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[hockeypuck]

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.

I want to use a simplified example that isn't that far off for me: let's say I am solely investing in Vanguard Total US Stock ETF in my taxable account using dollar cost averaging, $1000 a month. From Jan 1 to Oct 31, it has gone up 5% overall. Nov 1st, the only other time I log into my Vanguard account all year, my ETF has dropped 0.5% compared to Oct 31. Do I TLH that and sell all my shares? Maybe I still don't know the basics.

 

[tokkun]

I want to use a simplified example that isn't that far off for me: let's say I am solely investing in Vanguard Total US Stock ETF in my taxable account using dollar cost averaging, $1000 a month. From Jan 1 to Oct 31, it has gone up 5% overall. Nov 1st, the only other time I log into my Vanguard account all year, my ETF has dropped 0.5% compared to Oct 31. Do I TLH that and sell all my shares? Maybe I still don't know the basics.

Yeah, I think you are still missing some of the basics. You can only do tax loss harvesting if the value of your shares is lower than the price you purchased them at (a.k.a. their "cost basis"). In your example the majority of your shares would still be higher than cost basis. You could only do TLH on any shares that were new enough that the 0.5% drop put them negative, if any such shares existed. Also, if you are doing monthly DCA, you would need to alter your schedule to avoid wash sale rules.

You are probably noticing that if TLH can only be done when stocks are below their cost basis, and that the market tends to go up in price, then stocks will generally become immune to TLH over time. This is true, and it's the reason I think that paying a flat percentage of your total holdings to a service like Betterment is not worth it in the long run. Eventually you will be paying enough in fees on the shares that are immune to TLH to wipe out the savings on the ones that aren't.

Personally I don't see TLH as something that you need to be doing on a monthly basis. Wait until there is a big market drop, like the 10 point ones at the beginning of this year and end of last.

 

[Mrbob]

So vanguard must have raised some prices on fees. Betterment swapped out some vanguard funds for schwab funds in my account. I see SCHV now in place of VTV with SCHV having a lower fee than VTV. Plus some SCHF (Schwab International) in place of VEA (also with a lower fee), but that percentage is split.

 

[Wellington]

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.

1. Got my retirement accounts over 100k
2. Sold the condo so my life would stop being ruined by it
3. 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?

Great idea. How did you do by selling your condo? I feel so stuck with my house, it isn't necessarily killing me but my path to FI would be clearer.

For 2017 my goals are as follows

• Contribute to Roth IRA on 1/1/17 (cash already saved up in my account)
• Max out 401k for the 3rd straight year
• Continue growing my consulting business in an attempt to generate more side income
• Rid myself of the BS PMI payment I have to make for my house - biggest financial mistake I have ever made.
• Need to really control my spending way more

The last one will take an additional $10k or so in principle payments. It's shameful, but once I get to 80/20 LTV I plan on refinancing to save on both the PMI and interest. Can't believe how dumb I was when I purchased this place years ago.

2016:

• Executed a backdoor Roth IRA contribution for the first time
• Converted all my miscellaneous investments into Vanguard Index funds
• Picked up licenses in my industry that allowed me to boost my income and start a consuting biz
• First time ever that my gains during a year out paced my actual contributions. Feels gud man
  

Two ways to have more money to stuff your freedom fund and they are to either spend less or earn more. I focused heavily on earning more and it has been amazing. Base salary is higher, so the 5% company match on my 401k is higher and I have more at the end of the month to invest.

 

[SourBear]

The last one will take an additional $10k or so in principle payments. It's shameful, but once I get to 80/20 LTV I plan on refinancing to save on both the PMI and interest. Can't believe how dumb I was when I purchased this place years ago.

You should talk to your lender. I have PMI as well and once 80/20 is reached the PMI falls off automatically. No need to refinance at all.

 

[Nester99]

It was an odd year, net worth jumped huge due real estate increase (Canadian bubble) and my company merging...but cash flow suffered a bit do to some corporate restructuring.

Payed off my car which was a bit of an albatross, I over extended myself on a luxury suv, 2 years ago, (2 years old with only 15,000 km so some other chump ate the depreciation) I had bought my wife a new car and decided to drive mine into the ground, did not work out when a month later a lady turned left into me and totalled mine...I found the deal on the luxury and could not resist...paid it off in 2 years instead of the four I had planed to, one more year on the wife's car the Never again will I get into car payments unless 0% cash in hand only.

