|
I am in need of some advice. I am a 28 year-old graduate student with 2-3 years to go (yay experimental dissertation!). For that time I will be making gently caress-all nothing and because my job requires I travel frequently and work long hours another job is out of the question. Last year was a banner year, I got a scholarship (which my department is no longer eligible for) and a 2nd job while I could and almost tripled my income. With that extra money I paid off half my student loans (I get paid to go to school now) and threw a bunch of money into a Roth IRA right before the market took a poo poo, I'm down nearly 36%. I also spent some on a badly needed vacation. Any who here is my current situation: liabilities: 12800 @ 3.61% Student Loans - I'm in school so I don't have to make payments 3300 owed to Uncle Sam (my scholarship had no tax money taken out so I owe it all now, I put money aside to help cover this) assets: 6000 @ 4.00% HSBC CD expires on 04/14 2600 @ 2.45% HSBCDirect savings 4700 in a Roth IRA - Vanguard STAR fund 1000 in a Trad. IRA - with some Fidelity international fund I put this in the retirement thread because I have three options at the moment, as I see it: 1) The economy is in the shitter and prices are low so I should double down on my Roth IRA, when the CD expires put as much as I can into the Vanguard (different fund!) Roth IRA. The problem is that if things get worse (and the rule of gently caress Mickey Finn applies here) I won't be able to take advantage of dollar cost averaging. 2) Slow play the CD money by investing a fraction of it over the next 4-6 months (after April 15th). For example, 1000 in April, 1000 in May, and so on. 3) Say gently caress it and get off the roller coaster. When my CD term is up cash out a large fraction of my Roth IRA and take all the money and pay down my student loans even more, I think I can cut the current amount in half with plenty left over for savings. I'm torn between 1 & 3 right now. 1 seems like what a rational person would do, save to retire and just wait out the storm. But I am very pessimistic about what my money is going to do while I'm working toward graduation, it is a significant portion of my net worth and seeing it go down is not fun. I am also very tempted to pay off as much of my debt as possible, graduating debt free (or nearly so) will allow me to be more picky about my first job in a potentially down economy (like I said pessimism). Any and all advice, thoughts, or rants are welcome.
|
#
¿
Feb 3, 2009 19:48
|
|
|
|
| # ¿ May 12, 2024 18:14 |
|
|
The company I am starting with on Wednesday has a SIMPLE-IRA with Fidelity that I am going to max out (Roth with Vanguard too) but I can't decide which funds to put the money in to. Does anyone have any info on Fidelity funds? I like the Spartan funds because they have low expense ratios, at least compared to other funds I have seen.
|
|
#
¿
Dec 29, 2012 17:19
|
|
|
My reading of the SIMPLE IRA FAQ on the IRS website is that the $12,000 limit for the year 2013 is for my deferred income only and not the employer match (which is 3%). Is that correct or do I need to reduce my contributions so that I'm not over at the end of the year because of the employer match?
|
|
#
¿
Feb 23, 2013 03:10
|
|
|
Eyes Only posted:Thoughts? I don't think you did this correctly because you haven't weighted any of the volatility values. I spent way too much time doing a derivation of the cases in which you should invest in a house versus a diversified stock portfolio. The answer appears to be "when you already have lots of stock and not much house value" among a few other things. Maybe I did something dumb in there, but I had fun and it is late, so I'm going to bed! http://www.filedropper.com/hvs_1
|
|
#
¿
Sep 10, 2013 06:23
|
|
|
Eyes Only posted:(1) It doesn't seem that weighting come into play here, can you expand on this? When I say "volatility of the house" I mean the volatility of that particular house, which is already a function of the house's value and thus is already "weighted". The same goes for the volatility of the stock portfolio. It looks like you are using the house value times the volatility of the underlying random variable, which is the same thing. I think this is a potato/potahto situation. It isn't potato/potahto, you want to know the volatility of the person's net worth so you have to weight the volatility of the asset by the fraction of the portfolio it takes up. quote:(2) Why do you assume that paying the debt lowers the (weighted) volatility of the house? Fluctuations in the house's value are not based on the amount of debt outstanding or the equity that the homeowner has accumulated. If housing prices go down 10%, a home with a market price of 200k will incur a loss of 20k regardless of the mortgage situation. Payments on the debt do not reduce the value (weighting) of the house, they reduce the value of the debt. Since the volatility of the debt is zero to begin with, nothing changes and there is no increase in the portfolio's overall volatility. It follows that paying down debt