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[TheOfficeMut]

I take it that it's not advised to check your Vanguard account every day, especially if you're only investing in index funds like I am (Admiral 500 fund). Seeing it down 60 bucks in one day bums me out and I have to remind myself that it's a waiting game and long term investment.

 

[anonymous_abc]

I take it that it's not advised to check your Vanguard account every day, especially if you're only investing in index funds like I am (Admiral 500 fund). Seeing it down 60 bucks in one day bums me out and I have to remind myself that it's a waiting game and long term investment.

I do but I am a financial masochist. Don't do it if it causes you anxiety. Put it on autopilot and forget about it.

 

[TheOfficeMut]

I do but I am a financial masochist. Don't do it if it causes you anxiety. Put it on autopilot and forget about it.

I'm a paranoid pessimist. Part of me feels like the market is going to crash or the index I'm investing in is going to suddenly tank, and that I chose the wrong damn time to invest. lol

 

[anonymous_abc]

I'm a paranoid pessimist. Part of me feels like the market is going to crash or the index I'm investing in is going to suddenly tank, and that I chose the wrong damn time to invest. lol

Rest assured it will tank and it will collapse just to rise again.

As long as you leave it there nothing will happen.

The only mistake you can make is to pull it out. Not the question when you put it in.

Read about the worst market timer ever: Bob

 

[vinnygambini]

General question:

I'm pretty lean in my bank account, but max out all my contributions to my employer's pension benefit, tax-free savings, and registered retirement savings to maximize my returns - with that being said, how much have you set aside for your rainy day fund?

 

[anonymous_abc]

General question:

I'm pretty lean in my bank account, but max out all my contributions to my employer's pension benefit, tax-free savings, and registered retirement savings to maximize my returns - with that being said, how much have you set aside for your rainy day fund?

Currently roughly 10k.
But I am probably looking at scaling that back some.

 

[PlayerOne]

Yes, you might want to diversify to international too though.

my international TD e-series fund was never up ever in the past 1.5 years. i check everyday. it has never gone up nor have i ever broke even. ahaha.

 

[hollomat]

Got a question that I figured someone here might have an answer to.

I've maxed out my 401k for the year and want to put other money into retirement. However I'm above the income threshold for contributing to a Roth IRA and for deducting any contributions to a regular IRA. Is there anyway to contribute more to retirement accounts that would make sense without the IRA deduction or would it be better to just invest this money in index funds in a regular investment account instead? Obviously I'm aware that this is a great problem to have, but would like to try to put as much away as I can while I can since you never know when your situation will change.

 

[anonymous_abc]

my international TD e-series fund was never up ever in the past 1.5 years. i check everyday. it has never gone up nor have i ever broke even. ahaha.

It still paid dividends though and the point is you do not know what the future brings.

 

[cheezcake]

I'm an absolute amateur when it comes to this stuff, would I be right or wrong in saying most of the advice in this thread is US-centric and not really applicable to me (in Australia)?

 

[vinnygambini]

Currently roughly 10k.
But I am probably looking at scaling that back some.

Hmm. I have about $2k set aside for that and looking to bring that to $5k within the next few months.

I don't plan on getting fired or put myself in a situation that I need to touch those funds, but I realized if ever I was going to lose my job in this moment, I'd be in a pretty difficult position financially after a month of expenses.

 

[anonymous_abc]

I'm an absolute amateur when it comes to this stuff, would I be right or wrong in saying most of the advice in this thread is US-centric and not really applicable to me (in Australia)?

The generic advice is for the most part universal. (e.g. investing in low cost whole market ETFs, start as early as possible, don't time the market, etc..)
Specifics can be very US centric (e.g. 401k, IRA, etc..)

Ask and you shall receive.

 

[cheezcake]

The generic advice is for the most part universal. (e.g. investing in low cost whole market ETFs, start as early as possible, don't time the market, etc..)
Specifics can be very US centric (e.g. 401k, IRA, etc..)

Ask and you shall receive.

Awesome, I'll have to keep an eye on this thread. I start working full time in a couple months and I want to try and set myself financially from the get go, I've already decided to take a page out of Ghaleon's book and make a savings goal and track my actual savings against it. I'm going to have to figure out what goal I want to set though.

 

[Mairu]

General question:

I'm pretty lean in my bank account, but max out all my contributions to my employer's pension benefit, tax-free savings, and registered retirement savings to maximize my returns - with that being said, how much have you set aside for your rainy day fund?

