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[HammerOfThor]

Hey guys, so I recently left my job to start my own thing. Right now I have a 401k plan with Fidelity before my old company was bought out, and one with Tranamerica that we got after the buyout.

What are my best options to move this money? To be honest, I'm not the biggest fan of keeping money tied away for 30+ years and would rather invest in properties, but I know having that cushion won't be a bad thing. Are there options to move this money to somewhere where theres less of an early withdraw penalty?

 

[Cyan]

From memory, your choices (assuming a regular 401k) are to leave it where it is, roll over into another 401k at your next workplace (sounds like this isn't an option here), or roll over into a regular IRA. I don't think any of those options would help you withdraw it without penalty.

 

[demosthenes]

Hey guys, so I recently left my job to start my own thing. Right now I have a 401k plan with Fidelity before my old company was bought out, and one with Tranamerica that we got after the buyout.

What are my best options to move this money? To be honest, I'm not the biggest fan of keeping money tied away for 30+ years and would rather invest in properties, but I know having that cushion won't be a bad thing. Are there options to move this money to somewhere where theres less of an early withdraw penalty?

You can't avoid the penalty once it's deposited.

 

[PantherLotus]

Anyone have experience with 529s? You like what Fidelity offers? How difficult is the setup?

 

[GhaleonEB]

Anyone have experience with 529s? You like what Fidelity offers? How difficult is the setup?

529's are run by the states, and you are limited to the investment options they offer within the plans, much like an employer limits 401k investment options. Some have great options (index funds), some don't.

My kids are in a TIAA-CREF pair of index funds, which is what Oregon has in their 529 plan. You'll need to look up the 529 details for your particular state.

 

[Walter White Walker]

You can use any state's 529 plan - you don't have to live there (except for a few states) and your kids don't have to go to school in that state. Check out the Utah 529 plan - it has the lowest fees afaik and is pretty highly ranked.

http://www.savingforcollege.com/529_plan_details/index.php?page=plan_details&plan_id=52

 

[AndyD]

You can't avoid the penalty once it's deposited.

Can you move it from the old 401k to a new without penalty? Essentially combining multiple 401k from across jobs? What about a 403b?

 

[GhaleonEB]

You can use any state's 529 plan - you don't have to live there (except for a few states) and your kids don't have to go to school in that state. Check out the Utah 529 plan - it has the lowest fees afaik and is pretty highly ranked.

http://www.savingforcollege.com/529_plan_details/index.php?page=plan_details&plan_id=52

I'd forgotten this was the case, glad you brought this up. Reading up I am remembering all the complications that came up when we were looking around.

Not all states let you participate if you are out of state. Those that do, most don't offer any tax benefits for out of state investments. So if you are in a state with a crappy 529, it's worth shopping around to try and find one that has both better options and has state tax benefits. It got really complicated when I was searching, and since our options were pretty good, we stayed with our state plan.

From the otherwise good looking Utah plan:

Contributions to the Utah 529 plan of up to $1,920 in 2017 per beneficiary by an individual, and up to $3,840 in 2017 per beneficiary by a married couple filing jointly, are eligible for a 5% credit against Utah income tax. The maximum credit in 2017 is $96 per beneficiary for single taxpayers and $192 per beneficiary for joint filers. The credit limits are increased each year for inflation, but not decreased for deflation. Contributions to an account established after a beneficiary reaches age 19 are not eligible. Contributions from a non-owner are creditable by the account owner and not by the non-owner/contributor. Contribution deadline is receipt by December 31 for online processing; December 29 for manual processing.

Not a huge factor, but one to consider.

 

[demosthenes]

Can you move it from the old 401k to a new without penalty? Essentially combining multiple 401k from across jobs? What about a 403b?

I don't have experience with the 403 but I imagine it follows similar rules.

You can transfer your old 401k balance to either
1. Your new plan but only if it allows it. penalty free.
2. An ira penalty free.

It could also be allowed to stay where it is.

It's only if you just take the money when you get hit with a penalty before age 59.5.

 

[Walter White Walker]

I'd forgotten this was the case, glad you brought this up. Reading up I am remembering all the complications that came up when we were looking around.

