Support NeoGAF

[M-PG71C]

Today was a good day.

Indeed. Hopefully the markets will continue to hold steady and avoid volatility, the gains across the board have helped reduced my losses from Jan considerably. And even despite that, I'm still up overall YOY so it can only get better honestly.

 

[Smiley90]

Yeah after today, everyone should've made up any January losses I think. Let's hope the volatility isn't as big for the rest of the year.

 

[teh_pwn]

Indeed. Hopefully the markets will continue to hold steady and avoid volatility, the gains across the board have helped reduced my losses from Jan considerably. And even despite that, I'm still up overall YOY so it can only get better honestly.

Markets continuing to do well is extremely important as we're in the final phases of shaking off the 2008 recession. Global PMI is 54 and rising. Unemployment is dropping. We're crossing the chasm into a bull market. Increased rate of innovation, invention, and salary reviews. No more sitting on highly productive ideas that require a bit of capital because "but, but, the Greeks!".

 

[teh_pwn]

Questions as a noob here:

Now I'm a Canadian so I don't know worrying about currency exchange would be worth it for me to get American ETF such as Vanguard. Fortunately, Canada has the iShares which seems to operate very similarly to the Vanguards. Here is an example of their index fund of the Toronto Stock Exchange (TSX): XIU

I'm pretty happy about its very low commissions and fees and have brought these data up with my bank investment advisor. The advisor has all sorts of charts and graphics that seem to show how dividend funds have higher rate of return. Here are some fund examples they recommended me for a balanced return:

https://www.google.ca/finance?q=MUTF_CA:RBF264&ei=nAb4UqCDM6eniAKYxAE
https://www.google.ca/finance?q=MUTF_CA:RBF591&ei=nAb4UqCDM6eniAKYxAE
https://www.google.ca/finance?q=MUTF_CA:RBF590&ei=nAb4UqCDM6eniAKYxAE
https://www.google.ca/finance?q=MUTF_CA:RBF559&ei=nAb4UqCDM6eniAKYxAE
https://www.google.ca/finance?q=MUTF_CA:RBF496&ei=nAb4UqCDM6eniAKYxAE

What do you guys think ? I don't find the return to be exceptionally high and it has higher MER. However, these funds do provide plenty of dividends throughout so I guess maybe that makes a difference ?

Also, what is a good online brokerage for Canadians to use to buy iShares stocks if, indeed, the iShares are much better and I should get those instead ? RBC Direct Investment is costly and I hope to find a cheaper place.

Do none of these things. Wow. Might as well as put cash under your mattress. At least for all but 1-2 of those.

Edit: Nope, the seemingly somewhat rational funds with stocks are super high in fees. Avoid these like the plague.

What is an international currency blend index? Reminds me of luxury bottled water tasting.

 

[M-PG71C]

Markets continuing to do well is extremely important as we're in the final phases of shaking off the 2008 recession. Global PMI is 54 and rising. Unemployment is dropping. We're crossing the chasm into a bull market. Increased rate of innovation, invention, and salary reviews. No more sitting on highly productive ideas that require a bit of capital because "but, but, the Greeks!".

And with it, somehow, I hope we'll see more middle class job growth, increased salaries, and for me on a personal level, a revived healthcare industry. My wife and I are RNs and while things are peachy on my end at the VA, things are not looking so hot on her end. Hopefully by the time she finishes her DNP and become a nurse practitioner, the heathcare industry will have undergone it's necessary transition.

Yeah after today, everyone should've made up any January losses I think. Let's hope the volatility isn't as big for the rest of the year.

Absolutely, unfortunately for me I won't know for sure till tomorrow. My retirement is through a TSP with the VA and it's always one day behind in data/tracking.

 

[RustyNails]

Markets continuing to do well is extremely important as we're in the final phases of shaking off the 2008 recession. Global PMI is 54 and rising. Unemployment is dropping. We're crossing the chasm into a bull market. Increased rate of innovation, invention, and salary reviews. No more sitting on highly productive ideas that require a bit of capital because "but, but, the Greeks!".

How far up can Dow go? I'm sure there will be a crash within a decade or two, but is there an artificial cap on it?

