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My employer will contribute 25 cents for every dollar I contribute up to 6% of my pay. Does that generally mean they will give me 6% of my pay in free money, or that they will give me 25% of 6% of my pay? Also, the vesting period is six years. Is there any point in contributing if I know beyond a doubt I will not work here for six years?
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Feb 21, 2012 01:03
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| # ¿ May 13, 2024 11:46 |
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This may be more appropriate for the budgeting thread, but it seems relevant at the moment. I'm reading Elizabeth Warren's "All Your Worth". She recommends that you take your Take-Home Income (after taxes, before any retirement contributions) and structure your expenses as follows. 50% Needs (Housing, utilities, basic food, contractually obligated payments like student loans and car loans, etc.) 30% Wants (Luxury levels of food, cable/internet, buying things, etc.) 20% Debt Payment (excludes mortage/car payment/student loans, which are contractually obligated and therefore Needs) Order of priorities is: 1. Get or keep your expenses in these ratios every month 2. Use your 20% category to build up $1,000 to help avoid additional debt 3. Use as much of your 20% category as you need to in order to get full employer matching. 4. Use your 20% category to wipe out your debt (excluding mortgage/car/student loan) 5. Once 4 is completed, use your 20% category to build up 6 months' worth of Needs (not 6 months of take-home pay) as an emergency fund, because if you have an emergency you will want to cut your monthly expenses to the bone (to just the basic Needs). 6. Use that 20% to invest as you see fit
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Mar 8, 2012 21:48
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Solaron posted:2 questions. Please forgive me if they're incredibly dumb (hint: they are). They're helpful in an emergency, but they're a 30 day loan. Emergency reserves are recommended at 6-12 months. "Good" interest rates are still going to cost you a lot more than you lose out on in >1% interest by keeping cash available. I wouldn't count on a credit card for anything you can't pay for in cash.
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Mar 13, 2012 20:29
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And don't link your checking and savings. Wells Fargo was "kind" enough to link them to provide what they call Overdraft Protection, so when my debit card got swiped, my checking was drained and each transaction after that pulled directly from my savings with a $10 *PROTECTION* charge on top of it.
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May 9, 2012 18:10
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I'm interested in a three-fund portfolio with, ultimately: 55% Vanguard Total Stock Market Index Fund 20% Vanguard Total International Stock Index Fund 25% Vanguard Total Bond Market Index Fund I've got $30,000 ready to go. Admiral shares are available of all three funds, but they require $10,000 per fund. Would I be better off launching into this with a 33-33-33 split and Admiral shares and reallocating over time, or should I only go for Admiral on the 55% so that I can have my target allocation right off the bat?
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Oct 24, 2012 19:38
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My grandmother set up a Roth IRA for me when I was 19 and put $12,000 cash in it. Then died. That was 7 years ago and it's still at $12,000. The account is at Schwab, but I am wondering if it is possible for me to open a Roth IRA with Vanguard, transfer the $12,000 over to it, and then make my 2012/2013 contributions of an additional $10,500? Is this possible? Do I need to do something to simultaneously close my old and open my new Roth?
GoGoGadgetChris fucked around with this message at 22:02 on Mar 11, 2013 |
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Mar 11, 2013 21:58
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Xenoborg posted:Are you sure it is an Roth IRA and not a more general taxable brokerage account? You can't generally put money in for other people, you need to have made an amount greater than the contribution in taxable income that year, and not that much at once. It is indeed a Roth IRA. I made about $4,000 a year while I was in college and she just contributed for me without my knowledge for a few years. This was a surprise discovery a couple months ago. My parents have a financial planner and all I heard from them is that it currently has "$7,000 TIPS and $5,000 cash". All I need to do is find the Schwab account number and do Vanguard's online transfer process, right?
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Mar 11, 2013 22:22
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Well, it all worked out. I've now got a Vanguard Roth IRA with $22,500 in it. This represents all of my retirement savings. I'm 26 and can only save about $8,000/year for retirement for the next year. Let's say that I want to be at about 60% equity, 20% bonds, and 20% REITs for retirement planning. Since all of my savings right now is in tax-advantaged accounts, is it smart for me to just go with bonds and REITs at the moment and just buy stocks with a taxable account going forward? Or is hitting my ideal allocation right away more important than having my tax-advantaged accounts holding bonds/reits?
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Mar 12, 2013 23:18
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I opened a Roth this morning and purchased $10,500 of VTSAX. How does the pricing work out on that? Is it based on the closing value of the day prior ($39.04 was the closing value yesterday and the most current value when I opened the Roth), the closing value of the day I purchase it ($39.32 today) or the value when the funds clear?