10k

It used to be more but I started a taxable investment account with Vanguard and stuck the excess in the LifeStrategy Income fund. Seems better than just losing money through inflation while still being conservative enough if I need something in the short term (1-3 years)

 

[anonymous_abc]

Awesome, I'll have to keep an eye on this thread. I start working full time in a couple months and I want to try and set myself financially from the get go, I've already decided to take a page out of Ghaleon's book and make a savings goal and track my actual savings against it. I'm going to have to figure out what goal I want to set though.

Start by looking at your current spending habits.
I love YNAB and happily pay the yearly subscription fee.

 

[Flo_Evans]

With year end coming, I've been once again thinking about how another year has passed and wondering if we're on track with retirement savings. I'm getting old, which means I've been saving for retirement for a while at this point (since 2000); not the oldest in here, but all the folks posting about just getting started has made me realize just how long it's been, and I thought I'd offer a bit of perspective from someone who's been doing this for a while (and made my share of mistakes along the way).

Back in 2007 I built a dead-simple compounding savings table, showing what I thought we'd be investing per month and then extending it out for 25 years (my desired retirement age, from that point). It assumes the standard 8% growth.

A lot has changed in our priorities, how much we put in, how the market has done, etc. since I made the file. But I still go back to it, assumptions unchanged, as it gives me a simple goal to check our progress against. As months and even years go by, it has often felt like we're making very little progress, so it's been nice to have a measuring stick to see how we're doing. It ends with my desired age and savings. Here's how it looks right now, after a bit over nine years:



I wanted to post this given the recent discussion about market timing. I did this in 2007, but my wife and I opened our Roth IRA's in early 2000 - talk about bad market timing. We've now been through two crashes, and through it we've never timed the market. We just kept investing automatically every month, with extra bits as income allowed. Rode the market down, rode it back on up, investing both directions.

Two market crashes later, we're right on track. I don't feel confident saying I could have done better if I tried to time the market (and I'm 13 years into a finance career). I just do what I do in other parts of my life: just kept plugging away one bit at a time. It's working out just fine.

This is totally anecdotal, but there's a wealth of research indicating this anecdotal experience is very much the norm. Start saving when you can, and stick to your plan as the market does its thing.

(As an aside, it's a little nerve-wracking to be over 1/3 of the way to the end of the goal in time, but only <20% of the way there in raw savings. Ah, the power of compounding returns. Here's hoping it keeps playing out.)

The thread is nearly 3 years old and I'm feeling a wee nostalgic. Hope everyone is doing okay.

I really like this idea, I currently just track the year end totals but it really doesn't give me much of an idea how its actually doing.

 

[Cyan]

Got a question that I figured someone here might have an answer to.

I've maxed out my 401k for the year and want to put other money into retirement. However I'm above the income threshold for contributing to a Roth IRA and for deducting any contributions to a regular IRA. Is there anyway to contribute more to retirement accounts that would make sense without the IRA deduction or would it be better to just invest this money in index funds in a regular investment account instead? Obviously I'm aware that this is a great problem to have, but would like to try to put as much away as I can while I can since you never know when your situation will change.

There's a loophole called a backdoor Roth that you should look into. Quick details from an earlier post:

You'll want to do a backdoor Roth. Essentially how it works is you open a regular IRA and max your contribution--you can do this even at high income, though it won't be deductible--and then you do a Roth conversion, moving the funds to a Roth IRA. Ordinarily this would mean you now have to pay taxes on the amount converted, but since you weren't deducting it anyway, that won't be an issue.

I'm assuming here that you don't already have a regular IRA. If you do, it becomes a lot more complicated with prorating and whatnot. Also, while it's ok to invest the funds through the regular IRA and do the conversion later, you then have to a) sell whatever you invested in and b) figure out tax on the gain, and it's a lot easier to just leave it in cash.

You'll definitely want to do your own research here, there's some slightly fiddly stuff you have to do on your tax return, but you should be able to do it reasonably easily even if you don't have a tax person.

 

[cheezcake]

Start by looking at your current spending habits.
I love YNAB and happily pay the yearly subscription fee.

Thanks, I'll get on this with the free trial. I'm not sure exactly how much it'll change when I move out of my parents house, I'm trying to minimise additional expenses so it should just be rent (which I'll cap at 30% of take home income but will likely go a bit lower) and bills. I buy and cook my own food right now and pay for my phone bill. It'll be good to see exactly how much I spend on what though.