 

[teh_pwn]

And with it, somehow, I hope we'll see more middle class job growth, increased salaries, and for me on a personal level, a revived healthcare industry. My wife and I are RNs and while things are peachy on my end at the VA, things are not looking so hot on her end. Hopefully by the time she finishes her DNP and become a nurse practitioner, the heathcare industry will have undergone it's necessary transition.

That's a whole other can of worms.

I'm in engineering....probably one of the last sustainable middle class jobs. Even in there salaries are constantly deferred, budgets for really essential productivity gains shelved, accounting trickery to temporarily improve earnings, hiring reduced (and in other companies layoffs/hiring cycles).

I'm so fucking tired of the irrationality and long term detrimental impact that a recession has on the quality of life and the progression of humanity.

 

[teh_pwn]

How far up can Dow go? I'm sure there will be a crash within a decade or two, but is there an artificial cap on it?

So first of all, DOW is an arbitrary weighted index of just 30 companies. It was created to sell newspapers. Ignore it.

S&P 500 is a better index.

Second, the stock market isn't some meaningless set of numbers. When you buy stock, you own a tiny piece of a company. That money can be used to raise capital to buy equipment, hire people, build careers, create a revenue stream, and hopefully profit. It allows people to contribute to society and create products and services that improve the per capita productivity of society or add aesthetic value to it through arts that can inspire.

The market's price is short term valuation based on many factors.

Long term it grows because it's a reflection of the progression of humanity.

Will humanity continue to innovate and invent? Absolutely. For a long time. Just google all of the applications of Graphene. That stuff will be the plastics and oil of our time, and it's probably 5-10 years from market. From 50x faster CPUs to super capacitors. That's just 1 thing.

 

[M-PG71C]

That's a whole other can of worms.

I'm in engineering....probably one of the last sustainable middle class jobs. Even in there salaries are constantly deferred, budgets for really essential productivity gains shelved, accounting trickery to temporarily improve earnings, hiring reduced (and in other companies layoffs/hiring cycles).

I'm so fucking tired of the irrationality and long term detrimental impact that a recession has on the quality of life and the progression of humanity.

Sad, huh? Healthcare jobs are much in the same way as engineering, the last sustainable middle class jobs. We've done well for the past couple of years despite the economy but the ACA has had some negative impacts on smaller health systems. As a result, there is consolidation and the like kicking the industry down.

On the other hand, though, there is significant expansion of "First Assist" clinics, preventative care models, among others. It's not the first time the healthcare industry had to change their model to make money, nor will it be the last. Hopefully in a couple of years calm and controversy will wade and opportunity will show itself.

But yeah man, I completely agree with you. This recession sucked balls.

 

[AntoneM]

And with it, somehow, I hope we'll see more middle class job growth, increased salaries, and for me on a personal level, a revived healthcare industry. My wife and I are RNs and while things are peachy on my end at the VA, things are not looking so hot on her end. Hopefully by the time she finishes her DNP and become a nurse practitioner, the heathcare industry will have undergone it's necessary transition.



Absolutely, unfortunately for me I won't know for sure till tomorrow. My retirement is through a TSP with the VA and it's always one day behind in data/tracking.

Made a 28% return last year in TSP. It would have been higher in a S&P 500 index fund (29.X percent), but I have some of my contributions going to the TSP federal securities. Still, it's well managed and has a stupidly low cost ratio.

 

[RustyNails]

So first of all, DOW is an arbitrary weighted index of just 30 companies. It was created to sell newspapers. Ignore it.

S&P 500 is a better index.

Second, the stock market isn't some meaningless set of numbers. When you buy stock, you own a tiny piece of a company. That money can be used to raise capital to buy equipment, hire people, build careers, create a revenue stream, and hopefully profit. It allows people to contribute to society and create products and services that improve the per capita productivity of society or add aesthetic value to it through arts that can inspire.

The market's price is short term valuation based on many factors.

Long term it grows because it's a reflection of the progression of humanity.

Will humanity continue to innovate and invent? Absolutely. For a long time. Just google all of the applications of Graphene. That stuff will be the plastics and oil of our time, and it's probably 5-10 years from market. From 50x faster CPUs to super capacitors. That's just 1 thing.

Wow that's a crazy graph. Thanks for the perspective.

