opposable thumbs.db posted:

This is a bit of a niche scenario but I was wondering if anyone had any input on my situation. I was an employee of a startup and I had in-the-money ISOs that I exercised before leaving, for tax purposes. In part, this (and the resulting ~$70k tax burden that I'll be getting back slowly over time as AMT carryover) was funded by a loan from my parents. The loan has the following terms, simplified:

- $150,000 principal
- 5.5% annual interest
- No payments necessary until May 2020
- Only interest-only payments necessary until May 2022, then the rest paid over the following 6 years
- At any time I can pay down whatever I want.

After filing my taxes this year I will have an extra $60,000 in an Ally savings account and $36,000 in a Vanguard taxable target retirement fund (this is in addition to an emergency fund, 401k, IRA, etc). Given that paying back the loan is a guaranteed 5.5% return, would it make sense to throw the full $60k at the loan, while also liquidating the $36k taxable account and putting that toward the loan as well? I'd owe some long-term capital gains on the taxable account but given that I'll have AMT carryover it won't really matter anyway.

I don't anticipate having any difficulty paying down this loan no matter what; I guess I'm just asking if a guaranteed 5.5% return is worth paying the cash + liquidating a taxable investment account.

punk rebel ecks posted:

So I signed up for a credit union. I want to cancel my Chase bank account, including the credit card I have on file. I was just curious what the best way to do it would be?

Should I pay off all the credit card debts in Chase bank then cancel it and then sign up for a credit card under the credit union?

Or should I sign up for a credit card from the credit union first and then cancel the Chase credit card once the credit union one is mailed to me (I assume this will hit my credit hard?)

Pollyanna posted:

I think I came up with a decent beginning goal, with numbers behind it. This is more as a thought exercise as I'm working through the book.

What would it take to live on only the monthly returns from money that I've invested in some particular fund? Let's pick some arbitrary amount like $2500 per month in order to live at a bare minimum or something. Therefore, the question is, what X amount of money would I have to invest in a stock with Y annual return in order to get at least that much to live on per month?

Let's take VFIAX as an example. If I'm reading its profile right, in the past 10 years, it's had an annual return of somewhere between 20% and 13%, 16.5% on average. In order to make all your expenses for the year, you'd need to get at least $2500 * 12 = $28,800 from an annual return of 16.5%. The equation then looks like this:

code:

x * .165 = 2400 * 12
->
x = 28800 / .165
x = 174545.454545

So in theory, if you can invest $174,546 in VFIAX, which has had an average annual return in the past 10 years of 16.5%, it's possible to get enough money for each month just by withdrawing what it makes over time on average. This is obviously a heavily optimistic situation, but it's possible nonetheless.

Does that make sense? Maybe that'd be a decent goal, saving up to invest enough that you can live off the returns.

_{shut up pollyanna}

Pollyanna posted:

Do you think they knew what they were doing when they named that?

huhu posted:

I've been paying into a stock purchase program through work since November and will continue to do so until the end of May. The money sits in a bank account until May. In May, that money will be used to buy stock. The perk we get is that we get to buy the stock price at whichever is lower - the price in November or May. Then we get a 15% discount on that price. Then the stock can be sold almost immediately - it'll probably take about a day or two to sell. I've watched the stock fluctuate up or down by about 10% each day over the past few weeks. Assuming the market continues to be this volatile - I'm guessing it's probably best to withdraw myself from this program and not gamble on the stock fluctuating wildly between the time I buy and the time I sell - even if it is only a ~2 day window?

zaurg posted:

hey all, just checking in, is this a good time to time the market? April 7th seems like a good time.

tumblr hype man posted:

Your current efforts are the best solution to this problem, otherwise you are exposed to massive losses related to your short.

Worst case scenario is your company poo poo the bed and your competitor goes up theoretically to infinity. You're taking infinite losses on your naked short of the competitor at the same time that your company is presumably suffering. Keep liquidating your vested shares ASAP and call it a day. If you're super concerned (like you work for WYNN or something) then sell and keep the cash.

H110Hawk posted:

Don't. You have a great solution already. Betting on the downfall of your competitors is betting on the success of your company or the destruction of your industry. That's just reconcentrating your risk back into your industry.

