Easily doable and completely legal. Though the funds will go into whatever bank/trading platform you used to purchase the fund, you'll have to transfer them manually to a different bank afterwards.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
Easily doable and completely legal. Though the funds will go into whatever bank/trading platform you used to purchase the fund, you'll have to transfer them manually to a different bank afterwards.
toadsworth
Banned
Only $7k of my student loans are at 3%, thanks congress. This is the year where I'm gonna start seriously chipping away at them. Thanks for the advice, I'm sure I'll be asking for more later.
LucidMomentum
Member
Oh fuck, I need to check on that and start changing my budgeting accordingly.
Thanks for the reminder.
I'm paying off the rest of my fiance's engagement ring and finishing off the 1900 left on my 3.2% car loan today. This will free up an additional $700 a month. I have 70% of my house down payment goal saved up but since I'm going to be losing my job next year, i'm going to store that in a bond ETF for the time being. My savings account interest through a small community bank is a mighty .25% :/
It's likely we will move to a bigger city in the next 18 months for better work opportunities and I have a year salary minus taxes for a severance package waiting for me next year after we close. The plan is for 25% to be European vacation, 30% invested, 20% house down payment bump and 25% will be my unemployment nest egg.
I have a brokerage account with Scottrade and my IRAs are with Vanguard. I'm thinking about opening up a brokerage account with Vanguard so I have everything under one roof and going with one of their bond ETFs
Anyone recommend a good bond ETF for an investment period of 2-3 years and/or one to store cash reserves on a longer time period?
It's likely we will move to a bigger city in the next 18 months for better work opportunities and I have a year salary minus taxes for a severance package waiting for me next year after we close. The plan is for 25% to be European vacation, 30% invested, 20% house down payment bump and 25% will be my unemployment nest egg.
I have a brokerage account with Scottrade and my IRAs are with Vanguard. I'm thinking about opening up a brokerage account with Vanguard so I have everything under one roof and going with one of their bond ETFs
Anyone recommend a good bond ETF for an investment period of 2-3 years and/or one to store cash reserves on a longer time period?
demosthenes
Member
My friend does this and I don't think it's worth the hassle. He only has about $2k at play and made returns of I think 8 and 7% in his first 2 years and then in year 3 had a bunch of loans go bad. The amount he puts into each one though is only like $50, because you can choose this you can really minimize your risk by spreading out to a lot of loans.
titiklabingapat
Member
I haven't really saved in my 20s but I'm now 30. I'm finally able to save up. I have finally figured out budgeting with a more stable income and cutting those I don't really need. I think I can save about $35k to $40k a year for at least 5 years. Would that allow me to 'catch up' my lost decade of my 20s?
No other debt other than my car, which is a 36 month lease. Gonna buy an old clunker after it's done.
No other debt other than my car, which is a 36 month lease. Gonna buy an old clunker after it's done.
Unknown Soldier
Member
I did plenty of math and determined that buying a new car would definitely set back my retirement plans.
You have to live a little though. So I did something I've wanted to do nearly 5 years now.
No ragrets. Maybe later I'll have some. Probably not though.
You have to live a little though. So I did something I've wanted to do nearly 5 years now.
No ragrets. Maybe later I'll have some. Probably not though.
demosthenes
Member
This reads like a facebook status update.
Randolph Freelander
Member
If you can do $35k-40k per year in savings, that will certainly put a sizable dent in your savings deficit. There are many retirement calculators out there, so you might want to find one and plug in values relevant to you and see what they say. Another metric people use is how much have you saved relative to your annual salary by a given age. I haven't given much thought to this, but here's what a recent CNBC article had to say, which was quoting Kimmie Greene (of Intuit & Mint.com):
http://www.cnbc.com/2017/02/22/heres-how-much-money-you-should-have-saved-at-every-age.html
If you're starting at 30, obviously, you are behind the curve, but this can help you plan and give you an idea when you might catch up.