 

[Prax]

My husband and I just started formally saving about a couple of years ago.

I regret not starting earlier and whipping his finances into shape earlier (he.. pulled out of the market.. when it tanked.. instead of letting it ride back up.. if only I knew!! IF ONLY!!), but it looks like we're on track for a somewhat early retirement (or a tiny bit ahead!).
If we keep plugging away at this, it looks like I will reach an 8-9% interest landmark. If we hold somewhat steady, we could be "millionaires" by 2040. How nice..
We also have pensions from work that could be really good supplements, but it's better to ignore it exists so we can focus on what we can do.

Wish I was industrious enough to make a real graph like Ghaleon though. lol I am a bit of an Exel stupids with it comes to the graph-making.

Otherwise, feels good to be on track! Even while the market is probably heading into who-knows shenanigans with recent political turmoils.

Here's to a good year end and new year to all of you trying to make the best of the future. I think even if some of us are more cynical/pessimistic and therefore try to "save" just in case the worse comes to pass, it's also optimistic and hopeful in that we try to believe it will pay off in the end.

 

[hollomat]

There's a loophole called a backdoor Roth that you should look into. Quick details from an earlier post:

Thanks. Yeah I'd looked into backdoor roths, but I don't think they make sense just because the money that would be put into it is already being taxed at a very high rate.

 

[Cyan]

Thanks. Yeah I'd looked into backdoor roths, but I don't think they make sense just because the money that would be put into it is already being taxed at a very high rate.

I'm not sure what you mean. If the only reason you aren't contributing to a Roth is that you're over the income limit, doing the backdoor makes sense. It works out exactly the same: pay (admittedly high) taxes now, don't pay any further taxes.

Your other option is a regular brokerage account, which would be pay taxes now, continue to pay taxes as you go (dividends etc), pay taxes on gains when you sell.

A regular account is a lot more flexible than a retirement account, but since this is earmarked for retirement I wouldn't weight that too heavily.

 

[SourBear]

The problem with a backdoor ROTH is if you already have a traditional IRA you can't do the backdoor without somehow moving money out of your traditional IRA. The easiest way, but an option not available to many, is if your work offers a 401k option that will let you roll your traditional IRA into it. This option is the best because you avoid getting hit with taxes.

 

[tokkun]

Thanks. Yeah I'd looked into backdoor roths, but I don't think they make sense just because the money that would be put into it is already being taxed at a very high rate.

Math time.

A peek at VTSAX has the current stock market dividend yield at 2%. It you're in a high tax bracket, your total marginal rate is probably somewhere in the 35-45% range. Let's say 40%. Ergo, you lose 2% * 40% = 0.8% in growth due to taxes on dividends each year. We'll further assume that the real return rate on stocks is 6% over your investment horizon. With taxes on dividends it would become 5.2%.

Take your $5500 maximum Roth contribution for one year.

30 years @ 6% = $31,600
30 years @ 5.2% = $25,200

Of course, you presumably want to withdraw the money and use it. The effective tax rate on your withdrawal may vary quite a bit, depending on whether you are living the high life as a retiree and which state you live in, but for the sake of argument let's say it's 25%. $25,200 * 75% = $18,900

So to summarize, your $5500 today in
Roth -> $31,600
Taxable -> $18,900

That's 67% more in the Roth account.

 

[hollomat]

Thanks for the advice everyone. I'll definitely look more into it and put together a spreadsheet doing the calculation with taxes and everything to fully vet it.

 

[PflargBlarg]

is it advisable to go for specific ETFs like $HACK (cybersecurity), or ICLN (iShares Global Clean Energy)?

I have put in ~$25k Canadian into my TFSA, going for $27k before 2016 ends, and $31k within the first 5 months of 2017.

Now, I have a bunch of ETFs and funds in my TFSA. Mainly the typical TD e-series and Vanguard, iShares ETFs. (all equities: S&P, US Total, Canadian, International, Emerging Markets, Global except Canada, etc.) and a couple of randoms (iShares Global Water, iShares Global HealthCare).

Now, I'm looking to buy Clean Energy and Cybersecurity ETFs.

This seems really overcomplicated for retirement purposes.

The first thing that I always ask when I see a portfolio like this is what's your actual rationale for all these different holdings. You have tons of overlap and it seems really random.

XAW, XQQ, VUN, TDN908, TDB902 - These are all overlapping each other in various ways.

