LucidMomentum
Member
BRB Quitting my job and opening a firm.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
BRB Quitting my job and opening a firm.
So my wife's 401(k) is trash and the company (a start up) doesn't yet offer matching contributions.
After maxing out IRA contributions, is cobbling together a decent index portfolio from bad options (1.18%, 1.13% etc. fees) the best method of saving additional income towards retirement right now?
Sidenote: TSP is the best.
After maxing out IRA contributions, is cobbling together a decent index portfolio from bad options (1.18%, 1.13% etc. fees) the best method of saving additional income towards retirement right now?
Sidenote: TSP is the best.
SomewhatGroovy
Banned
This is deceiving and you know it.
On average, active funds from third party strategists run about 50 basis points. You add another 10 basis point platform fee and you're looking 60 basis points. An advisor then adds whatever he and his clients' agree to on top of that. Most independent advisors i know charge no more than 1% all in (so .6+ .4)! The .4 they collect is not for the actively managed fund but for the service they bring to the table, whatever that may be.
There is more to Advising than buying funds, index or not.
In FACT, your client can spend $0 for an active managed fund by going to a Direct Third Party Manager such as an SEI, and pay their advisor 10 basis points for an entire year. or 40, or 50.
anonymous_abc
Member
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anonymous_abc
Member
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Yeah I think a few of us are. You looking at getting one of those designations?
I use Betterment and like the service. They are vanguard index funds though (which they swap out occasionally for Schwab funds). Most will recommend just staying with vanguard but Betterments fees are reasonable and they allow for investing in fractional shares. Though they set the percentage. A 90/10 account of 90% stocks is like 17% vti 17% vtv 5% small 5% mid 37% vea and like 9% vwo emerging markets. I love their allocations so that is why I use them. You can enable tax loss harvesting too from a taxable account if you wish. They also offer tax coordinated portfolio option if you want to mix a taxable and non taxable account together.
Account at Vanguard? Believe you need to set that up. You can either deposit the dividend into your money Market account or have vanguard automatically reinvest dividends.
LordPezix
Member
Yeah I graduate with my BS in Finance in two months. I've already taken my lvl 1 exam, didn't pass but close, going in for round two. Just was looking to connect and see what other finance threads they may be participating in.
- Thanks
Randolph Freelander
Member
Come on, now. You can recognize a joke. Though, like all jokes, it's not one based too far off reality.
SomewhatGroovy
Banned
Okay, THAT is pretty dogshit. Good lord.
His fees are predicated on what MAY happen in his account and with variables neither he or his advisor have control over.
That account would never get approved with my broker-dealer.
Darren870
Member
Quick financial question, not retirement based though.
GF has a car loan at some crazy percentage (like 20%!?!)
She is paying $414 a month and the loan matures on Feb 2021. Basically looking at paying ~19k
She has the means to pay it off now for ~14k. Saving about $5k.
Is there anything else she can do? Car isn't even worth 8k. No crazy trade in deals people have heard of or something silly that we may be missing?
I've always bought my cars outright, so not really familiar with the best way to tackle this.
Cheers!
GF has a car loan at some crazy percentage (like 20%!?!)
She is paying $414 a month and the loan matures on Feb 2021. Basically looking at paying ~19k
She has the means to pay it off now for ~14k. Saving about $5k.
Is there anything else she can do? Car isn't even worth 8k. No crazy trade in deals people have heard of or something silly that we may be missing?
I've always bought my cars outright, so not really familiar with the best way to tackle this.
Cheers!
demosthenes
Member
She bought a car with a huge loan that wasn't even worth half?
Get that paid off asap and tell her to never do that again.
Darren870
Member
Well it was at the time. This was 2 years ago.
Randolph Freelander
Member
Suffice it to say, get rid of a 20% loan ASAP. Run, do not walk, to the payoff window.
Earthstrike
Member
Is she eligible for any line of credit where the interest is lower than that of the car loan? That's basically the only damage minimization available to her.
Amory
Member
Darren870
Member
Maybe, but that still won't be cheaper then paying it all off say tomorrow. Which she now has the means to.
Right?
That feeling when you look at YNAB and see no debt but $200 on a credit card. I opened up the Vanguard brokerage account today to invest my house down payment cache. Using the tool it's splitting me between:
12% Vanguard Total Stock Market ETF (VTI)
8% Vanguard Total International Stock ETF (VXUS)
56% Vanguard Total Bond Market ETF (BND)
24% Vanguard Total International Bond ETF (BNDX)
12% Vanguard Total Stock Market ETF (VTI)
8% Vanguard Total International Stock ETF (VXUS)
56% Vanguard Total Bond Market ETF (BND)
24% Vanguard Total International Bond ETF (BNDX)
80% is a huge proportion for bonds. Any idea why it's putting you so bond-heavy?
LordPezix
Member
Shielding for retirement?
Yeah it is. Risk and income and investment seem to be the largest factors. I'm thinking more 60/40 bonds to stocks and this hits it.
I'm looking max 3-5 years but hopefully closer to 2 before we buy a house. This is just a place to store the house down payment cash and future contributions so it's not getting shit .25% interest in my savings account.
Very true.
I'll be active in putting more money in as I go but passive in so far as tinkering with the distribution between stocks and bonds.
