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Xenoborg posted:I'm selling all my random mutual funds and moving to Vanguard. I did my retirement accounts a few months ago, and now want to do my taxable account too. I will be realizing ~30k in long term gains, and my AGI is 23k (half a year of income and maxed 401k/hsa). A few questions: 1) How do you expect your income to change for next year? Would there be any benefit in splitting your realized gains across years (i.e., only selling some of your funds and realizing a portion of your gain this fiscal year, and then waiting for January to sell the remainder)?
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Nov 23, 2015 21:30
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sean price posted:Hi there guys. Quick question about the often recommended book The Four Pillars of Investing. I'm reading a review of it here, which I will note was written fairly recently so should be pretty modern/updated advice: The advice of not more than 80% in US stocks makes sense to me for the reasons Bernstein has stated. I would likely stick to that if I lived in the US. How people run their portfolios is rather individual. The section on portfolio mix gives a lot of examples but doesn't tell you what is right for you. US Stock prices are very high at the moment and until more risk is observed by the market the price will stay that way. Things do seem safe when the Fed has 0% OCR, however that is anticipated to change in December with a slight increase. Economic performance globally will probably be poo poo up until around 2018. Given that I can't see into the future I'd recommend deciding a portfolio mix that suits you and make monthly contributions.
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Nov 23, 2015 22:40
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SpelledBackwards posted:1) How do you expect your income to change for next year? Would there be any benefit in splitting your realized gains across years (i.e., only selling some of your funds and realizing a portion of your gain this fiscal year, and then waiting for January to sell the remainder)? Income will be solidly in the 25% bracket for the foreseeable future. I was in the 15% bracket with 15k room to spare for LTCG because I didn't work the first half of the year. I was originally going to only realize that 15k, but decided that since I don't like what they are in (1.5% loving ER), I should just do it all now. Are dividend dates random or planned? Most of the money is in GFACX, can you tell when its going to give one? If its Dec 15 its probably worth waiting for. If its Jan 1 then maybe I should just realize 15k now and the rest wait for the dividend. I want to get out of this fund, but if waiting a month will be a lot of money I can wait it out.
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Nov 23, 2015 23:58
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Xenoborg posted:Income will be solidly in the 25% bracket for the foreseeable future. I was in the 15% bracket with 15k room to spare for LTCG because I didn't work the first half of the year. I was originally going to only realize that 15k, but decided that since I don't like what they are in (1.5% loving ER), I should just do it all now.
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Nov 24, 2015 00:52
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Xenoborg posted:Income will be solidly in the 25% bracket for the foreseeable future. I was in the 15% bracket with 15k room to spare for LTCG because I didn't work the first half of the year. I was originally going to only realize that 15k, but decided that since I don't like what they are in (1.5% loving ER), I should just do it all now. If they are equity mutual funds (as opposed to bond funds), then the value of the shares will drop proportionally to the dividends provided. Thus I'd be with SiGma_X in recommending selling before the ex-dividend date for tax reasons: https://www.bogleheads.org/wiki/Dividend#Mutual_fund_dividends
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Nov 24, 2015 01:12
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Xenoborg posted:Income will be solidly in the 25% bracket for the foreseeable future. I was in the 15% bracket with 15k room to spare for LTCG because I didn't work the first half of the year. I was originally going to only realize that 15k, but decided that since I don't like what they are in (1.5% loving ER), I should just do it all now. A 0.5% dividend or whatever is going to be a trivial concern next to the overall structure of your income taxes, really don't worry about it but the above post is correct that it's better to take the LTCG than the dividend, although the dividend will probably be qualified and treated at the same tax rate as a LTCG anyways.
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Nov 24, 2015 01:24
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The funds I'm selling all just saying December for their dividend dates. It makes sense that when they give dividend or capital gains they would decrease the share price accordingly, so I'll sell before December to avoid them being short term. Another question that just occurred to me: When is the expense ratio paid? One big chunk at some annual date seems impractical. Maybe something like 1/250th of the ER taken off every close?