I have my worries as well, but still want to try it out with a small sum.
Like your friend, I'm going to spread out the loans as well, I'll probably put a bit more than $2k though.
The plattform your friend uses, does it have some sort of security for loans going bad?
shadowsdarknes
Member
Anyone familiar with the ACORNS app?
It rounds up transactions and invests them into Vanguard funds. You give them your age and risk tolerance and it selects the right account.
Your $3.21 cup of coffee now becomes $4.00.
Once you've hit 5 dollars worth of round ups, it deducts that from your bank account and invests it.
It's nice passive savings that is supplementing my 401k for now. I'm not really making enough at the moment to be maxing out an IRA, but this is something nice that doesn't really dent my money too much but does provide substantial investments.
It rounds up transactions and invests them into Vanguard funds. You give them your age and risk tolerance and it selects the right account.
Your $3.21 cup of coffee now becomes $4.00.
Once you've hit 5 dollars worth of round ups, it deducts that from your bank account and invests it.
It's nice passive savings that is supplementing my 401k for now. I'm not really making enough at the moment to be maxing out an IRA, but this is something nice that doesn't really dent my money too much but does provide substantial investments.
chaosblade
Unconfirmed Member
This is depressing even though I'm technically ahead. Only because my job is shit and I wouldn't be able to support myself in retirement even if I followed this all the way there.
I've heard it's not really worth it because of the fees involved, and that you are better off just doing it yourself.
Neverwinter27
Member
Hey Randolph, would you recommend the booklet called "If You Can: How millenials can get rich slowly" by William Bernstein?
ZackieChan
Member
It's .99. Why not buy it, read it, and let us know?
I invested in the index stocks recommended by couch potato for Canadian investors (Vanguard Canadian, American, and XEF for international), but so far they all seem to be underperforming (overall 2% up) vs the S & P 500 (apparently up by 6% over the same period).
Should I have an S & P 500 fund too? I am hopeful the Vanguard funds will close the gap in performance...
Should I have an S & P 500 fund too? I am hopeful the Vanguard funds will close the gap in performance...
Neverwinter27
Member
I'm new to investing and would like to know if the contents in the book should be followed, and that the advice is sound, maybe you can give an opinion on it if you also read it?
hockeypuck
Member
The Bogleheads Wiki has a free PDF link from ETF.com:
https://www.etf.com/docs/IfYouCan.pdf
I like the content, I don't think it runs contrarian to what many say here.
Edit: I don't plan on following the recommendations to the letter, but I agree with the overall theme. For example, I'll likely add REITs to my Roth IRA next year, which is not explicitly discussed in the standard 3 fund portfolio (although Total Stock Market does cover some real estate companies). Another example, I only plan on rebalancing every 3 years or so, not every year like the pamphlet suggests. The less exchanging transactions I make, the less likely I'm going to act on my emotions, IMO.
Randolph Freelander
Member
Sorry, I've not read it.
Edit: Based on the available excerpt on Amazon (which is literally only a page), the book centers around a portfolio with 3 index funds (not bad!) with a recommendation to do 1/3 total stock, 1/3 international, and 1/3 bonds. At 25 years of age. This is far too conservative. I mean, it's $0.99 right now, so buy it and read it, I guess, but a young person would be better off doing a Vanguard target date fund.
anonymous_abc
Member
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Randolph Freelander
Member
It's always a good time to invest in index funds for your retirement.
Unknown Soldier
Member
Why so mean though ;_;
It was just a comment about how everything you do impacts your retirement. If you buy extremely expensive nice things for yourself, you will impact your retirement. Of course man cannot live on bread and water alone, so sometimes you have to do something nice for yourself. Just as long as you are aware of what you are doing.
PopcornMegaphone
Banned
Currently I have a vanguard account, but I'm looking at betterment.com as well. What's the general view of betterment vs vanguard?
