ClosingADoor
Member
"You can retire in 16.4 years." That would be quite early, don't know if I can keep this savings rate up, but I'm going to try.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
After doing some research today, I think I'm going with this US index tracker and put in 15-20% a month on top of my salary sacrifice: http://www.hl.co.uk/funds/fund-disc...gal-and-general-us-index-class-c-accumulation
Really low fee and seems to track well. Anyone think otherwise?
Really low fee and seems to track well. Anyone think otherwise?
I apologize if this isn't the right thread for this, but I couldn't think of any other available threads where this would be relevant.
I currently have an HSA with $270 in it. This was from my previous employer. I was going to just keep this account open in the event I needed to pay for any medical related expense, but they started charging a $2 admin fee monthly.
I don't have a HDHP with my current employer so I don't have an available HSA to transfer it to. It seems like I have two options. Letting it sit there and keep taking the $2 monthly hit or withdraw it and pay the 20% penalty. I haven't really had any medical expenses in years so I fear my monthly balance will continue to take $2 in fees every month for quite some time. What would you guys recommend? Do I have any other options?
I currently have an HSA with $270 in it. This was from my previous employer. I was going to just keep this account open in the event I needed to pay for any medical related expense, but they started charging a $2 admin fee monthly.
I don't have a HDHP with my current employer so I don't have an available HSA to transfer it to. It seems like I have two options. Letting it sit there and keep taking the $2 monthly hit or withdraw it and pay the 20% penalty. I haven't really had any medical expenses in years so I fear my monthly balance will continue to take $2 in fees every month for quite some time. What would you guys recommend? Do I have any other options?
As of right now, most likely in San Antonio. We are going to make a trip to visit SA soon to see if we really like it but I think the proximity to the ocean, Austin, Hill Country, and the cost of living compared to Houston, DFW and Austin make it very attractive. We'll be looking somewhere in the range of 200-225K
anonymous_abc
Member
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Last edited:
Thanks. You do make a good point. I will see if I can get them to do anything about the fee.
malingenie
Member
Agreed. It really sucks. It started at the beginning of this year for all WageWorks HSA accounts with a balance under $5,000.
question for financiers here
I put my house downpayment in the market. Yeah whatever. ANYWAY, I've really enjoyed the market run over the last few years. I think it's time to take it out.
It's all in index funds. Are my cap gains a function of the FUND buying and selling or is it how much time I've held the fund? I stopped buying last June and started putting stuff in the bank. So I was wondering if I should wait for June and get all LT cap gains only or if it's more the fund buying and selling so it won't matter and I should pull now before North Korea blows us up
I put my house downpayment in the market. Yeah whatever. ANYWAY, I've really enjoyed the market run over the last few years. I think it's time to take it out.
It's all in index funds. Are my cap gains a function of the FUND buying and selling or is it how much time I've held the fund? I stopped buying last June and started putting stuff in the bank. So I was wondering if I should wait for June and get all LT cap gains only or if it's more the fund buying and selling so it won't matter and I should pull now before North Korea blows us up
PantherLotus
Professional Schmuck
Looking to start a college fund for my kids (7 and 5) -- any good places to start?
demosthenes
Member
question for financiers here
I put my house downpayment in the market. Yeah whatever. ANYWAY, I've really enjoyed the market run over the last few years. I think it's time to take it out.
It's all in index funds. Are my cap gains a function of the FUND buying and selling or is it how much time I've held the fund? I stopped buying last June and started putting stuff in the bank. So I was wondering if I should wait for June and get all LT cap gains only or if it's more the fund buying and selling so it won't matter and I should pull now before North Korea blows us up
How long you've held the fund.
If you have reinvested dividends those will probably still be short, but not a large amount.
Are you in vanguard by chance? They have a lage, I think it's their cost basis that breaks down your total gain, your short and your long portions.
Look into your state 529 plan, see what funds are on offer.
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.