Cash flow has been a bit of a problem so we are putting great effort to reduce expenses, reading Mr Moneymoustache currently.

Tip to all, wives do not appreciate an austerity program just prior to Christmas....

 

[Wellington]

You should talk to your lender. I have PMI as well and once 80/20 is reached the PMI falls off automatically. No need to refinance at all.

I will refi down to a 15 year mortgage at that point is what I mean. Regardless of anything.

 

[NetMapel]

Does the rest of finance-GAF feel like we are due another recession in the next five years? If so, we should put our heads together and look for possible indicators that could trigger it. I am only looking at it in a historical context when I say we should be due one in about five years. What does finance-GAF say?

 

[samman6]

Hi investor guys. I need some advice here I have 800 bucks in an IRA to invest. I would like to buy some index based funds, however they all have min buy-in around 2500 bucks. How can I turn this 800 into 2500 so I can get on the index fund train. Unfortunately due to circumstances I cant just deposit money to get there. Should I look at individual stocks? I basically have no clue on this stuff.

 

[ClosingADoor]

Hi investor guys. I need some advice here I have 800 bucks in an IRA to invest. I would like to buy some index based funds, however they all have min buy-in around 2500 bucks. How can I turn this 800 into 2500 so I can get on the index fund train. Unfortunately due to circumstances I cant just deposit money to get there. Should I look at individual stocks? I basically have no clue on this stuff.

You're basically asking how to more then triple your money with stocks. That is not going to happen. And 800 is too low for any stock trading anyway.

Just save up until you reach the buy-in level or find a place without a minimum if they are available to you.

If you have no clue on how trading works, definitely don't go and try to make money on individual stocks. The point of index funds is to limit risk, since you will just go with the market.

 

[tokkun]

Hi investor guys. I need some advice here I have 800 bucks in an IRA to invest. I would like to buy some index based funds, however they all have min buy-in around 2500 bucks. How can I turn this 800 into 2500 so I can get on the index fund train. Unfortunately due to circumstances I cant just deposit money to get there. Should I look at individual stocks? I basically have no clue on this stuff.

What you want is an ETF (Exchange Traded Fund). They are like mutual funds, but are bought and sold like regular stocks. The minimum buy-in is the cost of one share, which is usually much less than mutual fund minimums. For instance, the cost of one share of VTI - the ETF for Vanguard's total US stock index fund - is currently $116. The cost of one share of VTIVX - the Target 2045 fund - is currently $19. Either of those would be good funds to start with, although if your IRA is with a different company than Vanguard, you may want to look at whether it offers its own ETFs as companies sometimes waive trading fees on their own products.

ETFs are unfortunately a little more complicated to buy & sell than mutual funds for beginners, but they are the best option if you can't get into the mutual fund you want because of minimum investment limits.

 

[SyNapSe]

Hi investor guys. I need some advice here I have 800 bucks in an IRA to invest. I would like to buy some index based funds, however they all have min buy-in around 2500 bucks. How can I turn this 800 into 2500 so I can get on the index fund train. Unfortunately due to circumstances I cant just deposit money to get there. Should I look at individual stocks? I basically have no clue on this stuff.

ETFs are sold like stocks but follow similar indices as most popular mutual funds and you should be able to purchase some with $800. What broker is your IRA with and what fund were you wanting to buy?

 

[PlayBoyMoney]

Hi investor guys. I need some advice here I have 800 bucks in an IRA to invest. I would like to buy some index based funds, however they all have min buy-in around 2500 bucks. How can I turn this 800 into 2500 so I can get on the index fund train. Unfortunately due to circumstances I cant just deposit money to get there. Should I look at individual stocks? I basically have no clue on this stuff.

You can get on the index fund train with Betterment already, they will take $800 minimum as long as you deposit at least $100 a month.

 

[Nipo]

I will refi down to a 15 year mortgage at that point is what I mean. Regardless of anything.

Why? My 30 year mortgage is 3.25% and my average annual return is nearly 8. I'm not paying back my mortgage a day early at that rate.