XAW will also overlap with all the international and emerging markets ones and there's the seemingly random Philippines one and the water and healthcare funds. And I haven't taken a look at all of them, but I suspect some of these have unnecessarily high fees as well.

If you had just XAW and VCN you would cover all this stuff in a much simpler way. You could perhaps add some other specific funds to that if you want to tilt your investment in some fashion. I could even understand splitting VXC/XAW into VUN,XEF, and XEC in order to save on fees, but currently your portfolio doesn't make a whole lot of sense.

As in most things, keep it simple. If you don't have at least a vaguely solid rationale for the holdings and the particular percentages of each holding, it's time to take a look at why you're doing what you're doing.

 

[Sky Chief]

I just started working for a startup and we're just in the process of incorporating and so on. Right now we have about a dozen employees. Currently, I'm technically a self employed contractor. How can I get a 401k going? What do I do with my old 401k from my previous job?

I feel like maybe right away I should start a traditional and/or Roth IRA? If I do both I can invest more money, right? What is the max I can contribute every month?

Any suggestions of who I should be investing with?

If it helps, I'm 36 and make $180k a year before taxes in California and have the potential of up to 100% bonus. I would like to be investing at least 25% of my income right now if possible.

I'd also like to know if you think I'm at the stage in my career that I should be working with a financial consultant instead of doing this myself? If so any suggestions or recommendations on picking a good one?

 

[GhaleonEB]

I just started working for a startup and we're just in the process of incorporating and so on. Right now we have about a dozen employees. Currently, I'm technically a self employed contractor. How can I get a 401k going? What do I do with my old 401k from my previous job?

I feel like maybe right away I should start a traditional and/or Roth IRA? If I do both I can invest more money, right? What is the max I can contribute every month?

Any suggestions of who I should be investing with?

If it helps, I'm 36 and make $180k a year before taxes in California and have the potential of up to 100% bonus. I would like to be investing at least 25% of my income right now if possible.

I'd also like to know if you think I'm at the stage in my career that I should be working with a financial consultant instead of doing this myself? If so any suggestions or recommendations on picking a good one?

If you can make their minimums, the answer is always Vanguard. If not, Fidelity seems to have lower minimums, and allows you to get in under them if you make monthly automated contributions. You can't go wrong with either.

Personally, I don't think most people need a financial consultant, if we're just talking about retirement investing. If your finances are more complex (and may be, as is often the case with small businesses), then a trip to an advisor may be wise. Just be sure to make sure they are a fiduciary advisor.

 

[Piecake]

I just started working for a startup and we're just in the process of incorporating and so on. Right now we have about a dozen employees. Currently, I'm technically a self employed contractor. How can I get a 401k going? What do I do with my old 401k from my previous job?

I feel like maybe right away I should start a traditional and/or Roth IRA? If I do both I can invest more money, right? What is the max I can contribute every month?

Any suggestions of who I should be investing with?

If it helps, I'm 36 and make $180k a year before taxes in California and have the potential of up to 100% bonus. I would like to be investing at least 25% of my income right now if possible.

I'd also like to know if you think I'm at the stage in my career that I should be working with a financial consultant instead of doing this myself? If so any suggestions or recommendations on picking a good one?

I am pretty sure that 401ks arent available to self-employed contractors. Once you get your business incorporated and your business offers a 401k to its employees is when you'll get your 401k.

 

[Sky Chief]

Thanks guys, I've been doing some research and am I correct that I can't get a Roth IRA because my income is over $132k?

 

[Randolph Freelander]

Thanks guys, I've been doing some research and am I correct that I can't get a Roth IRA because my income is over $132k?

You'll want to do a backdoor Roth. Essentially how it works is you open a regular IRA and max your contribution--you can do this even at high income, though it won't be deductible--and then you do a Roth conversion, moving the funds to a Roth IRA. Ordinarily this would mean you now have to pay taxes on the amount converted, but since you weren't deducting it anyway, that won't be an issue.

I'm assuming here that you don't already have a regular IRA. If you do, it becomes a lot more complicated with prorating and whatnot. Also, while it's ok to invest the funds in the regular IRA and do the conversion later, you then have to a) sell whatever you invested in and b) figure out tax on the gain, and it's a lot easier to just leave it in cash.

You'll definitely want to do your own research here, there's some slightly fiddly stuff you have to do on your tax return, but you should be able to do it reasonably easily even if you don't have a tax person.