I have VCN (Vanguard FTSE Canada All Cap Index ETF), VUN (Vanguard U.S. Total Market Index ETF), and XEF (IShares Core MSCI EAFE IMI Index ETF). They were the ones recommended by a Canadian Couch Potato excel file that compared different funds through different investment bodies (e.g. vs. TD e-series funds, and regular mutual funds). I don't have the link to that anymore, but they are all listed on http://canadiancouchpotato.com/recommended-funds/
With these ones it's mainly been a period of only maybe around 4 months now, so not that long so it could just be fluctuations. As I'm unclear on how many funds I should be holding at any given time, and exactly how to judge whether one is better than another, I want to be proactive and ensure I'm not dumping into the wrong funds from the get-go. This way I won't have to make up for something later that I could have resolved now while things are still early.
Edit: Hmm - looking at the accounts again now, it looks like the returns are much more in line with the S&P 500 than I thought before. Maybe I was viewing it at a bad time or something. My wanting to be doubly sure I've got my money parked in the correct spots is still around though. Especially with the new tax year now that I can put more into my RRSP.
Finishing up my PhD right now and the prospect of no longer being a grad student has me thinking quite a lot more about investing than I have over the last few years.
Right now, I am basically 100% stock in my Vanguard Roth (60% US stock, 30% International, 10% REIT). I am getting to the age (35) where I kind of think I should be looking a little more at bonds. I dunno, I sat tight or bought for the entire great recession and it worked out great. I have basically no fear of crashes at this point. A little fear might be healthier.
I'll also be pushing up against the limits of tax-advantaged space and will probably have to start looking at taxable account before too long.
To the extent I have a plan going forward, it's as follows:
1) Max out Roth 401k and Roth IRA in 2017. Last year I'll be able to do either, and will require an aggressive savings rate given that I'll only be employed part of the year, but too good of an opportunity to pass up creating so much tax exempt space. 2018 and onward these will have to be traditional.
2) Save up for a 20% down, 15 year home loan for a condo. I should be able to do this in about a year, so I'll probably just keep the down payment in a 1% online savings until I'm ready to buy.
3) Max out I-bonds each year. Seems like an obvious choice for a few reasons. No interest rate risk, no inflation risk, and effectively increases tax-deferred space. So it's a good step in to bonds while interest rates are low, and can be easily rolled into higher yield when rates are higher.
4) Thinking on tax efficiency of asset allocation. I think the right thing to do is basically to leave my Roth as all stock for the foreseeable future. Even though the dividends/cap gains rates are more efficient in taxable, it still seems like the most advantageous strategy is to seek to create as much tax exempt space as possible. At some point I may want to move this towards a fund like Wellington which is a nice fund but really tax inefficient. But, that also may be over-thinking things.
Eventually I'll have to start making taxable investments and think a little bit more about allocations across and within tax types. I'll...worry about that when I get there. I the mean time, greatly appreciate any thoughts or comments from anyone who read my rambling.
Right now, I am basically 100% stock in my Vanguard Roth (60% US stock, 30% International, 10% REIT). I am getting to the age (35) where I kind of think I should be looking a little more at bonds. I dunno, I sat tight or bought for the entire great recession and it worked out great. I have basically no fear of crashes at this point. A little fear might be healthier.
I'll also be pushing up against the limits of tax-advantaged space and will probably have to start looking at taxable account before too long.
To the extent I have a plan going forward, it's as follows:
1) Max out Roth 401k and Roth IRA in 2017. Last year I'll be able to do either, and will require an aggressive savings rate given that I'll only be employed part of the year, but too good of an opportunity to pass up creating so much tax exempt space. 2018 and onward these will have to be traditional.
2) Save up for a 20% down, 15 year home loan for a condo. I should be able to do this in about a year, so I'll probably just keep the down payment in a 1% online savings until I'm ready to buy.
3) Max out I-bonds each year. Seems like an obvious choice for a few reasons. No interest rate risk, no inflation risk, and effectively increases tax-deferred space. So it's a good step in to bonds while interest rates are low, and can be easily rolled into higher yield when rates are higher.
4) Thinking on tax efficiency of asset allocation. I think the right thing to do is basically to leave my Roth as all stock for the foreseeable future. Even though the dividends/cap gains rates are more efficient in taxable, it still seems like the most advantageous strategy is to seek to create as much tax exempt space as possible. At some point I may want to move this towards a fund like Wellington which is a nice fund but really tax inefficient. But, that also may be over-thinking things.
