demosthenes
Member
Ah ok, thanks, anyone else D:?
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How to Invest for Retirement
- Thread starter Piecake
- Start date
Ah ok, thanks, anyone else D:?
RustyNails
Member
I wish it were as easy as it sounds. No matter how much you try to convince your partner that diamonds have no intrinsic value and is a product of brainless mass American consumerism, or 50 African children died while excavating it, she will keep thinking you are a cheap fucker trying to get out of a bind. Trust me I tried it lolCertainly, starting out your marriage with tens of thousands in high interest debt is basically the worst idea in the world. It's basically an express ticket to resentment, bitterness and arguing over financial matters.
It is about time we as a society split the legally binding contract away from the ceremony and celebration. You can go back and do the latter part when you can afford it, which you quickly will be able to if you follow that article's advice, so you wouldn't even be delaying it that long.
the same goes for engagement/wedding rings. Going into debt to pay for a worthless rock is a terrible financial plan. Much wiser to use that debt to acquire some piece of property that actually appreciates in value. It also serves the original purpose of wedding jewels much better than jewelry that is basically impossible to sell on the secondary market. A $10,000 ring might be able to be pawned off for $5,000 ten years down the road, but $10,000 worth of appreciating assets is likely to be worth $20,000 or more at that point.
Somethings you gotta accept as known knowns and move on.
demosthenes
Member
I wish it were as easy as it sounds. No matter how much you try to convince your partner that diamonds have no intrinsic value and is a product of brainless mass American consumerism, or 50 African children died while excavating it, she will keep thinking you are a cheap fucker trying to get out of a bind. Trust me I tried it lol
Somethings you gotta accept as known knowns and move on.
Luckily, there are girls that don't care for such things.
Luckily, there are girls that don't care for such things.
Really? I would like to meet them.
Deadly Cyclone
Pride of Iowa State
Thread is like Greek to me. I'll drop by tomorrow for help but right now I have a Vanguard retirement plan, but barely pay any into it. I'm 28. I assume I can do the stuff in the OP but would have no idea what I was changing.
I do need to pay in more at the very least, but it's hard when I have credit bills and loans to pay right now...
I do need to pay in more at the very least, but it's hard when I have credit bills and loans to pay right now...
demosthenes
Member
Thread is like Greek to me. I'll drop by tomorrow for help but right now I have a Vanguard retirement plan, but barely pay any into it. I'm 28. I assume I can do the stuff in the OP but would have no idea what I was changing.
I do need to pay in more at the very least, but it's hard when I have credit bills and loans to pay right now...
What's the interest rate on credit and loans? If it's higher than 6-8% (assuming it is) those have priority.
Thread is like Greek to me. I'll drop by tomorrow for help but right now I have a Vanguard retirement plan, but barely pay any into it. I'm 28. I assume I can do the stuff in the OP but would have no idea what I was changing.
I do need to pay in more at the very least, but it's hard when I have credit bills and loans to pay right now...
Well, feel free to ask any questions that you have. I think what probably scares off most people from learning more about this is the jargon. The concept of index investing is actually rather simple. However, to understand any concept you first need to understand the terms.
Thread is like Greek to me. I'll drop by tomorrow for help but right now I have a Vanguard retirement plan, but barely pay any into it. I'm 28. I assume I can do the stuff in the OP but would have no idea what I was changing.
I do need to pay in more at the very least, but it's hard when I have credit bills and loans to pay right now...
Well, feel free to ask any questions that you have. I think what probably scares off most people from learning more about this is the jargon. The concept of index investing is actually rather simple. However, to understand any concept you first need to understand the terms.
^^
Like Pie says, Index investing is braindead simple, there are really only two concepts that you need to understand.
First is compounding yield, which shows you that even the smallest initial capital investment can grow into a huge sum of money over a long enough time. This means that saying 'I only have X amount to invest, so it's not really worth it' is the wrong way to think about things.
The second important thing is the idea that over the long term the vast majority companies make a profit. If they didn't they would go out of business. Using this idea you don't have to pick which companies will win, you just buy a little piece of all of them. This is the idea of the index.
Just knowing these two principles should enable anyone to build enough capital for retirement or whatever they want to do with their life with a relatively painless amount of financial sacrifice.