keeps total portfolio volatility constant, while buying stock always increases total volatility as long as the correlation is assumed not to be heavily negative. The assumption about house volatility being higher is not needed as this relationship remains true regardless of their relative values. I assumed no such thing. I assumed that the weight of the house value on the portfolio increased when someone pays into the mortgage. The net value of the asset is the current value of that asset minus the debt tied to that asset. The volatility of the debt being zero has nothing to do with it, I could have claimed that sigma_H was the volatility of the house and the debt with net value H and the math still works out the same. The bold sentence is generally untrue, both because of what I just said and because: Wikipedia posted:MPT is a mathematical formulation of the concept of diversification in investing, with the aim of selecting a collection of investment assets that has collectively lower risk than any individual asset. This is possible, intuitively speaking, because different types of assets often change in value in opposite ways.[2] For example, to the extent prices in the stock market move differently from prices in the bond market, a collection of both types of assets can in theory face lower overall risk than either individually. But diversification lowers risk even if assets' returns are not negatively correlated—indeed, even if they are positively correlated.[3] Edit: I also just found out if you do the the problem by assuming no net change in portfolio value and that Delta_H = - Delta_S (i.e. taking money out of the house to invest in stock), you get the same thing as equation (6) but with the inequality flipped, therefore you are usually increasing volatility by taking money out of the house and putting it into stocks (with the same list of parameters as outlined in the pdf I posted). MickeyFinn fucked around with this message at 16:58 on Sep 10, 2013 |
|
#
¿
Sep 10, 2013 16:42
|
|
|
I thought I would look into an HSA because I visit the doctor a fair bit. $30 x 20 visits a year x 0.25 (marginal bracket) = $150 and it is probably only going to get worse, and that doesn't include meds. It appears that you must have a high deductible plan and I guess I don't. drat.
|
|
#
¿
Sep 26, 2013 16:53
|
|
|
kaishek posted:Here's a quick puzzle: this year I got a bump up in salary but am also married with a spouse whose PhD grant ran out. We're pretty close to the top end of the 15% bracket filing jointly this year. Next year I expect I will be nudging into the 25% bracket. We have a "savings" buffer of a few thousand dollars, but that does not cover more than a month or two of expenses. In theory, we expect a parental bailout is possible if absolutely needed, and have good insurance and job security. I am new to the higher salary and we are slowly building up this fund but aren't there yet. Income tax rates are marginal and progressive. This sounds like a large decrease in liquidity to save a few hundred dollars, unless all of the $17k or so you are rolling over is gains.
|
|
#
¿
Oct 23, 2013 16:02
|
|
|
Xenoborg posted:How does this work for things that lost value? I took money out of a Roth IRA that was down ~8 years ago. Vanguard sent me a form showing the withdrawal with a letter saying the IRS had received one as well. As I recall, there was a column that said taxable disbursements: $0. I included the Vanguard form and got my refund as fast as normal.
|
|
#
¿
Oct 25, 2013 00:31
|
|
|
Huttan posted:Roth IRAs are only slightly less painful, if and only if you have had the Roth IRA for 5+ years and you are only withdrawing contributions. Otherwise, go back to the previous paragraph, bend over and grab your ankles. This keeps getting repeated and it is simply not true. Maybe three is right and there is some limit after converting from a traditional IRA, but I have contributed to a Roth and withdrawn from it in much less than 5 years and there was no penalty. It wasn't a 'qualified distribution' for a house or whatever either. Vanguard even sent me a letter that said 'you don't owe poo poo in taxes on this because it is all contributions.'
|
|
#
¿
Oct 30, 2013 15:38
|
|
|
oye como va posted:Question about my company's employee stock purchase plan: I had previously thought that if I was ever in your situation I would do something like this. I think you would pay short term capital gains on the 15% return, which is the same as your highest marginal tax rate. So just think of it as a raise. Perhaps someone else here can give a better answer.
|
|
#
¿
Nov 1, 2013 15:30
|
|
|
Jose Cuervo posted:I was recently hired at UVa as a post-doc (research associate) and I am now confronted with selecting a tax deferred savings plan. I have to make the following choices: how much to contribute to a 403(b) plan, how much to contribute to a Roth 403(b), and whether to use Fidelity or TIAA-CREF for the contributions. I don't know anything about TIAA-CREF, but if the Fidelity account lets you select the Spartan funds, choose Fidelity.
