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Long term investing questions to follow in later posts, but for now I have a general savings question: I set up my current savings account (which I wouldn't touch except to buy a house or make any other large and completely necessary purchases) when I got my first actual job a couple of years ago. I mainly wanted to make sure I'd have easy access to it until I determined how much I needed to have in my checking account. Now I'm accustomed to the amount I need to keep in my checking account, and I feel like I'm going to need to get my savings out of Chase bank so I can make more than 0.01% interest (seriously?). Keep in mind I may need to move sometime soon, far away possibly, and I still want the money relatively easily in case I buy a house. Does this rule out credit unions? Am I better off finding some kind of online-only savings account?
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Aug 2, 2010 05:37
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Let me get something straight; if I have $3K I put into Vanguard, can I mix that into as many Vanguard indexes as I want as long as they each have a minimum investment of less than or equal to $3K? Or do I have to put AT LEAST 3K into each fund I want to use?
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Aug 4, 2010 00:31
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Simple question: I want to open a Roth IRA with Vanguard pretty quick here, before the April 15th deadline. I know all I have to do basically is communicate to them that I intend this contribution to be for the 2010 tax year and that should be fine. My question is, do I need to wait until AFTER I've filed my taxes, or do I need to file my taxes first, or does it not matter one way or the other? I figure it shouldn't matter, as I'm not making any immediate earnings. I guess I'm just completely confused at how I'd claim any interest from here till April 15, 2011 on my taxes for 2011 when that time comes around. Can anyone clarify what my tax situation would be in this case? After my initial 5K contribution, I'll want to start making bimonthly payments to it after April.
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Jan 25, 2011 19:45
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That's the right basic strategy. I would actually look at the priorities as the following, assuming you're already debt free: 6-9 month safety fund Max 401k up to employer contribution (preferably WHILE you're getting your safety fund up if possible) Max IRA Savings for things you KNOW you're going to want (car, house) Then max 401k Sure you can live your life comfortably right now, but do you have a house (if you're going to want one)? And even if you have a house, your car will only last so long. I really think everyone needs an "I'm probably going to need this money sometime in the next 5-10 years" savings they're building up. You can do this with stocks too, but personally that's a little too volatile for me to play with. One day I'll start maxing my 401k, but for now I want to make sure I'll have a good down payment for a home, and I'll need a new car within 2 years or so. I'd rather live comfortably now and be OK in my retirement than live on the edge now and be rich when I'm 65. The trick I like to play is that whenever I get a raise, I proportionally up my 401k contribution so my savings plans remain the same, I don't notice any change in my paycheck, but I'm putting more away for retirement.
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May 1, 2013 14:44
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I find I'm way better at saving if I break everything into separate accounts for their specific purposes. Then I don't have to ask whether it's worth it to spend money on specific things, because that's literally what it's there for. Checking Account (Chase): My direct deposit account that catches my salary. I keep ~$5000 in this, and make sure it has no more than $5000 at the end of the month, IE the excess all goes to the remaining accounts. $5000 is more than necessary, but it buffers against months where I buy plane tickets, or have unexpected car issues, etc. With the money I make I can always cover my living expenses and student loan payments, and then feed the below four accounts. Checking Account 2 (Charles Schwab): For travel only. This is my pure luxury account, and I really have more in it than I need. That way when I go on vacation, I don't really need to think about where I eat or what souvenirs I buy. That's what this money is for. Savings Account 1 (Ally): This is 9 months' expenses. Not touching this ever unless I'm not gainfully employed. Savings Account 2 (Ally): I'll probably buy a house within 2 years. I'm building this up in anticipation of putting down 1/5 the overall cost of the house, and I'll keep going past that anticipated number because I'll probably want to make massive payments on a mortgage. Savings Account 3 (American Express): Car account. Plan is within 2 years I'll need a car, so I'll want to get a car with $0 and then pay it off within a year or so. Savings Account 4 (American Express): Since everything's basically covered by all of the other accounts, this is where anything extra goes. Once this goes above $xxxx.xx maybe I'll look at toying with stocks and the line, but until then this is my generic catch all after the others have been fed and my IRA and 401k have what I want them to. So I may be over preparing for things that are relatively uncertain costs, but at the same time I haven't had to think twice about purchasing anything for about four years now and I'm currently 29. That's the important part.
