chaosblade
Unconfirmed Member
Reminds me of the post asking about options with higher returns. Said the 7-8% market average was too low and if there were any options to consistently hit around 11%.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
Reminds me of the post asking about options with higher returns. Said the 7-8% market average was too low and if there were any options to consistently hit around 11%.
A risk-free 5% would make you a billionaire on other people's money.
My plan this year was on semiconductors and tech after bailing out on financials. Canadian banks weren't doing too great late 2015, but they seem to have rebounded due to their exposure to the US market these past few months, hence why I'm looking to rebalance my portfolio.
For what it's worth, my advisor, who already handles roughly half my assets, has already allocated a bunch towards financial institutions so allocating more may be redundant?
Unknown Soldier
Member
Yes but you won't get there in your lifetime if you started with $100, that's the point I was making.
To become a billionaire from zero you need to start Microsoft or Amazon or something.
mercenar1e
Member
i was wrong, i have VTSMX in the IRA and selling it or exchanging it would transfer the sale into a Federal money market account. the final screen asks me if id like to with hold 10% for tax purposes...
As long as the money market account is also inside your IRA, you have no tax burden. Like I said, as long as the money stays within the IRA, you should be able to switch funds as many times as you like without paying any tax.
If you think your broker is saying you owe tax on the transaction, I would suggest calling them and asking them to explain.
PflargBlarg
Member
That's why he said 'using other people's money'. If you had a risk free 5% return you would just take as many loans as possible that were lower than 5%.
anonymous_abc
Member
Lv99 Slacker
Member
Alright, guys. Finally serious about getting started. I've had a Fidelity account that has been collecting dust for a few years. I've done nothing with it. I'm interested in investing in index funds. The few times I've checked in here, people recommend mutual funds like total US, and total international (which symbols are those again?), but what about ETFs? Those investor class mutual funds are a bit daunting to get into with the $2500 investment minimum, but, again, it's the mutual funds that people only really talk about here, it seems.
Most of the Vanguard funds offer an ETF alternative that doesn't have the minimum. Here's Vanguard's total stock market ETF:
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0970
Fidelity also has a total stock market index but I believe it's only available as a mutual fund and not an ETF. I don't think Fidelity has its own ETFs but I could be wrong.
I think it depends on how large a cash reserve you have, above what you want for an emergency cash fund, and what you want to do with the funds. My wife and I keep a buffer in savings, and the rest in a blended index fund, which is just a basket of four other indexes (US stock index, international index, US bonds). It's where we park money for if/when the car dies or we need a new roof on the house (in a few years). It's a long enough horizon that we're okay taking market risk, but it's a bit less aggressive than an all stock fund.
Basically, identify how much you want to invest, what it's for, and on what horizon, then pick an appropriate investment vehicle for that horizon.
I'm nervous about Trump, too. My wife and I countered it by increasing our savings slightly (we bumped up the monthly amount going into the kids' 529 plans, as well).
You can get in under the minimums at Fidelity if you do an automated contribution plan (regular monthly investments) and contribute the minimum within 12 months (otherwise it's a small annual fee). That's how I got started with them. You'll just need to chat with their advisors online or on the phone, as they don't advertise that much.
Lv99 Slacker
Member
They do. About 91 total, with 12 being commission free: https://screener.fidelity.com/ftgw/etf/evaluator/goto/landing
Lv99 Slacker
Member
I spoke to a rep on the phone about an hour ago about this, and he said that Fidelity doesn't do this anymore.
Only the commission free ones are Fidelity's ETFs, the iShares ETFs you can get through any brokerage account. I don't see a total stock market ETF so you can either find an alternative (VTI or ITOT) or save up for the minimum needed for the mutual fund.
Oh that's a bummer. They did the last time I'd checked. Sorry.
I feel like Questrade keeps making their website worse and worse. I cannot even find out what my current account's balance is unless I go to the trading section of their site. Why are they hiding crucial data in the most inconvenient way ? Also, I'd like to request cash withdrawal from my account which has cash balance I need according to the trading section. However, in the Withdrawal Request page, it says I have $0 cash and $0 investment. Where did all my money go, hmmm ? All these financial companies seem to do their very best to try to lock money away from their clients and hard to move money around. Last time I tried to move some USD from my one USD account to another in another institution was a thoroughly annoying experience. All these financial institutions are just letting me down with horrible services and making it more difficult for you to move your money around. They all want to lock you in and deprive you of flexibility and choice.