Or just do a cheap wedding. My wife and I spent a few hundred bucks for a small bash at our church, which her parents picked up anyways. Going into marriage without wedding debt is wise, both as general investing advise not to mention the health of the wedding. Nice to see it framed as an investment decision, since it certainly is.One of the best strategies to fund your retirement: eloping.
I basically posted this so that I can easily find this article to convince my possible future wife that it makes a whole lot of sense to get hitched at the courthouse.
One of the best strategies to fund your retirement: eloping.
I basically posted this so that I can easily find this article to convince my possible future wife that it makes a whole lot of sense to get hitched at the courthouse.
Even cheaper don't get married at all! Bonus, we are saving $15k a year in taxes by staying legally single.
demosthenes
Member
Even cheaper don't get married at all! Bonus, we are saving $15k a year in taxes by staying legally single.
I've done a lot of tax returns for all manner of financial situations and this almost never happens. What gives.
Firstly how are you sure you will be reach retirement?, just retire never how about that?
Never understood this dream of dying old sitting down in a beach, I rather be alive old living actively, I seen these retired old guys before in Miami. I seen active alive Old guys these are the best people to be around with they LIVE.
Never understood this dream of dying old sitting down in a beach, I rather be alive old living actively, I seen these retired old guys before in Miami. I seen active alive Old guys these are the best people to be around with they LIVE.
I've done a lot of tax returns for all manner of financial situations and this almost never happens. What gives.
My BF and I make about the same amount of money. http://en.wikipedia.org/wiki/Marriage_penalty
My only advice on 401k is to max it out every year. It's tax free and forces you to save. The younger you start the better. And then only touch the money in an absolute emergency.What's the average a 25 year old should have in their 401k account after 3 years in the work force? I'm at about $12,500 and I feel like that's not very much. I decided against contributing my first year, and have done 6% to 8% the past two years (company matches up to 6%).
demosthenes
Member
My BF and I make about the same amount of money. http://en.wikipedia.org/wiki/Marriage_penalty
Actually now that you mention it: 1) I haven't done a lot of tax returns the past 2 years so a lot of new taxes could impact this & 2) most of my situations had one primary earner. So that makes sense.
Firstly how are you sure you will be reach retirement?, just retire never how about that?
Never understood this dream of dying old sitting down in a beach, I rather be alive old living actively, I seen these retired old guys before in Miami. I seen active alive Old guys these are the best people to be around with they LIVE.
If you retire you can only just sit around?
I am planning on being very active in my retirement. Traveling will be a large part of my early stage of retirement.
My only advice on 401k is to max it out every year. It's tax free and forces you to save. The younger you start the better. And then only touch the money in an absolute emergency.
Do you mean Roth IRA? Maxing a 401k takes quite a bit of money, and is most certainly not tax-free once your start taking out.
I think putting in what will get you your employers max match is definitely smart. After that, dump into Roth IRA to max if you can. After that (more like, if you know you'll hit your Roth cap), more into 401k if you want.
To be honest, I am still baffled that everything you earn in a Roth is tax-free once you start taking out. If they stop that benefit before I retire I will be sad.
demosthenes
Member
If you retire you can only just sit around?
I am planning on being very active in my retirement. Traveling will be a large part of my early stage of retirement.
Do you mean Roth IRA? Maxing a 401k takes quite a bit of money, and is most certainly not tax-free once your start taking out.
I think putting in what will get you your employers max match is definitely smart. After that, dump into Roth IRA to max if you can. After that (more like, if you know you'll hit your Roth cap), more into 401k if you want.
If you max y our employer match why not invest on your own. You have better funds to choose from usually and you don't get penalized if you have to sell.
If you max y our employer match why not invest on your own. You have better funds to choose from usually and you don't get penalized if you have to sell.
I personally follow that route, but I assume some people like to have their money "locked away" in retirement accounts to resist urges to use it.
Randolph Freelander
Member
How hard is it to get money out of an index fund?
I currently have my emergency fund setup in a savings account, but it only has a 0.75% APY. Feels like I'm leaving money on the table by not moving it into something with a better yield.
If that's your emergency fund, leave it where it is*. You don't want to put that into the market and lose a significant portion in a downturn, not when you could need the money on short notice.
If you have excess funds, then go ahead and buy into an ETF that follows the S&P (or some other broader index). You can sell that as quickly as you need to.
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*Someone might suggest a different vehicle, but it wouldn't be stocks.
How hard is it to get money out of an index fund?