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Mar 20, 2013 23:27
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https://www.mrmoneymustache.com One of his favorite topics is addressing people's complaints that he lived like a hermit so he can live like a hermit. One of his articles is about his "deprived family" that must live on $27,000/year. http://www.mrmoneymustache.com/2012/06/01/raising-a-family-on-under-2000-per-year/ Yes there is a typo in that URL but it is the correct link to the article.
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May 2, 2013 17:57
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Hashtag Banterzone posted:....it doesn't seem very useful unless you want to save up a bunch of money and then work freelance like him. Saving up a bunch of money and then working on your own terms is MMM's entire thesis. He did a great article recently about the "Internet Retirement Police" (another of his mannerisms that are either endearing or enraging, depending on whom you ask), in which he reiterates that early retirement does not mean sitting on the beach for 16 hours a day and committing seppuku if you accidentally work a 4 hour shift at a job you love.
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May 3, 2013 17:33
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Hashtag Banterzone posted:I just don't see that being an option for most people. Seems to me like there aren't a ton of jobs you can do that like. And the ones I can think of don't seem like they would be much fun. Do you mean to say that there aren't a ton of jobs that pay enough to accumulate a big chunk of money, or there aren't many jobs that you can continue to work on at your own leisure after "retiring"? If it's the former, he addresses the "I could never retire early on MY income!" issue here: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ If it's the latter, I don't know that he has an article explicitly focused on it, but he touches on it in just about every post. This is somewhat related: http://www.mrmoneymustache.com/2011/10/25/the-joy-of-part-time-work/
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May 3, 2013 17:58
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Funny you should mention the magical $75,000 number: http://www.mrmoneymustache.com/2012/09/06/does-peak-happiness-really-come-at-75000year/ And why is anyone throwing out the "Why would I want to live like a peasant so I can retire like a peasant" straw man as nobody in this thread or in any finance blogs is advocating it?
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May 3, 2013 18:57
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I'm trying to do some planning. I'm 26, healthy, own a house/car, no big purchases coming up so I'm trying to build my retirement savings as much as possible. Current assets are: $11,000 in a Roth IRA (contents: VTSAX) $2,100 in my HSA account (hopefully to be converted to a mix of the funds shown below) $17,000 in a CD that will be popping in about a year and a half. I'll worry about that when it's available. My employer contributes $815 to my HSA every year for me. Now that I've hit a balance of $2,000, I can open an HSA Investment Account, which seems awesome as it grows tax-free and reduces my own tax burden slightly. However, I'm confused by my options:  There's no way to avoid the monthly service fee and these funds have very high expense ratios compared to what I'm used to. I'm not a very well informed investor; all I do is buy VTSAX. Can anyone make a recommendation for what fund(s) would be appropriate for me? Do I want... bonds or something? Are any of the funds in my HSA option list similar to or complementary to my current balance of all VTSAX and cash?
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May 15, 2013 18:51
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ntan1 posted:
I'm holding off on any international funds because, unless I'm mistaken, the main holdings of VTSAX are companies that do a huge portion of their business internationally (although the top 10 holdings are only 15% of the fund...) I have more learning to do on the matter though. ntan1 posted:
I am in my 20s and consider myself extremely aggressive! Like I said before, I've got a CD worth about $17,000 that will mature in less than two years, so I'm not worried about being all-stock at the moment. I really appreciate your insight on the HSA as well. It doesn't seem to be too great a selection, but with $815 a year in free money, I may as well put it to use.
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May 16, 2013 17:25
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My buddy says he's got some Vanguard funds in his Roth IRA at USAA. How is that possible? I don't know much but I thought having an IRA with USAA meant you could purchase USAA funds, having a Roth IRA at Vanguard meant you could purchase Vanguard funds, etc.
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Jun 7, 2013 22:06
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6 months living expenses, not salary. Put it in an online savings account getting .85% and you're beating inflation.
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Jun 20, 2013 20:51
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You can withdraw your Roth IRA contributions at any time without penalty though?
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Jun 20, 2013 21:54
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P0PCULTUREREFERENCE posted:Anyone have recommendations / places to look and compare here? I'm only getting %0.05 on my emergency fund savings account, and if there really is a liquid option that much higher I should be considering it! http://www.bankrate.com/checking.aspx Do a search for MMA/Savings products. Discover is advertising .8% right now, and they're certainly trustworthy.
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Jun 20, 2013 22:57
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Our 401k is moving to a new provider. One of the Vanguard funds offered is VEMSX - "Extended Market Idx Signal" I can't find any evidence of this fund existing on Vanguard's website. What's up with that?
