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bhaltair posted:Is December 31, 2009 the final day to contribute to this years 401(k)? Yes. Getting as much as you can in a 401k is a good plan, but make sure you aren't overusing your family's generosity.
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Nov 12, 2009 05:51
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bhaltair posted:The real reason I wrote this post was to gain some guidance on building both my Roth IRA and Roth 401(k) portfolios. The vendor of the IRA is Vanguard so I am limited to there funds and ETFs -- given my youth how should I start building that portfolio? I like VTSMX. A stock index is a reasonable way to get started, and the Vanguard index funds have low overhead. If you want to go less aggressive when you have enough to diversify properly you can grab a bond index as well.
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Nov 12, 2009 17:27
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I just started investing in VEMIX and there is a redemption fee when you purchase. I looked on Vanguards website and it says:vanguard.com posted:The fund assesses a 0.25% fee ($2.50 per $1,000 invested) on redemptions. The fee is paid directly to the fund and therefore is not considered a load. Since it gets paid into the fund that I am buying, don't I basically get this money back? What is the point of a fee like this?
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Nov 14, 2009 23:29
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80K and any other savvy folks, what are your thoughts on using one fund for the US stocks portion of your portfolio (VTSMX) versus splitting it up between large/small cap, growth/value, or both?
mcpringles fucked around with this message at 01:27 on Nov 15, 2009 |
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Nov 15, 2009 01:21
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Daeus posted:I just started investing in VEMIX and there is a redemption fee when you purchase. I looked on Vanguards website and it says: The fee helps reflect the true cost of trading activity. This helps longterm investors from bearing the trading costs associated with inflows and outflows of money.
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Nov 15, 2009 06:26
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ZeroAX posted:80K and any other savvy folks, what are your thoughts on using one fund for the US stocks portion of your portfolio (VTSMX) versus splitting it up between large/small cap, growth/value, or both? having VTSMX and a total-international stock fund is a great start, but I do recommend adding small caps and/or value stocks, and reducing your overall equity exposure. If you tilt to small caps and value stocks, you can raise the expected return of your stock portfolio. But as this also raises risk, you can compensate by lowering your stock allocation and raising your bond allocation. Your expected return would be the same (as one with higher stock allocation, but the stocks are market cap weighted like VTSMX). But your lower overall stock allocation reduces the dispersion (both upside and downside) of your potential returns, which is a positive attribute in a portfolio. So I generally recommend tilting towards small and value stocks. Do a Google search for "Larry Swedroe Portfolio" where you will see an extreme example of this. He has a very low stock allocation, but the stocks are concentrated in the riskiest asset classes (small caps, international small value stocks, emerging markets).
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Nov 15, 2009 06:41
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80k posted:The fee helps reflect the true cost of trading activity. This helps longterm investors from bearing the trading costs associated with inflows and outflows of money. Ah yes, that makes sense now - thanks for the info. Because this is in my 401k, I feel I'll come out ahead because I'll have my money in for a long time.
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Nov 15, 2009 16:45
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80k posted:Do a Google search for "Larry Swedroe Portfolio" where you will see an extreme example of this. Thanks for this tip. That search brings up an incredibly interesting set of blog posts and forum discussions.
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Nov 15, 2009 21:06
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Fuschia tude posted:Thanks for this tip. That search brings up an incredibly interesting set of blog posts and forum discussions. Also do a search for Zvi Bodie (adding keywords "TIPS" and "LEAPS") which will bring you to an even more extreme version of this philosophy. I think the idea of having a low stock allocation but making your stocks risky is particularly attractive for those that want to protect themselves from extreme outliers, and/or believe that downside risk in equities is greater than we give credit to (due to possible negative skewness in returns and fat tails). This is getting into Mandelbrot/Taleb territory.
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Nov 16, 2009 18:46
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My employer currently has a 401k that I have been contributing to. For next year they will be offering a Roth 401k, which I will solely contribute to. Would I then be able to cash out my old 401k and roll it into a Roth IRA, or do you have to not be contributing to any 401k play in order to roll over? Would it be possible for me to roll the 401k into the Roth 401k? These are questions I'll probably find out in a month I'm just trying to do some planning in my head.