Randolph Freelander
Member
I feel you. I'm in the process of talking myself into buying a hybrid, which is a good 5 years ahead of when I had originally planned to even think about maybe buying a new vehicle.
ZackieChan
Member
I've actually been TOO nice to myself these past years.
Need to stop taking so many vacations
Same with me. I gotta stop spending like a drunken sailor.
br0ken_shad0w
Member
I've actually been TOO nice to myself these past years.
Need to stop taking so many vacations
On my current vacation to SE Asia, I told myself I would be frugal. Plane tickets were bought using points from the Sapphire Reserve bonus but somehow I still spent thousands of dollars >_>
ZackieChan
Member
I'm living in SE Asia now, and still manage to spend a ton of money 😫
PflargBlarg
Member
Which particular couch potato one is this? It doesn't sound like Canadian Couch Potato since I don't recall him having any XEF. Is it one of those earlier MoneySense ones? If so, I recall those ones having a ridiculous amount allocated to bonds, which will indeed kill your returns.
Mine is Canadian Couch Potato focused, with a mix of VCN and VXC/XAW, 0% bonds. This is what it looks like so far
Dashed black line is the S&P 500 and the dashed aquamarine-ish line is the MCSI World Index. The other 2 are my TFSA and RRSP. My (and your) index funds aren't indexed to the S&P 500 so I wouldn't expect them to be the same, but they're still tracking fairly closely. This is a cumulative view so you can see that I am fairly handily beating out the SP500.
Maybe you just unluckily had bad timing? What kind of time period are we talking here?
In any case, an SP500 fund would be a bit redundant as all those companies will be included in your other funds.
My company has a 401k plan with Fidelity that I signed up for and am contributing to (up to the match), so I decided to sign up for a Roth IRA with them. I'm looking at the Fidelity Total Marker Investor Class fund (FSTMX), and the minimum investment amount is $2500. Wish I'd have known that before I transferred in $500...
In any event, my questions are:
-I know that the max yearly contribution to an IRA is $5500, but is that per person or per account?
-Related to that, is there an advantage to having multiple IRAs (if possible)? Either with one or multiple institutions?
-Is the fund I mentioned above worth investing and maxing? I plan on reading a lot more, but as I'm just starting out, I'd like to have a simple and clear path forward in the short-term. Wanted to get started saving as soon as I could, especially since I'm starting a bit later (28 y/o).
Any other advice you might think is useful in addition to the above questions is appreciated. Thanks guys, and great thread!
In any event, my questions are:
-I know that the max yearly contribution to an IRA is $5500, but is that per person or per account?
-Related to that, is there an advantage to having multiple IRAs (if possible)? Either with one or multiple institutions?
-Is the fund I mentioned above worth investing and maxing? I plan on reading a lot more, but as I'm just starting out, I'd like to have a simple and clear path forward in the short-term. Wanted to get started saving as soon as I could, especially since I'm starting a bit later (28 y/o).
Any other advice you might think is useful in addition to the above questions is appreciated. Thanks guys, and great thread!
The $5500 limit is per person / per year. You can have multiple IRA accounts but there's no advantage and your max contribution is still $5500 across all accounts combined.
If you don't have the minimum amount to buy an index fund look to see if they offer an ETF for the same fund. Those will be sold as individual shares so the buy in cost is generally much lower.
Also 28 isn't too late to start. You're ahead of most of your peers by a large margin. Kudos and stick to whatever plan you decide is best for you.
demosthenes
Member
Amory
Member
I have a roth IRA set up from a rollover of my old company's 401k. I haven't contributed another dime in the ~5 years the account has been open
I'm set up pretty well for retirement to this point, but I know that that's the most glaring place where I need to do more.
How do you guys make it a priority? Or what's your system for funding it? I'm already giving a sizable portion of my income to my current 401k, and what I'm dumping into post-tax savings is going to an investment account for the near term.
