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I'm completely new to investing and need some advice. My financial situation is somewhat unique and I can't really afford a full service broker or advisor, but I want to start contributing to some long term investments. Disclaimer: my knowledge is limited to spending a week or so combing heavily through Investopedia, so forgive me for any naive statements. I make roughly $37k US annually, with a fluctuating monthly income due to the nature of my work. I'm 26, and I've managed to save about $10k since I finished college that is currently just sitting in a savings acct. I don't have access to a 401(k) option right now, though that may change soon. Am I best off opening a Roth IRA? If it matters, I do anticipate my income to increase pretty steadily as I enter my mid 30s. Additionally, if I open an IRA and meet my max contribution for this year, how should I invest the rest? I'm willing to take on long term growth investments with some risk involved, but I don't have the time or experience to actively manage investments for the time being. One final consideration: my fiancée is entitled to a $100k inheritance. We just found this out and aren't certain what sort of fund if any the money is in, or if there are any restrictions to her access, but assuming it's free for her use, what would be a good way to handle this sum? Again, long term growth with up to moderate risk would be pretty acceptable. We aren't planning to buy a house or anything, but would like to leave some of our funds accessible in 5-10 years, possibly for private investing. I guess all this boils down to the question, "where do I start?"
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Sep 15, 2012 02:19
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I could use some help rebalancing my retirement account. I know about enough to put money in a Roth IRA, and that's the extent of my useful investing knowledge. Currently I've got a Vanguard personal Roth IRA set up that I invest in manually, since I'm freelance and don't have really any other investment options available to me. On a friend's recommendation, I split my investments between three funds. I can't remember why he recommended these or what the original percentages were, given that it was a couple of years ago now, but here's how my account currently stands: Vanguard 500 Index (VFINX), ~53.4% Vanguard Target Retirement 2040 (VFORX), ~33.2% Vanguard Total International Stock Index (VGTSX), ~13.4% I'm 29, so I have a pretty good tolerance for risk at this point. I'd like to get some money out of the VGTSX, I think I bought into it when it peaked because it's delivered a -7% return to date. So I'm happy to sit on that for a while until the loss diminishes, if it ever will, before exchanging it for something else, but like I said, this isn't my area of expertise.
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Jul 14, 2016 20:50
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Moneyball posted:Not bad, but having a target date fund makes shares in the 500 fund redundant, as well as (someone can correct me if I'm wrong) the international index fund too. Higher expenses on the target date fund portion as well. Depending on how the Admiral class shares are calculated, yes. I have just shy of 20k in there right now. I'd be more than happy to sink as much as I can in the VFINX, it's performed really well... I assume putting some in VBMFX would just be to diversify?
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Jul 14, 2016 21:05
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GoGoGadgetChris posted:I don't think you do! Well I mean, I've sat on poor returns on that fund for two years, so I'm happy to keep it if that's the way to go. I'd rather manage it (as in, rebalance regularly) than leave it in the target retirement date fund since even with the loss on the International fund the IRA would be performing better overall than if I only had the Target Retirement fund. I'll probably do the 75 domestic/15 international/10 bonds mentioned above. Edit: I should clarify, I'm asking in part because I knew my current allocation was dumb, and in part because I genuinely do want to learn more about investing. So when I say I have tolerance for risk, I mean that. I get that "tolerance for risk" in large part means investing based on a plan, and sticking to that plan even if something underperforms. So if it seems like I'm not getting something here, I'm probably not! But I want to understand and know what a good plan would be for my timeline. MockingQuantum fucked around with this message at 21:55 on Jul 14, 2016 |
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Jul 14, 2016 21:52
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Alright, advice taken. I'm getting a better feel for this. So let me pose the question this way: Assuming I'm someone who can determine a plan and stick to it, would I be better off, long-term, going with the target retirement fund, or with a mix of funds, say: 60% Vanguard 500 Index 30% Vanguard Total International 10% some Bond fund like VBMFX and rebalancing it regularly? And for that matter, how often should I rebalance my account, if I go with the latter plan?