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Nov 24, 2015 06:10
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Avoiding the income from dividends so you don't have to pay tax on them is rather silly. I'd rather have 70% of that 0.5% than 100% of no dividends. It's like in lovely 401(k)s, a 1% ER S&P 500 fund is still better than a 0.5% ER money market fund (or whatever lovely 401(k)s have) even when you're paying more fees. By all means, minimize your taxes and fees, but don't go so far out of your way to avoid fees/taxes that you lower your overall net income. A coworker asked about what his spouse should invest in in her company's lovely 401(k) (my company's 401(k) is decidedly non-lovely) and two people said to park her money into the money market fund to avoid paying high fees. Utter nonsense. High fees are bad but it's better to have high fees on "high" returns than negligible returns in exchange for lower fees. Likewise if you're paying tax it means, on some level, you've made money. Granted there's value in simplifying your tax return. That's perfectly legitimate. 0.5% dividends on whatever amount might not be worth the hassle.
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Nov 24, 2015 07:53
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Desuwa posted:Avoiding the income from dividends so you don't have to pay tax on them is rather silly. I'd rather have 70% of that 0.5% than 100% of no dividends. It's like in lovely 401(k)s, a 1% ER S&P 500 fund is still better than a 0.5% ER money market fund (or whatever lovely 401(k)s have) even when you're paying more fees.
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Nov 24, 2015 08:42
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Desuwa posted:A coworker asked about what his spouse should invest in in her company's lovely 401(k) (my company's 401(k) is decidedly non-lovely) and two people said to park her money into the money market fund to avoid paying high fees. Utter nonsense. High fees are bad but it's better to have high fees on "high" returns than negligible returns in exchange for lower fees. It's not that simple, and depends on how bad the 401k actually is. With load funds and high expense ratios, you might lose money on a year that the market gains. You may want to exit the job with the poor 401k and rollover into better investments and want to keep things steady and predictible. Or maybe you just don't want to pay a fund that charges that much out of principle.
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Nov 24, 2015 09:35
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Desuwa posted:Avoiding the income from dividends so you don't have to pay tax on them is rather silly. This was my initial thought as well, disproven by the good people of the thread.
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Nov 24, 2015 14:43
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Xenoborg posted:This was my initial thought as well, disproven by the good people of the thread. All the broad market passive funds don't pay sky high dividends either and you shouldn't worry about dividend income for retirement type accounts
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Nov 24, 2015 21:08
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I recently decided to switch my 401k from a target retirement date fund to self managing percentages. From the stock end I'm OK, I have my allocation in the vanguard 500 index admiral fund but for bonds, the options all seem kind of crappy. Here is what I have to choose from: FTHRX http://finance.yahoo.com/q?s=FTHRX FNMIX http://finance.yahoo.com/q?s=FNMIX PIMSX http://finance.yahoo.com/q?s=PIMSX I say "crappy" because they all seem to have fairly high expense ratios. I only contribute enough to my 401(k) for company match and then my IRA and other savings are with vanguard so I can select from a better list. Am I correct in my judgement that these aren't great and does anyone think one is noticeably better than any others?
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Nov 24, 2015 22:39
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What's the ER of the target date fund you had?
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Nov 25, 2015 02:06
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gross .57 net .47 I'm not sure why they are different. I don't think I have seen that before. EDIT: While I'm here what is the thread opinion on REITs for a Roth IRA? I recently signed up for personal capital and its advisor app is recommending a small percentage in non traditional investments. Maybe because I don't own a house, I'm not sure. Is it worth looking into? Xguard86 fucked around with this message at 17:20 on Nov 25, 2015 |
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Nov 25, 2015 16:26
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I really like REITs for tax sheltered accounts. Resultswise I think they're one of my best performers this year.
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Nov 25, 2015 17:33
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Xguard86 posted:EDIT: While I'm here what is the thread opinion on REITs for a Roth IRA? I recently signed up for personal capital and its advisor app is recommending a small percentage in non traditional investments. Maybe because I don't own a house, I'm not sure. Is it worth looking into? It's mainly because REITs provide fairly decent yields since by law they have to return a majority of the profits back to investors via dividends and also combine bond-stock like characteristics. They make sense for non taxable retirement accounts but no so much for taxable accounts for tax reasons. For REITs I go with 15%
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Nov 25, 2015 18:05
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The other thing to keep in mind with REITs is that (at least according to Bernstein) you should look at it as part of your portfolio as a whole, including property you own.
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Nov 30, 2015 15:07
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I currently have <10% of my retirement savings in a Roth TSP account and the rest in a 3-fund Roth IRA with Vanguard. I was planning on rolling the Roth TSP into my Vanguard account after I exit the military, mainly for the convenience of not having to manage accounts with 2 brokers. Is there a reason I couldn't or shouldn't do this? The TSP does have rock bottom expense ratios, but the fund options are very limited. There shouldn't be any penalties for rolling a TSP account into an IRA as long as the accounts involved are both Roth or both traditional, right?
