Opened up a Vanguard account and started researching into the best funds to invest in long-term. I already have a Betterment account and their UI is really well done (especially in comparison to Vanguard's awful and confusing user experience from the early 00s), but Betterment's 0.25% fees are ouch. All of the funds I am looking to invest range from 0.14-0.18% and they are some of the top-performing funds -- well, except the emerging markets one but they're all stupid high around ~0.45%. I think I'll still keep Betterment around, for say, a Roth IRA.
Primarily I have been looking at funds with $3,000 minimums because that's seemingly doable. I think Vanguard's 500 Index might be a good "Core Fund" to start with.
Also talked to a buddy yesterday how a good and proactive gamble (well, not really a gamble you're just hedging that the markets are peaking) to take at the moment would be to up your investments in Bonds for the next couple of years especially with how the current administration loves to tank the markets by trying to impose idiotic tariffs.
Primarily I have been looking at funds with $3,000 minimums because that's seemingly doable. I think Vanguard's 500 Index might be a good "Core Fund" to start with.
Also talked to a buddy yesterday how a good and proactive gamble (well, not really a gamble you're just hedging that the markets are peaking) to take at the moment would be to up your investments in Bonds for the next couple of years especially with how the current administration loves to tank the markets by trying to impose idiotic tariffs.
I would go with VTI and VXUS with something like a 70/30 split, sprinkle in a bond fund like BND if you must but I wouldn't go wild with it if you're young. (Those are ETFs, all of which have mutual fund equivalents if that's your thing. The ETF gives you the same low expense that their Admiral funds offer but at minimum to get in.)
Vanguard's own splits regarding domestic and international stock is around 60/40 if you look at their target funds, but that's just a little too heavy on international for my money. Other target funds maintain a bit lower amounts of international, though common recommendations range from 20-40.
Regarding the "gamble," all literature on the subject repeatedly points out that timing the market is a bad idea. Just formulate a strategy and stick to it.
Vanguard's own splits regarding domestic and international stock is around 60/40 if you look at their target funds, but that's just a little too heavy on international for my money. Other target funds maintain a bit lower amounts of international, though common recommendations range from 20-40.
Regarding the "gamble," all literature on the subject repeatedly points out that timing the market is a bad idea. Just formulate a strategy and stick to it.
The "gamble" (hesitant to call it that) would just be to up your Bond investment from, say, 20% to 30% (or in your example from 30% to 40%) for the next couple of years, then back it down again to 20%. It wouldn't be completely reversing the split because that's silly, but yea, in essence, it's always a long-play.
And obviously, the older you get, the more you should invest in Bonds, but we're talking about as you reach retirement age.
And obviously, the older you get, the more you should invest in Bonds, but we're talking about as you reach retirement age.
One clarification, my example, the 30 is international. No bonds. I basically view them as an unnecessary drag on returns for someone decades out from retirement. Young(ish), invincible me views them as unnecessary even 15-20 years out, but I won't push that particular mindset on anyone.
If you're young and retirement is 30+ years out, holding anything more than 10% bonds is cray cray. I don't think any target date provider does it. Two providers of note, Vanguard and Fidelity, are at 10 and ~7 in their 2050 funds, respectively.
If you're young and retirement is 30+ years out, holding anything more than 10% bonds is cray cray. I don't think any target date provider does it. Two providers of note, Vanguard and Fidelity, are at 10 and ~7 in their 2050 funds, respectively.
Vanguard has some funds called "LifeStrategy" that do invest in bonds heavily:
https://investor.vanguard.com/mutual-funds/lifestrategy/
https://investor.vanguard.com/mutual-funds/lifestrategy/
By reilo Go To PostVanguard has some funds called "LifeStrategy" that do invest in bonds heavily:
https://investor.vanguard.com/mutual-funds/lifestrategy/
Yeah, but their target funds, essentially what they would actually recommend to an average person, steer well clear of that unless your age actually falls into the appropriate ranges. They certainly wouldn't put the average young professional in a 20% bond bucket.