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Jul 15, 2016 01:23
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pig slut lisa posted:I think either would be fine. If you go with the three fund approach, rebalance once a year on your birthday (or whenever). Only tweak I would make would be to replace your 500 Index with the Total Market Index (VTSMX/VTSAX) to get more mid- and small-cap stocks in there. Cool, I'll take a look at that. Thanks for the advice everybody!
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Jul 15, 2016 03:55
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Triglav posted:
Awesome, that gives me a clearer picture of what I should be doing. I think the LifeStrategy funds are probably the way for me to go, for now. A follow up question, though: given that, at least for the foreseeable future, I'll be able to contribute the annual max to my IRA, and probably do little or no other investing, what more is there for me to learn? I want to have a better handle on investing and stock market trading, but I recognize that the best thing I can do, at least for the IRA, is pick a distribution and don't touch it til I have to (which should effectively be never). What else is worth knowing, given my situation?
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Jul 15, 2016 20:06
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Triglav posted:Without breaking into financial analysis and managing your own investments, all that's left to learn is to just keep contributing to your plan, no matter the media noise. Your time horizon is decades, the news' is the next commercial break Works for me. When I get to the point where I can contribute to something besides just my IRA, I may be back, but until then, I'll stay the course. Thanks again!
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Jul 16, 2016 01:31
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I'm going through all our (mine and my wife's) investments, and kind of just found out my wife has a whole lot of money in a 529 account. She finished college with nearly all of it intact, apparently, after her grandfather started the investment when she was born. She doesn't plan to go back to school at any point, nor do I. We also have no plans to have kids, so there's no beneficiaries we could really transfer the 529 to. Is there any tax-advantaged way to move that money into a different investment? I don't totally understand how a 529 works, but as I understand it, you can't withdraw on the principal only, so we'd be paying tax on whatever we pulled out of there, correct?
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Jul 18, 2016 22:53
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wyoak posted:You'd be paying tax + the 10% penalty on the earnings. If she got any scholarships you can claim those without the 10% hit (still get taxed though), but otherwise I don't think you can get around the penalty. It's probably worth keeping the money in there unless you absolutely need it, in case your plans change or maybe you have some nieces or nephews. Dang, not the answer I was hoping for. We don't need the money, but it also literally has no use-- my wife and I won't be having kids (she can't), and the ship has sailed on either of us having nieces or nephews. I guess we'll just have to take the hit, though I don't know when it's going to be worthwhile to move the money out of there.
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Jul 19, 2016 05:56
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I've been reading If You Can, which has raised a question for me: at this point I'm primarily just contributing to an IRA, and I contribute to it when I can, since my work is freelance and I can't always contribute on a regular basis or a fixed monthly schedule. Should I be worried at all about when I'm contributing? The book (or pamphlet or whatever you'd call it) does talk about not trying to time the market, and being aware of historical behavior mostly so you're not tempted to sell when there's a bear market or buy when things are at their peak, but should I be looking at where things stand before contributing to my IRA? I've read up on dollar-cost averaging, which seems to imply I really shouldn't, I should just try to spread out my contributions over time, but anything else I should take into account?
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Jul 20, 2016 20:08
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Moneyball posted:Best time to invest is generally today. But if you want to dollar cost average, that's fine too. You'll miss the biggest gains and the biggest losses. In other words, better to just get the money into the IRA than stress about when to do it?
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Jul 20, 2016 20:11
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I Like Jell-O posted:Dollar-cost averaging is bad policy when it comes to long term investing. You may have heard the old aphorism that "time in the market beats market timing"; that applies to dollar-cost averaging as well. You are best off putting as much money in an investment as soon as is convenient as long as you think there is a positive rate of return. Okay, cool, that makes a lot of sense framed that way. Psychologically, for me at least, it makes more sense for me to put as much as I can into my IRA as soon as I have the funds available, too, as otherwise I'm prone to rationalizing why I might need to keep that money on hand instead.