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May 1, 2013 22:39
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AreWeDrunkYet posted:Why not just keep two accounts for cash, one convenient (checking) and one higher-rate, if that exists these days (savings)? If you need to split it up into separate pools for tracking purposes, it's a lot more convenient to do it in Excel than dealing with multiple accounts at multiple banks. It will be less of a hassle when you're filing taxes, if nothing else. When I do that I'm pretty bad about actually saving the money. My main concern is that if I decide I want a car that's ~15K more expensive than I planned, I don't want to throw money at it that I really should be socking away for a house payment. It basically lets me be guilt free. What I track in a spreadsheet is monthly contributions to each account, so it becomes super obvious when I've ignored my car account for two months. Taxes aren't an issue. All income goes to the checking account to be dispersed, and it's not exactly difficult to wait for three or four tax forms to come in the mail. I think it's definitely important to keep my travel account separate- when I'm on vacation the last thing I do is think about the kind of money I'm spending, and I go on several trips a year. I'm able to say "whoops, only have $500 bucks left for the next few days, time to slow up." I'll never run into the "oh crap, I'm going to have to let my checking account build back up for a couple of months because I spent way too much in Vegas" issue.
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May 3, 2013 01:53
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I'm about to quit my employer of 5+ years. I know plenty about my 401k and all that jazz, IE I want the financial institutions to roll my 401k into whatever new account I throw it in so there's no chance of me touching it and incurring all kinds of fees. However, my current employer rules so Vanguard is what my 401k is through. I don't know what my new employer will use. I do know that they're dicks and only match my contributions 50%. So basically what I want to know are what my options are. Option 1: Roll over my old 401k into the new one, hope it's not terrible. Option 2: Roll old 401k into a new account that's unrelated to the new employer. Is this even a real option? Basically I don't want to be paying a huge expense ratio, but on the other hand throwing my 401k (about $60,000 currently) into its own account that will never have any money added to it obviously is a good way to kneecap it in its infancy, basically. Do I really even have a choice here or do I just have to hope my new employer's 401k broker company isn't terrible and roll my old account into this one?
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Jul 15, 2013 01:34
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Option: IRA brings up another question I never understood actually. I max out a Roth IRA every year. I thought that meant I couldn't roll my 401k into an IRA. Is this not the case?
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Jul 15, 2013 02:38
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I know, I'm just a child and am mad that my new super-rich giant company isn't matching as highly as my old super-rich giant company. I'll just ratchet up my % contribution by 3% so it will continue to grow at the rate I'm happy with. Thanks guys, that was quick help. And those are questions I've had for a very long time, so hopefully I didn't come off as one of the "STOP THE THREAD RIGHT NOW AND HELP ME" types. Years of passively browsing around here never 100% answered the questions and none of my friends (or family, sadly) are very up to speed on how to save for retirement.
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Jul 15, 2013 04:06
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I posted in this thread a few weeks back. Basic story is I have $58,478 in an old employer's 401k and I want to roll that into a Vanguard IRA. Weirdly my old employer is not cool with me keeping the money there and will force me to move it out within 30 days for some reason. It's currently in the Target 2045 Retirement Index, which has obviously done really well lately. According to the employer's plan website that's got an expense ratio of 0.08, which is strange considering Vanguard's website itself claims it's 0.18. I don't understand that in the slightest. The current breakdown of that is 63% Total Stock Market Index Fund Investor Shares, 27% Total International Stock Index Fund Investor Shares, 8% Total Bond Marked II Index Fund Investor Shares and 2% Vanguard Total International Bond Index Fund Investor Shares. I'm kind of looking for help in how to allocate this money in the IRA. I could just throw it all into the 2045 of course, but is there any way to lower my expense ratio and still get basically the same mix? Obviously the Total Stock Market Index Admiral Shares fund (VTSAX, 0.05) would be a great place to throw that 63% chunk since it's got an even lower expense ratio, but the Admiral international index (VTIAX) has a 0.16 expense ratio. I guess maybe this is why the 2045 has a 0.18 overall? The other problem there is that if I throw the same percentages into those two as the 2045 does, I won't have $10,000 to throw into an Admiral class bond fund of any sort, so I'd have to find an alternative for the "safe" money. Any general or specific suggestions? Right now as a default I don't see why I couldn't just put it in the 2045 again, but it also is kind of tempting to put a higher percentage than 63% into the Admiral total stock market and put less in bonds. Somewhat relevant information: I'm 29, have maxed out my Roth IRA for several years (that's in the 2050 target fund actually), and am probably willing to be riskier than the average person my age; I have almost no remaining debt ($7K in 1.5% interest student loan), my savings far outweighs my debt, and I work in a high paying technical field that I'll always be able to find work in and won't become worse at as I get old (so, if I HAD to work till 65 and I HAD to find a new job somewhere, it could still happen and my income wouldn't take a hit).