 

[samman6]

What you want is an ETF (Exchange Traded Fund). They are like mutual funds, but are bought and sold like regular stocks. The minimum buy-in is the cost of one share, which is usually much less than mutual fund minimums. For instance, the cost of one share of VTI - the ETF for Vanguard's total US stock index fund - is currently $116. The cost of one share of VTIVX - the Target 2045 fund - is currently $19. Either of those would be good funds to start with, although if your IRA is with a different company than Vanguard, you may want to look at whether it offers its own ETFs as companies sometimes waive trading fees on their own products.

ETFs are unfortunately a little more complicated to buy & sell than mutual funds for beginners, but they are the best option if you can't get into the mutual fund you want because of minimum investment limits.

ETFs are sold like stocks but follow similar indices as most popular mutual funds and you should be able to purchase some with $800. What broker is your IRA with and what fund were you wanting to buy?

Never heard of these ETF things. They sound interesting. My IRA is with Fidelity. Its from an old employer. Basically the money is just sitting there doing nothing, right now I haven't put any money in there ever, this 800 is the initial investment that the company did on my behalf. Since I now live outside the US I don't have enough disposable income to really put money in here, since salaries in my new country are quite a bit lower, maybe in a few years. I looked on Fidelity's website and found a few of these ETFS, seems the Fidelity ones are commission free on the trade which is handy, I will do some research now. Thanks for all the great advice guys.

 

[tokkun]

Never heard of these ETF things. They sound interesting. My IRA is with Fidelity. Its from an old employer. Basically the money is just sitting there doing nothing, right now I haven't put any money in there ever, this 800 is the initial investment that the company did on my behalf. Since I now live outside the US I don't have enough disposable income to really put money in here, since salaries in my new country are quite a bit lower, maybe in a few years. I looked on Fidelity's website and found a few of these ETFS, seems the Fidelity ones are commission free on the trade which is handy, I will do some research now. Thanks for all the great advice guys.

Sure. And to answer the inevitable question, when you go to buy some shares and it asks you whether you want to do a market order or a limit order, just do a market order. Market orders are simpler and are sufficient for what you are trying to do.

 

[Piecake]

Does the rest of finance-GAF feel like we are due another recession in the next five years? If so, we should put our heads together and look for possible indicators that could trigger it. I am only looking at it in a historical context when I say we should be due one in about five years. What does finance-GAF say?

That's probably likely. Personally, I am going to just ride through it because I have little confidence in myself that I will be able to guess when to get out and then when to get back in. Plus, that just sounds like a hassle.

If you are interested in doing that, I would pay attention to Robert Shiller. He has a pretty good track record of recognizing bubbles and will likely mention something if he thinks he sees another coming.

 

[Wellington]

Why? My 30 year mortgage is 3.25% and my average annual return is nearly 8. I'm not paying back my mortgage a day early at that rate.

That's good for you but mine is at 5%. I am looking to save on the overall total interest paid as well as lower my monthly payment.

Really for me saving so hard for retirement (more FIRE than just retirement) is part of an overall plan on being kinder to my older self and reducing the amount of obligations. The remaining term on my current 30 year mortgage takes me to the age of 56, unless I can cover it with passive income, I want to rid myself of the mortgage itself as soon as possible. It effectively lowers the amount of money required to fit within the 4% rule.

 

[Walter White Walker]

Never heard of these ETF things. They sound interesting. My IRA is with Fidelity. Its from an old employer. Basically the money is just sitting there doing nothing, right now I haven't put any money in there ever, this 800 is the initial investment that the company did on my behalf. Since I now live outside the US I don't have enough disposable income to really put money in here, since salaries in my new country are quite a bit lower, maybe in a few years. I looked on Fidelity's website and found a few of these ETFS, seems the Fidelity ones are commission free on the trade which is handy, I will do some research now. Thanks for all the great advice guys.

If you do go with ETF's make sure you buy and sell only during market hours. There's a spread on ETF's - the Bid (what someone is willing to buy a share for), and the Ask (how much someone is willing to sell for). If you're trading after hours - or in a lightly traded ETF anytime - the bid/ask spread could be pretty big. If you're trading in market hours in a large, well traded ETF than the Bid and Ask are only going to be a penny or two apart.