.

 

[Sky Chief]

.

Thanks

 

[br0ken_shad0w]

So I recently got a lump sum check of $60,000. What's the best way to utilize it? Pay off student loans first? Put it in my Roth IRA and HSA? Low mutual fund? Or place it in a CD and wait a few years if I intend to buy a house.

 

[GhaleonEB]

So I recently got a lump sum check of $60,000. What's the best way to utilize it? Pay off student loans first? Put it in my Roth IRA and HSA? Low mutual fund? Or place it in a CD and wait a few years if I intend to buy a house.

Totally depends on your goals and situation. For example, how much student debt and at what rate? How long until you want to buy a house? Etc.

Personally I'd use it to max my IRA for this year and next ($11,000) and then go from there.

If you want to get more of it into retirement, just raise your 401k contributions (assuming you have one) and draw down the same amount of the cash to replace the income going into the 401k. (Which is also what I'd do, but then my house is nearly paid off.)

You'll also want to figure out how much of that check will go out the door as taxes, and don't spend/invest that portion.

 

[br0ken_shad0w]

Totally depends on your goals and situation. For example, how much student debt and at what rate? How long until you want to buy a house? Etc.

Personally I'd use it to max my IRA for this year and next ($11,000) and then go from there.

If you want to get more of it into retirement, just raise your 401k contributions (assuming you have one) and draw down the same amount of the cash to replace the income going into the 401k. (Which is also what I'd do, but then my house is nearly paid off.)

You'll also want to figure out how much of that check will go out the door as taxes, and don't spend/invest that portion.

The 60k is after taxes (original amount was 75k). I have 4 student loans total 40k with interest rates ranging from 3.5 to 6.5%. It's currently on auto pay right now and haven't consolidated them.

My original plan is to use that money for home improvement on my current house but decided not to do that anymkre.

I do intend to buy a house but earliest to even think about is probably 2019.

 

[mercenar1e]

The 60k is after taxes (original amount was 75k). I have 4 student loans total 40k with interest rates ranging from 3.5 to 6.5%. It's currently on auto pay right now and haven't consolidated them.

My original plan is to use that money for home improvement on my current house but decided not to do that anymkre.

I do intend to buy a house but earliest to even think about is probably 2019.

a quick example of what you'd be looking at with investing in a blue chip stock like AT&T.

$60,000 would get you 1,555 shares
each share gets you $0.48 dividend per quarter

$746 per quarter
$2985 per year
$29,856 in 10 years.

anything can happen between now and 10 years, the stock price can crash, they can reduce the dividends and investing in a single stock is riskier than investing in a fund like VTSMX which is regarded as the safer route but the returns are underwhelming and is meant for the very long term.

CD rates will get you $10,000 in 10 years.

how many years are left on the student loans?

 

[luchadork]

unless youre some sort of ballin' market savant, you should look at the interest rate on your debt as a guaranteed return if you were to pay it off early.

 

[friskykillface]

Should I buy hatchimals to resell to invest for retirement?

I've got a random question that might not even have to do with retirement but....... I've been working at this supermarket for the last 4 years and have a retirement account set up (my first job so I said I'll take that option for some reason)
If I take all of that money out will I be penalized when I do my taxes in 2017?
I do plan on quiting that job when I move in July so should I wait until I leave to take the money out?

Or did I just goof up and should just leave it in there , there's like $1500 which isn't a lot but would pay for a class next semester

 

[Piecake]

The 60k is after taxes (original amount was 75k). I have 4 student loans total 40k with interest rates ranging from 3.5 to 6.5%. It's currently on auto pay right now and haven't consolidated them.

My original plan is to use that money for home improvement on my current house but decided not to do that anymkre.

I do intend to buy a house but earliest to even think about is probably 2019.

I'd personally pay off that 6.5% loan ASAP.

 

[GhaleonEB]

I'd personally pay off that 6.5% loan ASAP.

Same. I'd pay off anything over 4-5%, really.

 

[Daante]

Hi guys,

Would you pay 40k upfront for profit tax on a sold apartment, or increase your new mortgage loan with that amount?.

Interests rate where i live is really low , 1,43% currently, and i could bind that up for 2-3 years if i would want to. History has always showed though having a moving/fluctuational interest rate is more beneficial compared to a fixed rate.