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Aug 3, 2013 19:55
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So I just finally killed my student loans. I'm basically looking for another place to start chucking large sums of money. I've got a relatively new car (owned) and I don't intend to buy a house within at least two years, maybe several more. So I'm thinking I might want to start putting at least some of my money in taxable funds to try to get more than 0.75% or whatever the ever-evaporating rate an Ally savings account happens to be right now. If left to my own devices, I'd just throw it into a taxable index fund. I'm 90% sure that would be the smartest way to go, though that 10% nags at me because that's where all of my retirement money is at. So I guess what I'm asking is twofold: 1) Should I start putting MOST of the money I intend to save into a taxable index fund with the hope that I beat the <1% a savings account would get me? And if so, are total market index funds the best bet? Or should I stick it in boring stuff like CDs or savings accounts given that I MAY want to buy a house within five years? So I guess I don't need it to be fully liquid, but liquid enough that I could start "stealing" from it in 3-5 years if necessary. 2) If so, what funds would be recommended? More index funds? ETFs? I definitely have no intention to do any type of frequent active management... Like I said the reason I'd be slightly uncertain whether to invest in more index funds is because all of my retirement savings is there. I suppose I can use this as an opportunity to get a sanity check on those accounts too. Any comments? Roth IRA: VFIFX (Vanguard Target Retirement 2050): 100% Rollover IRA: VBMFX (Total Bond Market Index): 9.38% VTIAX (Total International Stock Index(Admiral)): 26.23% VTSAX (Total Stock Index (Admiral)): 64.39% Savings/Emergency Fund: 1+ year of living and expenses plus enough to say "Oh poo poo I need to outright buy a new (used) car for no apparent reason." _________ So I'm kind of thinking I should be throwing maybe 20% of the money I plan on saving into that savings account and the other 80% into some kind of taxable fund. Yes or no?
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Mar 15, 2014 04:38
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I think what a lot of people miss is that it's just as important to be able to figure out how you're going to be comfortable living when it comes to retirement savings. If you're able to live on (the future's equivalent of) $30K/year, then that's what you want to aim for in your retirement. No matter what, you want a balance of living now without sacrificing future-you. But there tend to be two crazy extremes I see: People that decide they're cool with living like they're in the Great Depression so that they can retire early (Mr. Money Mustache, anyone?), and then the people that are saving up with the assumption that they need %75 of the current salary (inflation adjusted of course) in retirement to live comfortably in retirement. Each can serve as a good wakeup call, but are ridiculous extremes. Personally, I'd rather put in 40 hours a week for ten extra years than BIKE everywhere during my working and retirement years, but at the same time it's very clear to me I'm not going to need anywhere NEAR 75% of my salary when I'm retired. That's going to depend on what your salary is obviously, but if you're saving as much as most people think you SHOULD be to fund your own retirement, you shouldn't even be SPENDING 75% of your salary right now; surely you shouldn't be spending that much when you're retired and not driving to work every day and doing the type of random spending people do. My favorite retirement saving moment ever was when I got a 26% raise a few years back. I was used to logging into my 401k account and seeing that green "Congrats, the amount you're saving saving gives you a great outlook for retirement!" As soon as I got the raise and logged in, it skipped the yellow caution phase and gave me the red "holy poo poo the sky is falling, you're saving so little of your money, you'll never retire!" warning. Ahhhh, you make way more money now, which means you're going to NEED way more money for happiness! Sucks to be you!