 

[tokkun]

Why? My 30 year mortgage is 3.25% and my average annual return is nearly 8. I'm not paying back my mortgage a day early at that rate.

Just as a side note, even at 3.25% paying down your mortgage offers better risk-adjusted returns than pretty much any of the alternatives in the low volatility space. It is essentially zero risk for you, but the returns are better than other near-zero investments like money markets or treasuries. It even beats Total Bond Market, which only has a yield of 2.3% right now and comparatively much more volatility. Even the riskier intermediate corporate bonds only barely edge out the return at 3.5% yield. And this is all ignoring taxes.

So generally speaking, it is not that bad an idea to pay down your mortgage in lieu of whatever percentage of your allocation would go to bonds, if you are not 100% in stocks.

Does the rest of finance-GAF feel like we are due another recession in the next five years? If so, we should put our heads together and look for possible indicators that could trigger it. I am only looking at it in a historical context when I say we should be due one in about five years. What does finance-GAF say?

Historical context in what sense? Like we expect a recession every X years? Or that the average CAPE is high for stocks and reminiscent of other market crashes?

I'm not so sure. It is true that CAPE is high right now, which is causing a lot of the doomsaying, but it may fall without a price change by virtue of corporate tax cuts under a Republican administration. Moreover, there is also a theory that Trump will combine tax cuts with higher spending, triggering an inflationary period which will further reduce CAPE.

 

[GhaleonEB]

That's a good way to think of it. I've thought for a few years that our early mortgage payment was basically our fixed income/bonds component of the portfolio, earning 4.625%. We're 100% stock, otherwise. Whether to add bonds to the mix is one of the things we'll look at once the house is paid off.

 

[Nipo]

Just as a side note, even at 3.25% paying down your mortgage offers better risk-adjusted returns than pretty much any of the alternatives in the low volatility space. It is essentially zero risk for you, but the returns are better than other near-zero investments like money markets or treasuries. It even beats Total Bond Market, which only has a yield of 2.3% right now and comparatively much more volatility. Even the riskier intermediate corporate bonds only barely edge out the return at 3.5% yield. And this is all ignoring taxes.

So generally speaking, it is not that bad an idea to pay down your mortgage in lieu of whatever percentage of your allocation would go to bonds, if you are not 100% in stocks.



Historical context in what sense? Like we expect a recession every X years? Or that the average CAPE is high for stocks and reminiscent of other market crashes?

I'm not so sure. It is true that CAPE is high right now, which is causing a lot of the doomsaying, but it may fall without a price change by virtue of corporate tax cuts under a Republican administration. Moreover, there is also a theory that Trump will combine tax cuts with higher spending, triggering an inflationary period which will further reduce CAPE.

That is true but you're sacrificing some liquidity and interest deduction. It is much easier to sell 2% bonds if you need money than take a HELOC especially with rising interest rates. I guess since this thread is specifically about retirement investing and not general strategy though it is less important.

 

[tokkun]

That is true but you're sacrificing some liquidity and interest deduction. It is much easier to sell 2% bonds if you need money than take a HELOC especially with rising interest rates. I guess since this thread is specifically about retirement investing and not general strategy though it is less important.

The tax on the bond yield (if in a taxable / pre-tax account) will usually be more than the typical person saves on the mortgage interest deduction. The majority of people don't itemize at all, and even if you do, you don't get tax savings until the standard deduction threshold. I agree that there should be a liquidity premium as well, but as you say, that is less of an issue for retirement savings.

I think the bigger asterisk on the argument in favor of paying down the mortgage is that it is projecting based on today's bond rates (which are not far off historic lows) and modestly low inflation rates. It should really be based on rates over the course of your mortgage, and it is entirely possible they will be higher in the future.

 

[Zips]

Speaking of whether to put extra funds towards additional savings or paying down your mortgage faster...

I have been making extra payments towards my mortgage, which is at 2.99%. Part of this is so as to potentially bring down the cost of maintaining the place altogether so that when we move out we may be able to rent it out and have it pay for itself instead of only having the option to sell.

The question I have now though is whether to keep making those extra payments, or stop that and put those funds towards investing with a likely eye towards using them for part of a downpayment towards a larger home.

Basically I appear to be in a situation where I can cover my retirement savings, and either save for a bigger place, or pay down the mortgage faster, but not both.