I love YNAB. It has a learning curve but it's well worth it. If you have a large bank that you can connect your accounts directly through it, you can import transactions. I have to manually do my checking and savings accounts but I make 90% of my purchases through my Chase Freedom CC.
They have added some nice chart tracking tools lately.
It's free for the first year and i think 10% discount after for students if you have a .edu email. I'm using my fiance's email address.
He does say it's for home down payment saving purposes, so it's likely timeline and risk aversion factors taken into account. I'd certainly not go too terribly high risk when saving for something like that that should be relatively short term (relative to retirement savings obviously).
So I maxed out my Roth IRA for the year and figure I'll buy an index fund in my brokerage account. Would is there any reason not to get Vanguard Total Stock Market if it's already in my Roth? Is that reason enough to go with S&P 500 instead (VFINX)?
Also no matter how research I do I don't understand the difference between an Index Fund and an ETF - other than that you can buy an ETF at difference prices throughout the day and an Index Fund is traded at its closing price? Why do they have different minimum investments? Would I want to exchange an ETF for the equivalent mutual fund once it reaches the fund's minimum?
Also no matter how research I do I don't understand the difference between an Index Fund and an ETF - other than that you can buy an ETF at difference prices throughout the day and an Index Fund is traded at its closing price? Why do they have different minimum investments? Would I want to exchange an ETF for the equivalent mutual fund once it reaches the fund's minimum?
LordPezix
Member
That is true, but in reality after inflation is included he might be looking at a 3-5% return with that portfolio and if his target is a down payment for a house in a few years, an X down payment today won't get you X house in the future. If anything he should be considering what kind of house he wishes to move into and try and pace the down payment increase percentage with his portfolio. I mean this is all depending on where he wants to live, I am from Portland, OR so rapid housing price increase is the norm around here.
Do ETF has easier ways to track each shares bought or is that something I made up? Besides auto contributions only working with mutual funds I'm not sure if the differences matter that much. TSM is tax friendly so I would go that route
If you're looking at Vanguard funds, there's very little difference other than the minimum investment amount for their mutual funds, and the ability to buy partial shares of a mutual fund. This is from their website:
"What's the difference between a Vanguard ETF and a Vanguard mutual fund?
Each Vanguard ETF is a share class of a Vanguard index mutual fund, so many characteristicslike the fund's objective, holdings, and managementare identical.
The main difference is that Vanguard ETFs trade on an exchange like stocks, so they're pricedand can be bought and soldthroughout the trading day. Because they're traded on an exchange, they must be bought and sold through a brokerage account.
Vanguard ETF Shares also have lower expense ratios and investment minimums than Investor Shares of the same fund."
Oh, haha, I totally misread that. Yeah, that's quite a short time horizon.
What's a good rule of thumb for an amount to save per month from your salary?
I've been throwing bits and bobs each month into a Vanguard Stocks ISA split among a couple things, I'm going to just focus purely on index trackers from now on though after reading this thread.
Main goal besides generally saving, is to build up a down payment on a house (to be ideally bought in the next 3-5 years). I constantly see people warn against wasting time on savings accounts. Where should I keep the money I'm saving towards a house? Index funds too?
I've been throwing bits and bobs each month into a Vanguard Stocks ISA split among a couple things, I'm going to just focus purely on index trackers from now on though after reading this thread.
Main goal besides generally saving, is to build up a down payment on a house (to be ideally bought in the next 3-5 years). I constantly see people warn against wasting time on savings accounts. Where should I keep the money I'm saving towards a house? Index funds too?
demosthenes
Member
If she has the means do it. I have the means to pay off my 6k auto loan but I don't because It's .9% interest.
anonymous_abc
Member
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ZackieChan
Member
I'd love a calculator like this that allows me to increase contributions annually.
There is a major problem for people using this calculation in the US: healthcare costs.
For most people retiring early, healthcare costs will be significantly higher in retirement because:
- They are no longer being subsidized by your employer
- Costs have been growing faster than inflation
- As you get older, you tend to require more care
To really make an informed decision you need to model healthcare costs into your calculation. Although with the current political uncertainty about the ACA, it's not even possible to do that with any degree of confidence.
ZackieChan
Member
Banking on that single payer. Should kick in any day now...
anonymous_abc
Member
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RumblingRosco
Member
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ZackieChan
Member
Well yes, this one one model not one model to rule them all.
Anyway as it is now it seems unlikely that I will be retiring in the US.
Yeah, I certainly will not be living in the US for my retirement. Hell, I don't live there now. I'd rather be saving that extra cash for my retirement 🤓
Yeah I appreciate that. I have 3% of my salary pre-tax going directly to my pension, matched by employer. I'm planning on bumping that up to 10% or so.
What is your recommendation on where to store money saving for those larger purchases that aren't retirement based?
anonymous_abc
Member
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I'll take a proper look at the links when I get home, thanks for the info.
I guess my question is, if some of my goals end up landing in the 24 month ish range, what should "don't invest it" be? Savings account for the sake of somewhere to keep it?
RumblingRosco
Member
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I also wish I could enter how much I have saved currently. The calculator starts with zero, when I'd like to start with where I'm at. It's only useful if you are starting from scratch, unless I'm missing some options.
Isn't that the current portfolio value field?