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Apr 2, 2014 01:51
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The point I'm making is that the aforementioned MMM retired at 30. Technically he made a a lot of money off of the real estate market, and still makes plenty of money off his blog and landlording, but his ability to retire was based off of saving a freakish amount of money. The biking everywhere is the random example I brought up - sorry if I offended the biking enthusiasts in BFC. I will gladly work until I'm 40 when it's the difference (and it is the difference) between affording an out of country vacation or two a year, or eating out a few times a month, etc. ~13 years of life in the real-job workforce? That's nothing. As I said at the start of my post, it's all about saving for what you WANT. Obviously he's happy. But if I'm saving 70% of my current salary Mr. Money Mustache style, current-me is going to be very unhappy so future-me can have a better time.
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Apr 2, 2014 02:52
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Third paragraph in the post directly above my first one talks about saving enough to enjoy retirement but not at the expense of their current life. I am agreeing but adding more to my post than simply saying "Yeah, what this guy said!" Stumbling around, I see that there's a financial independence thread nearby. I'll have to check it out. Obviously I'm not interested in hyper-frugality, but I do enjoy hearing about other people's plans. I'm squarely in the boat where I appreciate compounding interest over time, but still am aiming for retiring early.
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Apr 2, 2014 03:08
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Captain Melo, you realize that if you roll your traditional 401k into a ROTH IRA, you'll have to pay taxes as if it was income, right? You may know that and I'm just beating a dead horse, but it's worth pointing out that if your roll it into a traditional IRA it will be tax free until you start making withdrawals when you're old and gray (or young and financially independent).
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Apr 17, 2014 20:35
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Celot posted:I'm 26, so 15% bonds in my portfolio seems a little on the aggressive side, don't you think? Not really. I'm 30 and I've got 90% of my retirement money in stocks. I don't see an issue with it. I'm not planning on touching that money any time soon, and stocks unquestionably go up more than bonds over loooong periods of time.
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Jun 18, 2014 22:16
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I feel like you should find a new job as a long term investment in your career...
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Jun 21, 2014 23:25
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There's nothing wrong with Fidelity itself. Like you said, the Spartan funds are pretty awesome. My funds each have 0.05 expense ratios. I actually like having my 401k through Fidelity. Up to this point I've only ever had Vanguard (both for IRAs and 401k), so it's cool to see all of the nifty tools and the like that Fidelity has. I actually think they're superior to Vanguard. Vanguard definitely has a lot more great funds, and they're a lot more friendly overall with expense ratios, but there are several Fidelity funds that are on par. If you've got a bad choice of funds to choose from, well, that has more to do with the company you work for and the benefits they're able to negotiate than with Fidelity itself. If you're a small company or if your company just bought a poor product, that's not on Fidelity.
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Jul 2, 2014 01:47
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Yeah I agree Vanguard is better in every way, I was more taking exception to the "stuck with Fidelity" wording. You could do much, much worse. The key is understanding what you're getting yourself into and maximizing your efficiency with what you've got to work with. I breathed a sigh of relief when I saw my new company's 401k was through Fidelity. It's definitely one of the BETTER companies to get "stuck with" more often than not thanks to their Spartan funds.
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Jul 2, 2014 02:03
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Vilgan posted:To play devil's advocate a bit: Well yeah, but not everyone can meet all of those. I don't own a house, I don't have a spouse, and I feel like being supremely confident in your job is a terrible idea no matter what (hey, I'm a badass engineer but nothing could save me when I lived in the Detroit area in 2006). Short term bonds or CDs, on the other hand, are totally viable for an emergency fund. Throwing it in stocks is crazy to me, but nothing wrong with bonds and CDs. However, I think that when you're starting out saving and don't have the means to max out a Roth IRA AND have a total safety net emergency fund, it's probably smart to throw money in that Roth IRA and call that your "break the glass in case of emergency" money. Sure, it'd be a shame if you pull that money back out because you'll be forfeiting your Roth contribution for that year. But if you keep it in an emergency fund instead, you're forfeiting it anyway. And you can always pull the principal you contribute to the Roth. You just might want to consider keeping the Roth in a mutual fund or bonds until you've built up a true standalone emergency fund.
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Jul 3, 2014 02:14
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Yeah SS is incredibly obnoxious when you really think about it. I ignore it by considering it a mandatory, direct payment out of my pocket to my dad (currently) and my mom (who has saved so little for retirement that SS will be almost all she's got feeding her on a regular basis). It's a little easier to swallow that way.