In my view, those funds are for people with crazy risk aversion.
Edit: Also, Vanguard doesn't even have people in actual retirement at 80% bonds. Their "Target Retirement Income" fund, which is for current retirees, still holds 30% in stock.
Haspha, Citi is offering me to upgrade to the Thank You Premier card, from my current Thank You Preferred.
Should I do it? They seemingly are the same except 3x on travel (which I could take advantage of), and the Entertainment/Dining are still 2x.
It's $95/yr membership. The only truly annoying thing is that I have so many recurring payments through my old CC I would need to update.
Should I do it? They seemingly are the same except 3x on travel (which I could take advantage of), and the Entertainment/Dining are still 2x.
It's $95/yr membership. The only truly annoying thing is that I have so many recurring payments through my old CC I would need to update.
If it's an upgrade they should keep your old account numbers intact I think. The way CC companies usually have this set up is that the credit line, balance and terms constitute the account itself, and the earn/redeem/fee structure is an attribute or suite assigned to that specific account ID. That's how Cap1 and Chase do it, but I'm not 100% sure about Citi.
Personally I think it's a fine deal. The extra 3x is nice but you're already earning 1x on Travel now, right? So the amount you'd have to spend on Travel every year to break even would be $95/(3%-1%) = $4750, assuming you're not paying a membership fee now. $4750 is a lot but as far as I can tell this includes air/hotel/rental as well as BART/CalTrain and Uber/Lyft. And with Gas added in that's gonna be a decent haul.
I'm sure there are better offers out there, but if you don't want the hassle of shopping around, this is a pretty good option to take.
Personally I think it's a fine deal. The extra 3x is nice but you're already earning 1x on Travel now, right? So the amount you'd have to spend on Travel every year to break even would be $95/(3%-1%) = $4750, assuming you're not paying a membership fee now. $4750 is a lot but as far as I can tell this includes air/hotel/rental as well as BART/CalTrain and Uber/Lyft. And with Gas added in that's gonna be a decent haul.
I'm sure there are better offers out there, but if you don't want the hassle of shopping around, this is a pretty good option to take.
Considering rolling over my 401k into a Roth IRA, and based on some calculations out there, I'd have to pay $3600 in taxes on the conversion.
Decisions, decisions. Might do it next year.
Decisions, decisions. Might do it next year.
By reilo Go To PostConsidering rolling over my 401k into a Roth IRA, and based on some calculations out there, I'd have to pay $3600 in taxes on the conversion.
Decisions, decisions. Might do it next year.
I assume that it's from your former employer? If you're getting out of it with $3600 in taxes, I assume the balance is low or you already have a significant portion of your assets in a Roth-style 401k, so you might want to go ahead and do it. Otherwise, you'll still (likely) want to get into an standard IRA, if only for the greater variety of fund options and you won't be left to the whims of your former employer regarding your selections. Even if you have good options now, they can always change them on you.
If your balance is significant and all/most of your contributions were pre-tax, I would be curious about the taxes due if you converted to Roth. My rudimentary understanding is that you would effectively end up paying your top applicable marginal rate on all converted dollars, so if your income tops out in the 25 or 28 percent brackets (or whatever they are now with last year's tax changes), then you would be paying that percentage on all or most of the converted amount. At that point, you could still do it, but you're essentially betting on taxes in the future being higher across the board such that your average rate paid is higher than your top marginal rate now.
Right. It's the second scenario cause I got a small amount from my prior employers contributions and I just became eligible for IRA enrollment with my new employer, so I was debating Traditional vs going Roth.
