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[vypek]

Not entirely sure this is the best thread but I don't know of a more appropriate one to ask:

Has anyone heard of Aspiration bank? Heard about them on a podcast where they have a high yield checking account with a 1.00% APY. Minimum opening deposit is $10.

One of their pages mentions that they are basing this off trust since the users can set the fees that are charged and can set them to 0 if they want but the bank hopes they don't do so. And that they donate 10% to charity.

I currently have a checking and savings account with Capital One 360 which aren't bad but wondering if this other bank is worth joining.

 

[Walter White Walker]

Not entirely sure this is the best thread but I don't know of a more appropriate one to ask:

Has anyone heard of Aspiration bank? Heard about them on a podcast where they have a high yield checking account with a 1.00% APY. Minimum opening deposit is $10.

One of their pages mentions that they are basing this off trust since the users can set the fees that are charged and can set them to 0 if they want but the bank hopes they don't do so. And that they donate 10% to charity.

I currently have a checking and savings account with Capital One 360 which aren't bad but wondering if this other bank is worth joining.

Judging from the way they seem to handle investments I don't think I'd trust them (2nd page of the article):

https://www.forbes.com/sites/samanthasharf/2015/07/10/want-1-interest-on-your-checking-account-you-can-get-it-but-make-sure-to-read-the-fine-print/#42fcd1031e91

It seems like they're being purposely obtuse about fees, although the article was written two years ago so maybe it's changed, I dunno.
I also don't know what this whole "trust" nonsense is they're spouting. It sounds like they think we owe it to them to pay bank fees because they're so swell? Screw that - I haven't paid a single bank fee in over 20 years ever since I switched to credit unions.

Also from the article:

So online banks and other fintech companies need to look beyond courting customers with impressive figures and be sure they are building something both comprehensible and sustainable. At the same time, customers can't abandon healthy skepticism just because a solution is tech driven and claims to hold a moral high ground. Being better than the big banks doesn't make something good.

edit: There are also other online banks offering better interest rates than 1%. I can see Ally is offering 1.15%, for instance.

 

[Quixzlizx]

My company was recently acquired, and our 401ks are now being managed by John Hancock. I'm not so happy, though, because this is the closest fund I could find to a passively-managed S&P 500 index fund, and the expense ratio is still 0.63% It's actually the lowest expense ratio I can see of any of the offered funds.

The equivalent expense ratio with my old 401k was 0.25%.

http://www.viewjhfunds.com/usa/C01/inda/

 

[Randolph Freelander]

My company was recently acquired, and our 401ks are now being managed by John Hancock. I'm not so happy, though, because this is the closest fund I could find to a passively-managed S&P 500 index fund, and the expense ratio is still 0.63% It's actually the lowest expense ratio I can see of any of the offered funds.

The equivalent expense ratio with my old 401k was 0.25%.

http://www.viewjhfunds.com/usa/C01/inda/

They actually have the audacity to call it an index fund, too.

How, um, flexible are you with your career situation?

 

[SecretMoblin]

the worst part is that it actually performs a solid ~1% worse than the underlying index... before fees

contribute to the employer's match and nothing else

blech

 

[Quixzlizx]

They actually have the audacity to call it an index fund, too.

How, um, flexible are you with your career situation?

I don't know if I want to switch jobs just in the hopes of there being a better selection in their 401k plans.

Do 401ks need to go through the employer, or can I invest 4% in this one (which would get me the maximum match) and the rest in a Vanguard fund or something?

 

[Randolph Freelander]

I don't know if I want to switch jobs just in the hopes of there being a better selection in their 401k plans.

Do 401ks need to go through the employer, or can I invest 4% in this one (which would get me the maximum match) and the rest in a Vanguard fund or something?

Your retirement account is effectively part of your compensation package. All things held equal (and things seldomly are), an employer with a better 401K is a better employer. So just keep it in mind that if and when you do execute a new job search, discussing the 401K plan is fair game.

Anyway, your option outside of your employer-sponsored plan is to do an IRA, but it's limited to $5500 per year under current IRS rules, not counting catch-up contributions for those above 50. The 401K is capped at 18,000 per year of your own funds, again not counting catch-up contributions. The good news is that you contribute to each plan simultaneously up to their caps.