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Jul 29, 2014 02:19
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Short answer - leave your money in that target retirement fund until you know what you're doing. Longer answer - read the OP (it's a good OP) and maybe the newbie personal finance stickied in this subforum. The money you're talking about is for retirement. Treat it as retirement fund, PERIOD. Don't touch until you retire. If you're planning on retiring around 2050, AKA ~35 years from now, you are NOT looking for the least risk as you stated in your first or second post. You are looking to grow your money over the long run because you're not going to use it until retirement. The lazy portfolio is basically what your target retirement fund is - an index fund (mutual fund made up of tons of different stocks) that tries to mirror the US stock market, an index fund that tries to capture foreign (developed) markets, and US bonds. The US stock market is long term growth, the international stocks are the same but give you some diversification in case the US market sees some bad times, and bonds are typically very low reward but very low risk. As time goes on, that Target Retirement 2050 fund will automatically be changed over so it puts more and more of the money in bonds instead of stocks to preserve your wealth. So now when you're 35 years out, it'll be mostly stocks. In 2045, it'll be probably 30% stocks (don't know what the actual method is), because you'll be about to retire and you'll want to lock in your earnings. The stock market is totally unpredictable and it goes up and down wildly at times. The only trend that it has for sure followed throughout its existence is that it hasn't been a flat sin wave - it ALWAYS has gone up over the long run. You've just got to remember that you never REALLY lose a lot of retirement money when the stock market is way down unless you sell it. Until you cash out, the dollar value is just a number. Once you know what you're looking at more you can move the money out to other funds if you'd like. Personally I plan to follow the allocations of the Vanguard target retirement fund basically, but once you have enough $$$ there are equivalent indexes that you can use that have a lower expense ratio, so I've already moved most of my money to those... Quick edit - You're a 28 year old accountant, that blows my mind. I'd think if ANY profession/degree would actually get an education on investing, it would be accountants. Brian Fellows fucked around with this message at 07:00 on Nov 22, 2014 |
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Nov 22, 2014 06:57
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Bulls Hit posted:If you know about my current fund, what is your comment on that? Honestly, I'd have to know a lot more about the certain funds, and just investment in general to try to split up my money. I just picked the one basically that said if you plan to retire now this is a safe bet. :/ Terrible, but I wasn't expecting these kinds of options. I figured it was "safe plan, moderate plan, risky plan". This is my first big time job, and I had no idea what to expect. To reiterate, the fund you have it in now is a great fund. When I actually got smart on the subject I was contributing to a 401K but had no idea what was going on (so you're ahead of Brian Fellows of Times Past already). I kept contributing and read a ton about it over a month, came up with my idealized plan, logged in... and saw that my 401k had defaulted to Vanguard Target Retirement 2045, which was exactly where I wanted it. GOOD THING I DID ALL OF THAT RESEARCH. My current employer uses Fidelity though, so it's good that I did that research. Fidelity Target Retirement funds have significantly higher expense ratios (though they're still reasonable) so instead of using those I was able to make a pretty good all encompassing mix of funds with low expense ratios that come out lower than my old Vanguard fund. Expense ratios are the biggest thing that murder people's retirement funds, always keep that in mind. That's how much money the firm that's managing your account eats.