|
|
#
¿
Dec 19, 2013 20:58
|
|
|
Jose Cuervo posted:I am not sure how to answer the question regarding what I plan to spend in retirement. Do you mean a dollar/year amount I think I will need after I retire? The comparison is simple, in principle. In 'traditional' accounts you pay tax when you withdraw the money in retirement. In 'Roth' accounts you pay tax on your earnings and then pay no tax when you withdraw it. If you think you will be in a higher tax bracket when you retire (because of pension, withdrawals from Roth-type accounts, lottery winnings, whatever) than you are better off paying the tax now rather than when you retire. There are complicating issues like you may be able to save more before tax (traditional) rather than after tax (Roth), and that will depend on which tax bracket you are in right now. As a post doc, I would guess you aren't going to be in a very high tax bracket, so it may not matter. As for getting married, anything that effects your tax status will effect the decision to go traditional or Roth for the reasons stated above. On the subject of calculators, I'm not sure min-maxing the contributions is a useful endeavor since you are only giving a rough guess as to your future retirement tax bracket anyway. More important than any of this is the expense ratios of the funds you have access to, you want low ratio index funds (well sub-1%), if only one of your options has these types of funds, then the decision has effectively been made for you.
|
|
#
¿
Dec 20, 2013 00:49
|
|
|
Shear Modulus posted:I'm in this weird situation where by my employer's policies I'm not eligible to participate in their retirement programs, but I held an account with the financial institution that manages their programs before getting hired and the retirement accounts showed up on my account page with them anyway, with balances of $0. Is anyone aware of any weird regulatory trap situations I may find myself in if I just continue ignoring these accounts? I've had several of these for 5-6 years now and it has never come up. I doubt it means anything at all.
|
|
#
¿
Dec 28, 2013 18:53
|
|
|
Vehementi posted:The correctness of the passive strategy relies on the assertion that it is impossible to perform research and choose good fund managers and/or funds. Since 50-90% fail, actively managed investing is doomed if research does not help - but I don't choose at random, so if research can help, then active funds may be viable. Can someone point me to the research that shows that I cannot research fund managers / funds to make good decisions? If past returns and future returns (either through an active manager or a single stock) are completely uncorrelated then you are, in fact, picking at random.
|
|
#
¿
Jan 4, 2014 00:56
|
|
|
surf rock posted:Is Vanguard's website notorious for being godawful, or is it just me? I've just been trying to register a user account on their personal investor website for more than a month, and I keep getting an error message after the first step, telling me that the registration process is currently down. This is absolutely ridiculous. I have had no problems in about 10 years of use. Maybe sign up was better a decade ago?
|
|
#
¿
Jan 21, 2014 15:28
|
|
|
Joiny posted:You're probably right. I just thought it was interesting and I am way too risk averse to try doing anything like this with my money anyway. The people who consistently under perform the market are doing so because of random chance as well. They just haven't been culled by the financial system yet. Lets make a simple model and see what it tells us. Assume a financial year involves guessing the result of 20 coin flips. If a player guesses 8 or more times correctly, they had a winning year and beat the market, otherwise they under performed the market each year. In this case, by pure chance, 97% of players will under perform and 3% will beat the market. Assuming that none of the players are culled after a bad year, after 10 years there is a 74% chance, based on luck alone, that any one player will have under performed every year during that period. I see little reason to think that there is anyway to pick a particular looser over a long enough time frame. However, if you could short the actively traded funds as a whole, then I might be interested. 
|
|
#
¿
Feb 1, 2014 16:55
|
|
|
I saw this on Mother Jones today (it is a few days old or somesuch): http://www.motherjones.com/kevin-drum/2014/04/sp-500-sets-yet-another-fake-record-year It looks like the inflation adjusted growth in the S&P 500 since 1998 has been totally wiped out by the two recessions that occurred. Maybe it is some graph illusion due to how it was plotted, but it doesn't make me particularly optimistic about high future growth rates.
|
|
#
¿
Apr 5, 2014 04:09
|
|
|
MickeyFinn posted:I saw this on Mother Jones today (it is a few days old or somesuch): As a follow up to this. I had some time and investigated the data:  The Real GDP is already adjusted for inflation (albeit, likely in a different way), but it looks like the problem with my previous statement is that it focused only on the S&P 500. GDP is growing, trying to the capture the whole market appears to ring true.