For you, the advice commonly offered in this thread is to contribute to your 401K to get whatever the full employer match happens to be (some are straight up dollar capped, others will match a given percentage of your salary, just find out what the max is for you and work towards that), then switch over and contribute to your IRA until you max it out, and then switch back to the 401K until you reach its overall maximum. If you have any excess beyond that, you can do independent investing in a taxable account.

Mixed in there could be an HSA, if you are eligible, as that depends on what type of health coverage you may have.

 

[Quixzlizx]

Your retirement account is effectively part of your compensation package. All things held equal (and things seldomly are), an employer with a better 401K is a better employer. So just keep it in mind that if and when you do execute a new job search, discussing the 401K plan is fair game.

Anyway, your option outside of your employer-sponsored plan is to do an IRA, but it's limited to $5500 per year under current IRS rules, not counting catch-up contributions for those above 50. The 401K is capped at 18,000 per year of your own funds, again not counting catch-up contributions. The good news is that you contribute to each plan simultaneously up to their caps.

For you, the advice commonly offered in this thread is to contribute to your 401K to get whatever the full employer match happens to be (some are straight up dollar capped, others will match a given percentage of your salary, just find out what the max is for you and work towards that), then switch over and contribute to your IRA until you max it out, and then switch back to the 401K until you reach its overall maximum. If you have any excess beyond that, you can do independent investing in a taxable account.

Mixed in there could be an HSA, if you are eligible, as that depends on what type of health coverage you may have.

It's a 2% match, that's 50% of up to 4%, which is why I said that would be the minimum.

It just pisses me off that there are no passively-managed funds available butwhy.gif

 

[vypek]

Judging from the way they seem to handle investments I don't think I'd trust them (2nd page of the article):

https://www.forbes.com/sites/samanthasharf/2015/07/10/want-1-interest-on-your-checking-account-you-can-get-it-but-make-sure-to-read-the-fine-print/#42fcd1031e91

It seems like they're being purposely obtuse about fees, although the article was written two years ago so maybe it's changed, I dunno.
I also don't know what this whole "trust" nonsense is they're spouting. It sounds like they think we owe it to them to pay bank fees because they're so swell? Screw that - I haven't paid a single bank fee in over 20 years ever since I switched to credit unions.

Also from the article:


edit: There are also other online banks offering better interest rates than 1%. I can see Ally is offering 1.15%, for instance.

Thanks! I'll avoid that bank and take a look at Ally instead.

 

[bennywhatever]

Question for everyone.

I've been putting all my Roth/401k into a blended investment forever (it's TRP 2050 target date fund). It's doing fine, the 10 year growth is at 5.98%, but I'm wondering if I'm missing out by not going with something else. Should I be doing something else? I see a few other options that look promising but I'm nervous to switch. Here are some of the options that look nice:

• Federated Kaufmann Large Cap Fund Institutional Shares (Gross Expense Ratio = .95%)
• Invesco Diversified Dividend Fund Class R6 (Gross Expense Ratio = .44%)
• Vanguard 500 Index Fund Admiral Class (Gross Expense Ratio = .04%)
• Wells Fargo Special Mid Cap Value Fund - Class Inst (Gross Expense Ratio = .87%)

Any of these look better? Should I just stick with what I have since I don't really know what I'm doing?

 

[Randolph Freelander]

Question for everyone.

I've been putting all my Roth/401k into a blended investment forever (it's TRP 2050 target date fund). It's doing fine, the 10 year growth is at 5.98%, but I'm wondering if I'm missing out by not going with something else. Should I be doing something else? I see a few other options that look promising but I'm nervous to switch. Here are some of the options that look nice:

• Federated Kaufmann Large Cap Fund Institutional Shares (Gross Expense Ratio = .95%)
• Invesco Diversified Dividend Fund Class R6 (Gross Expense Ratio = .44%)
• Vanguard 500 Index Fund Admiral Class (Gross Expense Ratio = .04%)
• Wells Fargo Special Mid Cap Value Fund - Class Inst (Gross Expense Ratio = .87%)

Any of these look better? Should I just stick with what I have since I don't really know what I'm doing?