ClosingADoor
Member
Keep a buffer in cash in your savings account. For the rest I would put it in a total market fund, or S&P fund, depends on your preference.
It's risky to time the market and over the long term you might miss out on more then you gain by waiting. But I wouldn't just dump it all right in now. Do a part of it every month, and stick to that amount.
Something to keep in mind about recessions is that you can use them as an opportunity to do tax loss harvesting, if you are willing to do the extra paperwork (or pay someone else to do so). If you are young, and this is money you were planning to stash away for decades as retirement savings, a recession can actually be beneficial to you from an investment perspective. Not as good as being a perfect investment oracle who can sell high and buy low, but that's a pretty unattainable goal to set.
This is a sum beyond a regular 3-6 month buffer. Slowly (over 12-24 months) depositing into a market fund IRA might be the way to go it sounds like.
Lv99 Slacker
Member
Good news. That rep I spoke to yesterday is full of shit. I called CS today for an unrelated issue, and, just in case, I inquired again about the automated withdrawal/investment loophole, and I was told that it's doable, but that I'd either need to fill out and mail a form he'd email to me, or to visit a local branch to get it done. I did the latter. So, there you go, y'all. If you want to buy some investor class Fidelity mutual funds but not deal with the $2500 minimum investment, either talk with a rep on a phone or (recommended) visit a branch.
PflargBlarg
Member
Hey guys, thought I would bring the thread back by having a discussion on what goals or milestones we've accomplished this year. Also known as showing off.
Looks like 2017 should be a solid year and I'm hoping to be able to max out all the available tax shelters and take my first step into taxable accounts.
How has it gone for you guys?
- Got my retirement accounts over 100k
- Sold the condo so my life would stop being ruined by it
- Build up a huge amount of tax deductions for future years by almost filling up the many years worth of contribution room that was available in my RRSP
Looks like 2017 should be a solid year and I'm hoping to be able to max out all the available tax shelters and take my first step into taxable accounts.
How has it gone for you guys?
Randolph Freelander
Member
In 2016, I was able to add HSA and independent investing to my mix, to go along with the 401K and Roth IRA. I can't complain. Plus, 2016 has been a good gains year.
anonymous_abc
Member
Nice idea
- Crossed the 100k net worth mark
- Moved to LA from Munich
- Had to sell all my investments in Germany
- Reinvested in the US
- maxed out my 401k
- maxed out my wife's and my IRA
- maxed out my HSA
- Have enough set aside to max out our IRA's for 2017 in January.
I want to hear more about this lol. (just bought a condo :/ )
PflargBlarg
Member
I had a more detailed post about it somewhere further back, but the short version is my tenant went insane (like literal mental breakdown) and drove to LA on a whim to become an actress without telling anyone. Long and expensive eviction process plus missed rent meant she cost me about $6000.
It's probably not something you need to worry about, lol.
- Finished off my $42000 in student loans 10 years ahead of schedule.
- Moved in with my girlfriend in August dropping rent from 815 to 375 and monthly expenses overall by 600-700
- Bought an engagement ring, which isn't the best move financially but I have 6 months to pay it off on Paypal credit with no interest and I didn't go overboard with it.
- Bumped retirement savings from the matching 4% to 10% on my 401k
- 4500 of 5500 into Roth and Rollover IRAs, finishing this next month
- Started using YNAB to budget and track all my goals and have a house down payment goal for next December
It was a good year and next year is looking great with goals of maxing my 401k when girlfriend starts adult job and paying my car off.
- Moved in with my girlfriend in August dropping rent from 815 to 375 and monthly expenses overall by 600-700
- Bought an engagement ring, which isn't the best move financially but I have 6 months to pay it off on Paypal credit with no interest and I didn't go overboard with it.
- Bumped retirement savings from the matching 4% to 10% on my 401k
- 4500 of 5500 into Roth and Rollover IRAs, finishing this next month
- Started using YNAB to budget and track all my goals and have a house down payment goal for next December
It was a good year and next year is looking great with goals of maxing my 401k when girlfriend starts adult job and paying my car off.
In 2016 I joined my company's pension plan, which I apparently was eligible for but nobody told me I was until recently.
Looked closer into my current investment's management fees/expenses and started to wonder if I could do better. Gonna poke more at this thread I think.
I also started looking into condo ownership in one of the most expensive cities in Canada. Which will most assuredly wipe out my savings and make me have to start over.