|
|
#
¿
Apr 5, 2014 15:27
|
|
|
Actie posted:I'm in my mid-twenties, and am at least passably familiar with retirement planning. That said, for the entirety of my working career I've lazily let the financial advisor my parents use also manage my own investment accounts (a brokerage account, a 401(k), a Roth IRA, and a trad. IRA), without giving much (any) consideration as to whether I could manage my money just as effectively myself. A related matter, which I also have failed to consider, is whether the advisor is worth the cost—the annual management fee is equivalent 0.75% of assets under management. (It appears that my 401(k) is excluded from the management fee, even though my advisor manages that, too) If you are paying him to "beat the market," he can't do that over long periods of time. Assuming he is not trying to "beat the market" then all he is doing is holding your money and skimming 0.75% off the top each year in addition to the fees in whatever he has your money invested, which will amount to a significant amount of money when you retire in 40 years (or sooner!). In Vanguard Target Retirement accounts you could be spending an expense ratio of about 0.2%.
|
|
#
¿
Apr 12, 2014 16:49
|
|
|
I realize that low interest rates are meant, intentionally or otherwise, to induce people to spend, but 1.6% APR locked in for 5 years, geh.
|
|
#
¿
Apr 27, 2014 16:08
|
|
|
moana posted:Is it 25% or 20? I'm not sure. Anyway, yes. Also consider bugging your company to offer an HSA so you can tuck away another $3k or so in there. You must have a high deductible health plan to use an HSA. Not everyone can do it. Edit: I mention this because it is a (rare) case where you have to sacrifice something, potentially a better health plan, to be eligible to make these contributions. It is not nearly as straightforward as savings in a 401k or IRA where you only sacrifice immediate access to the money. MickeyFinn fucked around with this message at 15:17 on May 13, 2014 |
|
#
¿
May 13, 2014 15:14
|
|
|
Nephzinho posted:Moved jobs a few months ago and still have my 401k sitting with their program in Fidelity. I have my IRA, brokerage, checking, and savings accounts with E*Trade and wanted to roll over my 401k so that I can manage/view everything from a single account. Is there any reason not to rollover from Fidelity? E*Trade has given me the option to open a OneStop Rollover that is some special "professionally managed portfolio" that keeps you from being able to trade - is this as bad an idea as it appears to be? The money is mostly in a Vanguard Target Date fund already with a small amount manually managed. I have yet to hear anything good about ETrade and retirement accounts. If you want to see everything on one screen, I would suggest you move everything to Fidelity rather than the other way around. Fidelity has "Spartan" funds with low ERs. ETrade is going to make you pay to move, most likely.
|
|
#
¿
May 18, 2014 16:47
|
|
|
Suave Fedora posted:I'm a little confused with Vanguard. I'm trying to open an account for my kids' savings ($6k). The savings are primarily for college but I want them to have the freedom to buy other things if college ends up being less expensive than what the fund has 14-15 years from now. Those accounts are the money that you will use to buy and sell those things they listed from Vanguard. So, you'll fund one of those money market accounts and then use the money in that account to buy the funds you really want (usually you'll select both and then you'll hardly notice the money you put in going in the the money market). At least that is the way I understood it working. From my understanding, Vanguard makes you do this sort of thing so you aren't moving a bunch of money in and out on a short time scale, like would happen if you were buying ETFs (for example) from them using money in an account at a different bank. Unless you have reason to believe your earnings in that account will be tax exempt, go with the prime money market fund.
|
|
#
¿
May 21, 2014 15:04
|
|
|
baquerd posted:Hold on a second, Suave Fedora is trying to buy a Vanguard mutual fund. He shouldn't need a brokerage account/settlement account. You can buy mutual funds directly from your bank account without any problems and I don't know what he's doing wrong that Vanguard is trying to give him a money market. I could swear I had to choose a money market account when I opened my IRA so that Vanguard has some approved place to put money when things happen like a fund gets closed down or something. I have never had a single penny in that money market fund either. I think Vanguard wants you to tell them where to park money while they sort out unusual things. This was a long time ago, so maybe I am mistaken. quote:Secondly, your advice to use the prime money market fund doesn't make sense. The tax-exempt money market has theoretically lower yields in exchange for its own earnings being tax-free. Where you transfer your money to from either money market has no bearing on your money market choice. When I said 'earnings in that account' I meant the money market fund, not whatever other funds are invested in. Should have been more clear.