The money (40K) would instantly go towards long term index funds. Playing with various calcylators it seems the difference makes very little effect long term thinking , 15-20 years, if i say have 40k starting amount compared to 5k, and instead can save a little more each month.

I can realistically save 40k in a time period of little more than 2 years time with my current cash flow.

In summary:

40k increase mortgage = 69% of new apartment is mortgage loan
40k not increase mortgage = 61% of new apartment is mortgage loan

 

[Jibbed]

Anyone from the UK knocking about in here?

Just turned 25 and I want to make sure the money I'm putting away each month will give me the greatest return in the long run.

At the moment it's just about half my wages straight into a basic ISA.

 

[Magni]

With year end coming, I've been once again thinking about how another year has passed and wondering if we're on track with retirement savings. I'm getting old, which means I've been saving for retirement for a while at this point (since 2000); not the oldest in here, but all the folks posting about just getting started has made me realize just how long it's been, and I thought I'd offer a bit of perspective from someone who's been doing this for a while (and made my share of mistakes along the way).

Back in 2007 I built a dead-simple compounding savings table, showing what I thought we'd be investing per month and then extending it out for 25 years (my desired retirement age, from that point). It assumes the standard 8% growth.

A lot has changed in our priorities, how much we put in, how the market has done, etc. since I made the file. But I still go back to it, assumptions unchanged, as it gives me a simple goal to check our progress against. As months and even years go by, it has often felt like we're making very little progress, so it's been nice to have a measuring stick to see how we're doing. It ends with my desired age and savings. Here's how it looks right now, after a bit over nine years:



I wanted to post this given the recent discussion about market timing. I did this in 2007, but my wife and I opened our Roth IRA's in early 2000 - talk about bad market timing. We've now been through two crashes, and through it we've never timed the market. We just kept investing automatically every month, with extra bits as income allowed. Rode the market down, rode it back on up, investing both directions.

Two market crashes later, we're right on track. I don't feel confident saying I could have done better if I tried to time the market (and I'm 13 years into a finance career). I just do what I do in other parts of my life: just kept plugging away one bit at a time. It's working out just fine.

This is totally anecdotal, but there's a wealth of research indicating this anecdotal experience is very much the norm. Start saving when you can, and stick to your plan as the market does its thing.

(As an aside, it's a little nerve-wracking to be over 1/3 of the way to the end of the goal in time, but only <20% of the way there in raw savings. Ah, the power of compounding returns. Here's hoping it keeps playing out.)

The thread is nearly 3 years old and I'm feeling a wee nostalgic. Hope everyone is doing okay.

Thanks for sharing this. I have a similar chart, but I'm all the way at the beginning on mine:

Regarding the bolded: do you mean you don't update future monthly contributions? That's what the orange line is on mine. I'm not forecasting any probable - hopefully! - increases, but I am updating it once I do increase those contributions.

I haven't had to weather a real crash yet, I have a feeling when the first one hits I'll be spending a lot of time outdoors trying not pull my hair out!

 

[GhaleonEB]

Thanks for sharing this. I have a similar chart, but I'm all the way at the beginning on mine:

Regarding the bolded: do you mean you don't update future monthly contributions? That's what the orange line is on mine. I'm not forecasting any probable - hopefully! - increases, but I am updating it once I do increase those contributions.

I haven't had to weather a real crash yet, I have a feeling when the first one hits I'll be spending a lot of time outdoors trying not pull my hair out!

Yeah, I haven't modeled out how things look with current contributions, which are up a bit. Partly because I'm hugging so close to the line, the curve won't look that different. I do plan to revisit once the house is paid off and we funnel that toward retirement - it should change the curve pretty dramatically.

 

[EarsOfASnake]

Anyone from the UK knocking about in here?

Just turned 25 and I want to make sure the money I'm putting away each month will give me the greatest return in the long run.

At the moment it's just about half my wages straight into a basic ISA.

A lot of the basics still apply, invest in index funds and leave it alone. For UK specific suggestions have a look at monevator.com , lot's of useful information there.

 

[Camp Freddie]

Anyone from the UK knocking about in here?

Just turned 25 and I want to make sure the money I'm putting away each month will give me the greatest return in the long run.

At the moment it's just about half my wages straight into a basic ISA.

Make sure you invest into your pension at least as much as your employer will match. Doing otherwise is almost literally throwing money away. Some employers are more generous than others.
If you are close to a tax boundary (i.e. the 40% one) then use your pension to keep your taxable earnings below the tax boundary.
Pensions effectively get taxed when you take them, so it's better to pay maybe 20% tax at retirement than take the money now and pay 40% on it.