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Nov 19, 2009 17:59
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abagofcheetos posted:My employer currently has a 401k that I have been contributing to. For next year they will be offering a Roth 401k, which I will solely contribute to. Would I then be able to cash out my old 401k and roll it into a Roth IRA, or do you have to not be contributing to any 401k play in order to roll over? Would it be possible for me to roll the 401k into the Roth 401k? Your are still employed at the same place, so I'm doubtful that you can rollover your existing balance out of the plan just because your employer is adding a Roth 401k option. But yes, you should just check with your plan administrator. You will still be needing your original 401k open if you are receiving company matching though, since the matching should still be contributed pre-tax. My guess is you will be maintaining both accounts and simply directing new money to the Roth 401k while receiving matching in the traditional 401k.
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Nov 20, 2009 23:26
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Hmm, the Q&A we were sent seems to suggest that they are going to match in the Roth, not separately in the regular 401k. Looks like I'll just have to wait and give them a call once I'm able to enroll. I'm just hoping to get all my retirement accounts to Roth as soon as I can.
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Nov 21, 2009 01:43
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abagofcheetos posted:Hmm, the Q&A we were sent seems to suggest that they are going to match in the Roth, not separately in the regular 401k. Looks like I'll just have to wait and give them a call once I'm able to enroll. I'm just hoping to get all my retirement accounts to Roth as soon as I can. It's not an employer option. IRS rules require company matching to be pre-tax. IIRC that is. edit: "IRS FAQ on Roth 401k posted:Can an employer match an employee's designated Roth contributions? Must the employer allocate the matching contributions to a designated Roth account?
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Nov 21, 2009 02:04
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BTW, 80k, I don't know if you know this: Vanguard JUST released a few more bond ETFs. Pretty cool.
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Nov 23, 2009 17:59
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Hey, Starting next year my fiancee and I are going to start getting our long term finances sorted out, but I'm a bit fuzzy on the mechanics. The issue is that I'm Canadian and all the specific advice in this thread is for the US. Is there anyone that can give a rundown on a Canadian version of the general advice given in this thread. I know that our version of the basic "max your 401k, ROTH IRAs, etc" is "max your RRSP", but after that I'm lost. Specifically, where should I open an account? Does a Vanguard equivalent exist here (low fees I guess is it's selling point)? If I open an account with a major bank, am I limited in my investment options...? Like I said, I think I'm good on the general planning it's just the details of what I physically need to go and do once we've determined our goals, calculated what we need to save, etc. I'm just not familiar with the investment landscape here. One specific question: if my fiancee has an amount of money available immediately, but we want to save in an RRSP under my name, can we just deposit her money in my account? I have a feeling that I would have to declare it as income...? OR can RRSPs be joint accounts? I did find that Finiki link a few pages back and will read it.
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Nov 24, 2009 22:43
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EchoBase posted:Hey, Starting next year my fiancee and I are going to start getting our long term finances sorted out, but I'm a bit fuzzy on the mechanics. The issue is that I'm Canadian and all the specific advice in this thread is for the US. Is there anyone that can give a rundown on a Canadian version of the general advice given in this thread. I know that our version of the basic "max your 401k, ROTH IRAs, etc" is "max your RRSP", but after that I'm lost. If you want to use index mutual funds, you can go to TD bank and buy their Efunds. The MERs are about 0.5%, which is basically the best rate right now for Canadian index mutual funds. You can also open a brokerage account somewhere and use it to buy ETFs, including vanguard ETFs, but that's somewhat more complex and doesn't work as well if you want to buy some every month. As for account types: Taxable account: Growth is taxed, but you can contribute and remover whenever RRSP: Contributions are tax-deductible, contributions are limited, all growth inside the account is tax-free, but all withdrawals are taxed at your full marginal rate TFSA: Contributions are limited, all growth inside the account is tax-free, and you do not pay tax on withdrawals as well You can run the numbers, and obviously it depends on what your income is now vs. later, but I think the TFSA is generally better and should be filled first. Of course, the contribution space for RRSP/TFSA carries over between years, so if you don't have enough to fill both this year, don't worry about it. Also, try not to make the mistake of regularly putting in and taking out money from your TFSA, because you'll end up over-contributing and facing big penalties. You can only put in $5000 per year, and if you withdraw, you only get that space back NEXT year.