 

[LJ11]

So my cousin asked me to help him out with his 401K, since I have a better understanding of it than he does. Unfortunately for him, they have American Funds, the expense ratios on these funds are nuts, 1.4 to 1.6% is the norm. AF offers "cheaper" shares but his plan limits him to the expensive ones, lol.

Not sure what to tell him at this point, thinking of just telling him to invest up to the match and that's it. First 3% is dollar for dollar, after that it's .50 cents up to 5%. It's a shitty fucking plan.

 

[M-PG71C]

Made a 28% return last year in TSP. It would have been higher in a S&P 500 index fund (29.X percent), but I have some of my contributions going to the TSP federal securities. Still, it's well managed and has a stupidly low cost ratio.

I got those returns between my old plan and new because I didn't join the federal government until around October or so. My previous employer did had a good 401(k). 3%of your salary in with a 4% match dollar-for-dollar. The Feds in comparison has a 1% salary in, 3% match dollar for dollar, 1% for fifty cents on the dollar or some odd shit like that. Basically, 5% in versus 7% from the other.

But you are right, that expanse ratio is awesome. And I do get a FERS annuity/pension out of it if I stick around (Which I fully intend to) so the retirement from the government is pretty legit IMHO.

 

[Piecake]

So my cousin asked me to help him out with his 401K, since I have a better understanding of it than he does. Unfortunately for him, they have American Funds, the expense ratios on these funds are nuts, 1.4 to 1.6% is the norm. AF offers "cheaper" shares but his plan limits him to the expensive ones, lol.

Not sure what to tell him at this point, thinking of just telling him to invest up to the match and that's it. First 3% is dollar for dollar, after that it's .50 cents up to 5%. It's a shitty fucking plan.

I would suggest that he talk to his HR department and see about getting Index funds into the plan, or at least allow him to invest in the cheaper ones. Hopefully the HR manager is nice and is not getting some kickback for offering this shit to his/her employees. Thats pretty ridiculous.

He should invest up to the match and then stop. After that, open up an IRA on his own and buy some index fund/s for that.

 

[Randolph Freelander]

Today was a good day.

I've been meaning to ask, did you buy back in after that hasty sell?

Despite last Monday, where my 401K fell 2.8% in a day, I finished last week up overall. I'm still down about 1.5 points for the year. and a bit more than 2 off my peak on January 22, but I was down almost 6 as of EOD Monday, so it's a nice (and quick) recovery.

 

[LJ11]

I would suggest that he talk to his HR department and see about getting Index funds into the plan, or at least allow him to invest in the cheaper ones. Hopefully the HR manager is nice and is not getting some kickback for offering this shit to his/her employees. Thats pretty ridiculous.

He should invest up to the match and then stop. After that, open up an IRA on his own and buy some index fund/s for that.

I'm not sure he's going to get HR to do anything, I told him to talk to the powers that be, he was reluctant so we just contacted the American Funds rep who shot us down. I'll push the issue with him when we talk tomorrow, has to at least try. He's an apprentice in a union, so I'm guessing it's going to be difficult to get any changes made. His coworkers are completely oblivious too, asked why no one has spoken up about it, they don't know any better so they just pick whatever AF is pimping.

So if he can't get any lost cost funds/indices, I'll suggest he invest up to the company match (5%) and then go with an IRA w/ low cost indices. Hate being put in this position since it's family, and I'm not sure he has much recourse.

Thanks for the help.

 

[RustyNails]

I've been meaning to ask, did you buy back in after that hasty sell?

Despite last Monday, where my 401K fell 2.8% in a day, I finished last week up overall. I'm still down about 1.5 points for the year. and a bit more than 2 off my peak on January 22, but I was down almost 6 as of EOD Monday, so it's a nice (and quick) recovery.

Yes I did ^^

Vanguard wouldn't let me re-buy the same funds because of the frequency policy, but I got something similar.

 

[Piecake]

I'm not sure he's going to get HR to do anything, I told him to talk to the powers that be, he was reluctant so we just contacted the American Funds rep who shot us down. I'll push the issue with him when we talk tomorrow, has to at least try. He's an apprentice in a union, so I'm guessing it's going to be difficult to get any changes made. His coworkers are completely oblivious too, asked why no one has spoken up about it, they don't know any better so they just pick whatever AF is pimping.