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Jun 30, 2013 20:31
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enthe0s posted:So I'm a fresh out of college student working my first job ever and know almost nothing about finance except for what I've learned over the past 2 days just reading hours upon hours of early retirement blogs and smart investing/saving. I think I'm on the right track, but I thought I would ask you goons to make sure and guide me. 1. Yes 2. Correct; your 401k contributions come out of your paycheck before taxes are applied. Therefore your taxable income is lower and you enter a lower bracket. (Note that tax brackets aren't fixed at 15, 20, 25, etc. You can pay 16%, 21%, 26%, and so on depending on exactly how much you make. Therefore you don't need to worry about lowering your income to get in under some cap number to drop 5%). 3. Because you'll be lowering your tax rate through your 401k contributions, and because it is a hedged bet against your future tax situation and whatever tax laws apply in the future. Roth IRAs are also awesome because you have MANY times more choices of funds than a 401k does. 4. Pay off loans for sure, but don't let a 4.5% mortgage or a 5% student loan keep you from starting a retirement account in the next 30 years. 5. Vanguard and Fidelity are options for your IRA. You only have one option with your 401k: Participate or don't. Your employer chooses a 401k plan (a company and several fund options) and you get to choose from those. As an example, I have the option of opening a Roth and/or Traditional IRA at any company and can purchase any available funds I want. My employer has a 401k plan through Charles Schwab with 9 fund options. If I want to have a 401k, my only option is to enroll in the Charles Schwab plan and select from the 90 funds.
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Jul 9, 2013 20:43
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Our company is going to offer a 401k match of "50% match on the first 6%". Does that mean that they will give me $0.50 for every $1 I contribute, not to exceed 3% of my annual income? Or that they will match 3% of my total contribution?
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Aug 12, 2013 20:12
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Guinness posted:It means for every dollar up to 6% of your income, they will contribute $0.50. Beyond 6% there is no more match. So if I made $100,000 a year and maxed out my 401k with $17,500, am I going to receive $3,000 in employer contributions (50% of 6% of annual income) or $525 in employer contributions (50% of 6% of total contribution)?
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Aug 12, 2013 20:22
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spinst posted:No company match on the 401(a). They fund the pension side of it. Just remember that "I'm young" is the strongest possible reason to save as much as possible! It only gets harder with kids, mortgage, car payment, and not having time (and compounding interest) on your side.
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Sep 8, 2013 19:07
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I have been paying off some debts and am now building an emergency fund. I should have a sufficient enough emergency fund in probably January. Then it probably will be time to start saving for a house... it never ends!
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Guy Axlerod posted:I see HSA chat in here once in a while. I'll be on a HDHP next year, who should I open an HSA with? Are you sure you have any say in the matter? My hdhp offered through work has an HSA through Chase. I didnt get to choose what bank my hsa was at, and I didnt think thst was typically up to the participant.
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Oct 5, 2013 23:03
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Does Four Pillars have a part about timing the market vs time IN the market?
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Nov 16, 2013 21:54
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My company has pretty sparse 401k and HSA fund options, but we do have the following highlights (all from Vanguard): 401k: Total US Stock Market HSA: Total International Stock Market, Total Bond Market (US) I can contribute to these accounts with my intended allocation, but my question is, how can I reallocate and maintain my goal allocation if the funds are spread across different accounts?
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Dec 4, 2013 23:27
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Has anyone read The Investor's Manifesto by William Bernstein (of Four Pillars' fame). It seems to be a very similar book but 7 years more recent. I have just finished the Four Pillars, and the table of contents of Manifesto makes it sound like a rehash.
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Dec 10, 2013 19:49
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Contributions can come out, but can you replace them? Without a 401k, you have a very small opportunity per year to avoid taxes on your retirement savings. I would argue that it is a nice amenity that, in a dire emergency, you can burgle your future self by withdrawing contributions, but certainly don't plan for it. How much do you spend every month? Cut that to 60% and multiply it by 6 months. Keep that in savings. Don't worry about interest on it because this emergency fund is here to keep you from getting poor, not to get you rich. Use https://www.bankrate.com to find an online savings account with good-enough interest (probably around 0.8%). Depending on where you live, what you do, your individual circumstances, etc., you may have any of a wide range of emergency fund needs. I'll estimate it at $7,500 as Slap Me Silly did. Put that in savings. For your Roth, Vanguard is the (only?) recommendation to be found here, but you'll notice their funds typically have minimums of $3,000, so you won't be purchasing two different funds just yet. Choose one of their Target Retirement Date funds (instant diversification at a slight cost of a few basis points in expenses). Note that you have until April 2014 to make your 2013 contribution. This is completely idiot-proof on Vanguard's website, so you won't accidentally make a 2014 contribution unless you try very hard to. You have no debt and, to look at your age and assets, you are probably saving a couple hundred dollars a month. You should have no trouble maxing out your Roth contribution for 2014 within a few months into the year. Overall, my recommendations are: 1. Figure out how much you need to survive on for 6 months if you lost your job, then put this amount in an online savings and don't give a crap if its yield is terrible. 2. Put $5,500 in a Vanguard Roth for 2013 (Recommendation: Target Retirement Fund) by April 3. Save diligently and get another $5,500 in your Roth for 2014 as soon as possible 4. When you've got that ~$11,000 in the Roth, you'll have enough to branch out into a few funds if you desire. Read the Four Pillars book in the OP or check out this incredible series of blog posts to learn more: http://jlcollinsnh.com/stock-series/
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Dec 26, 2013 19:31
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SiGmA_X posted:
Did they used to be heavier in bonds? Currently, every Target fund for ages 18 to 40 is holding 10% bonds, and the age 41-45 fund is only 15% bonds!
