thoseAREmySHOES
Member
Edit: Thanks for the help - I paid off the student loans today 
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
How to Invest for Retirement
- Thread starter Piecake
- Start date
demosthenes
Member
VBMFX seems reasonable given everything you've said.
I would want to pay off my student loans, I know you said negligible but that's my personal preference.
I would want to pay off my student loans, I know you said negligible but that's my personal preference.
SecretMoblin
Member
Hey, a fellow Minneapolitan! If you're that risk averse and need the money in that time frame, VBMFX is fine. I would at least put some in an extremely liquid account (money market or savings) both for your peace of mind and for any potential crisis-level event.
But $25k is a lot to work with. Depending on your credit and your definition of "sensible", there's a huge variety of ways you can deal with both the move and the car to avoid a cashflow shock. With that amount in reserve I'm also confused why you don't just accelerate your student loan payments, or pay them off. If you have the ability it will free up monthly income for your goals. And unless you've been consciously avoiding putting more than the bare minimum in equities, at least some of that money could have been churning in the market all this time.
And moving just outside of the urban core can save you a lot. With a car, places like Fridley or New Brighton/Columbia Heights are way cheaper (especially car insurance and rent) and you'll likely have access to similar-quality health care at a lower cost as well.
But $25k is a lot to work with. Depending on your credit and your definition of "sensible", there's a huge variety of ways you can deal with both the move and the car to avoid a cashflow shock. With that amount in reserve I'm also confused why you don't just accelerate your student loan payments, or pay them off. If you have the ability it will free up monthly income for your goals. And unless you've been consciously avoiding putting more than the bare minimum in equities, at least some of that money could have been churning in the market all this time.
And moving just outside of the urban core can save you a lot. With a car, places like Fridley or New Brighton/Columbia Heights are way cheaper (especially car insurance and rent) and you'll likely have access to similar-quality health care at a lower cost as well.
thoseAREmySHOES
Member
Edit: no longer needed.
demosthenes
Member
$700 debt with $25k in the bank.
Pay that shift off :lol
Pay that shift off :lol
+1, seriously. Even if it was actually 7000, that'd still be good to do. Piece of mind, clean slate, books settled and closed.
The_Inquisitor
Member
So I had some RSU's vest on 8/1. I got about a 300% increase in value during the vesting period. It looks like internet advice says I should sell the shares are re-invest in my 3 fund portfolio I already have. Is this correct?
Yes. Holding company stock is not a good idea, unless you are getting some sort of additional compensation for doing so. Aside from the normal arguments about diversification, there is a correlated risk between the stock price and your livelihood that you will want to avoid.
And the amount the RSAs appreciate / depreciate pre-vesting should have no bearing on the decision. Only post-vesting changes make a difference. Occasionally I will hold RSUs longer if they have changed in value a lot between vest and the time I am able to sell.
The_Inquisitor
Member
Okay thanks. Can I get a quick evaluation of my non-retirement portfolio? It was supposed to be lower risk because I thought I was going to buy a house sometime between 2015 and 2019. But now it looks like I won't anytime soon.
Vanguard LifeStrategy Conservative Growth Fund Investor Shares
Vanguard Selected Value Fund Investor Shares
Vanguard Total Bond Market Index Fund Admiral Shares
Vanguard Wellesley® Income Fund Investor Shares
I have the bond market at admiral shares because the expense ratio is only 0.05%. If I contribute most of my RSU amount into the Wellesley fund (~35k) it looks like I can get admiral shares there as well (go from 0.22 to 0.15%). My outlook for these investments has turned from 1-3 years to 3-5 now. I am anticipating if there is a market downturn of 10-15% I would cash out the bond fund and actually buy back into the above three funds since I really do not need this money currently. Thank you.
I think there is redundancy here, and you could probably achieve something similar with fewer funds. It is good to be able to answer the question "why am I holding this fund"?
Think about going with the classic 3-fund portfolio:
- US total stock market
- International total stock market
- US bond market
This makes it really clear what the purpose of each fund is in your portfolio and how your money is really allocated. Depending on how much control you feel like you really need and how much you care about expense ratios, you could get that down to 1 or 2 funds.