So if he can't get any lost cost funds/indices, I'll suggest he invest up to the company match (5%) and then go with an IRA w/ low cost indices. Hate being put in this position since it's family, and I'm not sure he has much recourse.

Thanks for the help.

Well, if he is in a union job he should talk to his union rep. Tell him to give him the information on why index funds are needed. Easiest way to do that is use the statistics. 1.5% ER can cost hundreds of thousands of dollars over 30-40 years, past performance does not mean future returns, and barely any actively managed funds can consistently beat the index.

Have him tell his union rep that the AF rep is ripping them off and lining his pockets by shoving these stupidly expense funds on you while he is getting kickbacks from the mutual fund company.

 

[LJ11]

Well, if he is in a union job he should talk to his union rep. Tell him to give him the information on why index funds are needed. Easiest way to do that is use the statistics. 1.5% ER can cost hundreds of thousands of dollars over 30-40 years, past performance does not mean future returns, and barely any actively managed funds can consistently beat the index.

Have him tell his union rep that the AF rep is ripping them off and lining his pockets by shoving these stupidly expense funds on you while he is getting kickbacks from the mutual fund company.

I'll tell him, heck I've already told him it's a ripoff, but I'm not sure he'll take it that far, you and I probably would, but he doesn't want to rock the boat. He should though, it's a fucking joke. They're all getting screwed but no one knows any better.

 

[arglebargle]

So first of all, DOW is an arbitrary weighted index of just 30 companies. It was created to sell newspapers. Ignore it.

S&P 500 is a better index.

Second, the stock market isn't some meaningless set of numbers. When you buy stock, you own a tiny piece of a company. That money can be used to raise capital to buy equipment, hire people, build careers, create a revenue stream, and hopefully profit. It allows people to contribute to society and create products and services that improve the per capita productivity of society or add aesthetic value to it through arts that can inspire.

The market's price is short term valuation based on many factors.

Long term it grows because it's a reflection of the progression of humanity.

Will humanity continue to innovate and invent? Absolutely. For a long time. Just google all of the applications of Graphene. That stuff will be the plastics and oil of our time, and it's probably 5-10 years from market. From 50x faster CPUs to super capacitors. That's just 1 thing.

Wow that's a crazy graph. Thanks for the perspective.

hidden in this graph is also the reason why returning to the gold standard is such an awful idea. decades long periods of deflation are extremely painful for the vast majority of the population.

 

[GhaleonEB]

I would suggest that he talk to his HR department and see about getting Index funds into the plan, or at least allow him to invest in the cheaper ones. Hopefully the HR manager is nice and is not getting some kickback for offering this shit to his/her employees. Thats pretty ridiculous.

He should invest up to the match and then stop. After that, open up an IRA on his own and buy some index fund/s for that.

IIRC, American Funds are sold exclusively through brokers with commissions. In addition to the expense ratio most of their classes of shares have a front end load and the broker gets a portion of that load as their commission. So his employer is almost certainly getting a commission on it; if it's a small company, the HR manager. Meanwhile the employees are getting fucked royally.

(I used to be on American Funds, as that's where my college money was when I got it. I ditched them for Fidelity a year ago and transitioned to index funds. Oh, to have those fees back....)

Edit: their share classes:

We offer two types of share classes, one for our regular mutual fund shares and another for CollegeAmerica, our 529 college savings plan. These include:

Class A and 529-A shares — Front-end sales charge and lower expenses.
Class B and 529-B shares — Back-end sales charge and higher expenses.
Class C and 529-C shares — Back-end sales charge and higher expenses.
Class F-1, F-2 and 529-F-1 shares — No sales charge. Offered only through participating fee-based programs.

The high expense ratios are only half the story. They are terrible, awful no good very bad funds. People are noticing and fleeing them:

After skating through the dot-com stocks fiasco with little damage, American Funds has had a brutal stretch. Its five largest funds as of Dec. 31, 2007, have all underperformed the Standard & Poor’s 500-stock index through Sept. 30, and investors have pulled out $246 billion over that time.

....for Vanguard's index funds:

The firm’s approach—choosing stocks by looking at individual companies’ financial data—has taken a beating at the hands of indexing, the passive method championed by John Bogle and the company he founded, Vanguard Group. Bogle argues that the average active manager, after fees, fails to beat the overall market. Active managers who do outperform, he says, can’t repeat the feat with enough predictability to make their funds good long-term investments.

