciates about 1% in real terms. If renting is cheaper than owning and you invest the difference, you should come out ahead. There's a ton of variables and I'm painting with a broad brush that may not be relevant to any specific location or scenario. But it's not at all uncommon for renting to come out ahead. Check out https://www.youtube.com/watch?v=UuAZ4M9f_sM and play with the spreadsheet behind the video, it's kinda fun fiddling with the inputs and seeing how good a deal owning has to be for it to win.
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May 10, 2021 03:17
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Unsinkabear posted:I've read the house-buying thread OP about how home ownership is more expensive than renting in the short term and the "renting is throwing away money" thing is real estate propaganda, but is that really still true in the long term life plan sense? I don't feel like what I save by renting vs owning from now to retirement could possibly add up to a larger pile of money than I will lose by continuing to pay rent without earning income all the way from retirement to death. A home is a constantly depreciating asset that substantial resources must be dedicated toward maintaining. If you don't have those resources to fix things when they are a small and expensive problem, they will often balloon into a big and extremely expensive problem (and the people you paid bank to fix it at either stage might gently caress you over). Your local government might also surprise you with increased property taxes or suddenly charge you and your neighbors $10k each for infrastructure maintenance that was planned before you were born, but were never alerted to. The area you buy into might go into decline as jobs flee and residents follow, resulting in your home plummeting in value. That home ownership has worked for some as an investment at all reflects a fundamentally broken approach to housing wherein property owners across the country have, for a variety of reasons (racism, greed, or simple fear of change), forced their local governments for decades to reject any meaningful additions to their area's housing stock through single-family zoning and endless legal and political challenges to multifamily development. The effect in economically vibrant areas has been mind-boggling returns on purchases as high demand and stagnant supply drive prices up up up. There's some metro areas that are finally acknowledging this and are working to enable supply to rise to meet demand, but there's enough pushback from both the left and right that you're unlikely to see this meaningfully alleviate current trends in those cities for a decade or more. please knock Mom! posted:Well I want to live in a city just like millions of other people and buying a house lets me lock in an amount per month it’ll cost me to do that. No loving with rent contracts, evictions, rent increases, etc. Plus I get to paint my walls and have a cat now. GWM (good with meow) 
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May 10, 2021 03:28
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Ramrod Hotshot posted:Sorry, dumb question - you say "during" your retirement years, when presumably you wouldn't be working, so you'll be cashing out your IRA bit by bit and that income would therefore be less than what you make at your job now? And might as well be taxed then instead of now, as it would with a Roth? Exactly. Your income in retirement will come from some combination of the following sources: 1) social security, 2) pension disbursements, 3) traditional 401k/IRA withdrawals, 4) Roth 401k/IRA withdrawals, 5) dividends/capital gains on securities in a taxable brokerage account, or 6) some other part time side gig/hobby that you decided to monetize (there are surely others but these are the main ones). Assuming you are over the official retirement age, income from 1, 2, 3, and 6 are all taxed as normal income, same as you are taxed today with the normal tax brackets. 4 is completely tax-free regardless of how much you withdraw and 5 is somewhere in the middle. Once you're retired, you have some control over how much you withdraw from the above options each year so you can minimize your tax burden to some extent. Most people don't need to "make" as much money in retirement than they do during their prime working years because your expenses are lower: no kids to pay for, maybe house is paid off, no commuting costs, more flexibility when it comes to traveling outside of peak seasons and you don't need to save for retirement anymore so that 10-30% (or more) that you're saving now is no longer an "expense". Some people actually want to spend more in retirement via travel or spoiling grandkids and they have to size their nest egg accordingly and/or plan on fewer years of retirement before they kick the bucket (i.e. work longer). For them, it probably makes sense to prioritize Roth contributions. But there will likely always be a place for traditional 401k/IRA since the first $40k of income is only taxed at 12%. Social security will eat into some of that (which you can optimize when you start taking distributions as well) and the rest could be trad 401k/IRA since it's unlikely you were maxing out all of your tax advantaged space while making $40k/yr.
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May 10, 2021 03:31
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I will still have some cash to spend after fully funding my 401k. I've heard VTSAX and VTI talked about in the last few pages. They look very similar, what's the difference?spf3million posted:Exactly. Your income in retirement will come from some combination of the following sources: 1) social security, 2) pension disbursements, 3) traditional 401k/IRA withdrawals, 4) Roth 401k/IRA withdrawals, 5) dividends/capital gains on securities in a taxable brokerage account, or 6) some other part time side gig/hobby that you decided to monetize (there are surely others but these are the main ones). Assuming you are over the official retirement age, income from 1, 2, 3, and 6 are all taxed as normal income, same as you are taxed today with the normal tax brackets. 4 is completely tax-free regardless of how much you withdraw and 5 is somewhere in the middle. Thanks!
