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Benminnn posted:With regard to emergency funds, I've been reading that I need 6 months living expenses. That's fine, and I've been lucky enough to have saved just about that much up. Well, you definitely don't want the money sitting in a checking account earning 0%. At the very least, put that money into an online savings account (like ING Direct) where you will earn enough interest to counter act inflation. You could also ladder a couple CDs or short term bills/notes. It really depends on just how liquid you want to be.
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Apr 17, 2010 22:44
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necrobobsledder posted:This might be a stupid question, but if you plan on retiring early, doesn't this partly make contributing to a Roth IRA probably worse than just putting it into a (carefully selected) set of non-tax advantaged investments instead? Because the early withdrawal penalties are pretty crippling and I'd really hate to be 50 totally hating life, and sitting on $8 million (inflation-adjusted), completely scared of withdrawing early and getting dinged to the extent that I might as well have just not bothered with a retirement account (all signs point to the US raising tax rates on the rich and all). There's some talk of raising the federal retirement age for these tax advantaged accounts and I'm just worried I'll actually regret putting money into a Roth IRA instead of just using the same Vanguard funds outside an IRA. Does anyone know about planning for early retirement that could help here? This is a goofy scenario. If you have $8 million real dollars at age 50, you don't really need to worry about a 10% early withdrawal penalty. You's be loving set for the rest of your life anyway. It is also worth noting that with a Roth IRA you can withdraw your contributions (but not earnings) penalty-free at any time. That being said, there is NO way you will be able to build up $8 million in an IRA. Well, unless you dump all your retirement money into one stock and that stock soars like a motherfucker a la Microsoft.
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Apr 17, 2010 22:50
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Benminnn posted:Right now it's already sitting in an ING Direct savings account and I still feel like I'm missing some opportunity. Well, there is no real answer to this question. It really depends on how risk averse you are. That being said, if you are young and single and all that jazz, you probably don't need more than just a couple months worth of living expenses in liquid assets.
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Apr 18, 2010 19:09
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This $8 million debate is kinda stupid, IMO. Besides, Roth IRA contributions can be withdrawn penalty-free at anytime. A wealthy 50 year old could probably thrive off these contributions and other investment vehicles for 9½ years (in which he'll be old enough to withdraw his Roth earnings with no penalty).
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Apr 18, 2010 19:15
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Cheesemaster200 posted:I have been recently sitting on a good deal of cash in my checking account which is over my 6-month reserve and am looking to put it into some sort of securities account. How do you define "medium term" A few years? 10 years?
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Apr 26, 2010 19:38
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Cheesemaster200 posted:A few years. A short-term investment grade bond fund might work, though rising interest rates do pose a threat in the near future (rising interest rates will knock down bond prices). A fund like VFSTX is reasonable; it has a low enough duration (sensitivity to interest rate changes) so that your money will be pretty safe in the short term.
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Apr 27, 2010 00:56
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A question for 80k: I purchased "Expected Returns: An Investor's Guide to Harvesting Market Rewards" (per your recommendation). It is a great read, though I would like to know your thoughts on something: What do you think of the author's suggested strategy of leveraging low-risk, low-return assets to achieve a better risk/reward profile than going long a risky asset (e.g. leveraging bonds to an equity-like level of risk)? Would this even be a practical strategy for a retail investor? Wouldn't the cost of financing this leverage nullify the additional return?
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Oct 2, 2011 02:25
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Rurutia posted:Because I'm not familiar with International markets. I've thought about doing proportional split for Domestic/International, but its not something I'm going to do before I think more about it. I don't understand why not being familiar with international markets would prevent you from diversifying the equity segment of your portfolio. You don't need to be a financial analyst to realize the benefits of spreading out your exposure. Let me put it this way: The United States now accounts for less than 50% of the world's GDP. Why would you allocate 85% of your equity exposure to U.S. stocks other than the fact that you simply live there? It would make more sense to go half domestic and half international (or somewhere in that ballpark) if you're looking at things logically. Try not to be overly patriotic when investing. "Home country bias" can really skew your portfolio.
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Oct 7, 2011 07:06
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Residency Evil posted:Posting here since it seems like a better fit. Vanguard does have an amazingly good record of tracking indexes better than its competitors. I can't speak for Schwab in particular on this but Vanguard is usually the safest pick for index funds because of this.
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Nov 22, 2011 03:59
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Residency Evil posted:I understand this, but isn't 1%/year going to be huge over 30 years+? Definitely more so than just hiring a CPA? Yes, a 1%/year asset management fee can really zap the value of your portfolio over a long period of time. Unfortunately, most (probably 90%) of financial planners and asset management companies will charge similar rates. Of course, if you are wealthy (say, a net worth of 20 million) then you could expect a far lower asset management rate since everybody will be fighting over you and your sweet-rear end money. Truthfully, there isn't much of a reason to pay someone else 1%/year to manage your money (unless of course, you are super wealthy). Most financial planners and wealth management companies can't really do anything you can't do, anyway. The truth is financial planners are salesmen; they are not finance/investment gurus. You could (potentially) save hundreds of thousands of dollars over a long period of time simply by investing your money in a diversified mix of index funds, compared to giving your money to a financial planner who will charge you 1%/year for the right to dump your dough into a bunch of crappy funds and then forget about you.
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Mar 1, 2012 01:47
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Residency Evil posted:I see this mentioned a bunch, but what's the level of "wealthy" where it makes sense to get an advisor for that charges 1%? $5M? $20M? If an account does get to that level why stop doing what's working? Is it just to get access to investment vehicles that are only available at that level? How likely are those to outperform the global 1% upfront loss you're taking? If all the advisor is doing is simply "managing" your investment accounts, then you're right.. there is really no need to ever pay an advisor or wealth manager for that since you can do that stuff yourself. However, if you become wealthy enough that you have to worry about estate planning and complex tax bullshit then it makes sense to pay a fee-based advisor to help you with up all that stuff. That is where financial planners actually provide value, IMO.
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Mar 1, 2012 02:56
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Does anyone have any recommendations for a reputable dealer that sells physical gold and silver at a less-than-murderous markup? I am not a doomsday precious metal-loving nut or anything, but I do want to park a small portion (maybe 5-10%) of my net worth into PHYSICAL precious metals to hedge against significant future currency devaluations and other dangers. I am not really interested in gold ETFs or funds; I have some serious doubts about a lot of these funds so I am looking for a place to buy physical.
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Apr 8, 2013 01:39
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