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Dec 2, 2015 22:25
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There should be no penalties. Personally I would leave it in TSP for the crazy low fees. You shouldn't have to do much management of the TSP funds, you might be able to do any necessary rebalancing via changing allocations within your Vanguard IRA.
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Dec 2, 2015 23:41
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Gray Matter posted:I currently have <10% of my retirement savings in a Roth TSP account and the rest in a 3-fund Roth IRA with Vanguard. I was planning on rolling the Roth TSP into my Vanguard account after I exit the military, mainly for the convenience of not having to manage accounts with 2 brokers. What limitations do you see with the TSP fund selection? I would love to get in on that action with my employer-provided plan (I get ERs of ~0.3% with my 457, which is plenty fine but not TSP low). I suppose there's not a real estate fund but as Tyro says you should be able to get that--or anything else you want--with your Vanguard IRA.
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Dec 3, 2015 06:14
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I need some help figuring out whether this is a stupid move or not. I have an outstanding car loan of a bit more than $16,000 @ 1.99%. I bought my car in June of 2014 but refinanced back in March of this year when I changed credit unions for a better interest rate and to consolidate my accounts. I've been paying $630 per month to eliminate the loan in about two and a half years (it's financed for 7 years, normal payments are $290). I hate debt, so I sat down this morning and determined that I could pay off the loan in its entirety today if I liquidated my VFIAX mutual fund of $11,000 and combined it with $5,000 from my liquid savings. At that point I'd be completely debt free by the end of this month, but I'd have about $100 in savings until next month when I'd start replenishing it with the $630 former-car-payment. I've had my VFIAX account since June of 2014. It's seen about a 7.2% ROI since then. My savings account has a laughable 0.10% interest rate. Thanks to YNAB (I started using it back in May, it's the best thing you guys had me do!) I have about $3000 in various "eventual funds" that I could pull from in case of emergency while I'm rebuilding savings. I also have some other tangible assets I could cash in to survive any surprises in the short-term. Is there anything about this plan that seems like a bad idea?
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Dec 3, 2015 23:46
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That seems like a very bad idea. You would be liquidating investments, paying capital gains tax, and obliterating your emergency fund to pay off debt that is essentially cheaper than inflation. Edit: leave your mutual fund alone, move your $5k to a 1% online savings account, and continue paying the debt off at your accelerated rate.
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Dec 3, 2015 23:50
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Droo posted:That seems like a very bad idea. You would be liquidating investments, paying capital gains tax, and obliterating your emergency fund to pay off debt that is essentially cheaper than inflation. Yes, definitely do not liquidate any reasonable long term investments to retire debt at 2% interest.
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Dec 4, 2015 02:25
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2% interest is low enough that, if you have a stable financial situation, it would be the kind of debt you keep around because it's more profitable to invest in other assets than to aggressively pay it down. Don't necessarily take that as advice to do that, though. Investing is all about securing the optimal returns for the amount of risk you can tolerate, and paying down a debt gives you guaranteed returns with no risk.
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Dec 4, 2015 09:35
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One thing with car loans is that by paying it off you can reduce the amount you insure it, since you're no longer required to have comprehensive/collision insurance. If you are not driven to financial ruin by total loss of a car, not insuring it for comprehensive is something to consider. Another small thing is that inflation is (currently) under 2% and predicted to be that way (judging by bond prices) for a while. So a 2% loan isn't quite "below inflation"
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Dec 4, 2015 10:06
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Like they said, leave your long term stuff alone. Pay and extra 200 a month on the loan, if you can swing it, and cut six months off of it.
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Dec 4, 2015 15:39
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Gray Matter posted:I currently have <10% of my retirement savings in a Roth TSP account and the rest in a 3-fund Roth IRA with Vanguard. I was planning on rolling the Roth TSP into my Vanguard account after I exit the military, mainly for the convenience of not having to manage accounts with 2 brokers. You don't need lots of fund options to do good investment, it's all about high quality and most importantly low cost funds. For TSP you could just move everything over to one of their target retirement funds.