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Nov 25, 2009 00:12
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80k posted:It's not an employer option. IRS rules require company matching to be pre-tax. IIRC that is. I've been contributing to a Roth for years now, and I know the matching contributions are pre-tax. I also have been contributing to a Roth IRA, but have no traditional IRA. Does this mean if/when I roll over my 401k, I'll have to roll my contributions into the Roth IRA, and roll the company's contributions into a (new) traditional IRA? I've been putting off this question for a long time...just would be good to know.
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Nov 25, 2009 15:27
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Don Wrigley posted:I've been contributing to a Roth for years now, and I know the matching contributions are pre-tax. I also have been contributing to a Roth IRA, but have no traditional IRA. Does this mean if/when I roll over my 401k, I'll have to roll my contributions into the Roth IRA, and roll the company's contributions into a (new) traditional IRA? Yes, that sounds right. I believe new legislation allows direct rollover/conversion of traditional 401k's into Roth (and pay tax). So presumably you can rollover your contributions and matching together into a Roth IRA, and pay taxes on the matching contributions. But it may be advantageous to rollover into Roth and Traditional IRA's respectively, and convert a little at a time. You definitely want to roll over your Roth 401k into a Roth IRA when you quit your job. Roth 401k's have minimum distribution requirements when you reach 70.5 (similar to traditional 401k's and IRA's), whereas Roth IRA's don't. Roths are great accounts to pass down to your heirs, so it's nice to have the option not to make distributions.
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Nov 25, 2009 17:24
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Anyone know whats with Ally's constantly daily changing interest rates for their online savings account? Every day this week it has been different.
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Nov 25, 2009 23:32
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Is The Financial Times a good newspaper? A quick look suggests yes, but it can be hard to tell. I ask because I just got a $50/6-mo. offer right after deciding to subscribe to something like this and a number of you seem quite on the ball regarding these things.
Radd McCool fucked around with this message at 02:01 on Nov 26, 2009 |
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Nov 25, 2009 23:36
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MrBigglesworth posted:Anyone know whats with Ally's constantly daily changing interest rates for their online savings account? It may have something to do with the fact that Ally Bank is really a unit of GMAC (General Motors Acceptance Corporation), which is still begging the U.S. government for more bailout money.
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Nov 26, 2009 15:48
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What is a reasonable rate of return to assume for long term investments (assuming relatively safe stuff... blue chip stocks, S&P average, mutual funds, gold etc)
maskenfreiheit fucked around with this message at 04:05 on Nov 30, 2009 |
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Nov 30, 2009 04:03
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I use 8%.
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Nov 30, 2009 04:06
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I don't understand where people pull this magical 8% return figure from. The current 10 year aggregate return on the S&P 500 right now is -23%. In fact, the last time the 10 year return was 8% pa (216% aggregate return) was in H1 2001. That's not including dividends, but it's not indexed for inflation either which roughly cancels that out in real terms. And this is before taxes. Edit: and just for reference, that point in 2001 only would have generated 8% pa if you pulled out then and there when the S&P was at 1300. The index continued to fall and in fact didn't recover to 1300 until 5 years later. GregNorc posted:What is a reasonable rate of return to assume for long term investments (assuming relatively safe stuff... blue chip stocks, S&P average, mutual funds, gold etc) barking frog fucked around with this message at 05:37 on Nov 30, 2009 |
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Nov 30, 2009 05:17
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barking frog posted:I don't understand where people pull this magical 8% return figure from. The current 10 year aggregate return on the S&P 500 right now is -23%. In fact, the last time the 10 year return was 8% pa (216% aggregate return) was in H1 2001. That's not including dividends, but it's not indexed for inflation either which roughly cancels that out in real terms. And this is before taxes. A return in the area of 9-11% is what you get annualizing over multiple decades. And not counting dividends makes no sense.