Not all states let you participate if you are out of state. Those that do, most don't offer any tax benefits for out of state investments. So if you are in a state with a crappy 529, it's worth shopping around to try and find one that has both better options and has state tax benefits. It got really complicated when I was searching, and since our options were pretty good, we stayed with our state plan.

From the otherwise good looking Utah plan:


Not a huge factor, but one to consider.

Here in Washington we don't have a 529 at all. Instead we've got this GET program where you pre-pay for tuition buying it by the unit. And, as I recall, it's based on the cost at the two most expensive state universities. It looked bad as I recall when I looked at it a number of years ago.

 

[longdi]

https://www.interactivebrokers.com.hk/en/index.php?f=26559

Anyone using interactive brokers to manage your own investments?

How safe are they compared with using financial institutions's brokerage arm?

 

[Walter White Walker]

https://www.interactivebrokers.com.hk/en/index.php?f=26559

Anyone using interactive brokers to manage your own investments?

How safe are they compared with using financial institutions's brokerage arm?

That guy's talking about shorting stocks, margin loans, hedge funds, active management, etc. I wouldn't give him a nickel. That's not investing, it's speculation.
I think you're better off getting an account at Vanguard, Fidelity, or Schwab and sticking the money in index funds.

 

[AppleBlade]

Yeah I took out my investment in the s&p500 index yesterday myself. Feeling uncertain about this market, you know.

And this is why you don't market time. NetMapel isn't alone because I know a few posters on financial boards that pulled out and I almost did the same thing in January. Trump's election spooked me but the stay the course folks here helped me avoid the noise. From that day to now the S&P 500 has gone up over 200 points. The return so far this year from that day to now is over 10%.

Stay the course folks!

 

[anonymous_abc]

.

 

[Yaboosh]

And this is why you don't market time. NetMapel isn't alone because I know a few posters on financial boards that pulled out and I almost did the same thing in January. Trump's election spooked me but the stay the course folks here helped me avoid the noise. From that day to now the S&P 500 has gone up over 200 points. The return so far this year from that day to now is over 10%.

Stay the course folks!

That's not too say it won't crash soon. It absolutely might. But you still stay the course unless you shouldn't have been in the market in the first place (because you need to use the money soon).

 

[Randolph Freelander]

I read an article the other day where a market analyst guy was predicting the S&P could fall to 1800, but might go to 3000 before doing it.

He could end up being right, of course.

 

[tokkun]

I have been gradually shifting more money towards International since last year, although that was more of a reaction to high US stock valuations rather than political events in the US, although it does have a side effect of hedging against them as well.

If you are nervous about Trump, I would recommend you do that. If you are not nervous about Trump, I would suggest the same thing.

 

[Izayoi]

OK retirement/investment GAF, here's one for you:

How to deal with friends who have "friends" who are financial/investment advisers and are absolutely ripping them off with ineffective, high-fee funds? My buddy trusts this guy because "his father is a partner of a major investment firm" and "they're rich, so how could they be wrong when it comes to money?"

He's not stupid, and he loves podcasts, so rather than confronting him outright I sent him the link to Freakonomics "What's the stupidest thing you can do with your money?" to try and get my point across re: low cost index funds.

Any other ideas or suggestions? It's frustrating because I hate seeing a friend get ripped off, but he's so adamant that I might just let it go if even Jack Bogle can't convince him.

 

[Yaboosh]

OK retirement/investment GAF, here's one for you:

How to deal with friends who have "friends" who are financial/investment advisers and are absolutely ripping them off with ineffective, high-fee funds? My buddy trusts this guy because "his father is a partner of a major investment firm" and "they're rich, so how could they be wrong when it comes to money?"

He's not stupid, and he loves podcasts, so rather than confronting him outright I sent him the link to Freakonomics "What's the stupidest thing you can do with your money?" to try and get my point across re: low cost index funds.

Any other ideas or suggestions? It's frustrating because I hate seeing a friend get ripped off, but he's so adamant that I might just let it go if even Jack Bogle can't convince him.

Let it go. If your advice is taken and leads him to go into index funds and he loses any money or makes less money than his friends or family then he will resent you. Let him do him.