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Nov 22, 2014 07:06
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What I really like about Roth IRAs, that no one ever seems to mention, is that it has absolutely no required minimum distribution. Your 401ks, Traditional IRAs, and basically everything other than Roth IRAs (and HSAs) have a minimum amount that you have to take out every year once you hit a certain age. So even if you have plenty of money coming out of taxable accounts, SS, rental properties, whatever, you have to take out a certain amount and up your tax bill. This is because your pal the US government has been patient, but goddamnit they want their money now. So you DO have to draw those down, whereas your Roth IRA can continue its compounding interest thang as long as you have other accounts to draw from. And that money's never taxed (again anyway; you've already paid taxes on it, so the government has nothing to gain from forcing you to take it out). I don't know that I'll use my Roth IRA like that (on my current path I'd more likely retire early and draw contributions/rollovers from it regularly), but it's a nice option if you find yourself old and gray, have easy access to the money you need from other accounts, and still want to leave some money for your heirs. Or poo poo, you just really want to hold out until you're 85 and then blow it all buying an island. Who am I to judge. Brian Fellows fucked around with this message at 04:18 on Dec 19, 2014 |
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Dec 19, 2014 04:16
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So I've got a problem that'll be coming up in one or two years... I always rebalance on tax day. I've got the basic target I aim for, x% stocks, y% bonds, a certain percent of those stocks in international and the rest in US stock. Problem is my 401k only has two funds that I feel like are worth a drat: FSEVX (Spartan mid-cap extended market, ER 0.07%) and FUSVX (Spartan 500 index, ER 0.07). The only normal international index available to me is FDIVX (diversified international, ER 0.91%); there's also an emerging markets fund that I won't be touching with a ten foot pole. Right now rebalancing isn't an issue, because I've got a lot of money in a rollover IRA from my last job's 401k, so I'm rocking Vanguards Admiral international fund. But pretty soon (next year or two) I won't have enough money in my IRA vs my 401k to get the allocation I want by using the IRA in international funds. So my choices will be: 1) Just make my IRA all international, all the time, and let that be a hard maximum international. Keep using the two domestic Spartan funds in my 401k. 2) Go international in my IRA until I can't hit my target allocation that way, then start contributing to the 0.91% international fund in my 401k and be sad about it. So I guess the real question is, at what point does it make sense for me to sacrifice friendly expense ratio and prioritize my allocation? Any suggestions on how I act here? I mean the math is simple: if I put $10,000 in the 500 fund, $7 disappears in fees a year. If I put that much in the international fund $91 bucks disappear. I know I'm doing it to diversify, and an $80 dollar difference/$10,000 isn't that big of a deal for a one year thing, but I'm leaning towards the SP 500 being pretty internationally diversified anyway. And option 3 is request a Spartan international index fund in my 401k, but I've already tried that and I'm waiting but have no expectations.
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Jan 27, 2015 03:52
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It is Fidelity, yes. I don't think I have the ability to use BrokerageLink. It would show up as if it was a separate fund option, right? I've also looked into an in-service roll over. Looks like that's a no go (no surprise). Symbol (Description) ER FBGRX (Fidelity Blue Chip Growth) 0.80 FEIKX (Fidelity Equity Income Fund Class K) 0.54 FUSVX (Spartan 500 Index Advantage Class) 0.07 FSEVX (Spartan Extended Market Index advantage Class) 0.07 MGOYX (Victory Munder Mid-Cap Core Growth Fund Class Y) 1.16 FDSCX (Fidelity® Stock Selector Small Cap Fund) 0.73 FDIVX (Fidelity® Diversified International Fund) 0.91 EIEMX (Parametric Emerging Markets Fund Institutional Class) 1.13 Company Stock Handful of freedom K retirement funds DBIRX (Dreyfus Bond Market Index Fund Basic Class) 0.16 It was pretty easy to just chase the two Spartan funds when this was such a small chunk of my portfolio. Even then extended market wasn't something I would've gone out of my way to put money into, but like I said, I didn't have a lot invested in it. Now it's grown a lot and it's time to make decisions...
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Jan 27, 2015 04:59
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Can you somehow withhold taxes from your taxable investment account? I've got money in a Vanguard taxable account, and the money I made this year from dividends and interest on my savings account drat near whittled my return down to nothing. So next year, I either pay quarterly estimated taxes (I have no idea how to make a best guess), or I owe money on April 15 and draw the ire of the IRS. I'd love if I could just automatically withhold something from my dividends so I don't get burned on not paying enough throughout the year.
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Feb 1, 2015 04:03
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It's not like you have to assume tax is going up in the future for Roth to be attractive. Even if taxes go DOWN in the future, it's cool to know that the dollar value in my Roth IRA is 100% real, bottom line money that I'll be drawing whenever I want. Also it doesn't have required minimum distributions, so that money can keep growing as fast as possible until you really need it. poo poo rules.