If you work in something hyper specific you could buy index funds that don't include that element, but that sounds like effort. If you work at one of the big tech companies then you are ironically rebuying several shares of it a year by buying index funds as they are generally the top 10 holdings in market cap weighted funds.

Keep on rich get richer-ing those shares and roll around in the profits.

zaurg posted:

Kylaer posted:

Don't time the market.

Razzled posted:

Am I making a mistake? My company got acquired. The old 401k plan had a .15 expense ratio and the new plan has a .4 expense ratio so rather than rollover balance I opened a Vanguard Rollover IRA (traditional) in my personal account and sent the old 401k there instead. My plan is to enroll that account under their Digital Advisor program alongside my roth IRA.

SA-Anon posted:

I think I posted earlier in this thread... TLDR for many many years I just socked away my earnings in a savings account because I really didn't know what to do with it.

In the last several years I have made it a point to open a Roth IRA, an HSA, and maximize my 401k contributions, when I can.
I bought a house and try to pay a bit extra toward's the principle.

However, I still have too much in cash, so I have been wondering what would be the smartest thing to do with it?

Is it possible to do...Roth IRA contributions for past tax years somehow?
Or would I be better off gradually putting it into a my vanguard accounts? (Or do it in one go?)
Or make additional 401k contribtuions? (Past the 18.5k maximum.)

gay picnic defence posted:

No, I just want more exposure to what I think will be a bull market for the next few years.

devicenull posted:

So, I'm about to pay of my mortgage, and I'm trying to figure out if I should start throwing more money at my retirement account or if I should start buying hookers and blow...

* I'm 32, and have ~270k in my 401k
* Our household income is too high to qualify for Roth IRAs
* I max out my 401k every year (although I usually get around $1000 refunded due to highly compensated employee bullshit)

My employers retirement calculator is saying I'll have 40k/mo if I retire at 67... which seems incorrect somehow.

Do I just start buying Vanguard target retirement funds with after tax money? Is there some other option I'm missing here?

pmchem posted:

I'm glad you like the Early Retirement Now link. I haven't read much from that blog -- I ran across the mortgage bit while doing mortgage reading -- but I guess I should check out more of it.

pmchem posted:

I don't think this has been answered yet.

In theory, it's very attractive to manage your assets as a whole portfolio. There are interesting arguments to be made in favor of, say, tilting heavy in stocks and away from bonds if you have a mortgage:
https://earlyretirementnow.com/2016/11/02/why-would-anyone-have-a-mortgage-and-a-bond-portfolio/

It is conventional wisdom to take advantage of tax-efficient fund placement when possible (IRAs vs taxable accounts),
https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

However, in reality, it's not so simple. Bonds come in tax-exempt flavors, some popular bond yields are lower than stock index dividends these days, you might sell the house, rebalancing is much more advantageous within an account than across accounts, different accounts may have different investment options available (e.g. your 401k vs. IRA), etc. There's no clean answer to your question, which is probably why nobody answered it yet.

Personally, I track my investments as a whole and make sure the whole picture reflects my desired allocation, but within each investable account I try to make it so that I can benefit from rebalancing if one asset outperforms another (cash is also an asset in this scenario). Not sure if I'd recommend that to someone else, though. Highly individual situation.

skipdogg posted:

2 Quick questions. I recently changed employment (for the first time in my adult life)

1) I have a 401K with Vanguard, I currently plan to roll the funds over to the new company's 401K plan with Fidelity. The new plan offers a decent selection of funds with very low expenses. Vanguard seems to recommend moving it to a Vanguard IRA. I don't plan on making any retirement contributions outside the new company 401K at this point in time

2) I have an HSA account with a couple thousand in it from the old job with BofA. Is there anywhere I can move this to avoid the monthly maintenance fee? New company uses an HRA system which they fund, so I believe I have to use all the HRA funds first and then I can use the HSA funds. I won't use all the HRA funds they offer in a normal year. I know it's only like 30 bucks a year in maintenance, but hey, 30 bucks is 30 bucks.

The Royal Nonesuch posted:

Hi BFC,

Looking at opening my first Roth IRA (long overdue) and my rookie question is are there better or worse places to open one with, or are they all generally fairly the same? My 403b is with TIAA-CREF, so I figure I might as well use them unless there are large differences between all these big names I see on the hats of my favorite golfers.

pmchem posted:

I don't get it, is he not allowed to learn from his mistakes?

