There's a fairly even split of people I guess. Who knows what it will be like next year.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
There's a fairly even split of people I guess. Who knows what it will be like next year.
TheRagnCajun
Member
Well yesterday showed us why they often call after hours "amateur hour". It will be interesting to see how the markets react long term. I don't think the republican congress will let Trump do anything suicidal with respect to trade a la Brexit
Randolph Freelander
Member
The only time better to open an IRA than the present is the past.
As far as multiple accounts, people can end up with multiple 401Ks by changing jobs and leaving your funds behind. It creates a little more complexity when you're trying to keep track of where you stand. You can solve this by either consolidating into your current employer's 401K, or rolling your old 401K(s) over into an IRA.
Randolph Freelander
Member
Good grief, they're robbing you in plain sight. If its within your ability, find somewhere better to work if the employer cannot or will not find a better plan provider. This is outrageous.
It's probably in his best interest to actually try to do something about the economy in ways that benefits him. So for the short term the jitters might settle for now. Medium and long term, who knows, since no one knows what he's really going to do as those things were barely discussed. I feel the foreign policies will be the ones destroying whatever gains he can make domestically. But for someone that's still in it for 20-30 years it's probably going to be alright regardless of what happens the next few years. The part that's difficult for me to decide personally is the non-retirement part of investment since we are hopeful to be able to move to a slightly larger place in a few years. I would just put the money aside now if it weren't for the fact that I live in an area where the down payment is fairly substantial. Letting that sitting around for an unknown period of time seems quite wasteful.
GodParticle
Member
So I put in for a roth IRA with vanguard, but I'm lost as to where to put the money. If I want to do a simple target date, where on the site/how do I do that? It shows under my account that I have "Vanguard Federal Money Market Fund (Settlement fund)"
You need to click Buy/Sell or "Exchange" and pick the Target Fund (or whatever) you want.
Thanks!
GodParticle
Member
Ok, I figured out the process, but not sure what to pick from. I wanted a simple target fund, but the expense ratio is like .15%. I looked at other things like index funds and they also seem to be around that. Isn't that really high?
Darren870
Member
I post in here. I'm American but have a retirement accounts in Australia, US and UK.
What info are you looking for? Basic principles apply no matter where you live though.
Randolph Freelander
Member
0.15% is fine, particularly as compared to other target date funds. I'd be surprised if you can find better for that category, actually.
GodParticle
Member
Oh, ok. I'll test it a while and see how it goes
demosthenes
Member
Vtsax and Vtsax haven't had dividends since 2014 according to Google finance? Don't have access to my vanguard account atm to see if that's true or not. Why would that be?
A portfolio I have of mostly blue chips is so weird since the election. WFC went up 5-7% two days in a row, while AMZN did the opposite. Strange that BABA is down post singles day, but I take it the market predicted it to be a little better, despite the sales records.
NKE, COST, KO, AAPL, SBUX, XOM, JNJ, WFC, F, BABA, AMZN, TSLA. Overall flat, if not slightly down.
NKE, COST, KO, AAPL, SBUX, XOM, JNJ, WFC, F, BABA, AMZN, TSLA. Overall flat, if not slightly down.
Randolph Freelander
Member
Google just isn't displaying the right information.
https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT#tab=4
hockeypuck
Member
So I finally opened a Vanguard IRA today, and it looks like I can only choose from their pool of mutual funds. I chose their VFINX index fund, but can I later switch to their similar VOO ETF so I can take advantage of going from an expense ratio of 0.16% to 0.05%?
Edit: oh crap, because I want to eventually perform a backdoor Roth conversion, I should've initially gone for a money market fund to avoid Mistake #4. Should I switch it to a money market fund preconversion?
Edit: oh crap, because I want to eventually perform a backdoor Roth conversion, I should've initially gone for a money market fund to avoid Mistake #4. Should I switch it to a money market fund preconversion?
Yes. Vanguard has a weird system where you have to 'upgrade' your account to a Brokerage account in order to use ETFs with it. But it's just a matter of clicking some buttons.
It doesn't really matter that much. It's the "Let it sit" part that's the mistake. If you don't wait forever to do the conversion you probably won't notice much difference. If you were to let the money sit intentionally (for instance if you were afraid of the step transaction doctrine) it's still not necessarily the case that you are better off putting it in a money market account. Yes, you have to pay ordinary income tax on the gains when you convert, but you get to keep the rest of the gains, which is probably something like 70-75% of it.