|
|
#
¿
May 21, 2014 18:30
|
|
|
Cicero posted:So contributions to a traditional IRA reduce your AGI, but you can only deduct your contributions if your income is below the limit...which itself is based on AGI (well, modified AGI). It appears that your modified AGI is calculated by adding back in the IRA contribution (link to irs). So I don't think you can use IRA deductions to allow IRA deductions.
|
|
#
¿
May 22, 2014 06:05
|
|
|
SmuglyDismissed posted:Speaking of really terrible expense ratios/costs I thought I would share the train wreck that is the Timothy Plan. Their gimmick is coined Biblically Responsible Investing. How much does this cost you? Well according to their Prospectus, a 5.5% front end load and expense ratios from 1.5% to 3%+. They were cast out of the temple and have to pay rent. 
|
|
#
¿
May 23, 2014 20:51
|
|
But how do they perform you ask? Every single fund under-performs vs the comparable fund they include in their own prospectus. I don’t know how they can sell this to people with a straight face.
|
etalian posted:lol look at the hall of shame for sinful companies: The only thing I learned from that chart is that Anheuser-Busch, InBev performs pornographic abortions for entertainment.
|
|
#
¿
May 24, 2014 03:34
|
|
|
tentish klown posted:What would you guys do if you hypothetically didn't *need* to save for retirement - if your every basic need is covered. However, this isn't enough for real luxury. For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC. If you earned that much yourself then you probably have a high income (say, $200k), but if it's been handed to you then it's out of kilter with your income and changes the game slightly. The aims for saving for retirement are totally different in this situation as it's not about making sure you have enough to live after you lose your main income. Also, adding to your savings makes a larger dent in your quality of life and has a smaller % effect on your total net worth. Two chicks at the same time.
|
|
#
¿
Jun 10, 2014 13:08
|
|
|
Sarcasmatron posted:I've got $100k that I'm looking at putting somewhere. I've got a couple of thousand sitting in a Fidelity Rollover IRA, so I was thinking about just putting it there and setting myself up with a few index funds. Seems that everyone ITT is really hung ho with Vanguard. Is there a material advantage to pulling my IRA out of Fidelity, opening a Vanguard account and putting everything there, or should I just put the $100k into Fidelity? My work SIMPLE IRA is with Fidelity and I have no complaints about the Spartan funds. The Fidelity interfaces are pretty good too. I wouldn't worry about going to Vanguard from Fidelity. My Roth IRA is with Vanguard.
|
|
#
¿
Jun 17, 2014 15:21
|
|
|
DNK posted:
Here are two charts showing why you should invest in stocks for the long term (>10 years) even if you think the market is overvalued currently. Also, if you really do think that there is going to be correction you should do a monthly contribution and then forget about it. It seems that there are four possible outcomes: (1) There is no correction and you are investing like normal - meh. (2) There is a short term correction and a following return to previous trend that includes your supposed ~30% overvaluation. Again, you are investing like normal only this time with a few months of cheap buy in - also meh. (3) There is a long term correction (i.e. the market drops and assumes a new trend upward). If you continue to invest over your lifetime, the overvalued purchases part of your portfolio would be only a small portion - again, meh. (4) Total economic collapse. Who cares what your retirement fund looks like?
|
|
#
¿
Aug 4, 2014 18:19
|
|
on timing the market
|
asur posted:One thing to note is that having an IRA essentially removes the ability to backdoor contributions into a ROTH IRA. Does this apply to SIMPLE IRAs as well?
|
|
#
¿
Sep 2, 2014 01:22
|
|
|
DNK posted:My question is one of account transfers: once I hit $4000 in STAR, could I take $3000 of those funds and move it to another (index) fund penalty free? And, furthermore, does this sound like a good idea? I did exactly this and experienced no penalties at all. Later I just dumped the STAR fund entirely for Target Retirement 20XX.
|
|
#
¿
Sep 4, 2014 19:30
|
|
|
If the company you work for has a match, shouldn't you take it even if you are planning to withdraw the money early? The penalty is only 10% compared to the 100% gain from the match.