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Jul 20, 2016 20:44
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It's looking very likely I will max out my Roth IRA contributions this year, and I'm curious where I should put money after that for this calendar year. As it stands, I have a somewhat strange situation: My main employer (I'm freelance, but mostly W-2 employment) offers a 403(b). They don't match any contributions to the account, and looking at the offerings, nothing is that amazing and expense ratios seem pretty high for what I'd be getting. Because I'm a union employee, though, they have to contribute non-taxable funds on top of my normal wages to a union-established 401(k) fund. So currently, I have a 401(k) that I didn't know about that has about $1700 in it. It similarly doesn't have great offerings, though I think it defaulted to a T. Rowe Price Target Retirement fund, which I'm okay with. If I'm able to contribute more money to long-term investments, should I be putting it into either the 401(k) or 403(b), or is there a compelling reason I should start a taxable investment account? Or, given that my income tends to be extremely variable, should I save any money I would be investing for the next calendar year, so as to hopefully max out my Roth IRA contributions again? It's not something I've been able to do two years in a row yet.
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Jul 22, 2016 21:51
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Leon Trotsky 2012 posted:Can you post exactly what funds and expense ratios you have access to? That would be the best way to get an accurate estimate. Both offer a lot of options, so forgive me for the long post: 401(k): AllianceBern Global Bond ANAGX 0.91% American Funds EuroPacific RERCX 1.14% BlackRock Equity Dividend MDDVX, 0.99% Columbia Small Cap Core LSMAX 1.38% Dreyfus Small Cap Stock Index DISSX 0.50% DWS RREEF Real Estate Secs RRRAX 0.99% Invesco Endeavor ATDAX 1.37% JPMorgan Gov't Bond OGGAX 0.76% JPMorgan Large Cap Growth OLGAX 1.11% MFS Aggressive Growth MAAHX 1.20% MFS Blended Research Core MUEAX 0.85% MFS Bond MFBFX 0.83% MFS Conservative Alloc. MACNX 0.99% MFS Growth MAGEX 1.12% MFS Int'l Value MGIAX 1.14% MFS Moderate MAMHX 1.05% Nuveen Mid Cap FDXAX 0.76% Oppenheimer Dev Markets ODMAX 1.36% PIMCO Hi Yield PHDAX 0.90% T. Rowe Price Target Retirement 2040/2050 (I'd be 60 in 2046) 1.28% I'm waiting to get more info on the 403(b), it's got a lot of offerings too but I don't have expense ratios on any of them. MockingQuantum fucked around with this message at 23:29 on Jul 22, 2016 |
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Jul 22, 2016 23:24
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GoGoGadgetChris posted:Some of that expense ratio goes back to your employer to cover the costs of administering the plan. Super common among small companies or really any company that doesn't want their 401k program to be an expense in any way. I think a lot of it is that. I've been looking at my wife's investment options at her new job and they're even worse. None of the ERs are below 1.15%.
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Jul 23, 2016 21:19
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ExtrudeAlongCurve posted:I feel like no one actually answered your question. One very important thing to note: unless it changed since I learned about it, you can't pull contributions from an IRA tax/penalty-free for a first time home purchase unless the IRA has been open for a minimum of five years. It sounds like incogneato might not have that issue when they actually get to the point of purchase, but I figured it was worth mentioning. It wasn't something I was aware of when I set up my partner's IRA last year.
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Jul 26, 2016 18:00
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GoGoGadgetChris posted:There are several different "five year rules" affecting IRAs and Roth IRAs, but the contributions made to a Roth IRA can be withdrawn at any time regardless of circumstance, use, or timing. Woo! Ahh okay. I must have not totally understood what I read, then. Or it was outdated. Or both.