Unsinkabear posted:

I normally see the /r/personalfinance one linked, but itt all I see from the last few months is this FI/RE variant. My income doesn't at all allow for early retirement as a realistic option and I don't see that changing anytime soon, is this still the one I should be looking at?

Heroic Yoshimitsu posted:

So even the best savings accounts only go up to .5% APY or thereabouts, then. Interesting, obviously that’s still not a lot but I guess there’s only so much you can find when you’re just having your money sitting in an account doing nothing.

I’m not sure what my other options are when it comes to what to do with my extra money (besides retirement investing). There’s stocks, obviously, but I’m really not ready or even well-researched enough to start gambling money away. Is there a more reliable way to use my money besides trading stocks, that’s more lucrative potentially then a savings account? I guess this is more of short term investing question, so this might not be really relevant to this thread. Sorry!

Enigma posted:

Thank you.

I have a brokerage account with Fidelity, near as I can tell it’s fine to invest in a Vanguard ETF from there rather than opening a Vanguard account?

Red posted:

Reading through a lot of articles, STAR consistently came up as well-rounded and reliable. I hadn't bought direct through Vanguard before, so I wanted to start with a simple fund (with a lower minimum) at first before adding more.

Any suggestions to supplement?

BaseballPCHiker posted:

Does anyone else think those retirement calculators plan on you spending WAY more than you would think? Most of them calculate as if you need to spend like 90% of what you do now. Which I would think by the time I retire I have the house already paid off which is a huge chunk of expenses.

ROJO posted:

Can someone clear something up for me regarding 401k in-plan conversions to Roth? My 401k is through fidelity, and I have already been maxing out a $19.5k Roth contribution, and get a 10% company match, and am fully-vested in everything. It turns out that our plan recently enabled you to choose automatic, daily, in-plan conversions to Roth for after-tax contributions if I want.

I guess what I struggle with, is why is this allowed, or what am I missing? It seems to be a direct and automatic bypass of the 19.5k limit for Roth contributions. If I read things right, I can just continue to contribute after-tax contributions past the $19.5k limit (subject to the total $57k limit for employer/employee contributions), and they will immediately be converted to Roth prior to accruing any taxable earnings, and will then grow tax free. I could then (if I choose), take an in-service distribution and move things to my Roth IRA.

This seems like a giant loop-hole, so I'm not sure what I'm missing. It would appear Fidelity and my plan have effectively weaponized/automated a mega-backdoor Roth 401k/IRA? Does anyone else have a 401k through Fidelity and see similar features on their account?

Eric Cantonese posted:

...for long term...purposes...

And if I was to sell ...

Meow Tse-tung posted:

I've been doing employer match 401k for a few years now. They match until like 3/5%, and I've been doing 10% of paycheck earnings. I've been thinking of starting a Roth and may do that this weekend, but is there any reason I should max 401k to 19.5k or whatever before starting a Roth?

The way I understand it is Roth lets me pull my contributions out without any downside, so unless 401ks are just generally way better, I feel like employee match 401k -> Roth to cap -> maybe some more in 401k after that is a good place to start with all this? Am I missing anything?

DACK FAYDEN posted:

My new job has an employee stock purchase programs that somehow almost seems not worth the effort. Am I insane?

The purchase price is a flat 5% off the market price on the last day of each six-month period. (It's not one of the good ones with a price lookback.)

Then that'll be taxed as normal income because I'm going to sell literally the day of, so it should not incur any additional short-term capital gains (or losses oh god I want to sell at the exact price I bought at)

That's not bad by any means but it's throwing all my money in a hole in return for slightly less than five percent (well okay, actually 100/95 so it evens out after fees)... right? Am I missing subtleties here? It still seems worht it for any money I don't need right away but it's incredibly underwhelming and I keep feeling I must be missing something. (The something might just be "gently caress it, it's 5%, lock it in and insta-sell", and if so, yes, please yell at me!)

QuantumNinja posted:

I see a lot of speculation that the market is due for a crash around April. How much should I pay attention to these and get out of positions? (Most of my position is high-dividend REITs and a few Vanguard ETFs.)