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Nov 30, 2009 06:02
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Unless you are looking at very detailed information all quotes are nominal so inflation doesn't really impact your 'where should I put my money' decision. Also, your 10 year return comment starts in the midst of the dot com boom which is a red herring. Many articles cover the same data, but the tables at the end of this one are pretty telling. http://www.istockanalyst.com/article/viewarticle/articleid/2803347
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Nov 30, 2009 06:03
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Hobologist posted:A return in the area of 9-11% is what you get annualizing over multiple decades. And not counting dividends makes no sense. alreadybeen posted:Unless you are looking at very detailed information all quotes are nominal so inflation doesn't really impact your 'where should I put my money' decision. Also, your 10 year return comment starts in the midst of the dot com boom which is a red herring. Many articles cover the same data, but the tables at the end of this one are pretty telling.
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Nov 30, 2009 06:15
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barking frog posted:I said in real terms. If you get 2% dividends in a given year but inflation is 2%, are you actually any better off? Depends on whether the assets inside the corporation have also appreciated due to inflation. Since there's no easy way to track that, most people stick with 9-11% nominal terms.
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Nov 30, 2009 08:11
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barking frog posted:Thanks for the link. Now I understand that when people give these figures they're talking about 30 year planning. One thing I'd like to add for retirement purposes is that ideally as you move closer to retirement, you restructure your portfolio to into safer securities with reduced market exposure, which will reduce the aggregate returns. Absolutely, it all comes down to time horizon. I'll probably be looking to buy a house in 3-5 years and that money is in bonds. My retirement portfolio is in almost entirely stocks but I literally don't plan on withdrawing it for 40-42 years.
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Nov 30, 2009 15:37
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I've had an investment brokerage account with Schwab since I was a kid, and my dad has always managed it and done very well. When I added my IRA accounts, he kept managing those as well just because. Recently I've become unemployed which has caused me to take a greater interest in my finances and notice more and he's recently retired and has apparently become bored and needs something to do. Apparently that something to do is essentially day trade with all my brokerage accounts. It started off with just my normal account, which I was okay with - I'm young and can be a little agressive, but has since migrated over to my IRAs as well. I have both a Roth and a traditional right now due to one year of having a high paying job then losing it, he doesn't have a lot of money to play with (about $15k total) but I'll be rolling my 401k over from my previous job shortly which has about $25k in it. I do like his involvement since I feel like he's more knowledgable about finances, he's financially secure so I trust him, and he's making money, not losing it, but I still feel like as far as my retirement accounts go, I should just be sticking my money somewhere, keeping it there and doing periodic re-evaluations rather than constantly trading and paying fees. Am I being crazy?
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Dec 2, 2009 20:26
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KarmaCandy posted:Am I being crazy? No, it's entirely reasonable to not want your long-term savings day-traded by someone else. If you do want to be in Dad's Mutual Fund you can always set aside a particular 5k or 10k account for that and keep the rest more conservatively invested.
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Dec 2, 2009 20:44
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Really 'day trading' and 'retirement account' shouldn't be in the same sentence.
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Dec 2, 2009 20:44
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Good christ, he should not be day trading with your poo poo. Maybe he's done well so far, but this is a classic trouble situation - you feel guilty about hassling him for it because he's family, and you and he both likely have unrealistic ideas about how well he can do in the long term. To buy and hold something cheap is a pretty sound gambit that can still be "aggressive". Sounds like you think that's a good idea and you're not so sure about your dad's approach - well, same here, and I think you should just have the difficult conversation and do it.
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Dec 2, 2009 20:48
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In related news, I've had a lump sum sitting in my brokerage account for over a month now, but I haven't yet put it into the portfolio I designed. It seems like every day I have the free time to do it, the market is up a couple of percent, and I'd prefer to wait until it's down a few percent to put the money in. I really need to stop trying to time the market but...aggh.