Whee.
Looked closer into my current investment's management fees/expenses and started to wonder if I could do better. Gonna poke more at this thread I think.
I also started looking into condo ownership in one of the most expensive cities in Canada. Which will most assuredly wipe out my savings and make me have to start over.
Whee.
demosthenes
Member
Age 30.
Bought my first house w/ 22% down.
Retirement accounts hit 110k.
Now that house is bought will up my 401k again back to 10%.
1/1/17 will be my 5th straight year of funding my IRA on 1/1.
Only other debt is my car and considering the interest rate is .99%, I'm just going to let the normal payments pay it off.
Looking ahead to next year:
Will spend some more time in NYC as my really good friend is opening his restaurant (i'm from buffalo).
Planning a possible 2 week trip to Japan with a friend.
Planning a trip to Montreal for Dreamhack.
Hoping nothing in my new house breaks!
As much as I tried to plan out and budget my house purchase and all the stuff I needed for it, while I think I did a pretty good job, gotta get back on the budget train.
Awesome freaking job.
Bought my first house w/ 22% down.
Retirement accounts hit 110k.
Now that house is bought will up my 401k again back to 10%.
1/1/17 will be my 5th straight year of funding my IRA on 1/1.
Only other debt is my car and considering the interest rate is .99%, I'm just going to let the normal payments pay it off.
Looking ahead to next year:
Will spend some more time in NYC as my really good friend is opening his restaurant (i'm from buffalo).
Planning a possible 2 week trip to Japan with a friend.
Planning a trip to Montreal for Dreamhack.
Hoping nothing in my new house breaks!
As much as I tried to plan out and budget my house purchase and all the stuff I needed for it, while I think I did a pretty good job, gotta get back on the budget train.
Awesome freaking job.
spiderman123
Member
As a fund manager, I recommend that for those who are seeking to invest to immunize their portfolio, contingent immunization strategies are more frequently used.
Similar story here. Mini-milestones:No major goals or milestones for me, financially. Just keeping on plugging away.
-Increased the monthly 529 contribution from $75 to $100 per kid, after the election
-Maxed contribution to the HSA, due to a January hospitalization and a daughter getting braces
-Drew down our company stock from ~1300 shares to <1000 (spreading out the sales across years to distribute the tax hits)
-Stayed the course on 401k contributions
-Tracking to pay off the house in 2019, 14 years into a 30 year mortgage, a shift in strategy from last year
Going to just keep plugging away next year.
demosthenes
Member
Do you mind sharing your schedule of payments? Maybe just using % if you don't want to share $? How much down? How much did you increase monthly payments?
I already have an extra $50/month going to principal (only bought the house 3 months ago) but I've been thinking about increasing that come next year sometime.
Ultramantaro1
Member
Small milestone for me in time for the end of the year: net worth passed 50,000 for the first time, just turned 26.
Thought I would feel a little happier, instead now I set my sights towards the next big round number. Do you ever feel relief or is there a continual desire to accumulate more?
Thought I would feel a little happier, instead now I set my sights towards the next big round number. Do you ever feel relief or is there a continual desire to accumulate more?
My job isn't doing to well business wise. We got a email two days ago that they will no longer be contributing to our pension.
While it's way too early to see if we will be able to pull ourselves out of this rut, I was wondering what kind of investments I can do now in case my company starts to lay us off.
I have a little over $20,000 in savings but I want to invest some of that in the hopes of having a little bit more in case of an emergency.
Any advise would be greatly appreciated.
While it's way too early to see if we will be able to pull ourselves out of this rut, I was wondering what kind of investments I can do now in case my company starts to lay us off.
I have a little over $20,000 in savings but I want to invest some of that in the hopes of having a little bit more in case of an emergency.
Any advise would be greatly appreciated.
ClosingADoor
Member
Money you use for investing, should not be emergency money, it is for the long term. If you end up being fired and then need that money while the market is down, you have lost more.
I'd make a calculation of your monthly budget. Set aside a certain number of months you feel comfortable with (I do about 6 months) in a savings account. The rest would go into index funds. Don't put a large sum in right now, but spread it over time a bit, so you don't end up buying at the top of the market, it spreads the risk a little more.
How that goes in the US with taxes and plans for that, I have no idea about.
I need to get a better handle on things. We had a family member who took care of things but he passed.
401k is doing well for both of us, but need to make IRA contributions a regular thing, and same with 529s instead of a "once a year write a check" thing.