Judged by the flows of investor cash, Vanguard has been winning the argument. Since the end of 2007, it has gobbled up $613 billion, mostly in its index mutual funds and index-tracking exchange-traded funds.

 

[TrAcEr_x90]

SS?? I just dont see there being any real ss money by the time we all retire...

.

 

[GhaleonEB]

I might be misunderstanding your post. The broker and employer are not one and the same

I am a business owner. I have 100 employees. I need a 401k.

I go to a broker dealer and speak to a financial advisor. I tell him I need a 401k plan. He shops for 401ks around. Regardless whom he picks, he is getting paid by the fund family he goes to as you mentioned (if he uses AF 401k, he gets paid a portion of their fees in form of commissions).

So the financial advisor comes to me. He introduced me to American Fund wholesaler. I like it. I implement it know fees I and my employees will pay.

That's it. I , the employer, do not get paid by American funds or by my financial advisor. I am paying AF who splits their commission with the financial advisor.

Perhaps I misunderstood the relationship as it was described; it sounded like the company was acting as the broker and making the commissions. If that's not the case then that conflict of interest lies with the broker not the company.

Regardless, that was not my primary point: the employees, by virtue of using American funds, are getting a really awful set of investments. Not only do they lag the overall market greatly - in no small part due to the high expense ratios - they also have a high fee structure in place with the loads. Employees are going to lose hundreds of thousands of dollars to those fees over the course of their employment and retirement. The employer is doing them a massive disservice. Either because they are getting bad advice from a broker who is making money by selling AF, or because they are getting part of that commission directly. It doesn't really matter, as the result is the same.

Thanks for clarifying the relationship.

 

[Piecake]

SS?? I just dont see there being any real ss money by the time we all retire...

.

We can easily fund SS forever with a few minor tweaks. The SS crisis is hugely overblown. The only way it becomes a crisis is if we decide to do something really fucking stupid.

I mean, honestly, does that look like a program in trouble or out of control?

 

[GhaleonEB]

That's true. I loathe AF personally

They also have a counsel team who get together and decide what positions stick or don't in their funds. It's a hive mind decision within a select group of people. What this means is that there is little consideration to bottom - up research. They tend to go with trending assets. A lot of their funds have overlap, which means that your numerous funds with them all share a lot of the same individual stocks.

Horrid.

I'd noticed the overlap, but wasn't aware of their structure. The more I read about American Funds the more I realized I had to get out of them. I really wish I had a time machine and could go back several years. :\

 

[gooderthanu]

Oh, it definitely is, but diversification is important as well. Maybe I simply missed what the expense ratio of the 2050 fund was, but those lifetime retirement funds should be quite cheap, like .20 expense ratio cheap. I am really not quite sure why your other index fund costs .6 though, so you might just have a bad 401k that hikes up the ER of funds.

Actually her 2050 fund is at .78 in fees!!!!

She has a vanguard sp500 index fund VINIX at 0.04 and a VANGUARD SMALL CAP INDEX INSTL at 0.08. I'm thinking 80/20 or something like that. the small cap had 37-38% growth

 

[Piecake]

Actually her 2050 fund is at .78 in fees!!!!

She has a vanguard sp500 index fund VINIX at 0.04 and a VANGUARD SMALL CAP INDEX INSTL at 0.08. I'm thinking 80/20 or something like that. the small cap had 37-38% growth

Yea, that right there is the best plan.

 

[clav]

I found out my workplace offers a SIMPLE IRA.

Should I fill that first, then the Roth IRA or the other way around?

I think I plan to convert the SIMPLE IRA to a Roth IRA although there is a Simple IRA stipulation that includes conversions: can't touch funds for 2 years.

 

[Piecake]

I found out my workplace offers a SIMPLE IRA.

Should I fill that first, then the Roth IRA or the other way around?

I think I plan to convert the SIMPLE IRA to a Roth IRA although there is a Simple IRA stipulation that includes conversions: can't touch funds for 2 years.