|
|
#
¿
Sep 18, 2014 19:51
|
|
|
Zero VGS posted:Ah see, I knew I was overlooking something. The match must get taxed as income if I pull it early, right? Still seems like a no-brainer though, unless I leave the job after only a few years and the match doesn't vest. What I was thinking was more like the benefit of taking the money. I don't know a thing about vesting, so I'll leave that out for the time being. Let us assume that your company will match up to 3% of your gross pay ($2400 if you make $80k/year). At $80k/year your highest marginal federal tax rate is 25%. So, you can take that $2400 (before tax!) out and invest the $1800 you get after taxes. Or you can invest the $2400 in the company plan and get the match to make a total of $4800. When you pull it out early and eat the 10% penalty (35% total tax rate) you end up with $3120, nearly 75% more than you would have gotten by taking your pay directly. Vesting is a complication, and so is maybe short term capital gains? I dunno. I should be clear that this is not advice to take any particular action. I simply mean that I haven't come up with a reason not to take the match, even if you intend to pull the money out early.
|
|
#
¿
Sep 19, 2014 00:10
|
|
|
Peanut3141 posted:Goons, help me make a smart decision instead of simply the one that feels good. First off, the best financial decision can be the one that feels good, you still have to live with your money decisions. It seems like you've got a ton of savings, is there anything else you'd do with the money besides invest it? Buy a house? Take a trip around the world? Eat condor eggs? My preference would be to pay it off if the only two options I had were invest or pay it off. Keep in mind that student loan debt (I assume you are American) is nigh impossible to get discharged. No matter what happens (almost) in your life from now until that balance hits zero, you will have to pay that money back. That made me really adverse to holding on to my debt, even though it was ~$10k and 1.6% when I left school.
|
|
#
¿
Sep 28, 2014 16:52
|
|
|
Peanut3141 posted:No, I'd just invest it. I already have a house/mortgage, though I might be moving closer to the new job soonish. It might be easier to just have the downpayment in hand as opposed to buying on contingency. I am American, so there's no way to get rid of it. My wife did declare bankruptcy before we met and that was the debt that couldn't be discharged. It sounds like you are trying to manage your anxiety as much (or more) than your money. The above poster is right, read the stuff in the OP and get comfortable with your options.
|
|
#
¿
Sep 28, 2014 19:12
|
|
|
Guinness posted:IRA contribution limit is staying the same for 2015, but 401k limit is going up to 18k. Is that going to raise the SIMPLE IRA limit to 12.5k? VVVV Yay! Next year I get to contribute 1040/month instead of 1000/month! VVVV MickeyFinn fucked around with this message at 02:18 on Oct 4, 2014 |
|
#
¿
Oct 3, 2014 23:51
|
|
|
antiga posted:This is an odd thing to say because diversification is one of the only places I'm aware of that you could make a decent argument for a free lunch. If he's already decided to buy high risk bonds, it's dead wrong to say that diversifying his purchase is 'adding risk'. Are "I bond funds" riskier than CDs? If not, then why are they not the default advice around here if the returns are higher? If so, then why would you recommend that someone take on more risk to chase returns in the current low interest rate environment?
|
|
#
¿
Oct 5, 2014 17:46
|
|
|
GanjamonII posted:Ok I figured as much and am going to change it up. Is there some target (10%?) that I should stick to? If I were in your shoes, I'd keep as little in there as possible. As in, if there is a vesting period, moving it out shortly after vesting, and if there wasn't, moving it out immediately after it lands in my account. Edit: Perhaps a better answer is the following, how much of your retirement account would you be ok with losing on the same day you lose your job? You have to decide if you are being paid well enough for the increased risk you are taking by holding your company's stock vs a diversified fund and the fact that the performance of that stock is correlated with your employment, perhaps not highly correlated, but correlated nonetheless. MickeyFinn fucked around with this message at 20:08 on Oct 15, 2014 |
|
#
¿
Oct 15, 2014 20:01
|
|
|
|
| # ¿ May 12, 2024 18:14 |
|
|
etalian posted:So what's the opinion on employee stock purchase programs? I am trying to evaluate the risk of this plan by looking at the worst case scenario. Let us assume that the stock price is relatively constant on a month time scale. If, every month, you buy some fixed amount of stock you make an immediate return of 17.6% (1/0.85). Then, the next month, you transfer that money to some suitably diversified portfolio. Practically speaking, even if the stock were totally wiped out (for a one month period somehow) every 6 months, you'd still be making money. So, the worst case scenario is that the company goes bankrupt and you lose your job and one month of ESPP contributions. If this happens 6 months or more after you started making those contributions, it was worth it. I'm usually against buying in to ESPPs, but I'd participate in this one.
|
|
#
¿
Oct 18, 2014 16:27
|
|