The TRP and most of the other funds presented have high expenses. The Vanguard 500 fund is the good one of the bunch. Do you have any others to select from? If you had a good international fund and a good bond fund in the mix, you could effectively piece together a passive approach similar to a target date blend. Even better if you also had another small/mid cap fund.

If those are truly the best of the bunch, I'd have no qualms going solely into the Vanguard 500 fund with the 401K and then possibly using an IRA to diversify into other categories. But for the average retirement portfolio, the 500 is going to be a significant portion of it.

 

[Linkura]

Question for everyone.

I've been putting all my Roth/401k into a blended investment forever (it's TRP 2050 target date fund). It's doing fine, the 10 year growth is at 5.98%, but I'm wondering if I'm missing out by not going with something else. Should I be doing something else? I see a few other options that look promising but I'm nervous to switch. Here are some of the options that look nice:

• Federated Kaufmann Large Cap Fund Institutional Shares (Gross Expense Ratio = .95%)
• Invesco Diversified Dividend Fund Class R6 (Gross Expense Ratio = .44%)
• Vanguard 500 Index Fund Admiral Class (Gross Expense Ratio = .04%)
• Wells Fargo Special Mid Cap Value Fund - Class Inst (Gross Expense Ratio = .87%)

Any of these look better? Should I just stick with what I have since I don't really know what I'm doing?

Low ass expense ratios are the way to go.

 

[bennywhatever]

The TRP and most of the other funds presented have high expenses. The Vanguard 500 fund is the good one of the bunch. Do you have any others to select from? If you had a good international fund and a good bond fund in the mix, you could effectively piece together a passive approach similar to a target date blend. Even better if you also had another small/mid cap fund.

If those are truly the best of the bunch, I'd have no qualms going solely into the Vanguard 500 fund with the 401K and then possibly using an IRA to diversify into other categories. But for the average retirement portfolio, the 500 is going to be a significant portion of it.

Oh yeah, I have quite a few more. I was just looking at those big numbers vs low expense ones

Vanguard Mid-Cap Index Fund Admiral Shares - .06%
Vanguard Small-Cap Index Fund Admiral Shares - .06%
Vanguard Developed Markets Index Fund Admiral Shares (International)- .07%
Vanguard Intermediate-Term Bond Index Fund Admiral Shares - .07%
Metropolitan West Total Return Bond Fund Plan Class - .38%
BlackRock Strategic Income Opportunities Portfolio Institutional Shares - .76%

 

[Randolph Freelander]

Oh yeah, I have quite a few more. I was just looking at those big numbers vs low expense ones

Vanguard Mid-Cap Index Fund Admiral Shares - .06%
Vanguard Small-Cap Index Fund Admiral Shares - .06%
Vanguard Developed Markets Index Fund Admiral Shares (International)- .07%
Vanguard Intermediate-Term Bond Index Fund Admiral Shares - .07%
Metropolitan West Total Return Bond Fund Plan Class - .38%
BlackRock Strategic Income Opportunities Portfolio Institutional Shares - .76%

You're good to go, buddy. Drop the TRP.

If you want to mimic its blend, you're going to go about 60% domestic stock, 30% international, and 10% bonds. The 60% domestic is going to be split roughly 44/16 between large and small/mid. If I were looking at your fund selections, and I was interested in approximating a target blend, it's going to be something like

Vanguard 500 - 44%
Vanguard Mid - 11%
Vanguard Small - 5%
Vanguard Developed - 30%
Vanguard Bond - 10%

Don't even think about any of the other funds you've shown.

As you go forward, and assuming you want to continue following a target approach, you're going to gradually increase your allocation to bonds over time, and gradually reduce your exposure to the rest. This is a shift of, say, 1% per year, nothing major. Just every now and then, check the portfolio split of your preferred target fund and adjust your own allocations accordingly.

 

[bennywhatever]

You guys are the best. Thanks for the advice!

 

[Morts]

Got an email from HR saying that they overpaid my employer match by $24 back in November and they'll be taking it back. Now I'll never get to retire.

 

[demosthenes]

Got an email from HR saying that they overpaid my employer match by $24 back in November and they'll be taking it back. Now I'll never get to retire.

It's 401k audit season. I did this to one of my clients last year, we found they over paid some employees in the match and theuy had to take it back.