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Jul 26, 2016 19:16
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On this thread's advice, I've done more digging into my investment options, including a Solo 401k, and I'm finding I'm in kind of a lovely situation for investing. Here's where things stand: -29 yo, married, no kids -Have an existing Roth IRA which I think I'll be able to contribute the max to on an annual basis -Work multiple part-time jobs, as well as some freelance work The issue is that only one of the part time jobs I'm working offers a retirement account (It actually offers two, a 403(b) that they've set up, and a 401(k) set up by my union that they pay required distributions into). Given that this one place constitutes less than half of my income, I couldn't ever put much of my income into one of these retirement accounts, since they both require payroll deductions rather than direct after-tax contributions. I also couldn't put much in a Solo 401(k) either, since if I'm reading the restrictions correctly, I could only ever put in 25% of my income that's subject to self-employment tax, which would have been about $800 last year. Long story short, most of what I could put into retirement accounts besides my Roth IRA is pretty small. Should I contribute everything I can, even if it means those accounts being a pretty low balance for the foreseeable future? Or am I better off pooling all my non-IRA investments together and doing a taxable brokerage account? I'd still focus on mutual funds & ETFs if that was the case, I have no interest in managing a portfolio more than quarterly or annually at most.
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Aug 20, 2016 00:44
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etalian posted:Also it's important to start saving early due to the math of compounding. Well money will be going into an account regardless, it was more a question of whether I should put it in these 401(k)s or a taxable account. The core issue is, I think, that I could put more money into a taxable account sooner. There's going to be a hard cap to how much ends up in those non-taxable accounts, and it looks like I can't opt into them until the beginning of 2017 anyway.
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Aug 20, 2016 15:51
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Mike Danger posted:Thanks! I'm going to go try and figure out a better method for budgeting, YNAB just isn't cutting it for some reason. YNAB works exceptionally well for some people and terribly for others, it seems. It fits how I think about money, and in particular has been a lifesaver since I'm freelance and have a wildly inconsistent income, but it works best if you stay pretty close to your budget and let it guide your spending decisions, which takes a lot of time and discipline until it becomes habit. It's a very non-traditional way of managing a budget, I find.
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Aug 22, 2016 22:16
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How important is international exposure? Right now my IRA portfolio is about 80% S&P index, 10% Total International and 10% Total Bond market, and I'm getting a lot of push from friends (who know at least marginally more than me about investing) to dump the Total International and just put it in S&P index. Not sure of the reasons why, beyond my S&P index seeming less volatile than Total Int'l.
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Sep 9, 2016 00:22
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monster on a stick posted:There have been years where international has outperformed US (like much of the first decade of this century.) You also miss out on diversification from such companies as Nestle, Toyota, Samsung, most of the bigger health care-related companies like Novartis and Roche, etc. Look at the holdings of Vanguard Total International, there are some major companies there whose products you use every day, why wouldn't you want to own them? Makes sense. I guess the follow up question would be, should I worry about any overlap between S&P Index and Total Int'l? I'd have to pick through their holdings (on my phone at the mo) to see if there's much in the way of market cap overlap though. Other follow up question would be, what's a healthy balance between domestic and international? Given how lovely my International fund has performed it seems like if I were going to rebalance it wouldn't be bad to do it now.
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Sep 9, 2016 00:42
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Hey thread, I got a new job with good pay and benefits and it means I have a couple of questions. I'm just shy of 31, have roughly $26k in a Roth IRA, another $30k in a savings account that's likely to go towards a down payment on a house at some time in the future, along with about $100k in a 529 that I'm not sure what to do with yet. My job is with a very small company, so no 401(k), however, my employer matches a percentage of my gross pay in a SEP-IRA. So far it's got about $2500 in it. Also an emergency fund that will cover about half a year of expenses. First question is, I think this is the case but if someone can clarify for me, that'd be great: is the $5500 max IRA contribution per-account or for all IRA accounts? My understanding is that it's the latter, so I could personally only contribute $5500 max regardless of whether I'm putting it in my Roth or my SEP. Is that right? Other question: I have a lot more flexibility on finances with this new job, but I don't really plan to change my spending habits. Should I just continue putting money in the savings account for some future theoretical house purchase? Should I start a taxable investment portfolio? Should I do both? I have no particular savings goals, but I'm fine with tying up money for more than a year or two for the sake of building wealth.