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Feb 14, 2015 16:21
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It is. It's the same as the non-Admiral version of the fund, but it's got a smaller expense ratio that's offered to you because you're investing more money. For example if you go to Vanguard's VTSAX (Admiral Total Stock Market Index) there's a note up top that says "Also available as Investor Shares mutual fund and an ETF." What he's saying is that until you have a lot of money, the expense ratio difference between the two isn't very important. You definitely need to look at ER every time, but with Vanguard funds they're very low. Ten years at the VTSAX expense ratio of 0.05% with $10,000 invested: $118. Ten years at the VTSMX (same fund, non-Admiral version) expense ratio of 0.17% with $10,000 invested: $399. So you're talking about saving ~$30 a year if you had an Admiral fund instead of the investor version. Not a lot at the dollar value you have now. So now it's probably for the best to stay at an allocation that makes you comfortable and not worry about minor fees. When you get a lot of money definitely look into splitting it up. But the most important part at this point is your SAVINGS RATE. That's far more important than chasing rates while you're young. Save as much as you can.
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Feb 24, 2015 00:54
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What I tend to do (emergency fund and every tax advantaged account maxed out already) is contribute to a savings account I have earmarked for a 3-5 year time frame (next car, house downpayment, who knows what) AND a taxable investment account. I just funded the taxable investment account with my bonus a couple of years ago (so it was already over the minimum for the fund I wanted). So I always treat my 3-5 year savings account as something I HAVE to contribute X dollars to every month (because it's money I'm definitely planning on using, just don't know on what yet), whereas my taxable investment account gets whatever play money I have left over to throw at it. I can always use that invested money if I want to, but I don't want to - it's there to make me more money. But with my 3-5 year savings account, well... If you know you want it in 3-5 years and definitely don't want it to LOSE money, it's not too sensible to keep it in stocks.
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Feb 25, 2015 03:39
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MJBuddy posted:I looked at Vanguard's Target Retirement Income Fund. It's straight up bonds that are protected from losing money to inflation, because it literally tracks inflation. They're typically called TIPS if you want to Google around about them. They're backed directly by the US government.
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Feb 25, 2015 04:06
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That's actually my exact problem. I can do a pretty good job mimicking the Total US Stock Market with the Spartan S&P 500 and Extended Market funds, but the only international stock option is ridiculous. Have to keep my entire international allocation in my IRAs (which grow at a much slower rate than my 401k, obviously). I asked the benefits center for the Spartan international fund months ago and got a form letter along the lines of "We'll pass this onto the appropriate party, thanks for your interest."
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Mar 1, 2015 06:42
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You mention your higher tax bracket - if you throw more in your 401k is there a change that brings your taxable income low enough to contribute to Roth too? I couldn't believe how much smaller my tax bill was once I started maxing out my 401k.
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Mar 9, 2015 22:56
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GoGoGadgetChris posted:You Mega Backdoor Roth people are lucky. I just asked our 401k provider (an actual financial advisory company, not just the HR Lady) and he said "We don't offer a Roth 401k" and had no clue what I meant by "After tax contribution". You could always try the ole hang up, try again method.
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Mar 11, 2015 23:28
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Jesus Christ, he's talking about taking out a loan for $5K max and paying it off in under a year. This is not the financial independence, retire by age 35 thread, AND he's already putting away 10% of his money in a 401K. This is much better than most Americans are with money. gently caress. People need vehicles to get places, and there's something to be said for not having a car that you're endlessly dumping unknown amounts of money into, hoping that it lasts a little longer. It sounds like you're relatively early in your career and just got your first raise - that about right baram? Assuming that's the case, your plans sound fine. VTSAX is a great fund to have in your 401k, so that's definitely a good place to put your money. Opening an IRA with Vanguard is a good idea as well - if you don't have good bond funds or international stock index funds in your 401k, then your IRA is where you'd want to have them. Of course, if your 401k has VTSAX, there's a good chance you've got some other good things in there. I would recommend you put money in your IRA if possible, but like I said, you've gotta have a car, and you're doing well in your 401k. One option might be to scale back your 10% 401k contribution and put some in your IRA, UNLESS you need to contribute 10% to get the full employer max. Always get your employer max. Edit - (IRA vs. Roth IRA talk)A Roth IRA isn't really less efficient. Your $5500 yearly max is for Roth OR Traditional. $5500 Roth is worth more money, because you've already taken taxes out of it, while the Traditional would be deducted from your taxes and you'll pay tax when you're taking it out. So basically you're gambling: If you expect your taxes to be less when you need to tap retirement accounts, 401k and traditional IRA will be better options. If you expect taxes to be higher in retirement (either because you're making more, or because the gov't hiked rates), Roth accounts are better. Or you can hedge your bets and have some pretax and some post tax. That's what I do (401k and Roth IRA). Brian Fellows fucked around with this message at 23:50 on Mar 17, 2015 |