TheOfficeMut
Unconfirmed Member
Hi,
I'd like to invest in index funds through Vanguard. I have my account and can transfer up to 10,000 right now. Being that the OP is a little outdated I'd like to know which index fund is the best to invest in at the moment? I'm looking for above-average returns - no need to keep it modest.
Thanks
I'd like to invest in index funds through Vanguard. I have my account and can transfer up to 10,000 right now. Being that the OP is a little outdated I'd like to know which index fund is the best to invest in at the moment? I'm looking for above-average returns - no need to keep it modest.
Thanks
demosthenes
Member
Google just isn't displaying the right information.
https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT#tab=4
Thanks, I assumed something was off.
The fund information in the OP is not outdated. Retirement investing is a longterm game. The advantage of that is that performance comes down to the fundamentals of a fund, and how it is doing "at the moment" tends not to matter all that much.
hockeypuck
Member
Apparently when I opened my account it automatically became a Brokerage account (I guess Vanguard sets that as the default nowadays?).
So, looking at the $5,500 contribution I made in my IRA account, I cannot exchange it from the mutual fund that it is currently in for ETF shares. Correct me if I'm wrong, but I have to first sell my mutual fund, put the money in the Vanguard Federal Money Market Fund (Settlement fund), then use the money from the settlement fund so I can buy ETF shares. Is this the correct way of looking at it?
Seems awfully convoluted.
Don't have the answer to your question since I haven't done it, but if your only concern is the expense ratio, your VFINX funds will be automatically bumped to VFIAX after you hit $10K.
Well, the whole thing with index investing is to be average, instead of trying and (probably) failing to beat the market. Although you can allocate more to equities to increase expected return if you have the risk tolerance.
But as was mentioned the funds will be the same and in the US don't change much. The exception is if you're in Canada or another country where we are seeing competition heating up and driving down management expenses. So in that case you would definitely want to look around to find the current best deal. But know that all these funds ultimately invest mostly the same way and thus perform similarly, except that some might be undercutting the others in terms of MER. (And the fees do add up to be a big deal over time, so you should worry about them.)
hockeypuck
Member
Ah, that makes sense, thanks. Then I might as well stay put and wait for Admiral class.
Another question for the board:
My income level precludes me from taking any deductions/tax-deferments for IRAs. I've maxed out my 403b contributions, which takes care of the only tax-sheltered retirement investment plan that I know of that I qualify for.
The classic wisdom I've been learning is, follow these steps for retirement savings:
1) meet my employer's match for the 403b
2) max out a (Roth)-IRA, $5,500 a year
3) max out the rest of the 403b (thankfully my employer uses a decent Fidelity plan where I was able to choose a low expense-ratio index fund)
4) open a taxable account (a good problem to have, I guess)
I'm not sure if Step 2) applies to me, because I can't take any deductions from any IRA. The only tax-advantage strategy I think I can use is to perform a Roth backdoor conversion.
Here are my questions:
Edit: LOL! I tried to open a Roth-IRA account, and Vanguard won't let me since I already contributed $5,500 into my traditional IRA. But I need to contribute at least $1 to open an account. What a first-world problem. Time to wait hours on the phone for the infamous Vanguard customer service.
Edit2: Huh, I guess the website wouldn't let me contribute more than $5500 into an IRA account, that answers that. Guess I really do have to open a 3rd account (IRA, Roth IRA, "taxable") even though I personally don't see any differences between my traditional IRA and a taxable one. Edit3: nevermind, I just found out that my $5,500 per year will compound tax-deferred in a traditional IRA even if I can't take deductions. Reading is wonderful.
I'm pretty sure you can create an account at Vanguard without making a contribution. When you get to the part where it asks you how you are going to fund it, just choose the "I'll send a check" option. You don't actually have to send a check.
You then fund the account via a conversion from your other IRA. Conversions do not count as contributions.
Has anyone that watches this thread dealt with early withdrawals from an IRA for education? I'm trying to figure out if money used for rent while in school is withdrawal able penalty free if it's the not over the amount listed as room and board expense by the school. That's how I'm reading this IRA page under qualified education expenses.
https://www.irs.gov/publications/p970/ch09.html
I think I might have asked this before but don't remember.
https://www.irs.gov/publications/p970/ch09.html
I think I might have asked this before but don't remember.