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May 10, 2021 03:56
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Ramrod Hotshot posted:I will still have some cash to spend after fully funding my 401k. I've heard VTSAX and VTI talked about in the last few pages. They look very similar, what's the difference? VTI is an ETF that exists as an extension of VTSAX the mutual fund. Vanguard has a patent that allows VTI to exist as shares of VTSAX, though once the patent expires you can expect a lot of brokerages to pull that trick. What's weird about the arrangement, at least to me, is that VTI has a lower expense ratio (0.03% and no barriers for VTI across brokerages vs 0.04% and need to invest at least $3,000 to start in VTSAX, and there'll likely be a purchasing fee if you're not using Vanguard).
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May 10, 2021 04:14
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Ramrod Hotshot posted:I will still have some cash to spend after fully funding my 401k. I've heard VTSAX and VTI talked about in the last few pages. They look very similar, what's the difference? VTI is an ETF, VTSAX is a mutual fund. Differences outlined here - https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
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May 10, 2021 04:46
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Re: DCA vs lump sum, I like the money guy shows interpretation the best, personally. If the amount of money involved is life-changing, then you should dollar cost average it in. If not, then you can do the lump sum and take your chances. Everyone is going to have a different interpretation of what a life-changing amount of money is of course, but that's a good way to look at it I think.
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May 10, 2021 05:16
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pokeyman posted:In the long term, housing appreciates about 1% in real terms. In the super long term though I wonder about stability in the housing market. While massive investment in public housing, enacting occupancy taxes, enacting new income tax rates for rental property income all seem extremely unlikely right now there may come a day when the dam bursts and more is done to lessen the value of housing as an investment, which would definitely impact overall value. Or so I can dream, admittedly my views are colored by the insanity going on in Austin right now.
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May 10, 2021 07:12
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Sardonik posted:In the super long term though I wonder about stability in the housing market. While massive investment in public housing, enacting occupancy taxes, enacting new income tax rates for rental property income all seem extremely unlikely right now there may come a day when the dam bursts and more is done to lessen the value of housing as an investment, which would definitely impact overall value. Or so I can dream, admittedly my views are colored by the insanity going on in Austin right now. I hear ya. I'm in Canada, where housing didn't take much of a hit in 2008 and has only ballooned since. A ton of Canadians answer the question "what do you have in savings?" by pointing to their house and turning out empty pockets. The government is terrified of crashing the market, but wages have been stagnant for decades, so rents can only go so high and a generation is giving up on buying anything. It feels untenable, but the Canadian Debt Bubble Megathread is over eight years old, so what can you do? Something something irrational solvent. And that 1% real return for housing is an average over ~a century. Plenty of room for booms and busts lasting a big part of our lifetimes.
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May 10, 2021 07:54
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pokeyman posted:In the long term, housing appreciates about 1% in real terms. If renting is cheaper than owning and you invest the difference, you should come out ahead. If you play with the numbers, this analysis is very, very vulnerable to this: CubicalSucrose posted:The typical "wrong" thing I've seen from rent-advocates is apples-to-oranges comparisons between (something like renting 800 sqft) vs (something like buying 1800 sqft). Increasing the rent assumption from 5% to 6% of home purchase price has buying overtaking renting in a handful of years, and being much better long term. Eyeballing available properties in my area, the apples-to-apples comparison is more like 7-8%. That produces conclusions that jive with many other analyses - that buying comes out ahead in a market-dependent, but usually single digit, number of years.
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May 11, 2021 15:04
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supercrooky posted:If you play with the numbers, this analysis is very, very vulnerable to this: The video is about a rule of thumb that states "if your rent would be more than 5% of the purchase price you're better off buying", so yes, I suppose the analysis is "vulnerable" to exactly what it states? If your rent is jacked up 20% (or 50%) then of course it becomes a worse deal against a steady purchase price.
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May 11, 2021 16:56
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Always bet on landlords jacking up the price. Human greed is inescapable.
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May 11, 2021 16:59
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My landlord just renewed my below-market lease at the current price while also letting me add a pet without any additional deposit or pet rent. Sometimes people are alright.
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May 11, 2021 19:49
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pokeyman posted:The video is about a rule of thumb that states "if your rent would be more than 5% of the purchase price you're better off buying", so yes, I suppose the analysis is "vulnerable" to exactly what it states? I am not talking about jacking of rent at all. I am pointing out that the critical value for the rent or buy decision point is the exact one that the other poster pointed out as a commonly mis-estimated one, and gave an example of a real market where the only way you'd get to 5% is by making that common mistake.