Traditional vs. Roth for relatively high earners (compared to the mean, at least, we're not talking one-percenters by any stretch) really comes down to a tax rate gamble. The lower your income, the more you favor Roth because you would pay taxes at low marginal rates now with the expectation that your income would be higher, thus taxed more, in your later years, and you avoid that by going Roth. The higher, the less you favor it, because all those Roth dollars are taxed at the highest marginal rate applicable to you before you make your contribution, so avoiding that and then paying taxes later can lessen your tax burden because that income would go through all tax brackets, would be subject to deductions, etc., so you pay an overall lower average tax rate. (The rate of growth is going to be the same either way, and the future taxes paid in terms of dollars would certainly be more, but the net to you is still the question of what percentage is it.) The gamble is there's no certainty where tax rates might be in the future, one can only guess. Many just take the certainty of the tax rates now and bite the bullet.
That said, if the tax hit is indeed only going to be $3600, that lends towards just going ahead and doing the Roth conversion, it's a small gamble. If that decimal moved over a spot or two, then you'd start asking more questions.
That said, if the tax hit is indeed only going to be $3600, that lends towards just going ahead and doing the Roth conversion, it's a small gamble. If that decimal moved over a spot or two, then you'd start asking more questions.
What's a good stock that's available for like $10 a share to get into?
My main goal is to secure enough funds to say eff these jobs moving to Iceland. Need a good get rich in two years plan.
Are bonds a good investment now or should I wait?
My main goal is to secure enough funds to say eff these jobs moving to Iceland. Need a good get rich in two years plan.
Are bonds a good investment now or should I wait?
... I just paid off my credit cards. This has been a long fucking battle, but jesus I did it.
Next up, last bit remainder of my student loans, which should happen within a month.
Next up, last bit remainder of my student loans, which should happen within a month.
By Furyous Go To PostMy main goal is to secure enough funds to say eff these jobs moving to Iceland. Need a good get rich in two years plan.
Don't we all.
By reilo Go To Post… I just paid off my credit cards. This has been a long fucking battle, but jesus I did it.This is what I’m going to focus on now. I booked two vacations and built my PC, not buying shit for awhile now. I already paid off one so I just need to focus on the other
Next up, last bit remainder of my student loans, which should happen within a month.
Was looking into buying stocks but I have no idea what I’m doing and haven’t really taken the time to educate myself on it
Fantastic read on how the poorer Americans are propping up the economy in a unhealthy way....
https://www.reuters.com/article/us-usa-economy-consumers-insight/mortgage-groupon-and-card-debt-how-the-bottom-half-bolsters-u-s-economy-idUSKBN1KD0EM
https://www.reuters.com/article/us-usa-economy-consumers-insight/mortgage-groupon-and-card-debt-how-the-bottom-half-bolsters-u-s-economy-idUSKBN1KD0EM
Ha going to be hilarious when the economy goes tits up in 2 years and people are going to pretend that no one could see it coming.
By The Frankman Go To PostFantastic read on how the poorer Americans are propping up the economy in a unhealthy way….
https://www.reuters.com/article/us-usa-economy-consumers-insight/mortgage-groupon-and-card-debt-how-the-bottom-half-bolsters-u-s-economy-idUSKBN1KD0EM
This was because during the recession, we only passed one real stimulus under Obama. He tried for a jobs second bill but the GOP shot him down. So the fed took over by lowering interest rates to try and bolster the economy by making loans cheap. Instead of the state taking on debt, the individual did.
Bye student loans.
Bye credit card loans (I do keep a single revolving balance but that's my every day card).
Bye debt, you bitch.
Bye credit card loans (I do keep a single revolving balance but that's my every day card).
Bye debt, you bitch.
By reilo Go To PostBye student loans.Congrats! Welcome to more disposable income to spend on stupid shit (and maybe retirement)!
Bye credit card loans (I do keep a single revolving balance but that's my every day card).
Bye debt, you bitch.
By reilo Go To PostBye student loans.
Bye credit card loans (I do keep a single revolving balance but that's my every day card).
Bye debt, you bitch.
Dope. Congrats.
Invested 100 dollars (80 something euro at the time) through Drivewealth back in January, just picking some companies I like/use. Sitting on 126 bucks now. Had previously hit about 140 but Twitters poor results last month hit hard. I've basically just been letting it sit but I think from next month I'll be throwing in an extra 100 a month and being more active. Fun way to spice up some of my saving.