 

[Morts]

It's 401k audit season. I did this to one of my clients last year, we found they over paid some employees in the match and theuy had to take it back.

I'm honestly surprised it's never happened to me before. Oh well, I guess I got to earn dividends on that $24 for a few months.

 

[SyNapSe]

The TRP and most of the other funds presented have high expenses. The Vanguard 500 fund is the good one of the bunch.

Those active funds are pretty damn good though too.
http://beta.morningstar.com/funds/XNAS/KLCIX/quote.html

That 401k has great options all around. Most of the actives in my 401k would have to pay me an ER just to match an index.

 

[aronnov reborn]

Noob Question:

What is the difference between gross composite and net composite? Is the net composite just the returns after fees?

For Example for one of my mutual funds For Composite YTD

Pure Gross Composite - 17.39
Pure Net Composite - 15.69
Russell 1000 Growth Index - 13.99

 

[demosthenes]

I'm honestly surprised it's never happened to me before. Oh well, I guess I got to earn dividends on that $24 for a few months.

In my experience it's rare? It mostly happens when you change 401k company or payroll company as you learn about each other and your practices. Once stuff is known, there shouldn't really be any mistakes, it's like clock work.

 

[SecretMoblin]

Noob Question:

What is the difference between gross composite and net composite? Is the net composite just the returns after fees?

For Example for one of my mutual funds For Composite YTD

Pure Gross Composite - 17.39
Pure Net Composite - 15.69
Russell 1000 Growth Index - 13.99

Assuming you're with Prudential, yes, this is right. I think all (or most) of their funds have 12b-1 fees, are front-loaded, and have ~1% expense ratios, all of which drag on returns.

 

[Flo_Evans]

Thinking about diversifying into some real estate...

Anyone own rental properties? (maybe there is another thread for this?)

It seems very risky and a good way to go broke (and way more work than monitoring a 401k) but something about having a rental property appeals to me.

There are some pretty cheap houses and multi family units in my area that could generate a decent $500/month per tenant if done right.

I also think it would be cool to hand the deed to my kids once they are 18 to give them a huge leg up. Let them live there, sell or keep renting it out.

IDK maybe I should just add some REIT funds to my stock portfolio.

 

[RSTEIN]

Thinking about diversifying into some real estate...

Anyone own rental properties? (maybe there is another thread for this?)

It seems very risky and a good way to go broke (and way more work than monitoring a 401k) but something about having a rental property appeals to me.

There are some pretty cheap houses and multi family units in my area that could generate a decent $500/month per tenant if done right.

I also think it would be cool to hand the deed to my kids once they are 18 to give them a huge leg up. Let them live there, sell or keep renting it out.

IDK maybe I should just add some REIT funds to my stock portfolio.

I own several residential units.

The key thing is: invest for cash flow, not capital appreciation. Build an excel model that will allow you to quickly analyze the cash flow characteristics of each property. I have analyzed literally hundreds of opportunities but only own a handful... not many make economic sense.

Invest in areas that have immigration and intramigration, net population growth, close to major transportation hubs, have infrastructure or other projects on the go to draw new citizens, etc.

Real estate is not a get rich quick scheme. It's a good place to go once you have money due to its steady nature.

My mortgages are 25 years so I'm just going to let my tenants pay for them and hopefully with a bit of capital appreciation and additions to the portfolio end up with $3-5 mill after 25 years.

 

[Piecake]

Thinking about diversifying into some real estate...

Anyone own rental properties? (maybe there is another thread for this?)

It seems very risky and a good way to go broke (and way more work than monitoring a 401k) but something about having a rental property appeals to me.

There are some pretty cheap houses and multi family units in my area that could generate a decent $500/month per tenant if done right.

I also think it would be cool to hand the deed to my kids once they are 18 to give them a huge leg up. Let them live there, sell or keep renting it out.

IDK maybe I should just add some REIT funds to my stock portfolio.

Do you have handyman skills?

If not, I'd probably get some before buying any property. Paying someone to do that for you is going to cost some dough.

 

[Flo_Evans]

I own several residential units.