 

[Randolph Freelander]

Tell your friend that they are rich because they make money off rubes like him.

 

[demosthenes]

I read an article the other day where a market analyst guy was predicting the S&P could fall to 1800, but might go to 3000 before doing it.

https://i.imgur.com/e0VfYgV.jpg[/mg]

He could end up being right, of course.[/QUOTE]

I LOVE this picture.

 

[GhaleonEB]

OK retirement/investment GAF, here's one for you:

How to deal with friends who have "friends" who are financial/investment advisers and are absolutely ripping them off with ineffective, high-fee funds? My buddy trusts this guy because "his father is a partner of a major investment firm" and "they're rich, so how could they be wrong when it comes to money?"

He's not stupid, and he loves podcasts, so rather than confronting him outright I sent him the link to Freakonomics "What's the stupidest thing you can do with your money?" to try and get my point across re: low cost index funds.

Any other ideas or suggestions? It's frustrating because I hate seeing a friend get ripped off, but he's so adamant that I might just let it go if even Jack Bogle can't convince him.

As Randolph said, they got rich from swindling money out of suckers like him. If you want to put in the effort, show him what losing 1% of your growth via fees to those leaches does to a retirement portfolio.

Simple example: starting from scratch and saving $1,000 per month for 30 years.

8% per year growth: $1,490,000 after 30 years
7% per year growth (assuming they "only" take a 1% fee): $1,220,000 after 30 years

Difference is $270,000, or 24% of the growth over that 30 year horizon. That's why they're rich, and he's going to be working well into retirement age.

It's *much* worse if they're taking more than 1%.

 

[phanphare]

I have been gradually shifting more money towards International since last year, although that was more of a reaction to high US stock valuations rather than political events in the US, although it does have a side effect of hedging against them as well.

If you are nervous about Trump, I would recommend you do that. If you are not nervous about Trump, I would suggest the same thing.

if I'm in it for the long haul does it matter much? my money will still be chillin long after trump's presidency

 

[Walter White Walker]

if I'm in it for the long haul does it matter much? my money will still be chillin long after trump's presidency

It's good to spread it around I think. Some years the US stock market is best, other years international developed, other years international developing.
Like this year, for example. My US money is up 11% but my developed is up 18% and my developing is up 21%.
Developing is rather volatile, though. My ETF (SCHE) is regularly up and down by 1%, sometimes even 2% in a single day. I don't care but some people can find that disconcerting if they're paying attention to it.

 

[Wellington]

It's good to spread it around I think. Some years the US stock market is best, other years international developed, other years international developing.
Like this year, for example. My US money is up 11% but my developed is up 18% and my developing is up 21%.
Developing is rather volatile, though. My ETF (SCHE) is regularly up and down by 1%, sometimes even 2% in a single day. I don't care but some people can find that disconcerting if they're paying attention to it.

I love these charts

 

[tokkun]

if I'm in it for the long haul does it matter much? my money will still be chillin long after trump's presidency

As I said, the motivation for increasing the fraction of my stock holdings allocated to International is not about Trump, it's about valuations.

Valuations are only a good predictive factor of market returns in the long term (10+ years) and have little correlation with returns in the short term (< 3 years). If you are planning to keep your money invested for a long time, that is even more reason to be cognizant of valuations.

Translation: Higher CAPE means higher valuations. CAPE for the S&P500 is currently ~31. In non-US developed markets it is roughly 20. If historical patterns hold, we would therefore conclude that it is more probable that we will see higher returns in the next 10-15 years from non-US markets.

 

[PopcornMegaphone]

Recently I've been warily looking at those CAPE metrics as well. Like you, tokkun, in the past year I've significantly beefed up my international. Additionally, I'm 40 now so I've added some bonds. Basically, this year I implemented a 3 fund portfolio. Here's roughly my current portfolio ratios (taxable and non-taxable):

84% Equities
16% Bonds

70% Domestic Equities
30% international Equities


My first world dilemma now what to do with my taxable account. For a long time I was dollar cost averaging in equities every month with extra money, but valuations are pretty crazy right now so I stopped. Instead I've started to build up a cash position in a money market with the thought if the market crashes I can jump in. Another option is paying extra to my 15yr mortgage every month, but my rate is a desirable 2.85%. That rate is so good I'm not eager to pay it down. Plus I'd lose liquidity.