Eventually I'll have to start making taxable investments and think a little bit more about allocations across and within tax types. I'll...worry about that when I get there. I the mean time, greatly appreciate any thoughts or comments from anyone who read my rambling.
For a 3-5 year time horizon on purchasing a home, and if we've got no problems having to wait an additional year or getting additional funds if the market takes a downturn (an actual crash is different, of course), are a conservative Vanguard blend of bonds and index funds a good idea for squirreling away the down payment with a not alarming amount of requisite risk?question for financiers here
I put my house downpayment in the market. Yeah whatever. ANYWAY, I've really enjoyed the market run over the last few years. I think it's time to take it out.
It's all in index funds. Are my cap gains a function of the FUND buying and selling or is it how much time I've held the fund? I stopped buying last June and started putting stuff in the bank. So I was wondering if I should wait for June and get all LT cap gains only or if it's more the fund buying and selling so it won't matter and I should pull now before North Korea blows us up
I'm tired of my Chase savings acct earning me nothing on my current saved amount.
I assume your issue is complicated, but the general rule of thumb is "max out a Roth IRA" as you can't predict future tax brackets.
If that is your concern, it is better to go half & half.
The principle is no different from investing in broad index funds. You reduce risk of loss due to future changes in your personal income or tax rates) by diversifying. I'm not sure I completely buy the argument that Roth-only is completely predictable, because I wouldn't put it past our government to decide they are going to start taxing Roth accounts for people who make more than $X or have more than $Y accumulated.
This is my philosophy and approach as well. It's not quite 50/50 as we have Roth IRA's and a traditional 401k, but that's the idea from having both. I like the hedge.
It also lets you manage your income bracket in retirement: take traditional with withdrawals up to a marginal income bracket, and then Roth after, to minimize taxation of the traditional, and stretch if further.
This is what I was leaning towards. I'm just not sure, given my circumstances.
Randolph Freelander
Member
Stay away from Morgan Stanley, kids.
http://www.reuters.com/article/us-morgan-stanley-wealth-vanguard-idUSKBN18001I
http://www.reuters.com/article/us-morgan-stanley-wealth-vanguard-idUSKBN18001I
Mutanthands
Member
Wow, that is some bold bullshit from Morgan Stanley. Vanguard "underperforming and less popular?"
demosthenes
Member
Even if they are less popular at MS, I wonder why they're less popular there. Maybe because they've been told not to push them?
Or step 1 of weeding out their employees that rely on those index funds?...
Earthstrike
Member
Anyone in canada invest in vanguard? What do I need to do, because I'm ready to make my next full tfsa and rrsp contributions and I want them in vanguard world market.
Make a free account at questrade.ca
transfer money to it
buy shares of, say, VUN.TO, VFV.TO, whatever vanguard fund you feel like. List here: https://www.vanguardcanada.ca/individual/indv/en/product.html
(e.g. specifically for your "world" wishes, Global excluding Canada is VXC.TO, there's a bunch of other ones too.)
forget about it for the next 40 years
PflargBlarg
Member
Also to jump on here, XAW is slightly better than VXC (at least for the moment) because of lower management fees and they hold SOME of their holdings directly whereas all of VXC's holdings are other US-listed Vanguard ETFs (which means you can't dodge the withholding taxes).
You can read more here (http://canadiancouchpotato.com/2016/06/20/cost-versus-convenience-in-ex-canada-etfs/) but if you're going for an all-in ex-Canada ETF there's no reason to choose VXC over XAW right now.
I asked this in the credit cards thread but thought maybe it might apply for here too..or maybe it doesn't. Apologies if it doesnt
I got a question: My parents just gave me 10k in a check/loan to put away to start saving for a house. They are going to give me another 20k over the next 3 years (something about a 10k limit in gifts per year?)