The key thing is: invest for cash flow, not capital appreciation. Build an excel model that will allow you to quickly analyze the cash flow characteristics of each property. I have analyzed literally hundreds of opportunities but only own a handful... not many make economic sense.

Invest in areas that have immigration and intramigration, net population growth, close to major transportation hubs, have infrastructure or other projects on the go to draw new citizens, etc.

Real estate is not a get rich quick scheme. It's a good place to go once you have money due to its steady nature.

My mortgages are 25 years so I'm just going to let my tenants pay for them and hopefully with a bit of capital appreciation and additions to the portfolio end up with $3-5 mill after 25 years.

Yeah I don't necessarily have the free capital to do it right now. I'm just kind of examining where I'm at and where I want to go, I find if I don't have some goal my liquid savings get spent very quickly on toys and stuff.

Piecake I am decent with a hammer but I have found with my own house and cars and stuff I would much rather pay someone else to do it. Kind of makes me question if I want to be so hands on being a landlord or just buy more funds.

 

[Mrbob]

So after all these years I've decided I can handle my roth ira investment on my own so I'm in the process of moving my roth ira in kind to vanguard.

My question is in regards to what to do with VEA and VWO. I am contemplating simplifying to VXUS since it contains about 20 percent emerging market anyway. When I googled each ticker and looked at each chart history they looked identical. The only thing I could think of to keep VEA and VWO separate is that I think it would cost less basis points to do so. VEA is 7 points, VWO is 14 points, and VXUS is 11 points. If I have a similar spread of VWO being 20% and VEA 80% for international I'll pay under 11 basis points combined.

 

[Smiley90]

the CAD giveth, the CAD taketh away...

 

[Joe]

TD Ameritrade doesn't show total IRA total performance to date only individual positions.

Is it me or is that crazy?

Edit: Nevermind, I found it. Whoops!

 

[vacantseas]

This might be something that Fidelity might be able to answer vs someone on GAF, but maybe not.

I have a employer 401K on Fidelity that I contribute to as well as a Roth IRA that I contribute to on my own.

I want to open up an investment account on Fidelty and use some of the money in one of those accounts to fund that new investment account.

Am I able to do that, just take money out of one and put it into a new account, or does one or the other get taxed when I do that? Is it better to just fund the account by transferring money from my bank account to the new account?

Thanks.

 

[Walter White Walker]

This might be something that Fidelity might be able to answer vs someone on GAF, but maybe not.

I have a employer 401K on Fidelity that I contribute to as well as a Roth IRA that I contribute to on my own.

I want to open up an investment account on Fidelty and use some of the money in one of those accounts to fund that new investment account.

Am I able to do that, just take money out of one and put it into a new account, or does one or the other get taxed when I do that? Is it better to just fund the account by transferring money from my bank account to the new account?

Thanks.

https://www.fidelity.com/customer-service/how-to-transfer-between-accounts

 

[Randolph Freelander]

This might be something that Fidelity might be able to answer vs someone on GAF, but maybe not.

I have a employer 401K on Fidelity that I contribute to as well as a Roth IRA that I contribute to on my own.

I want to open up an investment account on Fidelty and use some of the money in one of those accounts to fund that new investment account.

Am I able to do that, just take money out of one and put it into a new account, or does one or the other get taxed when I do that? Is it better to just fund the account by transferring money from my bank account to the new account?

Thanks.

You can withdraw your contributions to the Roth without penalty at any time, but don't do it if you're just going to fund a different investment account. Just start that one from scratch with excess funds as they are available.

 

[Wellington]

You can withdraw your contributions to the Roth without penalty at any time, but don't do it if you're just going to fund a different investment account. Just start that one from scratch with excess funds as they are available.

Dumb question and I feel I know the answer.

-If I contribute to a Roth via the back door method, do I have to wait 5 years as with any other rollover to avoid penalty?

I assume yes that I have to wait. (Not that I am touching the money, but I should know not to raid it in case I have a major emergency.)

 

[Randolph Freelander]

Dumb question and I feel I know the answer.

-If I contribute to a Roth via the back door method, do I have to wait 5 years as with any other rollover to avoid penalty?

I assume yes that I have to wait. (Not that I am touching the money, but I should know not to raid it in case I have a major emergency.)