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Dec 4, 2015 18:19
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Vanguard Whistleblower Could Get Billions in Tax Dodge Complaintquote:If you are among the 20 million Americans saving for retirement through Vanguard, you may be in for an expensive shock. The nation’s second-largest mutual fund company (after Fidelity) is under fire for not taking more of your money. That sounds ridiculous, but based on arcane provisions of the endlessly complex U.S. tax code, the Pennsylvania-based company may soon be forced to pay a staggering amount of back taxes because of the famously low fees it charges to manage your nest egg.
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Dec 4, 2015 23:22
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Guess we will see how that pans out but it sure seems like a shakedown to insist that vanguard produces taxable profit to cut into shareholder returns that are in turn subject to personal tax liability.
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Dec 5, 2015 01:20
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Didn't they try to do that before and it didn't work?
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Dec 5, 2015 01:57
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Well I'm sure all congressmen and senators are vanguard investors so we know how this will pan out.
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Dec 5, 2015 02:49
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I definitely understand the impulse to ensure that corporate fatcats like me, 0.0000001% owner of Vanguard, pay enough taxes on our posttax retirement investments
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Dec 5, 2015 03:10
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So what do they want Vanguard to do, charge "industry standard" expense ratios, pay taxes on those profits, then return what is left as dividends? That seems like bullshit.
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Dec 5, 2015 05:20
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Alereon posted:So what do they want Vanguard to do, charge "industry standard" expense ratios, pay taxes on those profits, then return what is left as dividends? That seems like bullshit. The cynic in me though recognizes that those "industry standard" folks are behind a very large amount of the money powering laws and they all absolutely hate Vanguard.
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Dec 5, 2015 05:31
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Alereon posted:So what do they want Vanguard to do, charge "industry standard" expense ratios, pay taxes on those profits, then return what is left as dividends? That seems like bullshit. The whistleblower was angry since Vanguard is not as run as a for profit company due to its unique structure.
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Dec 5, 2015 07:40
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It's quite clear that the law wasn't written with something like Vanguard in mind, and this is a pretty clear cut case of the letter vs the spirit of the law. Doubly so because the  missing profit is still being taxed in the US, just on the other end as individuals realize their gains.Not sure if there's an easy way out because there are a lot of financial institutions with a vested interest in forcing Vanguard to raise its rates because then they can raise their rates on their own inexpensive index funds that compete with Vanguard's current prices. I think Vanguard stands a good chance, though, but it'd be a different story if Vanguard were more dominant because then it'd be easy to spin it as Vanguard being anti-competitive. As it is the worst case is some kind of government-mandated price fixing, which is weird in the other direction. etalian posted:The whistleblower was angry since Vanguard is not as run as a for profit company due to its unique structure. The whisteblower stood to gain a lot. Desuwa fucked around with this message at 08:13 on Dec 5, 2015 |
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Dec 5, 2015 08:10
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Yeah, as far as frivolous lawsuits go, this one had an EXTRMEEEELY LARGE CARROT attached to it. I honestly cannot blame the plaintiff. This is one of those things that would have come up next year by a different dude if the current dude didn't do it. All that said, the lawsuit should be immediately legislated around or defeated in a high court.
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Dec 5, 2015 09:37
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I joined a company 6 months ago, and I'm reviewing my initial choice for where my 401(k) funds are allocated. I'm contributing up to my employers match, and currently have 100% in JP Morgan's 2050 retirement fund. I've read ifyoucan.pdf and now I'm looking at maybe my previous choice not being the best option. Our company has vanguard index funds, but they're different than those indicated in the pdf. Our list of choices are for Vanguard : VANGUARD DEVELOPED MARKETS INDEX FUND: VDVIX VANGUARD INSTITUTIONAL INDEX FUND: VINIX VANGUARD SMALL-CAP GROWTH INDEX FUND: VISGX VISVX: VANGUARD SMALL CAP VALUE INDEX FUND No bond index from Vanguard, but there is: DODGE & COX INCOME FUND: DODIX I can't imagine this is right, but would the allocation be 33% VDVIX 33$ VINIX 33% DODIX if I was looking to emulate the advice laid out by William Bernstein? Thanks for the help!
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Dec 7, 2015 00:08
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GordonComstock posted:I joined a company 6 months ago, and I'm reviewing my initial choice for where my 401(k) funds are allocated. I'm contributing up to my employers match, and currently have 100% in JP Morgan's 2050 retirement fund. Glad you read the Bernstein piece, it's great. We need more information to know if a 67-33 allocation between stocks and bonds is right for you. How old are you? How risk averse are you?
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Dec 7, 2015 00:45
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