Good grief, I've spent way too much money this year on large, one-time purchases (or at least only once per 20 years). Gonna have to be relatively frugal again. I still have enough in savings to last me over a year if I lose my job, but need to build the checking account back up again.
By reilo Go To PostBye student loans.
Bye credit card loans (I do keep a single revolving balance but that's my every day card).
Bye debt, you bitch.
Selling houses, yo. My listing went live at noon today. Showing at 1. Had an offer in hand at 2, just above list price.
By Pac-12 Go To PostSelling houses, yo. My listing went live at noon today. Showing at 1. Had an offer in hand at 2, just above list price.damn, that's amazing
By Kibner Go To Postdamn, that's amazing
Worked out quite nicely. And based on neighborhood comparables, no reason to hold out for better offers.
By Adam Go To PostThoughts on deferred compensation plans vs. after tax plans?
General rule of thumb, while realizing tax rates in the future are not set in stone:
The closer you are to being a baller => defer
The closer you are to being a pauper => after tax
A couple of expanded thoughts above:
http://slaent.com/thread/748387/page/4/post/1527708/
http://slaent.com/thread/748387/page/4/post/1527852/
By Pac-12 Go To PostGeneral rule of thumb, while realizing tax rates in the future are not set in stone:
The closer you are to being a baller => defer
The closer you are to being a pauper => after tax
A couple of expanded thoughts above:
http://slaent.com/thread/748387/page/4/post/1527708/
http://slaent.com/thread/748387/page/4/post/1527852/
Interesting.
I was planning on maxing out my 403b for sure this year, and thinking about starting a "mega" back door Roth. The Roth is in lieu of maxing out my 457.
Why defer if you're closer to baller status?
By Adam Go To PostInteresting.
I was planning on maxing out my 403b for sure this year, and thinking about starting a "mega" back door Roth. The Roth is in lieu of maxing out my 457.
Why defer if you're closer to baller status?
Average tax rate in the future vs. top applicable marginal tax rate now
Your taxable income in the future will progress through all applicable marginal rates. Say you have $50,000 in income, you'll deduct some of it, then pay 10% on part, 15% on the next part, 25%, etc. This is going to work out to an average tax rate well below whatever your top overall tax bracket happens to be.
If you do after tax now, that money is going to be taxed at whatever the top marginal rate you qualify for. So if you top out at 28%, by not deferring the compensation (contributing before tax), you're by default paying 28% on that money before you put it into your after tax plan.
It just works out that the lower your income now, the lower your applicable marginal rates now, the more you want to pay those marginal rates now as you anticipate your income will be higher in your later years and you'll not want to pay higher marginal rates that drive up your average tax rate to some value above your top rate now. And the inverse is true the higher your income, you don't want pay your top marginal rate now, but would rather pay a lower average tax rate in the future. (This, of course, is making a bet that tax rates of the future won't completely screw you.)
Gotcha. I have a feeling I'll get screwed by tax brackets on the future though.
So in my case, you would recommend maxing out all tax deferred plans prior to doing anything else?
So in my case, you would recommend maxing out all tax deferred plans prior to doing anything else?
Make a list of funds that look appealing to you. Vanguard's website will list all of them for you and list out their historical growth, expense ratio, risk factor, and minimums.
Determine a good "core" fund and invest in that, then diversify a bit into two or more other funds. For example, here's my list of potential target funds I might invest in and certain criteria around them:
And then take it from there to determine which to invest in. That's just my list, I'm not going to invest in all of them, but it might give you an idea where to start.