If it's 100% basis (ie., immediate conversion), there should be no penalty. https://money.stackexchange.com/a/26620

It would be nice if I could actually translate into plain English what the IRS actually says about it here. https://www.irs.gov/publications/p590b/ch02.html#en_US_2015_publink1000231064

 

[Randolph Freelander]

So after all these years I've decided I can handle my roth ira investment on my own so I'm in the process of moving my roth ira in kind to vanguard.

My question is in regards to what to do with VEA and VWO. I am contemplating simplifying to VXUS since it contains about 20 percent emerging market anyway. When I googled each ticker and looked at each chart history they looked identical. The only thing I could think of to keep VEA and VWO separate is that I think it would cost less basis points to do so. VEA is 7 points, VWO is 14 points, and VXUS is 11 points. If I have a similar spread of VWO being 20% and VEA 80% for international I'll pay under 11 basis points combined.

I estimate that if you were to have $100,000 in international, you'd save yourself $26 per year if you held VEA and VWO instead of VXUS, before you account for any time or transactional costs of maintaining the 80/20 balance yourself. If your balance is less, then you save less.

If that's worth it to you, then by all means.

 

[Aruarian Reflection]

So I've been reading the Bogleheads wiki to learn some basics for setting up my first 401k, but I still feel way over my head. I like simplicity and would highly prefer if I can pick an allocation now and not have to think about this for a long time. My provider through work is Fidelity, and I take it that the Fidelity target date funds are not a good choice, so I am looking at a three fund portfolio.

However, my problem is that the recommended funds that I read about (usually Vanguard) are not offered by Fidelity. I have read that VTSMX can be approximated by 80% VIIIX and 20% VEMPX.

Is VTMNX my version of Vanguard Total International Stock Index Fund (VGTSX)?

Is VBTIX my version of Vanguard Total Bond Market Fund (VBMFX)?

The funds available to me, plus a bunch of the Fidelity target date funds:

So if I want a 50/30/20 allocation (does that sound appropriate) would I go with 40 VIIIX / 10 VEMPX / 30 VTMNX / 20 VBTIX?

 

[Randolph Freelander]

(snip)

So if I want a 50/30/20 allocation (does that sound appropriate) would I go with 40 VIIIX / 10 VEMPX / 30 VTMNX / 20 VBTIX?

Yes, those funds are still Vanguard, equivalent with what we often recommend, you're just looking at their institutional counterparts to the retail versions.

I wouldn't go 20% in bonds, not unless your retirement is closer than what it typically is for people that post in this thread. Vanguard doesn't have 20% in their target funds unless your target date is 2035 (or sooner). If your date is later than that, go with less. Their 2055 fund has 10%.

In fact, if you were to use 2055 as your base, you might consider as your starting point

39% VIIIX
14% VEMPX
36% VTMNX
10% VBTIX

Which is basically not too far off from what you had, though both stocks as a whole and international as a component are heavier.

 

[RSTEIN]

I don't know if I want to switch jobs just in the hopes of there being a better selection in their 401k plans.

Do 401ks need to go through the employer, or can I invest 4% in this one (which would get me the maximum match) and the rest in a Vanguard fund or something?

You should definitely write a letter to HR and the CEO. Tell them that all employees are being grossly overcharged and it's impacting company morale. Employees feel saddened that thousands of dollars are being poured down the drain. Tell all employees to write similar letters/make complaints.

 

[FullMetalx117]

Hey I guys need some investment advice since I was just enrolled into my employer's 401k plan.

I have the option of choosing between a Roth 401K and traditional 401k. In addition I plan to open up IRA accounts.

I WANT to retire early. When I mean I early, I mean late 40s, early 50s. And even then I wouldn't mind some flexibility to access funds in my 30s.

I don't mind maxing out 401k/IRA contributions if that's the smart thing to do.
Does anyone have advice on how to best allocate retirement funds for an income of around 80k pre-tax?

 

[SecretMoblin]

Hey I guys need some investment advice since I was just enrolled into my employer's 401k plan.

I have the option of choosing between a Roth 401K and traditional 401k. In addition I plan to open up IRA accounts.

I WANT to retire early. When I mean I early, I mean late 40s, early 50s. And even then I wouldn't mind some flexibility to access funds in my 30s.