At a minimum investing wise I'll continue to max my 401k and perform a backdoor roth every year.

I'm open to suggestions or feedback on anything.

 

[Linkura]

I love these charts

2008-2009 are fucking nuts to look back on.

 

[GhaleonEB]

2008-2009 are fucking nuts to look back on.

They were nuts to experience!

 

[longdi]

I read an article saying there is still 10 more years for this gradual bull run. Some thing about reliving the good 80s-90s again.

How are gaf sentiments? To put in more investments or to feel scared as 2017 markets have beem so positive, yet things like housing and jobs are still limited around me.

 

[RumblingRosco]

-

 

[GhaleonEB]

I read an article saying there is still 10 more years for this gradual bull run. Some thing about reliving the good 80s-90s again.

How are gaf sentiments? To put in more investments or to feel scared as 2017 markets have beem so positive, yet things like housing and jobs are still limited around me.

My first thought is, always be investing. We don't know what's going to happen, so I just stick with my regular investment schedule, which is automated.

My feeling is the market is over-valued, and particularly over-valued because part of the run up was based on things big business hoped Trump would pass, but didn't, and now seemingly won't. He is gutting regulations though, maybe that's enough for them.

I feel like the bottom is going to drop out again in the next few years, but I'm going to do the same thing I did the last few times: keep plugging away. In January I'll look at my domestic/international allocations again, in the context of the discussion that just happened.

 

[MaxDOL]

I love these charts

This chart make me feel very remorse for not invest right after i finished university back in 2005.

My country 's stock index total return beat all other asset classes with impressive 15% annualized return when using the same time frame.

 

[mstevens]

Just finished up my second week of ynab and I am absolutely loving it. Even convinced my fiancée to budget her stuff as well.

It was so satisfying on payday to top off the necessary things and then throw the rest of the money in savings and fun stuff. I don't want to turn super frugal, but it has totally helped with unnecessary spending. For instance - I went to the store yesterday to get some toiletries and I would normally grab a few extra things to make the trip "worth it", but I ended up just getting what I needed.

Question for those that use it: I currently have a savings category that has a few things in it (all under the savings account on the left too). What do you do about Roth IRA contributions and things like that? Just budget it in and pay it out every month? I wish I could somehow see the running total on the left, but I don't mind doing it this way.

 

[demosthenes]

Just finished up my second week of ynab and I am absolutely loving it. Even convinced my fiancée to budget her stuff as well.

It was so satisfying on payday to top off the necessary things and then throw the rest of the money in savings and fun stuff. I don't want to turn super frugal, but it has totally helped with unnecessary spending. For instance - I went to the store yesterday to get some toiletries and I would normally grab a few extra things to make the trip "worth it", but I ended up just getting what I needed.

Question for those that use it: I currently have a savings category that has a few things in it (all under the savings account on the left too). What do you do about Roth IRA contributions and things like that? Just budget it in and pay it out every month? I wish I could somehow see the running total on the left, but I don't mind doing it this way.

Can't comment on the program, but to fund my IRA on 1/1/XX, I transfer $458 a month (~5,500/year) from my checking account to my savings account. To me, the money is spent, and it sits there during the year accumulating. During the first few days of January I will transfer this money to my IRA account and purchase what I want. Perhaps you could incorporate this into the program some how?

 

[mstevens]

Can't comment on the program, but to fund my IRA on 1/1/XX, I transfer $458 a month (~5,500/year) from my checking account to my savings account. To me, the money is spent, and it sits there during the year accumulating. During the first few days of January I will transfer this money to my IRA account and purchase what I want. Perhaps you could incorporate this into the program some how?

Yeah that's pretty much how I have it set up. With ynab if you budget money in and don't spend it, it accumulates over the months and you can set goals and things. Won't be able to do that or see the total if I so it this way, but it's not a huge deal - I can just look at the IRA account to see. More of a convinience question.