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Dec 2, 2009 20:55
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My wife's self-directed retirement fund at work has around 15k in it currently. I'm looking at the allocations and realize neither of us has any clue how they should be set up. Right now it's 50% into Allegiant Treasury Money Market Fund, and 50% into PIMCO Total Return Fund. There's about 20 other options as well. How the hell do I know which one I want? I want to get this and our 401k's set up correctly, and then finish it off with a ROTH IRA. I figure with our 2 401k's, this retirement account of hers and a ROTH, we should be okay for retirement. I really hope so at least. Anyway, anyone able to shed some light on this for me? I can list the options if it would help, but I don't want to spam unnecessarily. EDIT: For what it's worth, our performance YTD has been 5.93%, which I'm assuming probably isn't that great? 3-month is 2.86%. Solaron fucked around with this message at 21:45 on Dec 2, 2009 |
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Dec 2, 2009 21:43
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slap me silly posted:Good christ, he should not be day trading with your poo poo. Maybe he's done well so far, but this is a classic trouble situation - you feel guilty about hassling him for it because he's family, and you and he both likely have unrealistic ideas about how well he can do in the long term. Yeah, I don't think he's going to beat the market or anything though he may think that. I have a feeling I would have seen those same exact gains without any trading (I didn't really start investing my IRA until around the market was poo poo) and perhaps greater gains, especially without the $200 in trading fees. I feel like it's a hobby that's getting out of hand due to boredom. It started off just fixing my brokerage account a bit, then more active trading, then fixing some of my retirement accounts so they were more diverse - things I appreciate and approve of. But I can see that it's going from buying/selling a few times a months to buying yesterday, selling today. I already sent him an email about it thanking him for his help but that I think I'll take it over in January when I plan on rolling everything over into my Roth IRA (I assume I have to sell everything then anyway - even if all my accounts are at Schwab?) KarmaCandy fucked around with this message at 22:21 on Dec 2, 2009 |
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Dec 2, 2009 22:18
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Solaron posted:EDIT: For what it's worth, our performance YTD has been 5.93%, which I'm assuming probably isn't that great? 3-month is 2.86%. Don't try and make decisions based on performance, just develop a plan for how you want your assets allocated, and find the lowest-fee method of sticking to that plan. As for developing a plan, the first post can help you with that. EDIT: A blog I read today has a decent article on some of the parts of asset allocation people miss: How your life affects asset allocation and risk tolerance big shtick energy fucked around with this message at 01:20 on Dec 3, 2009 |
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Dec 2, 2009 22:47
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SecretFire posted:Don't try and make decisions based on performance, just develop a plan for how you want your assets allocated, and find the lowest-fee method of sticking to that plan. As for developing a plan, the first post can help you with that. Just read the article. I think my problem is figuring out what the hell the difference really is, so I just go off of past performance! Sounds like it's a bad idea. Let me check some of the information out in the OP and see what I can figure out. Thanks!
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Dec 3, 2009 03:15
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And if anyone's curious, here was his explanation:Dad posted:Just so you know the logic behind my trading, there are no tax consequences for your IRA from all my trading since it will all be ordinary income whenever you take your distributions. For that reason, there is no real reason to hold any investment long term since you won't get capital gains tax treatment anyway. So I just take a profit when a stock or ETF (which I prefer to mutual funds due to the low overhead expenses and also because they trade all day long) has moved a considerable amount and I think the market will fall back soon and I can buy it back cheaper. Hopefully you can then make the same gain twice if the stock or ETF rebounds again. In that regard, you also don't have to worry about "wash" sales which usually prevent you from selling a stock for a loss and then rebuying the same stock within 30 days (this rule does apply to your regular taxable account as do all the other issues I just mentioned). This trading strategy in my own IRA account has bascially gotten me back to even after the market downturn during the last two years so it does work for me--but maybe I am a bit more aggressive. Any thoughts on this method? I'm still not comfortable with it and am going to go with something more long term, but do other people do something similar to this?
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Dec 3, 2009 04:52
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KarmaCandy posted:And if anyone's curious, here was his explanation: He's correct on the taxation issues, and on the benefits of ETF's. Some one earlier mentioned that daytrading and retirement-accounts should not be in the same sentence. However, i would rather day trade in my retirement account than a taxable account for the reasons your dad mentioned (cost of taxes, complicated tax returns, and wash sales). There is a legitimate longterm investing strategy that involves buying when the market is down and selling when it is up. It's called rebalancing, and is a foundation of asset allocation. However, it sounds like your Dad is doing a bit more than just rebalancing and is, in fact, market timing. I would clarify with him on how he decides to jump in and out of the market, so you can better understand where he is coming from. I am guilty of market timing myself, so I am not going to jump to conclusions about your Dad.
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Dec 3, 2009 05:26
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