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Mar 17, 2015 23:44
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Does it not make sense to you that someone starting their career would want to get an auto loan at a low interest rate while they focus additional savings on an emergency fund, getting their 401k match, or paying down student loans that have a higher interest rate than their low rate car loan? I'm not calling anyone right or wrong, but to act like what he's talking about doing is insane is a little much. You don't know anything about his car; how do you have better insight into how serviceable it is than he does? Someone that has done the math on their hypothetical loan payments and believes they can pay it off within a year sounds like they're thinking about it the right way. Brian Fellows fucked around with this message at 00:16 on Mar 18, 2015 |
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Mar 18, 2015 00:12
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Because you also get taxed on that money as normal income, on top of the 10% penalty. If you hide it in the 401k, you're not taxed on it until you withdraw it. Also not contributing to tax-advantaged retirement accounts is the WORST thing you can do if you're looking for financial independence early. First you're turning down that sweet, sweet 50% match (though I'd check your plan - it's usually 50% UP TO 6% or something like that, not a flat 50%), which is an immediate 50% return on your money. Second, Google Substantially Equal Periodic Payments and Roth Conversion Ladder. There are ways to get at that money before retirement age without taking the 10% hit, AND you get to hide the gains from taxes so it grows super fast in the meantime before you want to draw from it.
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Apr 30, 2015 03:20
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So I am in a strange position I never expected (or hoped) to be in, so I thought I'd throw this to you guys and see if you there was an obvious YES/NO answer. A relative passed away a couple of weeks ago, leaving me with an inherited IRA. It's not a ton of money as far as long term goes - say $50,000. He had it with AxA Equitable, and it was in a 3% fixed interest account. They don't sell the 3% fixed anymore, because obviously no one's giving out that much. I don't want to even get in to what they've made off of him by paying 3% and pocketing the rest since 1998, when he opened it. Anyway, my immediate reaction was screw you guys, I'm throwing it to Vanguard with most of the rest of my money and out of here; a 3% fixed interest account is a dick thing to sell to the 40 year old man they sold it to in 1998, and it makes even less sense to me as a 31 year old. 3% is inflation; it will never be worth more than the $50,000 it's worth right now, as far as true spending power goes. But it occurs to me, since I'm doing alright, maybe I can move it into another fund for now with Equitable and try to make some money out of it, then throw it back into the 3% fund when I'm much older. It will always be available to me because I'm grandfathered in, even if I temporarily move it out. Now the only paperwork they gave me showed recent results but no expense ratios. From past experience, eyeballing the funds, they all looked like high expense ratio type funds. I don't know poo poo about Axa Equitable... maybe they take even more off the top typically than even just the expense ratio? Anyway, my question boils down to: is there any scenario in which keeping my money in Equitable could make any sense, knowing that I could eventually lock whatever's left into a 3% fixed account to basically protect my assets from inflation at a later date? I'm assuming I'll see the expense ratios and/or front loads and immediately laugh and roll this badboy to Vanguard, but is that maybe premature given that my current retirement savings (again, at age 31) make this essentially play money?
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Aug 17, 2015 23:59
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SpelledBackwards posted:I was under the impression that you can't just keep the money in there forever, and that the federal government requires you to take Required Minimum Distributions (RMDs) that draw it down over time. In this case, it looks like inheriting it as a named beneficiary rather than within a general estate changes how it gets distributed. I can't; there are required RMDs starting in the year after inheriting it based on MY life expectancy. I'm 31, so while RMDs will eat into it, it won't be that significant. This happens whether I roll it to Vanguard or keep it where it's at.
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Aug 18, 2015 00:43
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| # ¿ May 12, 2024 17:08 |
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The point is that your savings rate is drastically more important than anything when you're young. How did this crazy tangent even start? My brother graduated with a useless degree and a ton of debt, to the point where he works a lovely job with no-so-great pay, in something totally unrelated and hasn't bothered to even make a resume (graduated years and years ago). I graduated with a great degree and tons of debt. We both paid off our loans within a few years and continue to save way more than we make. Ta-daa! The true secret to long term retirement saving AND day to day living.
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Aug 26, 2015 03:42
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