Once I get my emergency savings back up to where I want it (and this wedding paid off) I'd like to do some additional investing seperate from my 403b and IRA. Is there any good beginner FAQs or videos I could look at? I'm not wanting to micromanage or daytrade, but it would be nice to have some sort of investment account that I can pour into. I would, however, like the option to buy a specific stock if the urge arose.

Edit side question: if I do find something that's similar to what I'm looking for, one concern for me is if it makes filing for taxes more confusing. I assume you only list it if you're pulling profits out of whatever brokerage account you're using, but I'd like to know for sure.

 

[SecretMoblin]

Yeah that's pretty much how I have it set up. With ynab if you budget money in and don't spend it, it accumulates over the months and you can set goals and things. Won't be able to do that or see the total if I so it this way, but it's not a huge deal - I can just look at the IRA account to see. More of a convinience question.

Once I get my emergency savings back up to where I want it (and this wedding paid off) I'd like to do some additional investing seperate from my 403b and IRA. Is there any good beginner FAQs or videos I could look at? I'm not wanting to micromanage or daytrade, but it would be nice to have some sort of investment account that I can pour into. I would, however, like the option to buy a specific stock if the urge arose.

Edit side question: if I do find something that's similar to what I'm looking for, one concern for me is if it makes filing for taxes more confusing. I assume you only list it if you're pulling profits out of whatever brokerage account you're using, but I'd like to know for sure.

Assuming your IRA is with a broker, it's probably easiest to just open a separate taxable account with them. One of the positives about competition is that most of the big brokerages have become much easier to use, have more responsive customer service, and have plenty of useful help for new investors.

Brokerages will take care of most of your tax preparation needs for you. Some of the more nitty-gritty tax issues like tax-loss harvesting and wash sales will require a bit more heavy-handed monitoring on your part, but if you're mostly just going to be using it for longer-term holdings it's less of an issue.

Depending on what your holdings are, you will need to report things like dividend payments or capital gains through mutual funds on your annual taxes. The brokerage and/or the fund itself will provide all the necessary documentation for this.

 

[demosthenes]

Assuming your IRA is with a broker, it's probably easiest to just open a separate taxable account with them. One of the positives about competition is that most of the big brokerages have become much easier to use, have more responsive customer service, and have plenty of useful help for new investors.

Brokerages will take care of most of your tax preparation needs for you. Some of the more nitty-gritty tax issues like tax-loss harvesting and wash sales will require a bit more heavy-handed monitoring on your part, but if you're mostly just going to be using it for longer-term holdings it's less of an issue.

Depending on what your holdings are, you will need to report things like dividend payments or capital gains through mutual funds on your annual taxes. The brokerage and/or the fund itself will provide all the necessary documentation for this.

@ ms

You'll receive a 1099 every year for your taxable account. It will tell you what you have to report for income: dividends, capital gains, etc. When you want to know what to do with it either remember to ask here or remember this post, I can help out. I'm a CPA, more on the assurance side but can help with tax issues.

 

[Joe]

Me
Age: Late 20s - Early 30s
Account: Roth IRA
Risk Tolerance: High
Retirement Target: 60s

Portfolio
Allocation: 100% Equities
Composition: 50% Domestic, 50% International

Do you think I'm currently too high on International for the long-term (roughly next 10 years)?

I occasionally compare my portfolio against a portfolio with 60/40 domestic and international split and in the short-term my portfolio has not lagged in performance.

 

[Piecake]

Me
Age: Late 20s - Early 30s
Account: Roth IRA
Risk Tolerance: High
Retirement Target: 60s

Portfolio
Allocation: 100% Equities
Composition: 50% Domestic, 50% International

Do you think I'm currently too high on International for the long-term (roughly next 10 years)?

I occasionally compare my portfolio against a portfolio with 60/40 domestic and international split and in the short-term my portfolio has not lagged in performance.

I can't find a link, but I remember that Vanguard did a study on that very issue and came to the conclusion that the ideal amount of international holdings is between 20 - 40% of your stock portfolio.

I don't know how they came to that conclusion or if they took into account P/E ratios.

 

[Walter White Walker]

I can't find a link, but I remember that Vanguard did a study on that very issue and came to the conclusion that the ideal amount of international holdings is between 20 - 40% of your stock portfolio.