I don't know if Vanguard has a similar type of fund, but I keep my non-retirement funds in Fidelity's blended index - which is pretty much just that. US stock market (two of their index funds), international stock market, and US bond market. The funds are not quite as comprehensive as I'd like, but the trade off is I get into all three spaces in a single "fund" (really basket of funds) and don't worry about allocations. I like the simplicity and that keeps me from fussing around with allocations and making bad decisions.
Looks like Vanguard has a total world stock market fund that could be paired with their US bond fund, for a two-fund solution.
Domino Theory
Crystal Dynamics
I'm curious what others have to say about this, too. I have VTSMX as my only non-retirement account fund, but it seems weird to have that when my retirement account's TRF holds it as well.
Vanguard has a number of widely diversified blended funds, including the LifeStrategy series, one of which is already in his portfolio. That's why I'm asking about the motivation of the current fund choices.
I didn't realize that's what the Lifestrategy series of funds were. Yeah, that's an odd blend of funds then. They are a good tool to simplify investing, not over complicate with so many of them in the portfolio.
The_Inquisitor
Member
So I can explain why. When I started putting more money aside in 2012 I had only 1 fund. The fund I chose was the Lifestyle one. When i got more money I decided to start investing in the Wessley fund since it's a low risk fund that's mostly dividend based since again I was anticipating exiting within 3 years. I put 10k into the bond fund to get admiral shares which give that ridiculously low expense ratio.
Now that my horizon has broadened a bit I agree I probably should increase my risk. The thing is I've gotten a 6.6% annual return since 2012 which while is low versus the current market growth is pretty acceptable given this was supposed to be fairly risk adverse.
Now my question is if I transfer funds from my current 2 non bond funds how do I select funds that are past capital gain only? Is this something Vanguard can help me with automatically?
Now that my horizon has broadened a bit I agree I probably should increase my risk. The thing is I've gotten a 6.6% annual return since 2012 which while is low versus the current market growth is pretty acceptable given this was supposed to be fairly risk adverse.
Now my question is if I transfer funds from my current 2 non bond funds how do I select funds that are past capital gain only? Is this something Vanguard can help me with automatically?
demosthenes
Member
What do you mean past? Long-term?
The_Inquisitor
Member
In 2012 my goal was to buy a house within 3-4 years. So I invested in life strategy as a lower risk blend. Well my company did decently the past few years so I decided to try some othe recommended low risk funds. With the recent housing bubble and the fact I may move states in near future my risk tolerance/horizon have now changed. I really couldn't have predicted this back in 2012 otherwise I would have done the 3 fund portfolio most are recommending (my 401k is actually allocated pretty close to what other posters are saying and is very aggressive).
I think the biggest hole is international right now. So I'll probably looking at the international fund someone listed.
I've finally been sent log in info for my workplace pension and am now able to see what funds are being used and are available to me.
Currently sitting at 100% Scot Eq Universal Lifestyle Collection.
The funds available are limited to those chosen by Argon/Capita who deal with our pensions which sucks because the lowest fund charge is 0.65% on mainly index style funds.
Currently considering:
SE BlackRock Aquila US Equity - 50%
SE BlackRock Aquila World (ex UK) Index - 38%
SE BlackRock Aquila 75/25 Equity and Bond Index - 12%
Currently sitting at 100% Scot Eq Universal Lifestyle Collection.
The funds available are limited to those chosen by Argon/Capita who deal with our pensions which sucks because the lowest fund charge is 0.65% on mainly index style funds.
Currently considering:
SE BlackRock Aquila US Equity - 50%
SE BlackRock Aquila World (ex UK) Index - 38%
SE BlackRock Aquila 75/25 Equity and Bond Index - 12%
Yes, but the option to do so is not turned on in their accounts by default. You need to do this:
1. Go into Account Maintenance in your Vanguard Account
2. Select "Cost basis method", then "Change cost basis methods"
3. Choose "SpecID" as the cost basis method for your funds.
4. Wait, because apparently it takes them a couple days to process the change.
Once you have done that, it is pretty straightforward. When you go to sell, it will let you choose between individual lots and will tell you the capital gains for each lot and whether it qualifies as long-term or short-term.