It's also worth investing in stocks and shares ISA. You don't get taxed when you cash them in, and they give much more flexibility than pensions.
Due to the pension "time-bomb" I don't trust the government to not fuck things up in the future. Osbourne did everyone a huge favour removing the annuities requirement, because annuities providers were ripping people off like crazy, but it also showed how easy it is for governments to totally change pension schemes to whatever they want.

Not sure what you mean by a basic ISA. If that means a cash ISA, then don't use it as a long-term savings plan. The rates tend to be appalling.

As written above. If you're investing long term, put most of your money into index funds and don't fiddle with it. Assuming you intend to live your retirement in the UK, keep a large fraction of your money in UK funds (i.e. FTSE 100, 250 and All-Share trackers).
Put some money in other markets to make it more stable (US, Euro and Japanese indexe funds are good) and put some cash into special funds based on your long-term expectations (e.g. a tech fund or a Chinese fund, if you expect them to rule the world in 2050).

General advice is to move into safer funds as you get closer to retirement. Bonds and blue-chip funds mean you don't risk getting your pension wiped out by a financial crisis.

I am not a financial adviser. You should see one. Seriously, they will really help. Your employer might be able to provide you with one for free as part of setting up your pension (my last two employers have done so).

 

[hendersonhank]

I used to be in the EuroPacific, Income and Investment funds. I'm so sorry. Those are awful options.

I added the expense ratio with a link to the AmericanFunds page to your post.

Personally I'd avoid the EuroPacific and Growth funds, as they are the higher fees and more narrowly focused in purpose than the others (Euro international and growth stocks, respectively) and which leaves you the Income and Investment funds.

The Investment and Income funds are pretty similar, TBH. The latter favors larger cap stocks with higher dividends, and some equities, the former mid-cap. They've had similar returns. I suggest doing some reading on those two and on their respective strategies.

Do you have to pay a commission on the front end of the purchase as well?

The American Funds site says 5.75% front load fees. I asked HR about it and she referred me to the accountant, who said: "The only fee is amount .5% for each contribution an employee makes, but it is a one-time fee. It only occurs at the time funds are contributed each payday and does not occur again for funds that have already been contributed."

So I guess they're sucky funds, but I figure I'll put in 3% to get the 50% employer match, which will get me a total of 4.5% put in per paycheck. Then max out my IRA, then put the rest into a regular taxable account.

 

[Wellington]

Executed my backdoor Roth contribution, extremely easy to do via Vanguard. Maxed 401k, 401k match, and Roth IRA for the year along with my taxable account contributions. Will have the cash on hand for the next IRA contribution on Jan 1. Feels good man. Ghaleon's post earlier was a real motivator.

 

[AndyD]

Quick question. My wife has an old 401k from a previous job. Now she has a 403b at her current employer. Can and should we roll the 401 to the 403 or into an IRA? We have an IRA with TD Ameritrade. The 401, 403 and IRA are all largely target funds right now.

 

[Maxim726X]

This thread has been great for me, as well. At the very least it motivated me to start investing on a more consistent basis. I'm still a novice.

What funds are most of you guys investing in right now? I've kept it kinda simple.

- Betterment Roth IRA (just started last year; plan on maxing this out every year).
- Vanguard Index Fund (VTSMX)- Putting about 2K a month right now... Who knows how long I'll be able to do this, but for now I can. So far hasn't wielded the best performance.
- Acorns: Put a few hundred a month, in addition to spare change.

Should I diversify more? Change my index fund?

 

[Wellington]

This thread has been great for me, as well. At the very least it motivated me to start investing on a more consistent basis. I'm still a novice.

What funds are most of you guys investing in right now? I've kept it kinda simple.

- Betterment Roth IRA (just started last year; plan on maxing this out every year).
- Vanguard Index Fund (VTSMX)- Putting about 2K a month right now... Who knows how long I'll be able to do this, but for now I can. So far hasn't wielded the best performance.
- Acorns: Put a few hundred a month, in addition to spare change.

Should I diversify more? Change my index fund?

I tried Acorns and moved away from it with zero regrets. The service itself is way too expensive, tho I liked the change idea. The amount I had invested in there was minimal, getting charged $1/month on like $50 made no sense.

Also, why didn't yo do the Roth IRA with Vanguard?