I don't know how they came to that conclusion or if they took into account P/E ratios.

Yeah - they recommended 20-40% in international markets back in 2012:

https://personal.vanguard.com/pdf/icriecr.pdf

(In the "Conclusion")

I'm right now sitting at about 25% international developed, 6% developing. So sort of middle of the road, I guess.

 

[ClosingADoor]

This chart make me feel very remorse for not invest right after i finished university back in 2005.

My country 's stock index total return beat all other asset classes with impressive 15% annualized return when using the same time frame.

Same here, although a bit later. Wish I didn't use all my savings to pay off that low interest student debt (it was like 3% a year), but put it into some funds. Would have made a great return on it. Nothing to do about it now. But if I ever get kids, I'll make it a priority to teach them finances early on. I see people my age (28 years old) wasting their money left and right with no thought about it. That is going to bite them later on.

 

[tokkun]

Me
Age: Late 20s - Early 30s
Account: Roth IRA
Risk Tolerance: High
Retirement Target: 60s

Portfolio
Allocation: 100% Equities
Composition: 50% Domestic, 50% International

Do you think I'm currently too high on International for the long-term (roughly next 10 years)?

I occasionally compare my portfolio against a portfolio with 60/40 domestic and international split and in the short-term my portfolio has not lagged in performance.

Seems OK to me. Vanguard Total World is 52/48, so you're pretty much in-line with that. People will often advocate for a home country bias because of currency risk, but that is more than offset by the present-day difference in valuations in my mind.

If you hold a lot of international, remember to keep tax-efficient asset placement in mind. Your international stocks will generate a tax credit if held in taxable accounts, but not if they're in your retirement accounts.

 

[TylerD]

Just finished up my second week of ynab and I am absolutely loving it. Even convinced my fiancée to budget her stuff as well.

It was so satisfying on payday to top off the necessary things and then throw the rest of the money in savings and fun stuff. I don't want to turn super frugal, but it has totally helped with unnecessary spending. For instance - I went to the store yesterday to get some toiletries and I would normally grab a few extra things to make the trip "worth it", but I ended up just getting what I needed.

Question for those that use it: I currently have a savings category that has a few things in it (all under the savings account on the left too). What do you do about Roth IRA contributions and things like that? Just budget it in and pay it out every month? I wish I could somehow see the running total on the left, but I don't mind doing it this way.

I'm glad you are enjoying YNAB. I've been using it since 09/2016 and love it. Pay days and filling your categories are the best!

The way I have mine setup is I have my BUDGET accounts (checking/savings/credit cards) and TRACKING accounts (Scottrade,401K, Vanguard Brokerage, Van Rollover, Van Roth IRA). I update the balances "manual adjustment" once a month after my 401K contribution clears so I can track the net worth report. YNAB recommends you don't put stuff like mortgage/car notes/student loans in tracking but you can.

I have my "Retirement" sub category under the Quality of Life Goals category group and budget into that category as I see fit until I contribute to the fund outside of YNAB. When that clears the bank account, I make a transfer from that budget/bank account to the tracking account. It deducts from my budget category and you can track it under the spending reports. This will knock down your age of money because YNAB thinks you are spending it but I don't care too much about that.

If you don't track those retirement accounts you can just do a transaction to the company of your retirement fund from your retirement category if your bank doesn't auto import transactions. Mine doesn't so I have a little more work to do but I feel a better sense of control on what is going on.

Off Topic: Try to get into the habit of recording your transactions and expenses on the fly in the phone app and let YNAB match them when they clear your bank account / credit card and import. It makes it much easier to stay on budget because the credit card imports seem to be about a day behind them actually posting to your account. If your category amounts stay as "real time" as possible, you can better control spending and it's easier to stay on budget.

 

[Icelandic_Jazz]

Following up on my Mega Backdoor Roth effort:

I'm attempting to roll my workplace Aftertax 401k over to a Roth IRA with Fidelity. It's going pretty smooth, but with a few complications. I don't have enough in the aftertax 401k to hit the minimum investment amounts for VTSMX or FSTMX. I currently have about $2k in the aftertax so I'm not far off. Should I wait to transfer it over, or go with an ETF like VTI? I could convert the VTI over to a mutual fund once I hit the minimum if that makes sense to do.