My last day with my current employer is this Friday. I cannot participate in my new employer's 401(k) until I have worked there for a year. What is the best way to move my funds from my current employer's 401(k)? I was thinking of rolling it into my Vanguard Roth IRA. Would this be a good option? It would have much better funds than what I am currently invested in with my current employer's 401(k).
Thanks for any help!
Thanks for any help!
You can roll them into your IRA pretty easily, and getting them into Vanguard's low cost funds is always a good idea. You should take the opportunity to evaluate traditional IRA vs. Roth, to makes sure the latter still makes sense, but otherwise definitely do it.
https://investor.vanguard.com/401k-rollover/how-to-roll-over
What happens if I have already contributed the maximum $5,500 amount to my Roth IRA? Will a transfer from a 401k not count towards that maximum contribution amount?
Thank you!
Thanks so much for your help!
Randolph Freelander
Member
When you get there, double check that you can't participate at all or that you're just not eligible for matches for the first year. If it's the former, shame on them. If it's the latter, it's par for the course but you can still take advantage of contributions on your own (though you would favor funding your IRA before your 401K, in this case).
LucidMomentum
Member
So my company is saying in December that there's a reorganization coming out and I may or may not have a position in January.
Is there anything I need to do with my Vanguard 401(k) if I am let go?
I have about 37k put in it over the past couple of years.
I also have about 18k left in student loans, but my company doesn't match my contributions to that OFC.
Worst case, is there any way to use my 401(k) to pay down / off the student loans to drastically lower my monthly expenses in the event of a layoff, without taking a major hit on the amount in the 401(k) due to fees and taxes?
Is there anything I need to do with my Vanguard 401(k) if I am let go?
I have about 37k put in it over the past couple of years.
I also have about 18k left in student loans, but my company doesn't match my contributions to that OFC.
Worst case, is there any way to use my 401(k) to pay down / off the student loans to drastically lower my monthly expenses in the event of a layoff, without taking a major hit on the amount in the 401(k) due to fees and taxes?
Wellington
BAAAALLLINNN'
I like listening through financial podcasts. Had been going through the Afford Anything podcast by Paula Pant (whom I had heard of through Mad Fientist), it's not bad but I really like this episode on the seven stages of financial independence. Check it out if you guys are looking for anything to listen to for the afternoon. http://podcast.affordanything.com/stages-financial-independence-joshua-sheats/#more-766
I like Josh Sheats, he is the guy behind Radical Personal Finance.
Check out this link: https://www.nerdwallet.com/blog/investing/how-to-rollover-401k-roth-traditional-ira/
I like Josh Sheats, he is the guy behind Radical Personal Finance.
Check out this link: https://www.nerdwallet.com/blog/investing/how-to-rollover-401k-roth-traditional-ira/
LucidMomentum
Member
Will do, thanks! I know I have a combination of before and after tax personal contributions as well as company matched contributions so I've got some learning to do.
Good point. I will find out. Thanks!
Thanks for the heads up.
Hi guys, I have a problem and was wondering if there is a good solution here. A few years ago, my boss talked me into signing up for a Roth IRA managed by the American Fund. Problem is, this is one of those fee-heavy mutual funds and I don't want to lose out on hundreds of thousands of dollars over the next ~40+ years.
My question is this: is there a way to transfer my money out of this fund and into a low cost index fund without incurring massive fees and paying tax twice? I only have around $10k in the fund at the moment, so even if I get fucked it won't kill me, but I'd like to inquire regardless. Thanks!
My question is this: is there a way to transfer my money out of this fund and into a low cost index fund without incurring massive fees and paying tax twice? I only have around $10k in the fund at the moment, so even if I get fucked it won't kill me, but I'd like to inquire regardless. Thanks!
Yes, you can transfer it into an IRA at any other brokerage, and change funds without any issues or taxes. (Roth to Roth is no issue, and IIRC Roth to traditional IRA is also no issue, but as noted up thread there are tax implications of going from traditional IRA to Roth). You will probably pay some modest fees for closing the account with American Funds, which are largely there to deter you from doing so.