I dont plan on buying a house in the near future as I still need to save up, BUT would like the option to just in case. What is my best option to save and invest this money? I came up with a few
1. 5 year CD with ~2% APR. However if I cancel early, most places have a fee of 6 months worth of APR
2. 1% APR savings account
3. Negligible APR but ~150-200$ sign up bonus through banks like Chase.
Thoughts? I figure the CD is the best option, as it's about 200 a year, with a 100$ penalty. So if I have it for at least 2 years it would net me a minimum of 300$
I got a question: My parents just gave me 10k in a check/loan to put away to start saving for a house. They are going to give me another 20k over the next 3 years (something about a 10k limit in gifts per year?)
I dont plan on buying a house in the near future as I still need to save up, BUT would like the option to just in case. What is my best option to save and invest this money? I came up with a few
1. 5 year CD with ~2% APR. However if I cancel early, most places have a fee of 6 months worth of APR
2. 1% APR savings account
3. Negligible APR but ~150-200$ sign up bonus through banks like Chase.
Thoughts? I figure the CD is the best option, as it's about 200 a year, with a 100$ penalty. So if I have it for at least 2 years it would net me a minimum of 300$
demosthenes
Member
For a couple that is married filing jointly the limit in 2017 is closer to $28,000 I think per year without having to file a gift tax return. FYI.
I'd do something like this: https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0084
All of your choices are basically NO risk. I don't have an issue with a little risk but going into bond funds is definitely on the lower side of risk.
Oh, I'll let them know and maybe they can give me more at once, thanks!
Yea I am looking for no risk, but my main goal is to make as much interest as possible in the few years that I'm saving. I mean, I might as well right? I'll look at your link, thanks
those two things are contradicting.
Is it? I meant as much money as possible as while having little to no risk, like the options I mentioned above. (obviously nothing is 100% no risk, since you never know what could happen =P)
chaosblade
Unconfirmed Member
The options you are considering have different risk. A savings account is going to lose money to inflation while home prices rise. A CD will likely keep pace with inflation (but not home prices), at the cost of your money being inaccessible unless you pay the fee.
A bond index will more likely outpace inflation and earn returns on top of it. Not a ton, but more than you would get out of the options you listed. Bonds can also be relatively safe even in an economic downturn, as an example the total bond market came out basically unscathed during the 2008 recession compared to stocks.
But obviously there is the (relatively low) risk that you will gain less, or even lose some. But bonds are pretty stable and not as erratic as stocks, so even if you were to lose some money on them it would most likely wouldn't be much.
It's certainly a bet I'd take over a CD or savings account.
(FWIW, I actually went with a riskier option while I had my house savings invested. Had it in a 60/40 stock/bond fund that did pretty decent, but I wouldn't necessarily recommend that if you are looking for low risk).
So, I need a little advice. My 401k company, Principal is garbage. Lowest fund has a 1.65% expense ratio and so far this year I'm making 3.5% I did better over the previous year but probably still lower that what others have. My company also doesn't match. I will probably only work here for another year or two. My question is, should I continue to put money into the 401k or Max out a Roth IRA and then put the rest in the 401k? I believe I make over the amount to get tax refunds on the IRA. I will also probably be in a lower tax bracket at retirement.
chaosblade
Unconfirmed Member
If you have no employer match and the best fund is 1.65% I wouldn't use it at all. Just open up a Vanguard/Fidelity account and use that.
Then I guess use it if/when you max out the IRA.
Are bonds what was recommended to me above in Vanguard? I will need to look more into that.
FWIW, I'm not able to buy houses right now anyway, so I don't think it's fair to compare any investing to the rising cost of houses. Maybe I'm looking at it the wrong way. Even in regards to inflation. I mean, even in a savings account with super low interest it's got to be better than having a bundle of cash at home right?
All this investment stuff is so confusing...even with that detailed OP
chaosblade
Unconfirmed Member
Yeah, that would be a good one to go with. You could probably just buy their admiral shares with the amount of money you are talking about investing, which would cut the already very low fee by 2/3.
I didn't mean to compare investing in index funds vs a house, but rather not investing vs index funds. If you don't invest and only earn 1-2% per year, you will end up with less money to put toward your house than if you invested in a bond index and earned around 4% per year. Changes in house prices vary dramatically depending on location, but it isn't unheard of for them to go up 20+% year over year.
CDs or savings accounts are better than doing nothing with the money, they just aren't really optimal if you know you're going to be sitting on it for a several years.