Unless you can't do this because of fund minimums, I'd fund the SIMPLE up to the match, then fill out your Roth, then Fill up the SIMPLE. If you plan to roll it over into a Roth IRA, might as well put as much money into your Roth as you can to begin with

 

[gooderthanu]

Ok another question... If I have student loan debt but about half of it is at 3.5% and the other half is 6.5%. I know to pay down the 6.5% first but I was wondering what about investing? Do I always want to invest for retirement? Do I want to invest for having more money throughout the year? I know it would be taxed but how much is taxed and does it beat out 6.5% on student loans? Also have my house payment but I only throw a little extra on that at 4%. Realistically I could probably invest 5k a year into student loans or another index fund on the side or more into retirement?

 

[vehn]

edit: nm

 

[clav]

Unless you can't do this because of fund minimums, I'd fund the SIMPLE up to the match, then fill out your Roth, then Fill up the SIMPLE. If you plan to roll it over into a Roth IRA, might as well put as much money into your Roth as you can to begin with

If I'm not mistaken, I don't qualify for SIMPLE IRA unless I've been at the company for two years.

Eh, I'll ask HR later today.

 

[GhaleonEB]

So I transferred a bunch of my money last year into another fund, which generated a tax event. I thought it would be all a "long term transaction" (so only 15% tax), but $4,500 of the gains went to long term and $900 to short term.

I just put in all of that data into my tax stuff, and it's showing up as me owing $1,500 on my gains of $5,500. Isn't a 28% tax rate a bit high? Most of it is short term which I thought would only be a 15% tax rate.

Are you in the 28% tax bracket? Short term is taxed as income at your top income tax bracket, long term at the 15% rate.

 

[Smiley90]

Ok another question... If I have student loan debt but about half of it is at 3.5% and the other half is 6.5%. I know to pay down the 6.5% first but I was wondering what about investing? Do I always want to invest for retirement? Do I want to invest for having more money throughout the year? I know it would be taxed but how much is taxed and does it beat out 6.5% on student loans? Also have my house payment but I only throw a little extra on that at 4%. Realistically I could probably invest 5k a year into student loans or another index fund on the side or more into retirement?

Always pay off debt before investing. You'll make/save more money this way.

 

[vehn]

Are you in the 28% tax bracket? Short term is taxed as income at your top income tax bracket, long term at the 15% rate.

bleh actually i calculated it a bit wrong, plus entered in something wrong in the form. seems to be a bit better now

 

[Cyan]

Always pay off debt before investing. You'll make/save more money this way.

I don't know that I'd agree with this advice. It depends very much on personal situation: interest rate, investment possibilities, and so on.

Like, 6.5% interest is high enough that I'd probably pay that off before investing in anything. But then, if I had a 401k option with matching (i.e. a guaranteed 100% instant return on investment), I'd probably do that first, before paying off any debt.

Then also, how high is my income relative to my debts, what are my expenses like, etc. "Always pay off debt first" is much too broad.

 

[Randolph Freelander]

Always pay off debt before investing. You'll make/save more money this way.

Lies.

It's requiring more self control for me to not be more aggressive with my car loan, which is 2.9%. Prioritizing that over an investment that brings in 9% is absurd. I'm still paying down my loan a bit faster than required, sort of hedging, I guess, but anything significantly more than what I'm doing is quite irresponsible.

 

[GhaleonEB]

I don't know that I'd agree with this advice. It depends very much on personal situation: interest rate, investment possibilities, and so on.

Like, 6.5% interest is high enough that I'd probably pay that off before investing in anything. But then, if I had a 401k option with matching (i.e. a guaranteed 100% instant return on investment), I'd probably do that first, before paying off any debt.

Then also, how high is my income relative to my debts, what are my expenses like, etc. "Always pay off debt first" is much too broad.

To add a couple thoughts, another factor is your debt tolerance. We hear about risk tolerance a lot in investing, but I think there's a similar concept with debt. Personally, I find being in debt stressful and pay it off fast, perhaps faster than I mathematically should given other investment opportunities. My quality of life is simply better if I'm not worrying about it. (I grew up with my parents marriage collapsing under a crushing debt load.)

There does get to be a point where paying down very low interest debt faster vs. investing becomes downright foolish - don't pay down a 2% loan while starving a 401k match, as Cyan said. A rule of thumb is to put extra money into what's going to get you the biggest return. If your debt interest is low, the money will be put to work more effectively in other investments. If it's high, it might be better to pay it down.