The_Inquisitor
Member
Thank you so much
Randolph Freelander
Member
Get your sell orders ready, people. Yes, I know the market has had a rough few days, but I'm topping off my 401K contributions for the year with tomorrow's payroll, so the market can only head down from here because of Murhpy's Law.
Contributed my Roth IRA max (5.5k) two days ago, market tanked today and already lost $100. woohoo!
Randolph Freelander
Member
^^ See, folks. The law is sound.
I'll never forget this. My junior year of high school, we were to make a speech on any topic for English class. My classmate's speech was on Robert Kiyosaki's Rich Dad, Poor Dad. It was so creepy, like some MLM pitch. One of the cringiest damn things I've ever witnessed. I wonder what grade she got for it.
ThanksVision
Member
can someone who is really great at this stuff shoot me a PM if they have a free moment? I'm new to this and have to move money around. I'd prefer not share details on the forum
Domino Theory
Crystal Dynamics
I have an Ally savings account with some money in it (1.15% APY) that's my if-shit-hits-the-fan, my-legs-got-cut-off, etc., cash and I'm wondering if it could grow a tad more while still being accessible by being put in a specific mutual fund or bond fund on Vanguard? What do you guys think?
demosthenes
Member
Typically, unless the American economy goes under a bond fund should be fine. Yes there will be some lag in selling and having your cash again and you may have capital gains but it shouldn't hinder you.
So I currently make about $115-120K and I might be taking a job next month that puts me in the 120-122K range. I don't expect my tax bracket to ever change (the incomes in my field basically start high and stay high but don't change much). I'll be getting married next year and my fiancée will be starting out at about ~45K with the potential to reach ~80 or maybe even 100K.
I'm already contributing to a mandatory 401a (we don't get 401ks) which I have absolutely no control over. I've paid off a decent amount on my student loans and refinanced the rest to 2.87%. Am I correct in thinking that the next step is to get a traditional IRA? Seems like I will never be eligible for a roth IRA because I make too much money.
I'm already contributing to a mandatory 401a (we don't get 401ks) which I have absolutely no control over. I've paid off a decent amount on my student loans and refinanced the rest to 2.87%. Am I correct in thinking that the next step is to get a traditional IRA? Seems like I will never be eligible for a roth IRA because I make too much money.
If you have enough money in taxable accounts to cover the deductible, you might want to just invest the entire HSA account and pay your medical bills out-of-pocket. It can be desirable to leave money in your HSA as long as possible since it gets such favorable tax treatment.
Sàmban;246071846 said:
You can use the Backdoor Roth IRA method to avoid Roth IRA income limits for as long as the loophole that makes it possible continues to exist (which may not be long if Congress can actually succeed in passing a tax bill).
Excellent
Unknown Soldier
Member
Rich Dad, Poor Dad is actually a very good book.
Just read the book and take some of the good advice to heart and then completely forget about the author or anything else he has ever done.
quackamole
Member
Anybody here familiar with individual 401k? I am a freelancer, been contributing to a traditional IRA for a few years but feel like I need to do more to secure a decent retirement. Can I contribute to both a traditional IRA and an individual 401k? What if in the future I take a fulltime job and they offer me 401ks will I be able to roll over? And where can I find out more about individual 401ks?
Please help!
Please help!
aronnov reborn
Banned
If i want to rollover a traditional 401k into a ROTH when are the taxes due? Are they due upfront or is at the end of the year when i file my federal taxes?
PantherLotus
Professional Schmuck
Couple 401K questions as well:
1. is the yearly cap (18K I believe?) based on personal contributions only or personal + company matching contributions?
2. if you hit or will exceed your cap, will the process through payroll typically flag that, or will the process through the investment partner (say, Fidelity) stop you from doing so?
3. if the answer to 2 is no, is there some penalty / tax that happens?
shorter: how does the yearly cap work and stop you from exceeding it, and once you hit the cap what happens?