I started a new job in Japan and finally have some money saved up. I'd like to start investing it. I'm not really sure how to proceed. Seems like it might be tricky to invest as an American living overseas. This area really isn't my forte, and I've only done some rudimentary investigating, but I was wondering if any of you guys could share some advice, or point me in the right direction.
I'm 26 and feel like I'm getting started too late with this stuff!
I'm 26 and feel like I'm getting started too late with this stuff!
PantherLotus
Professional Schmuck
Anyone here an expert on debt to income ratios and how they factor into mortgage rates? Do they? We have perfect credit but our DTI ratio is around 50.
Ether_Snake
å®å®å®å®å®å®å®å®å®å®å®å®å®å®å®
If you get a bonus, is there any way to lower due taxes if you managed to max out your RRSP and TFSA (Canada) contributions for that year anyway?
Seems 100% useless to contribute to that if your company doesn't match, like, what's in it for you? Maybe there's some sort of benefit I'm not aware of, but I don't see any. The only reason I contribute through my company is because they do match up to a certain amount, so it's free money, especially considering the available funds are pretty much the same I would usually invest in anyway.
Seems 100% useless to contribute to that if your company doesn't match, like, what's in it for you? Maybe there's some sort of benefit I'm not aware of, but I don't see any. The only reason I contribute through my company is because they do match up to a certain amount, so it's free money, especially considering the available funds are pretty much the same I would usually invest in anyway.
demosthenes
Member
Do you intend to move back to America?
Don't forget to file your us tax returns each year. As an American citizen you still have to file, there is a credit for foreign taxes paid so don't worry about getting screwed. You're not too late. What are your goals?
The contribution is tax deductible for federal and most state income taxes. The poster said they were ineligible for a traditional IRA deduction, so their combined marginal income tax rate is probably somewhere in the ballpark of 30-40%.
They also said they were planning to leave their job in 1-2 years. When you leave your job, you can roll a 401K over into an IRA without any tax penalty. So they would only need to deal with those high fees for 1-2 years, then switch to low cost funds. If they end up in a lower tax bracket in retirement, this would produce a net win vs Roth IRA contributions. But it hinges on how confident they are that they will be switching companies.
Yeah, I'm fairly certain I can't get any deductions with a traditional IRA. I file jointly with my wife and she has an employer sponsored plan at work. The MAGI is super low to get a deductions at that point, $99,000. I believe that if I don't put any money towards my 401k next year, I can say that I do not participate in an employer sponsored program so my MAGI limit will be within range for me to get fully deducted. But then I'm kind of screwed because sure, I'll get my IRA fully deducted by then after I max that, I can't go contribute more to a pre-tax plan since I can't touch my 401k.
I'm iffy on the math so I wasn't sure which was more beneficial:
A) Using pre-tax money but with a 1.65 expense rate and 2-3% less on returns than a better plan.
B) Using post-tax money with a .18 expense rate and 2-3% more on returns.
In the long run, it's probably not that big of a deal if I only stay at the company for a few years. It just annoys the crap out of me that the plan has such a high expense ratio and the returns aren't spectacular.
Although the logic is sound, I think that Roth vs Traditional is something many people tend to overthink. When the calculus is based on predicting your living situation and tax law a few decades from now, the amount of uncertainty is huge. I don't have much confidence that what seems like the optimal solution today will actually end up being optimal.
On the flip side, people tend to underrate the emotional component of investing - i.e. the value of investing in a way that doesn't cause you grief over it.
My advice to you would be to do the Roth IRA contribution first, and only start putting money in the 401K if you max out the Roth IRA. Not because it is necessarily optimal, but because it sounds like it will cause you less stress to do so.
Nope. Too conservative. If it's for retirement, 100 percent in equities until you're like 55.
I am 100% stocks and I am 33.
I don't see the reason to invest in bonds at my age because what do I care if the market crashes in 10 years? It has plenty of time to bounce back before I retire. The only thing investing in bonds will do is lower my projected return rate.
That is basically my plan as well, but you gotta do what you feel comfortable with. Nothing worse than panicking and selling at a bad time. Losing out on a bit of return rate is a lot better than that.