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Jul 28, 2017 20:16
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Hoodwinker posted:You are correct about having the $5,500 limit for combined contribution amounts to both your Roth and SEP. You can put the full amount into one or the other, or some combination in both that adds up to $5,500. Sounds good. I was concerned that there was something better I could do with the money than leave it in an account with a not-great (1.15%, I think) interest rate but I suppose there's no point in doing anything with it until I know what I want. It'll probably all end up going towards a house and a car within the next 5 years anyway.
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Jul 28, 2017 20:45
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So I've got a Roth IRA and a SEP-IRA (the latter is pretty new and is mostly for employer contributions). When I set up the Roth IRA I built my own asset allocation, in part to learn the basics of investing. With this new SEP-IRA I just went with Vanguard's Target Retirement fund. So I'm curious, is there much reason for me to actually bother with my own asset allocation in the Roth, or am I safer/better off just going with the Target Retirement? I rebalance once a year and honestly I have no idea if I have an intelligent asset allocation anyway. Here's my current allocation in the Roth IRA(I'm 30yrs old for reference): 70% VFIAX (S&P 500 index, Admiral shares) 20% VGTSX (Total International Stock index) 10% VBMFX (Total Bond Market index) The SEP-IRA is all VFIFX Target Retirement. It represents a little under 10% of my total investments, the Roth IRA is the other 90ish%.
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Aug 8, 2017 21:18
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Syrinxx posted:Couldn't he just buy VTSMX until it hits 10k then it will auto convert to Admiral? It didn't autoconvert for me when I hit that point, if I remember correctly. You have to exchange for Admiral funds like you would anything else, but I think it at least prompts you to do so with a "There's Literally No Reason Not To" message when you log in.
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Aug 23, 2017 04:01
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So I've been mulling over some of the Roth-vs-Traditional discussion that was happening in here and I'd like to wrap my head around what I should be doing. I'm 31, full-time job, married, yadda yadda. All accounts are with Vanguard. Currently, I have about $33k in a Roth IRA. I foresee being able to continuously invest the maximum contribution to an IRA of some variety for the foreseeable future. My job is in a very small company, I'm one of three employees and I replaced a guy who only left because he wanted to retire early after 18 years at the company, hah. No 401k, instead the owner just deposits amounts at various times of the year into a SEP-IRA I established. The SEP-IRA contributions basically represent a match of 25% of my pay. So the SEP-IRA functionally could just run its course, I've set it to automatically invest 100% into the appropriate Target Retirement, mostly so I don't feel the urge to micromanage two IRAs. The SEP functions as a Traditional IRA. So I could split my own contributions between the two IRAs just about any way I want. I had planned to contribute entirely to the Roth, but what would be the advantages of splitting it or contributing to the Traditional?
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Sep 28, 2017 16:15
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Honestly, speaking as someone who was a new investor not that long ago, I think a lot of people who hold a minimum bond allocation, be it 10% or otherwise, when they're young enough to not have to care much about hedging against market volatility are doing it because drat well near every "newbie's guide to investing" and brokerage firm's suggested allocation has a minimum of 10%. So you do it because everybody tells you to. Buy-and-hold investors who have an IRA and nothing else, generally speaking, probably aren't the type to actually sit down and look at the math and ramifications of a market crash based on different possible bond allocations.
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Oct 2, 2017 04:18
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The problem with 529s is if you suddenly decide that grad school isn't a good choice for your career, you're stuck with an account that you can't do anything with, short of passing it on to someone else in your family. Speaking from experience here. My wife has a generous 529 that was put together for her by her grandparents, she didn't use any of it for college since she got a full ride, spent half a semester in grad school, and now we don't know what to do with it. Admittedly, it's a very different situation, since you can withdraw the principal from a 529 without penalty. In our case, it was set up 25 years ago, so a major chunk of it is going to be subject to tax and a 10% penalty if we try to move it anywhere. That wouldn't be the case if you were socking money away for potential grad school in the next few years, I suppose. Yeah not sure what we should do about her 529 and it gives me headaches.