I had money in a Roth IRA for myself and my wife, paying absurd front-end fees at American Funds, for the better part of a decade. We transferred that to Fidelity, and then into Fidelity index funds with little hassle. There is some paperwork involved, but Fidelity customer service is very good and it went smoothly and quickly. They even reimbursed (or probably got back from American Funds) the account closure fee they sucked out of the IRA. My old adviser socked me with another fee on his own because he's an asshole.
After the transfer I calculated what my savings would be at retirement had I been with index funds from the beginning. It was horrifying. Get out of American Funds as soon as you can.
Transfer to Fidelity: https://www.fidelity.com/retirement-ira/ira-transfer
Transfer to Vanguard: https://investor.vanguard.com/account-transfer/transfer-ira
All things equal, there's no reason not to go with Vanguard. I went to Fidelity because our 401k is through them and it was a convenience to use one brokerage.
Thanks for the advice. Would you recommend I go to Vanguard first to ask them for assistance?
edit - actually read through the vanguard page you linked. Nevermind!
The company I work for was recently aquired by another company. The new company offers stock at a 15% discounted rate. I'd like to participate, but I'm not sure how much to buy. Apparently they sell it twice a year and you put in a percentage of your salary as what you'd like to buy. Does anyone know how that works?
The stock is MSI. I'm trying to decide if it looks like a good buy. It has seemed to have had a good rate of return for years and they're a staple in several markets, so I don't see them going anywhere anytime soon or even doing badly. If I can buy and reinvest dividends, it seems like a good long-term investment. They've had a few reverse splits, though. I'm not sure if that's good or bad. It seems bad.
Anyone have any advice to offer?
The stock is MSI. I'm trying to decide if it looks like a good buy. It has seemed to have had a good rate of return for years and they're a staple in several markets, so I don't see them going anywhere anytime soon or even doing badly. If I can buy and reinvest dividends, it seems like a good long-term investment. They've had a few reverse splits, though. I'm not sure if that's good or bad. It seems bad.
Anyone have any advice to offer?
Darren870
Member
I did this with my old company. It's called ESPP, I was putting in the max every paycheck (25% of my salary). I sold it all as soon as I got the shares though.
My company does the same, or similar.
How much to put in depends on one key detail: to what extent are you exposed to market risk to get the 15%? If you have to hold onto the stock for a period of time, it's worth thinking about how invested in company stock you want to be. If there is no market risk, then go all in, up to the max contribution - and sell the stock. Or hold a very small amount. Use it to fund your IRA, or other long term goal, but don't go heavily into company stock.
Here's how my employer plan works: I contribute via paycheck deductions to the SPP, for six months. At the end of the six months, the purchase price is the lower of the first day or last day of that six month window. That way, if the stock goes up the discount is actually 15%, plus the price appreciation. Once the shares are deposited, we can sell instantly with no cost. So it's a minimum 15% return on a six month investment with no market risk. I'd be a fool to pass it up. (We're currently using this to pay down our mortgage at an accelerated rate.) If say, I had to hold the stock for a year or more, then I'd be a bit more wary, depending on how much that meant we'd be holding.
chaosblade
Unconfirmed Member
The fees and restrictions definitely determine how good of a deal a stock benefit is. I can buy stock and get a 15% match with no fees on the purchase, but there is a flat fee + % fee on selling. It's enough to encourage holding and discourage frequent selling, so I'd rather just put that money in an index fund in my 401K.
n0razi
Member
I just opened up a Vanguard Roth IRA and maxed it out with $5,500. Now I want to invest in the starters like the 500 Index Fund and Total Stock among others but they all have a minimum of $3000 to buy. Does that mean I have to wait a couple of years to amass more than $5,500 so I can get into more than one fund?
Randolph Freelander
Member
You don't need both the S&P 500 and the Total Stock together (the 500 -- or large caps -- comprises nearly 75% of Total Stock). Go for Total Stock by itself. If you want diversification into something like international, handle that with a portion of next year's contribution.
Hm, seems the consensus is to just buy and sell as soon as I can, assuming it's value is greater than what I paid for it. I was thinking more, hold on to it for 10+ years and reinvest dividends. Maybe I should just buy and sell.
Thanks for the input, everyone. I'll have to mull it over. I think the buy and sell strategy is decent if I decide not to buy and hold.
You could also buy a Target fund until you have enough money to move into whatever funds you want. It's easy to buy and sell shares within Vanguard. I sold all my shares in a specific fund and bought another fund last week.