I don't mind maxing out 401k/IRA contributions if that's the smart thing to do.
Does anyone have advice on how to best allocate retirement funds for an income of around 80k pre-tax?

Unless you're expecting very aggressive wage increases on an 80k base, are very young, have extremely limited regular expenses, get incredibly lucky with equity markets, and are willing to save a much larger portion of your income than the usual ~15-20%, aiming for a comfortable late 40s retirement will only make you depressed.

There are heavy cost penalties for playing around with 401(k) and IRA funds before you qualify for distributions.

Both a Roth 401(k) and a Roth IRA are more flexible, but they still shouldn't be treated as savings accounts. You will need to max both out every year and pour as much as possible into a taxable account. You can roll over the Roth 401(k) into the Roth IRA penalty-free.

Allocation depends somewhat on your 401(k) offerings. If you have the ability to invest in low-cost index funds, you're in luck.

 

[PflargBlarg]

Unless you're expecting very aggressive wage increases on an 80k base, are very young, have extremely limited regular expenses, get incredibly lucky with equity markets, and are willing to save a much larger portion of your income than the usual ~15-20%, aiming for a comfortable late 40s retirement will only make you depressed.

I dunno, it shouldn't be that hard if you stay away from the default north american consumerist spendthrift lifestyle. I make less than him and am pretty much on target for late 40s retirement (and that's assuming any pay increases are only within range of inflation or less). It's really just a function of how much you save. I save about 55% of post-tax income which is really the only trick to it as long as your income is high enough to make that viable.

Getting myself to a 6 figure salary would pretty much make it a cakewalk. Obviously this depends on markets keeping roughly in line with their historical averages but that doesn't seem like too crazy of a concept.


Anyway, my actual post is that I've gotten down to just ~$1600 left of contribution room in my tax-sheltered accounts as of yesterday. That will easily get filled up over the rest of the year so it's looking like 2018 will be my year for starting up my taxable account.

Thank you Canada for having contribution room roll over year-to-year with no limit.

 

[Randolph Freelander]

Thank you Canada for having contribution room roll over year-to-year with no limit.

Man, I would love to be able to do catch-ups for past years in the US. Our version of a "catch up contribution" just isn't the same, and isn't available to anyone below 50.

 

[FullMetalx117]

My fund options are pretty awful for 401k (employer matches 4%)

I have all the TRP retirement fund options available (with my target being 2055) but the net expense ratio would be 1.32%

I went ahead allocated 100% into State Street Russell Small Cap Index Sec Lending Series Fund Class VIII that has an expense ratio of 0.7% (this is the lowest of the funds I have available).

For IRA accounts I'll likely invest in a fund that doesn't track the S&P 500. Also contributing $200/month into HSA account and I'll probably have that follow the VTI.

Anyone see any issues with this plan?

 

[Randolph Freelander]

.

Your employer hates you. I'm talking active, intense loathing.

100% in small caps isn't a good strategy. In a balanced portfolio, small caps would be approximately 9-10% of your domestic stock holdings, which further shrinks in your overall portfolio with any international and bonds you may hold.

Your options aren't good, I get it, but that doesn't mean you want to over-allocate into what should be a small segment of your holdings.

 

[FullMetalx117]

Your employer hates you. I'm talking active, intense loathing.

100% in small caps isn't a good strategy. In a balanced portfolio, small caps would be approximately 9-10% of your domestic stock holdings, which further shrinks in your overall portfolio with any international and bonds you may hold.

Your options aren't good, I get it, but that doesn't mean you want to over-allocate into what should be a small segment of your holdings.

My mistake, I meant that I'm 100% allocated in this fund for the moment - State Street S&P 500 Index Securities Lending Series Fund - Class IX
(02/1996)

I'm assuming 100% in the S&P 500 isn't ideal either. There's a JP Morgan U.S. Equity Fund as well but the expense ratio for that is 1.14%. Really wish the Vanguard funds were available but I'm still satisfied with all the tax savings this year.

 

[tokkun]

I dunno, it shouldn't be that hard if you stay away from the default north american consumerist spendthrift lifestyle. I make less than him and am pretty much on target for late 40s retirement (and that's assuming any pay increases are only within range of inflation or less). It's really just a function of how much you save. I save about 55% of post-tax income which is really the only trick to it as long as your income is high enough to make that viable.