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May 11, 2021 21:08
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I've got a question on HSAs. So I've seen that you can reimburse yourself for qualified medical expenses at any time in the future, so if I'm 30 now I can save the receipt and reimburse myself tax free for any past expense when I'm 65. But I'm questioning if it wouldn't be better to reimburse myself immediately. If I pay a $100 medical bill out of pocket today, is it correct that I can only reimburse myself $100 35 years from now when I'm 65? If I pay the medical bill out of pocket today, and withdraw $100 from my HSA to put into a taxable index fund that I intend to leave alone, other than taxable distribution of dividends this would be more tax efficient would it not? Because that $100 35 years from now would only be worth a fraction of what it is today due to inflation, and withdrawing the equivalent of that $100 in 2021 money in 2056 then would be taxable. I've already maxed my Roth IRA for 2020 and 2021, but maybe if I don't in 2022 it would be a great opportunity to reimburse myself from my HSA and move it into the Roth so it remains tax free for any expense in perpetuity. Of course we don't know what tax rates will be in the future, and it's likely I'll have less income in retirement, etc etc. And of course I expect my medical expenses to go up as I age, and maybe that's what makes the difference here. That my medical expenses will be so high it should be no problem getting all that money out tax free. As it is now I only expect to spend a few hundred dollars a year in medical expenses, so I've still got plenty of excess money sitting in my HSA. I feel like I may not be understanding something because I haven't seen any discussion like this on HSAs But at the very least it takes some of the burden off me for keeping medical receipts around until I'm 65. Even though I keep them in the cloud, who knows if I'd lose them or not. Baxate fucked around with this message at 23:08 on May 11, 2021 |
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May 11, 2021 23:04
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The idea is that you invest that $100 in the index fund while leaving it in the HSA. The next 30 years of growth occurs entirely tax free, and you still get to pay today’s medical bills with future dollars.
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May 11, 2021 23:14
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As far as I have figured out, I don't see why you come out far enough ahead to be worth holding onto receipts for years. Here's my understanding: e.g. let's say I pay a $100 expense out of the HSA now, I'm out the tax-free growth of $100 for the next thirty years. But if I delay re-imbursement, then I spend $100 of post-tax dollars, which doesn't get invested into a non-advantaged account. The loss is the LTCG I have to pay on the $100 that I put into a non-advantaged account. But if I haven't maxed my advantaged accounts, then the $100 could fit into my 401(k) or Roth anyway and I haven't lost a thing. Does the above hold water? Is there some other angle?
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May 11, 2021 23:24
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raminasi posted:The idea is that you invest that $100 in the index fund while leaving it in the HSA. The next 30 years of growth occurs entirely tax free, and you still get to pay today’s medical bills with future dollars. Ok is that the part I was missing that the earnings are entirely tax free? I was thinking it was like a 401k and you’d pay tax on the earnings if withdrawn for non medical expenses. So if I max my HSA for 35 years I’d contribute 35x$3600 ($126k) and that’s all I’d ever pay tax on? If my account balance is greater than that it’s all free money?
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May 11, 2021 23:29
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Baxate posted:Ok is that the part I was missing that the earnings are entirely tax free? I was thinking it was like a 401k and you’d pay tax on the earnings if withdrawn for non medical expenses. Your earlier belief is correct. An HSA is like a traditional 401k in that way. You have to pay income tax on withdrawals for non medical expenses.
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May 11, 2021 23:33
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Baxate posted:Ok is that the part I was missing that the earnings are entirely tax free? I was thinking it was like a 401k and you’d pay tax on the earnings if withdrawn for non medical expenses. So if I max my HSA for 35 years I’d contribute 35x$3600 ($126k) and that’s all I’d ever pay tax on? If my account balance is greater than that it’s all free money? HSA's are triple tax advantaged No tax on contributions No tax on growth/investment gains No tax on withdrawals when used for qualified medical expenses. Age 65 or older and you can withdraw your money for any reason, but HSA funds spent on non medical expenses will be taxed.
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May 11, 2021 23:33
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Ulf posted:As far as I have figured out, I don't see why you come out far enough ahead to be worth holding onto receipts for years. Here's my understanding: Basically, but you also will always have the option to withdraw the earnings on that $100 in your HSA tax free if you use it for medical expenses, which you won't get should you increase your 401k contribution a corresponding amount. You'd also have to pay taxes on that $100 before you could put it in a Roth, which means lower principal and less gains.
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May 12, 2021 00:27
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Baxate posted:I've got a question on HSAs. HSA money is tax-free on deposit, growth, and withdrawals. If your money in an HSA can be invested in the market (most can), then you're saving the tax on the growth by leaving it there instead.
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May 12, 2021 00:37
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