Unless it's absurdly low interest, somewhere in between is probably the right answer, with the variation being caused by your debt tolerance, investment opportunities, level of debt, age, etc. Always pay off debt first is not sound advice. You can't make up time if you focus on loans and lose 10 years of retirement investing since it's so dependent on long term compounding.

 

[simplayer]

Newbie here; please help!

So, I just started investing in my companies 401k, and I've put the lion's share of my investments (80% of the weekly 401k investment) into this:
http://money.usnews.com/funds/mutual-funds/target-date-2051%2B/blackrock-lifepath-index-2055-portfolio/livax/performance

I thought it would be fairly stock heavy, but the returns are pretty terrible compared to index funds (13% last year vs ~30% for index funds)

So I'd like some opinions on funds I have available:

https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0528
https://fundresearch.fidelity.com/mutual-funds/summary/316071109
http://quotes.morningstar.com/fund/NSCRX/f?t=NSCRX
https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=1860
http://www.marketwatch.com/investing/fund/wfdsx
https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=1870

For Vanguard, the funds are classified as InstPls generally (though employee benefit index is listed as Client A, whatever that means).

I'm leaning towards a split between Vanguard employee Benefit (over extended market due to lower expense ratio) and the Vanguard total Intl market.

Am I totally off base there?

 

[Piecake]

Newbie here; please help!

So, I just started investing in my companies 401k, and I've put the lion's share of my investments (80% of the weekly 401k investment) into this:
http://money.usnews.com/funds/mutual-funds/target-date-2051%2B/blackrock-lifepath-index-2055-portfolio/livax/performance

I thought it would be fairly stock heavy, but the returns are pretty terrible compared to index funds (13% last year vs ~30% for index funds)

So I'd like some opinions on funds I have available:

https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0528
https://fundresearch.fidelity.com/mutual-funds/summary/316071109
http://quotes.morningstar.com/fund/NSCRX/f?t=NSCRX
https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=1860
http://www.marketwatch.com/investing/fund/wfdsx
https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=1870

For Vanguard, the funds are classified as InstPls generally (though employee benefit index is listed as Client A, whatever that means).

I'm leaning towards a split between Vanguard employee Benefit (over extended market due to lower expense ratio) and the Vanguard total Intl market.

Am I totally off base there?

I think you are on the right track, but I would include the extended Market fund. The Vanguard Employee benefit fund tracks the SP 500, meaning that it does not include many mid caps and all small caps. You are losing out on diversification if you don't invest in the the extended market.

I would probably put 50% into the SP 500 fund, 10% into the Extended market (maybe 45-15), and 40% into Total international.

 

[blitz64]

Index funds is a great way to invest for retirement.

I suggest this website:
http://www.bogleheads.org/wiki/Main_Page

 

[Chumly]

Alright GAF save me. My wife is currently invested in a 403b program through Edward jones and with American funds. I would love to get out if I can. Long story short she is a teacher but with a kind of contracted program. There is no employer wide retirement program but she can set up an individual 403b which they match at 50%.

When I look online it's all about employer 403b programs so I'm trying to figure out where I can go to get a cheaper individual 403b plan.

 

[simplayer]

I think you are on the right track, but I would include the extended Market fund. The Vanguard Employee benefit fund tracks the SP 500, meaning that it does not include many mid caps and all small caps. You are losing out on diversification if you don't invest in the the extended market.

I would probably put 50% into the SP 500 fund, 10% into the Extended market (maybe 45-15), and 40% into Total international.

Cool, thanks for the advice!

 

[Piecake]

Alright GAF save me. My wife is currently invested in a 403b program through Edward jones and with American funds. I would love to get out if I can. Long story short she is a teacher but with a kind of contracted program. There is no employer wide retirement program but she can set up an individual 403b which they match at 50%.

When I look online it's all about employer 403b programs so I'm trying to figure out where I can go to get a cheaper individual 403b plan.

I guarantee that she is getting screwed over by fees. Edward Jones and American Funds are absolutely terrible. She is likely going to have to talk to the school or school district to see how she goes about changing the funds in her 403b

 

[Chumly]

I guarantee that she is getting screwed over by fees. Edward Jones and American Funds are absolutely terrible. She is likely going to have to talk to the school or school district to see how she goes about changing the funds in her 403b

See that's the problem. The school has her set up her own individual 403b program with a broker. We can go anywhere as long as we can find a broker to set up out own 403b. All the school does is literally mail a check to the broker to then invest the money. They are 100 percent hands off otherwise. The problem I'm running in to us that were getting destroyed by loads and fees by doing this.