Getting myself to a 6 figure salary would pretty much make it a cakewalk. Obviously this depends on markets keeping roughly in line with their historical averages but that doesn't seem like too crazy of a concept.


Anyway, my actual post is that I've gotten down to just ~$1600 left of contribution room in my tax-sheltered accounts as of yesterday. That will easily get filled up over the rest of the year so it's looking like 2018 will be my year for starting up my taxable account.

Thank you Canada for having contribution room roll over year-to-year with no limit.

It's tough in the US due to health care costs. It is certainly possible to get by in a low cost-of-living area on ~$20K / year. If you want to go with a 4% withdrawal rate, that means savings of $500K in today's dollars. It is feasible to do that by age 40 with an $80K salary, starting in your 20s.

The problem is that there is tremendous uncertainty over how much you will need to spend out-of-pocket on health care 30 or 40 years from now, so it is difficult to project the growth in expenses over time, even if you remain frugal with discretionary spending.

My mistake, I meant that I'm 100% allocated in this fund for the moment - State Street S&P 500 Index Securities Lending Series Fund - Class IX
(02/1996)

I'm assuming 100% in the S&P 500 isn't ideal either. There's a JP Morgan U.S. Equity Fund as well but the expense ratio for that is 1.14%. Really wish the Vanguard funds were available but I'm still satisfied with all the tax savings this year.

Honestly, you could do a lot worse than 100% S&P 500. The Warren Buffett portfolio is 90% S&P 500 and 10% treasuries / cash, FWIW. If you don't have any good alternatives, I wouldn't fret over it. You can always add some International or Small Cap exposure in an IRA or taxable account if you want more diversification.

 

[FullMetalx117]

It's tough in the US due to health care costs. It is certainly possible to get by in a low cost-of-living area on ~$20K / year. If you want to go with a 4% withdrawal rate, that means savings of $500K in today's dollars. It is feasible to do that by age 40 with an $80K salary, starting in your 20s.

The problem is that there is tremendous uncertainty over how much you will need to spend out-of-pocket on health care 30 or 40 years from now, so it is difficult to project the growth in expenses over time, even if you remain frugal with discretionary spending.



Honestly, you could do a lot worse than 100% S&P 500. The Warren Buffett portfolio is 90% S&P 500 and 10% treasuries / cash, FWIW. If you don't have any good alternatives, I wouldn't fret over it. You can always add some International or Small Cap exposure in an IRA or taxable account if you want more diversification.

Thanks for the advice. Definitely going to diversify in other retirement accounts.

 

[Husker86]

My mistake, I meant that I'm 100% allocated in this fund for the moment - State Street S&P 500 Index Securities Lending Series Fund - Class IX
(02/1996)

I'm assuming 100% in the S&P 500 isn't ideal either. There's a JP Morgan U.S. Equity Fund as well but the expense ratio for that is 1.14%. Really wish the Vanguard funds were available but I'm still satisfied with all the tax savings this year.

Hell, I have Vanguard funds, but John Hancock adds 1% fees to them. Vanguard S&P 500 has a fee of 1.05% through my 401k.

 

[BraXzy]

I've opened a Lifetime ISA (UK) with Hargreaves & Lansdown and wanted some advice on investment options considering its hopefully going to be fairly short term - around 3 years (for house not retirement).

At the minute I'm debating whether or not to have some mixed fairly high equity funds for the first year or so and then move into something more balanced year 2 and very low risk year 3. I was looking at the various Vanguard 40/60/80% funds for example and maybe a US/global index fund.

 

[milanbaros]

I've opened a Lifetime ISA (UK) with Hargreaves & Lansdown and wanted some advice on investment options considering its hopefully going to be fairly short term - around 3 years (for house not retirement).

At the minute I'm debating whether or not to have some mixed fairly high equity funds for the first year or so and then move into something more balanced year 2 and very low risk year 3. I was looking at the various Vanguard 40/60/80% funds for example and maybe a US/global index fund.

Unless you can afford a 50% drop in that timeframe I'd just keep your savings in cash.