Because of the relatively short time frame of maybe 3 or 4 years, and the likelihood that we will sell this place for funds to use as a downpayment, as much as I might like the possibility of having two properties and renting out one, I am leaning towards continuing to make the extra payments as a secure way to help increase the equity we could then use towards a larger home.

That sound about right to anyone?

 

[NetMapel]

Historical context in what sense? Like we expect a recession every X years? Or that the average CAPE is high for stocks and reminiscent of other market crashes?

I'm not so sure. It is true that CAPE is high right now, which is causing a lot of the doomsaying, but it may fall without a price change by virtue of corporate tax cuts under a Republican administration. Moreover, there is also a theory that Trump will combine tax cuts with higher spending, triggering an inflationary period which will further reduce CAPE.

Partly is due to the timeframe in which we generally experience a crash every ten years. Isn't there also a new finance technique that mimics credit default swap that's growing fast? https://www.bloomberg.com/amp/news/...investors-look-for-panic-button?client=safari

 

[newjeruse]

Is there a way to figure out why, on a fairly quiet day on the market, Fidelity Growth Company went down 5%? Seems like a weird aberration.

 

[Randolph Freelander]

Is there a way to figure out why, on a fairly quiet day on the market, Fidelity Growth Company went down 5%? Seems like a weird aberration.

I can't find news of it, but history suggests they may have done a capital gains distribution today. Last December, they had one for more than $5, the previous year more than $4. Today's price drop suggests that the distribution could have been $7, or in that range.

If that's the case, you didn't lose a dime. The distribution will either be sitting in your account or reinvested once it's actually paid, depending on your reinvestment settings.

 

[cubicle47b]

It's always a little scary when your mutual fund drops 5-10% points out of nowhere even when you know what's happening.

 

[newjeruse]

Makes sense now. Thanks for the help guys.

 

[Randolph Freelander]

Makes sense now. Thanks for the help guys.

To follow up, on 12/27, the fund issued a dividend of $0.093 per share, capital gains distribution of $8.069. The fund price lost $7 per share, so there were market gains of $1.16 (8.069 + 0.093 - 7.00).

You're good to go, all's well that ends well.

 

[cheezcake]

What percent of your savings would people recommend putting towards investment?

Like what realistic risk should you factor in if you're going for an index fund?

 

[SyNapSe]

What percent of your savings would people recommend putting towards investment?

Like what realistic risk should you factor in if you're going for an index fund?

If income, I think you'd want to put away at least 10%. If it sounds like a lot start with 5 and then increase it periodically. If you really have a ton sitting in savings let us know

Not 100% sure what you mean on the second question. In general, indexes can track things with lower or higher risk so it's your choice.

 

[ClosingADoor]

What percent of your savings would people recommend putting towards investment?

Like what realistic risk should you factor in if you're going for an index fund?

For me it is not so much about percentage of savings. I put away a certain amount of months of income in a savings account, for if stuff goes bad and I'll need it. Then the rest goes into investments a bit every month. The more the better. There is little reason to have a ton of money in a savings account where it gets almost nothing at the moment in interest.

 

[anonymous_abc]

What percent of your savings would people recommend putting towards investment?

Like what realistic risk should you factor in if you're going for an index fund?

Best case scenario, try to max out your 401k.

 

[CopperPuppy]

Weird question:

I do my retirement investing through Vanguard, and specifically through shares in the total stock market index fund. I recently logged in to contribute for 2016 and noticed that I had some cash sitting in one of those Vanguard money market funds they automatically set up for you, probably because of dividend payouts or something. I went ahead and rolled these over into more shares in the total stock market index fund, thinking that it would decrease my total allowable contribution for the year (from $5,500) accordingly, but it still says that I can contribute the full $5,500.

Can anyone enlighten me on why this is the case? Seems like cash swept into your money market fund should count toward your contribution, no? What am I missing here?

 

[demosthenes]

Weird question:

I do my retirement investing through Vanguard, and specifically through shares in the total stock market index fund. I recently logged in to contribute for 2016 and noticed that I had some cash sitting in one of those Vanguard money market funds they automatically set up for you, probably because of dividend payouts or something. I went ahead and rolled these over into more shares in the total stock market index fund, thinking that it would decrease my total allowable contribution for the year (from $5,500) accordingly, but it still says that I can contribute the full $5,500.