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Dec 26, 2013 21:49
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razz posted:
The SA Forums are blowing up for me right now, so apologies if I've been beaten to the punch several times on this, but I recommend this as a very easy to understand primer: http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/ Some things you'll learn are that the amount never "steadily" ticks up, and the reason why you can expect to be rewarded for your investment is because you ARE shouldering the risk that someone will push the Make Your Money Worth $0 Button.
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Dec 27, 2013 22:55
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obi_ant posted:I'm glad that you're starting to invest. I read this very thread a few years back and everyone here is very helpful. I think she's got $6,0000 in a savings already. That's about a year's expenses for them!
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Dec 27, 2013 23:36
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Blindeye posted:So I have a question for you guys because I've been pretty antsy about saving money. For a while I've been contemplating opening a Vanguard S&P 500 index fund account but I didn't have enough cash that I was comfortable setting aside (I want to have at least 6 months living expenses liquid for an emergency). Now that I feel I can do it I'm a bit spooked by everything sitting at a record high number and seemingly accelerating faster. Is there a better fund I should be looking at that I can put <5k into and have a bit less chance of losing my shirt because I bought high? For reference I'm 25 years old and already max out my 401k contributions so this is supplementary savings. If you had the ability to predict when the market is going to rise or drop, you would own all the money in the world. I see this saying on this forum a lot and I like it: Time in the market beats timing the market.
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Dec 29, 2013 21:54
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bam thwok posted:Well, ROTH season is open again. Anyone else skittish about making their full contribution after a spade of headlines calling this one of the best bull runs in over decade? God yes. I opened my Roth with a 2012 contribution and to date it's 100% in VTSAX. I'm tearing my hear out trying to decide on adding total bond, total intl stock, or MORE VTSAX
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Jan 2, 2014 21:41
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Guinness posted:Yeah that's the thing, going forward I think I'm going to just invest in funds in my retirement accounts and keep my individual stock investing (or gambling, if you prefer) in my taxable account. I already started doing that last year when I just bought all SPY with my 2013 contribution. Hence why I'm thinking of opening an account with Vanguard. Well, the expense ratio is lower at Vanguard and they charge you $0, so the hype is worth it if your goal is keep more of your money. Have you read the Four Pillars yet? A few of your investing habits have entire chapters dedicated to their shortcomings.
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Jan 2, 2014 22:47
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Guinness posted:Incidentally, it is in the mail right now. It's an excellent book. I would recommend reading through it before you do your transfers and contributions. If you got the current edition, it hasn't actually been "updated" in any way, but there are about 12 pages at the very end that were written in 2011 and reiterate a few of his major points. On a personal note, I think even Bernstein over complicates retirement investing. His diversification timeline for the first several years of investing will involve REITs, precious metal funds, and some other stuff that seems a bit overkill.
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Jan 2, 2014 22:57
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One thing I couldn't reconcile from Four Pillars was: 1. Don't invest in things like art. This is the "Greater fool" theory where it only has value if you can sell it to someone for more than you paid for it. 2. BUY SOME GOLD, SONNY
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Jan 3, 2014 00:18
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As, always, the Four Pillars has the answer. Bernstein's chapter on active fund managers is excellent. Fund managers who beat the market in one year have a slight statistical likelihood of outperforming the market by a minute amount the following year. Beyond that, there is no statistically significant benefit to remaining with the same manager than picking a new one at random. The main take away from the chapter is that there are no talented stock pickers. There are, however, people who are naturally bad at it and can be relied on to underperform the market on a consistent basis.
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Jan 3, 2014 21:50
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I love data about mid-caps. Don't they just become large caps if they do well and small cap if they flounder?
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Jan 4, 2014 01:15
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| # ¿ May 13, 2024 11:46 |
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First decide if you're going to want to spend it in the next... 10 years. Didn't you ultimate decide to invest it because that's what the benefactor wanted? Consciously decide you aren't touching this money for 10 years and Target Retirement Date the hell out of it! (Vanguard's account creation tool won't even LET you make a mistake, by the way. Don't be nervous)
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Jan 6, 2014 23:58
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