I'm set up pretty well for retirement to this point, but I know that that's the most glaring place where I need to do more.
How do you guys make it a priority? Or what's your system for funding it? I'm already giving a sizable portion of my income to my current 401k, and what I'm dumping into post-tax savings is going to an investment account for the near term.
disillusion386
Member
I'm on the same boat with my Roth IRA (just began contributing to it) where I bought shares for ETFs of index funds. What are people's usual buying strategy as they put in more money into the account? Keep buying the same funds? Right now, I have roughly 65% in large cap, 25% in mid cap, and a little less than 10% in small cap.
When I have enough in the account to invest in the index funds with higher investment requirements, should I go ahead and sell the ETF shares?
When I have enough in the account to invest in the index funds with higher investment requirements, should I go ahead and sell the ETF shares?
Question for you all. When researching ETFs to buy, what do you look for? What do you want to see?
I'm building an ETF ranking system right now (to be available for free). My plan right now is to calculate a rolling 5 year, 3 year, and 1 year information ratio for each ETF using each ETF's respective benchmark. So if you're looking at the SPY or IVV then the benchmark would be the S&P 500. The benefit of this approach is since the ETF returns are net of fees, the fees are baked into the ranking. So if one ETF has a fee of 0.08% but has a lower information ratio than an ETF that has a fee of 0.15%, then it might be worth it to pay more. This will really come into play when evaluating smart beta etfs/factor etfs.
Thoughts?
I'm building an ETF ranking system right now (to be available for free). My plan right now is to calculate a rolling 5 year, 3 year, and 1 year information ratio for each ETF using each ETF's respective benchmark. So if you're looking at the SPY or IVV then the benchmark would be the S&P 500. The benefit of this approach is since the ETF returns are net of fees, the fees are baked into the ranking. So if one ETF has a fee of 0.08% but has a lower information ratio than an ETF that has a fee of 0.15%, then it might be worth it to pay more. This will really come into play when evaluating smart beta etfs/factor etfs.
Thoughts?
demosthenes
Member
$458 transfers from my checking to a savings account on the first of the month. On 12/31 I have about $5,500 in that account. I transfer that on 1/1 to my ira.
I have 2 funds, spy and...i don't know why I can't think of that other one 😫😫. I usually alternate their funding.
I'm more of a mutual fund guy myself, but I would think that if you were comparing ETFs you would also want to compare the bid-ask spreads.
That's a good one. I've noticed other services provide a separate liquidity ranking. My initial plan was to only rank ETFs with more than $100m in AUM.
To be honest - most people around here seem to choose ETFs that are 1:1 analogues of Vanguard or Fidelity index funds. For instance most buy VTI when they can't get into VTSMX (or just want a smaller position, etc.)
Randolph Freelander
Member
Active funds are worse than we thought
http://www.marketwatch.com/story/wh...-funds-beat-the-sp-than-we-thought-2017-04-24
http://www.marketwatch.com/story/wh...-funds-beat-the-sp-than-we-thought-2017-04-24
LucidMomentum
Member
So, I should just mirror an S&P 500 index fund then?
Randolph Freelander
Member
And charge 1.5% fees.
PflargBlarg
Member
I remember reading this, interesting article. It made me laugh because I recall people talking about how large caps are now the domain of index funds but! there's still room for active funds in the mid and small caps!
Lol, I guess not.
ClosingADoor
Member
Yeah... still trying to talk my parents out of theirs, but I think I'll give up. Enjoy the fees and the tens of thousands of euros of extra spending. These guys are just picking index funds for you (I've shown them what is in the package, and it is just dozens of funds, which makes no sense to me) and charging the fee, cut out the damn middle man already...
demosthenes
Member
Ah, sorry missed this before. I just didn't know who or what it was directed at. And it had a really vague comment about something you did!
This is what my finance professor told me oh so many years ago. I dunno why people still insist on throwing money away when there's so much data out there arguing against these managed funds.