(and what is y'alls strategy with that percentage you would otherwise be committing to your 401K? additional personal index funds? holding that as cash/liquid?)
(i'm not reasonably close to hitting a yearly cap but i can imagine that happening in the near future so trying to wrap my arms around how this all works)
1. is the yearly cap (18K I believe?) based on personal contributions only or personal + company matching contributions?
2. if you hit or will exceed your cap, will the process through payroll typically flag that, or will the process through the investment partner (say, Fidelity) stop you from doing so?
3. if the answer to 2 is no, is there some penalty / tax that happens?
shorter: how does the yearly cap work and stop you from exceeding it, and once you hit the cap what happens?
(and what is y'alls strategy with that percentage you would otherwise be committing to your 401K? additional personal index funds? holding that as cash/liquid?)
(i'm not reasonably close to hitting a yearly cap but i can imagine that happening in the near future so trying to wrap my arms around how this all works)
Wellington
BAAAALLLINNN'
1. Personal only. Personal + company limit is at $54k.
2.I have Fidelity and they cap me at $18000 even if I am supposed to continue contributing.
Bonus: With my corporate set up, if I am not contributing, my company does not match. So for example this and last year I kept track in order to adjust downward to 5% so I would get the full company match for the year. Takes basic math to figure out the timing.
Maiden Voyage
Gold™ Member
In a few years, after paying off my mortgage, I plan to max my contributions to my 401k, at $18k/year, and max my contributions to a Roth IRA, capped at $5,500/year. My understanding is that I can withdraw, without penalty, from the principal balance on my IRA at age 59 1/2 and that I can withdraw on my 401k at 62 1/2.
Between now and then, the likelihood of me being able to retire early is real as the interest earned on these accounts would be greater than my annual cost of living. If I am to even partially retire at, say 50, I would need to wait to have access to my funds without paying a penalty.
If this case holds to be true, what are they best ways I can have money from age 50-62 1/2? Would investing outside, after maxing, the 2 retirement plans be a reasonable method of having extra cash for early retirement? I currently have an HSA that is invested as well. Would that make the most sense after the other 2 retirement accounts?
Between now and then, the likelihood of me being able to retire early is real as the interest earned on these accounts would be greater than my annual cost of living. If I am to even partially retire at, say 50, I would need to wait to have access to my funds without paying a penalty.
If this case holds to be true, what are they best ways I can have money from age 50-62 1/2? Would investing outside, after maxing, the 2 retirement plans be a reasonable method of having extra cash for early retirement? I currently have an HSA that is invested as well. Would that make the most sense after the other 2 retirement accounts?
This describes my situation as well. We're paying off the house next August (1 year, woo!) and will be maxing the IRA, 401k and having spare. Our current plan is to invest it in a regular brokerage account (regular tax treatment), where we already hold our medium-term savings funds.
If there's a better idea, I'd love to hear it.
demosthenes
Member
This is what I'm doing. I have my Vanguard account for this. I want to have a soft retirement at 55. Keep working for health insurance and some pay. I plan to use that Vanguard money.
Yeah, that's my plan as well. Build it up as a bridge between early retirement (I'm targeting early 50's) and when the IRA can be tapped into. Glad to know there are others in that boat.
anonymous_abc
Member
.
Last edited:
Maiden Voyage
Gold™ Member
Thanks everyone!
Randolph Freelander
Member
Donald Trump: "I hate Obama. Whatever he wants, I don't want."
Aide: "Obama wants world peace."
Trump: "Launch the nukes."
ZackieChan
Member
Luckily we don't need them financial advisors, since we have this thread.
When will Evilore introduce his own fiduciary rule?
Randolph Freelander
Member
We always act in the best interests of our clients (after our 3% fee).
ZackieChan
Member
You gotta eat
demosthenes
Member
I'm split. I could fund my 401k to max for the first time this year or I could drop an extra 8k on my mortgage. I was dead set on maxing my 401k but this thought has cropped up in my head. Anyone in a similar position? At age 31.
TheRagnCajun
Member
What's higher? The rate on your mortgage or the rate on your 401k investment?