Determine a good "core" fund and invest in that, then diversify a bit into two or more other funds. For example, here's my list of potential target funds I might invest in and certain criteria around them:
Ticker Name Risk Expense Ratio
VFINX Vanguard 500 Index Fund Investor Shares 4 0.14%
VASGX Vanguard LifeStrategy Growth Fund 4 0.14%
VBMFX Vanguard Total Bond Market Index Fund Investor Shares 2 0.15%
VLACX Vanguard Large-Cap Index Fund Investor Shares 4 0.18%
VEXPX Vanguard Explorer Fund Investor Shares 4 0.44%
VXUS Vanguard Total International Stock ETF 5 0.11%
VTI Vanguard Total Stock Market ETF 4 0.04%
BLV Vanguard Long-Term Bond ETF 3 0.07%
MGK Vanguard Mega Cap Growth ETF 4 0.07%
VGT Vanguard Information Technology ETF 5 0.10%
VOO Vanguard S&P 500 ETF 4 0.04%
VFIFX Vanguard Target Retirement 2050 Fund 4 0.15%
VBIAX Vanguard Balanced Index Fund Admiral Shares 3 0.07%
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares 4 0.04%
VEXAX Vanguard Extended Market Index Fund Admiral Shares 5 0.08%
VSMAX Vanguard Small-Cap Index Fund Admiral Shares 5 0.06%
And then take it from there to determine which to invest in. That's just my list, I'm not going to invest in all of them, but it might give you an idea where to start.
By Adam Go To PostGotcha. I have a feeling I'll get screwed by tax brackets on the future though.
So in my case, you would recommend maxing out all tax deferred plans prior to doing anything else?
Even being able to afford to max means tax deferral is likely a good idea. But there's just always the future tax rate risk to consider. There's just no guarantees in life.
As for fund selection, low cost index funds are going to be the best. And there's no need to buy into a lot of them for some false sense of diversification. In fact, if you can, you can get by on just a small number (diversification is vital, but buying into a large number of funds isn't the way to do it). Take reilo's list above, and the ones you would want would be VTI (total stock market, a domestic fund), VXUS (total international), and maybe something like BLV. Allocations should be heavy on domestic, less heavy on international, and lightest (for someone young) on bonds (I don't carry any). For example, recommendations for the domestic/international split range from 80/20 to 60/40. Vanguard's own target funds are 60/40, whereas other providers might be closer to 70/30. I like more domestic, with the basic idea that the heaviest component of domestic stocks (large caps) are heavily exposed to international business already, so my international stock holdings are on the lower end of the recommended range.
If your own funds do not offer the above, try to find something similar enough, though you may need to piece together your domestic holdings from a variety of sources, with the basic blend being large cap + mid cap + small cap. Again, just to go by traditional weightings, the heaviest would be large at around 70-75% (of the domestic portion, not your overall portfolio), followed by mid-caps at around 18-20%, and then small caps with the remaining portion (10% or less). Again, looking at reilo's list, the large cap is VOO, small cap is VSMAX, but right above it is VEXAX, which actually covers small and mid caps. Should you not have those options available, just look for an S&P 500 index fund for your large cap, something like an S&P Midcap 400 fund for mid, and Russell 2000 for small.
But again, keep it simple. Buy into a limited number of broad index funds, and try to stay away from high expense managed funds. There's quite a lot of evidence that managed funds do not provide any benefit over index funds, and their higher expenses eat into your returns. Avoid.
Bad time to have started a new 401k a few months ago 😂
-11.53% Personal Rate of Return💀
Even though markets are enjoying a sweet Halloween rebound on Wednesday, the Nasdaq is still down 9% in October. It's on track for its worst month since November 2008.
Good news for retirement savers. 2019 401k individual contribution limits went up to $19000 (from $18500), +6000 for people above 50, and the IRA limit finally went up, as well, increasing to $6000 (from $5500), +1000 again for people above 50.
https://www.forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more/#2c122112776c
https://www.forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more/#2c122112776c
Talked to my financial advisor this morning. Still on track to retire at age 65 and able to pull 70-75% of my current income for the 23 years following that retirement, according to their conservative estimates. If I get social security (lol) and the market performs above average (lmao) then it is over 100% of my current income.