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Oct 19, 2017 15:44
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Hoodwinker posted:Withdraw it, pay the tax and eat the penalty because it's still essentially a chunk of "free" money? I mean yes, that's literally the only option. The only headache source is that, if I understand correctly, 529 withdrawals on anything besides principal are treated as income, so they're taxed at income tax rates and have the potential of pushing us into a higher tax bracket if I'm not careful about how much I draw at one time.
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Oct 19, 2017 15:54
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H110Hawk posted:529's are post tax if I recall correctly. It's just the gains that are tax free if used for education. We neither can have kids nor are we looking to adopt, and my niece (the only potential one at this point) got a full ride. It's kind of a perfect storm of "well what the hell do we do with this now?"
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Oct 19, 2017 16:34
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Barclays US is also at 1.3%. I know they don't have the greatest reputation but the US branch seems to be okay. I've had an account with them for a while without issue. Though strangely, their standard savings is 1.3% and their "Dream" savings, with a max monthly deposit of $1k, is still at 1.2%. I guess the tradeoff is you get that extra .05% bonus every three or six months you don't withdraw from it or something? I don't get it. Might move all of the cash I have in my Dream account back into standard savings.
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Oct 30, 2017 19:17
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80k posted:Try Schwab. And buy Schwab ETF’s through their account. Just as good and as cheap as Vanguard with better customer service. Has Schwab's customer service drastically improved in the last couple of years? My dad had all his accounts through Schwab up until about 2015 and switched over to Vanguard because every customer service experience he had with Schwab was incredibly frustrating, and it's not like he was asking for anything complicated. As for Vanguard they've always been fantastic to me, and I sometimes do ask them annoying, complicated questions.
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Jan 11, 2018 18:27
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80k posted:I don’t use Schwab but many Bogleheads seem to feel Schwab has better service. Ah that's good to know. My dad's experience may have been an outlier, I think he primarily worked with one agent there so maybe the guy was just a dud in general.
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Jan 11, 2018 19:45
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Thirding Credit Karma, they've been really fantastic for me so far, caught one suspicious pull (that turned out to be nothing) within about half an hour of it happening.
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Jan 23, 2018 16:48
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Got a quick question about S&P 500 index vs Total Stock Market index: What's the advantage of one over the other? For context, I have a couple of retirement account (SEP-IRA and Roth IRA at Vanguard, no 401k) that are just Target Retirement funds, I used to care enough to keep them in individual funds and balance every year but switched to Target Retirement last year. Only reason I could see switching back to index funds would be to get access to Admiral funds. Since my tax-advantaged space is limited to the annual $5500 cap, I've also got a taxable brokerage account that is currently all S&P 500 index. Should I trade that to Total Stock Market? I'd like to keep my taxable account in stocks to avoid more taxable events with bond funds.
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Apr 16, 2018 17:48
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GoGoGadgetChris posted:Don't sell your sp500 to buy TSM. You'll probably whip up a nice tax bill if you do that. Just buy TSM in the future rather than sp500 if you want! There's not much of a different between the two, although TSM has you covered in the event that a rando small cap company shoots up 69,000% Yeah, sorry, I misspoke-- I meant moving towards TSM on future contributions, not selling off the S&P to buy it. I was still thinking in terms of IRA and exchanging one fund for another.
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Apr 16, 2018 17:56
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HSA question, I get health insurance through work, and it's a high-deductible plan. My employer doesn't sponsor any sort of HSA, so do I just go and open one myself wherever I want? It seems weird to me that it'd be that straightforward.
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Apr 17, 2018 18:30
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| # ¿ May 22, 2024 12:56 |
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Guinness posted:Yes, it is that straightforward. Just be sure to double-check that your HDHP is assuredly qualified to be paired with an HSA. I will do my due diligence, but I'm guessing since my health plan has "HSA" in the name (and the deductible is $13,000 for me and my wife) I probably qualify.
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Apr 17, 2018 21:38
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