For reference my traditional 401k has S&P500 and a Target Date retirement funds. I also have taxable investments through Vanguard with VTSAX and VTIAX.

This thread has been a major help, thanks again for all the advice.

 

[tokkun]

Following up on my Mega Backdoor Roth effort:

I'm attempting to roll my workplace Aftertax 401k over to a Roth IRA with Fidelity. It's going pretty smooth, but with a few complications. I don't have enough in the aftertax 401k to hit the minimum investment amounts for VTSMX or FSTMX. I currently have about $2k in the aftertax so I'm not far off. Should I wait to transfer it over, or go with an ETF like VTI? I could convert the VTI over to a mutual fund once I hit the minimum if that makes sense to do.

For reference my traditional 401k has S&P500 and a Target Date retirement funds. I also have taxable investments through Vanguard with VTSAX and VTIAX.

This thread has been a major help, thanks again for all the advice.

Any appreciation that occurs prior to the conversion will be taxed as normal income in the year you do the conversion. On the other hand, appreciation that occurs after conversion is completely tax-free. So it pays to do your conversion promptly if you want to minimize your tax bill.

You can always park the money in a money market account in the Roth IRA if you need to wait before buying into a mutual fund. An ETF is also a fine alternative, provided you aren't paying fees on the trades.

 

[mstevens]

.

@ ms

You'll receive a 1099 every year for your taxable account. It will tell you what you have to report for income: dividends, capital gains, etc. When you want to know what to do with it either remember to ask here or remember this post, I can help out. I'm a CPA, more on the assurance side but can help with tax issues.

Thank you both. My financial advisor just moved it a small firm and I doubt they have the online infrastructure to compete with some of the bigger online brokerage sites, so I should probably go with one of those for the account that I want to personally manage. Can someone point me in the right direction for what kind of account I want to open and where? (I want to be able to invest in some stable investments as well as have the option to get behind some specific stocks) - any video resources explaining some dos and don'ts would be great as well.

.

Perfect! I didn't know about the tracking accounts. That's exactly what I was looking for. And ya, I input everything manually (my bank accounts are not linked) for the benefits you mentioned.

 

[morch]

So i haven't got kids of my own, and my sister is a single mum of 3 kids, i cant really do much to help her so I'm thinking of setting up a SIPP(uk 401k) in their name and putting a few thousand £ over a couple into it, and just leaving in it an index linked fund to do its magic for 55 years.... Most bizarre of birthday and xmas presents to some 3 and 4 year olds but i think it'll be interesting to see what happens

 

[Piecake]

So i haven't got kids of my own, and my sister is a single mum of 3 kids, i cant really do much to help her so I'm thinking of setting up a SIPP(uk 401k) in their name and putting a few thousand £ over a couple into it, and just leaving in it an index linked fund to do its magic for 55 years.... Most bizarre of birthday and xmas presents to some 3 and 4 year olds but i think it'll be interesting to see what happens

You can set up a retirement account in someone else's name in the UK?

I'd probably double check on that because you can't do that in the US, and I imagine the reason why you can't is because it could be used as a massive tax dodge.

 

[Joe]

I can't find a link, but I remember that Vanguard did a study on that very issue and came to the conclusion that the ideal amount of international holdings is between 20 - 40% of your stock portfolio.

I don't know how they came to that conclusion or if they took into account P/E ratios.

Yeah - they recommended 20-40% in international markets back in 2012:

https://personal.vanguard.com/pdf/icriecr.pdf

(In the "Conclusion")

I'm right now sitting at about 25% international developed, 6% developing. So sort of middle of the road, I guess.

Thanks for the input and info!

Seems OK to me. Vanguard Total World is 52/48, so you're pretty much in-line with that. People will often advocate for a home country bias because of currency risk, but that is more than offset by the present-day difference in valuations in my mind.

If you hold a lot of international, remember to keep tax-efficient asset placement in mind. Your international stocks will generate a tax credit if held in taxable accounts, but not if they're in your retirement accounts.

Thanks for the tip! I've gotta check that out now.