Can anyone enlighten me on why this is the case? Seems like cash swept into your money market fund should count toward your contribution, no? What am I missing here?

Do you not have auto reinvestment turned on? If those were dividends/cap gain distributions/other then that counts as income as part of the IRA. The $5,500 limit is what YOU specifically add to the account each year.

 

[hendersonhank]

Weird question:

I do my retirement investing through Vanguard, and specifically through shares in the total stock market index fund. I recently logged in to contribute for 2016 and noticed that I had some cash sitting in one of those Vanguard money market funds they automatically set up for you, probably because of dividend payouts or something. I went ahead and rolled these over into more shares in the total stock market index fund, thinking that it would decrease my total allowable contribution for the year (from $5,500) accordingly, but it still says that I can contribute the full $5,500.

Can anyone enlighten me on why this is the case? Seems like cash swept into your money market fund should count toward your contribution, no? What am I missing here?

I have a somewhat related question. If I sell some funds in my Fidelity Roth IRA, so that the proceeds end up still in that IRA in the Fidelity Money Market, do I have to pay capital gains tax even though it's still in that IRA and I haven't withdrawn it? And similarly to the above question, can I use those funds to contribute to the index fund in that same IRA without it counting toward my yearly contribution limit?

 

[CopperPuppy]

Do you not have auto reinvestment turned on? If those were dividends/cap gain distributions/other then that counts as income as part of the IRA. The $5,500 limit is what YOU specifically add to the account each year.

Understood. If I just rolled that amount back over into the IRA, what changes for me tax-wise? Am I taxed on that amount or anything?

 

[demosthenes]

Understood. If I just rolled that amount back over into the IRA, what changes for me tax-wise? Am I taxed on that amount or anything?

You're not really rolling anything if I'm understanding you correctly, right now your account looks like this:

Money market $555
VTSMX / VTSAX: $15,000

Just purchase more of VTSAX with the $555. See if you don't have auto reinvest on? Nothing changes tax wise.

I have a somewhat related question. If I sell some funds in my Fidelity Roth IRA, so that the proceeds end up still in that IRA in the Fidelity Money Market, do I have to pay capital gains tax even though it's still in that IRA and I haven't withdrawn it? And similarly to the above question, can I use those funds to contribute to the index fund in that same IRA without it counting toward my yearly contribution limit?

The yearly contribution limit only applies to NEW money you're putting into the fund. You electronically transfer $5,500 from your bank account to the Vanguard/ST/etc account.

You WOULD pay when you withdraw the money but because it's a Roth you never pay taxes on the withdraws because you already paid tax on the money up front. You can sell funds and buy funds. It's like your 401k. When you sell funds and buy new funds, you don't pay tax on that.

 

[CopperPuppy]

You're not really rolling anything if I'm understanding you correctly, right now your account looks like this:

Money market $555
VTSMX / VTSAX: $15,000

Just purchase more of VTSAX with the $555. See if you don't have auto reinvest on? Nothing changes tax wise.

I appreciate your help. That situation is what I have here. Apparently I don't have auto-reinvest turned on, so say it looks like the following:

Money Market: $500
VTSMX: $20,000

And I use the $500 to buy more VTSMX, I don't owe taxes on anything and my contribution limit is not affected? So basically I can contribute additional money swept into my money market fund regardless of present contribution and without tax liability?

 

[demosthenes]

I appreciate your help. That situation is what I have here. Apparently I don't have auto-reinvest turned on, so say it looks like the following:

Money Market: $500
VTSMX: $20,000

And I use the $500 to buy more VTSMX, I don't owe taxes on anything and my contribution limit is not affected? So basically I can contribute additional money swept into my money market fund regardless of present contribution and without tax liability?

Yes as long as the money market account increased from your account itself and not an outside source.

FYI, if you have $20k in VTSMX and this is a Vanguard account. That should have automatically rolled into VTSAX the admiral shares version of VTSMX that has a lower expense ratio. I'd ask Vanguard CS why it hasn't.