 

[Unknown Soldier]

I'm late to saying this, but great OP and great thread.

I happen to own some Google and Boeing and that's up like crazy but I also own other individual stocks which have underperformed the market. Owning individual stocks is fun but I'm focusing on weighting my Vanguard Total Stock Market + Total International Market ETFs until they are at least 75% of my portfolio. Yeah, I buy these things as ETFs, it's just more convenient that way.

 

[Piecake]

See that's the problem. The school has her set up her own individual 403b program with a broker. We can go anywhere as long as we can find a broker to set up out own 403b. All the school does is literally mail a check to the broker to then invest the money. They are 100 percent hands off otherwise. The problem I'm running in to us that were getting destroyed by loads and fees by doing this.

That is very very odd. I looked at Vanguard and they seem to offer one to Employers, but not sure how that would work for your wife since she is an employee.

http://www.403bcompare.com/Employee/Vendor/VendorBrowse.aspx

That site says that Vanguard is a vendor, so who knows? You can call them up and find out. Fidelity is also on there.

Yea, if you can't find anything good, I would just invest up to the match and then fully fund your IRA.

 

[Piecake]

Companies Squeeze 401K Plans From Facebook to JPMorgan

The most frugal have been scaling back company matches and setting lower limits for the maximum annual payment they’ll make to a 401(k) account, according to hundreds of government filings analyzed by Bloomberg. A difference of three percentage points on a match can add up to hundreds of thousands of dollars lost for employees over the course of their careers.

“There’s been an implicit contract for years and years -- workers save and companies match -- but now they’re changing the rules,” said Brigitte Madrian, a Harvard Kennedy School professor who studies retirement policy and corporate management. “Most individuals can’t do it on their own. We’re going in the wrong direction.”

It hasn’t worked out that way. The median balance in 401(k) and individual retirement accounts for households headed by people ages 55 to 64 who had accounts at work was just $120,000 in 2010, according to the Center for Retirement Research at Boston College.

Those savings will provide only $4,800 a year, assuming seniors withdraw 4 percent annually, the amount recommended by retirement benefits experts to ensure retirees don’t run out of money in their lifetimes. Financial planners say that retirees need savings of at least 10 times their annual income to live comfortably.

Companies that adopted 401(k) plans have realized they can adjust them, tinkering with the plumbing and, in the process, costing workers millions in retirement savings. What’s more, contributions aren’t mandatory as they generally are in traditional pensions. Since 401(k) contributions are measured as a percentage of payroll, the savings from any cuts are realized immediately. Some employers are changing what they offer to lower their own expenses and improve profits.

We have a severe retirement crisis on our hands. 55-65 year olds who have a 401k only have 120k in it (if you include people who don't, its 12k). And companies are taking action to reduce their contributions which can cost hundreds of thousands of dollars to employees. All for the sake of more profit and a higher stock price.

Depressing stuff.

I wonder if we will get to the point where 401ks are basically an expensive IRA because companies stopped matching. At that point, I would hope that congress drastically increase the contribution rate for IRAs

 

[clav]

If I'm not mistaken, I don't qualify for SIMPLE IRA unless I've been at the company for two years.

Eh, I'll ask HR later today.

Unless you can't do this because of fund minimums, I'd fund the SIMPLE up to the match, then fill out your Roth, then Fill up the SIMPLE. If you plan to roll it over into a Roth IRA, might as well put as much money into your Roth as you can to begin with

I asked HR, and the Simple IRA is with Ameriprise.

Thoughts?

 

[Piecake]

I asked HR, and the Simple IRA is with Ameriprise.

Thoughts?

I honestly don't know anything about the company or much about SIMPLE IRAs either. I am simply going under the assumption that they function similar to a 401k and 403b.

That said, the company really isn't important (unless they have stupidly high maintenance fees), the funds that the company offers is important.

http://www.bogleheads.org/forum/viewtopic.php?t=52084

Its rather old, but you should apparently watch out for high load fees on the funds.