And we're going to sell our rental condo, and hopefully use the money to buy my wife a new car outright and pay off my student loans for good.
401k is doing well for both of us, but need to make IRA contributions a regular thing, and same with 529s instead of a "once a year write a check" thing.
And we're going to sell our rental condo, and hopefully use the money to buy my wife a new car outright and pay off my student loans for good.
Calamari41
41 > 38
I'm thinking about opening up a UGMA/UTMA account for my new son at Vanguard before the end of the year (I want to get it on the 2016 taxes for gift tax reasons). Does anybody have any experience or advice with these kinds of accounts?
I know that a 529 account is also an option, but I don't want the money to only be for education. If I understand it correctly, you get hit with a penalty in addition to standard taxes if you use 529 money for something other than college expenses, right?
My thinking is basically to have this be the start of his retirement account, ~20 years early. If I can do a good enough job teaching him about finances, he can hopefully have the sense to hold onto it and continue contributing to it as soon as he starts with an income, so that he won't have to worry nearly as much about money as he gets on with his career.
I know that a 529 account is also an option, but I don't want the money to only be for education. If I understand it correctly, you get hit with a penalty in addition to standard taxes if you use 529 money for something other than college expenses, right?
My thinking is basically to have this be the start of his retirement account, ~20 years early. If I can do a good enough job teaching him about finances, he can hopefully have the sense to hold onto it and continue contributing to it as soon as he starts with an income, so that he won't have to worry nearly as much about money as he gets on with his career.
Spoony Bob
Member
Would $300 video game figurines be a good investment?
Randolph Freelander
Member
If the heads bobble, yes. Otherwise, no.
Only if you're pretty sure your card will be declined.
We pay pay enough extra each month to roughly double the principle each month. What my wife and I realized last year is we could pay it off in ~4 years is we just took our incoming company stock (SSP, vested) and put it to the mortgage. Once we do that we can max IRA and 401k, and still have extra.
The raw math favors investing vs. paying down early, as our interest rate is 4.625%. But we have other reasons for wanting to be out from under it. (Such as freeeeeeedooooommmmm.) So I don't recommend it as an investment strategy, it's more of a lifestyle objective. (As is retirement, which is the balance we're trying figure out.)
PflargBlarg
Member
I know we usually talk about it but does the raw math actually favor it in this case? Paying down the house is a guaranteed 4.625% return. It's not out of the realm of possibility for the markets to return less than that (although they were very strong this year). I'm no mathematician so I figure it's kind of a tossup since we don't really know what the market is going to do over the short term.
It's in the realm of possibility, but it's more likely that pumping it into retirement would do better over the long term given historical returns. But as you said, the rate is high enough that it's not black and white. If it was 3%, it would be more clear.
I just try to add that caveat whenever talking about it, since so many factors go into it. I wouldn't offer paying down the mortgage as blanket advice.
hockeypuck
Member
I'm planning on opening a taxable account in 2017, and wanted to get others opinions on whether Betterment is worth it for its Tax Loss Harvesting Plus automated algorithm. Is doing TLH manually easy and not cumbersome at all using, say Vanguard's website? I understand the very basic concept of TLH, but if I'm not the type who logs into his investments accounts every week, I don't think I'll really use TLH to its maximal potential. And if my investment strategies are all passive index funds, do I really want to be selling these off anyways? (and then remembering to re-buy them 31 days later) Seems counter-intuitive to the "buy and hold" mantra that I want to follow.
Well, it's the same basic process that you are required to follow any time you sell shares in a taxable account. If you have a capital gain you need to report that on your taxes. Tax loss harvesting is the exact same process. Even the same tax forms.
The main complication is that you need to keep track of sell dates to avoid wash sales. But keep in mind that avoiding wash sales with Betterment means giving up some control over your retirement accounts as well. And these things apply to any accounts owned by a spouse if you file jointly.
Probably not. However you have to pay a management fee of 15-35 bp to use Betterment. So the real question would be whether the difference between your performance and this 'maximal potential' covers that cost. Odds are that eventually the management fees will exceed the gains from TLH. This is because the fees are always proportional to your total balance, whereas TLH is more likely to benefit more recent contributions.
The general response to that is that you can trade the shares for something that is pretty similar, but not identical. i.e. trade Total US for S&P 500. And if you want, you can trade back once you are outside the wash sale window. So, you don't really need to change the basic investing principles.