 

[Y2Kev]

I'm about to fund my Roth IRA (well, tIRA -> backdoor Roth) on Jan 1. I own three funds in the IRA:

VTSMX (total stock) ~30%
VWINX (wellesley): ~20%
VWELX (wellington): ~50%

Any ideas? I usually use my Retirement accounts for bond exposure since I don't hold any bonds in taxable accounts. Should I bother with more bonds?

I'm thinking about just dumping into Total Stock and converting to Admiral so I get the ER savings.

 

[Javaman]

The tax on the bond yield (if in a taxable / pre-tax account) will usually be more than the typical person saves on the mortgage interest deduction. The majority of people don't itemize at all, and even if you do, you don't get tax savings until the standard deduction threshold. I agree that there should be a liquidity premium as well, but as you say, that is less of an issue for retirement savings.

I think the bigger asterisk on the argument in favor of paying down the mortgage is that it is projecting based on today's bond rates (which are not far off historic lows) and modestly low inflation rates. It should really be based on rates over the course of your mortgage, and it is entirely possible they will be higher in the future.

When I decided to pay off my house instead of putting the extra money into investments I looked at it backwards. Would I borrow money on my house to invest in the stock market? The answer for me was no way. So I took care of the mortgage first. Being a small mortgage on a starter home made it an even easier decision. I do find that a lot of people only look at the mortgage interest vs expected stock growth difference and rarely figure risk into the decision.

 

[demosthenes]

I'm about to fund my Roth IRA (well, tIRA -> backdoor Roth) on Jan 1. I own three funds in the IRA:

VTSMX (total stock) ~30%
VWINX (wellesley): ~20%
VWELX (wellington): ~50%

Any ideas? I usually use my Retirement accounts for bond exposure since I don't hold any bonds in taxable accounts. Should I bother with more bonds?

I'm thinking about just dumping into Total Stock and converting to Admiral so I get the ER savings.

I'm very far from retirement (age 30) but I have very limited bonds in my personal (consider it retirement) investments and that's it. Don't have them as part of my IRA/401 but will reconsider later on.

 

[Chris R]

I'm very far from retirement (age 30) but I have very limited bonds in my personal (consider it retirement) investments and that's it. Don't have them as part of my IRA/401 but will reconsider later on.

Vanguard says I currently have bonds at 5.6 of my assets when I should be targeting 10% according to them.

I think it's fine where it's at right now.

 

[demosthenes]

Vanguard says I currently have bonds at 5.6 of my assets when I should be targeting 10% according to them.

I think it's fine where it's at right now.

For retirement I have:
401k - no bonds.
IRA - no bonds
Personal vanguard - 9% bonds. Vanguard tells me that same 10%

 

[Staccat0]

This thread is invaluable to me right now as 2017 is the year I am gonna figure this shit out. It's one of those things where I just want someone to tell me what to do and this seems like a nice first step.

 

[Chris R]

This thread is invaluable to me right now as 2017 is the year I am gonna figure this shit out. It's one of those things where I just want someone to tell me what to do and this seems like a nice first step.

Don't wait for 2017, or at least make sure you get a contribution in for 2016 before you file your taxes.

 

[PflargBlarg]

Things are looking good for the end of the year. A naive calculation says I've saved 55% of post-tax income. That's almost certainly incorrect because of the difficulties in figuring out income and expenses related to real estate rental/selling but I figure it's close enough.

I think I'll set a goal for 2017 of getting to 60% as I I'm definitely going to ask for a raise in the next meeting with management.

 

[Piecake]

I'm about to fund my Roth IRA (well, tIRA -> backdoor Roth) on Jan 1. I own three funds in the IRA:

VTSMX (total stock) ~30%
VWINX (wellesley): ~20%
VWELX (wellington): ~50%

Any ideas? I usually use my Retirement accounts for bond exposure since I don't hold any bonds in taxable accounts. Should I bother with more bonds?

I'm thinking about just dumping into Total Stock and converting to Admiral so I get the ER savings.

I would definitely dump it into Total Stock. Though to be fair, I am not a fan of bonds and managed funds, so my advice is not totally unbiased.

Personally, I like how Tokkun conceptualizes bonds. If you have a mortgage, loans, or any other debts think of paying those off as investing in bonds and include that in your investment portfolio. The rest of your portfolio can be all or mostly stocks (that's assuming that you are still relatively young).