I currently have my emergency fund setup in a savings account, but it only has a 0.75% APY. Feels like I'm leaving money on the table by not moving it into something with a better yield.
It's as easy as selling the amount of shares you need. It takes 3 days for the trade to settle and then you would be able to withdraw the cash.
Randolph's advice is correct. Though, I am personally doing what you are thinking about. I have most of my excess cash (everything over about 1.5 months worth of salary) in index funds. This is generally not advised, though I am comfortable with my employment situation and do have extreme backup options if I were to lose my excess cash.
At least with an index fund, even if the market crashes, you won't lose ALL of it as the market never will go to zero. I'm willing to take the risk, but I don't think anyone would ever actually advise someone to put their emergency funds in the stock market.
How hard is it to get money out of an index fund?
I currently have my emergency fund setup in a savings account, but it only has a 0.75% APY. Feels like I'm leaving money on the table by not moving it into something with a better yield.
http://www.bogleheads.org/wiki/Roth_IRA_as_an_emergency_fund
You could always look into this strategy. I personally do not do it because I don't invest in bonds nor am I really all that comfortable with it. However, if bonds are a part of of your investment allocation and all of that crap in the link made good sense and you are totally cool with the risks, then this is probably the strategy you are looking for.
If that's your emergency fund, leave it where it is*. You don't want to put that into the market and lose a significant portion in a downturn, not when you could need the money on short notice.
If you have excess funds, then go ahead and buy into an ETF that follows the S&P (or some other broader index). You can sell that as quickly as you need to.
---
*Someone might suggest a different vehicle, but it wouldn't be stocks.
Yeah, that's about what I figured.
Since I have about 4 months net income in savings currently, think I'll shift just 1 month into stocks and keep 3 months "safe". Should make for a decent balance between security and profitability.
Another reason to avoid actively managed funds and go with index funds...
http://www.nytimes.com/2014/06/23/o...-and-rebates-for-brokers.html?hp&rref=opinion
Good article, and man, what a corrupt mess...
In the last quarter of 2012, for example, the brokerage TD Ameritrade sent all nonmarketable customer orders those that cant be completed immediately based on the market price to the one exchange that paid the highest rebate. In the first quarter of 2014, it sent nonmarketable orders to two venues that paid the highest rebates.
Senator Carl Levin, the subcommittee chairman, rightly called it a frankly pretty incredible coincidence that the firms judgment on best execution for tens of millions of customers had invariably led it to use the venues that paid the highest rebates. Under questioning, Steven Quirk, an executive of TD Ameritrade, conceded that in the trades cited by Mr. Levin the firm had virtually always used exchanges that paid the most. He also estimated that the firm made $80 million last year from maker-taker rebates.
Meanwhile, many brokerages promote their low trading costs. But the fees to trade stocks do not include the hidden costs that are incurred when investors dont get the best price. A study from 2012 estimated that rebates cost individual investors, mutual funds and pension funds as much as $5 billion a year.
http://www.nytimes.com/2014/06/23/o...-and-rebates-for-brokers.html?hp&rref=opinion
Good article, and man, what a corrupt mess...
I want to do some cleanup with my Vanguard account. Is there any way to remove inactive accounts. For example, I initially had the VTSMX (Vanguard Total Stock Market Index Fund Investor shares) before I upgraded it to the Admiral version (VTSAX). The VTSMX is just sitting there with nothing in it (oddly enough I have two of them...). I want to remove or at least hide them...
RumblingRosco
Member
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I want to do some cleanup with my Vanguard account. Is there any way to remove inactive accounts. For example, I initially had the VTSMX (Vanguard Total Stock Market Index Fund Investor shares) before I upgraded it to the Admiral version (VTSAX). The VTSMX is just sitting there with nothing in it (oddly enough I have two of them...). I want to remove or at least hide them...
You can do that in the settings. Go under Balance and Holdings and then click on the customize this page link on the upper right corner.
Well, having it empty there means nothing really, but if you want it cleared I believe you need to get in touch with Vanguard. Their online chat has always been super helpful for me.
By the way, does anyone have a link to articles discussing the average savings of Americans at specific ages (20s, 30s, etc) that isn't outdated (pre-recession)? I am wondering how I compare or more importantly where I "should" be.
http://awealthofcommonsense.com/retirement-plan-stack/
This one is data from Vanguard. It looks incomplete though because I think they are just taking into account 401ks
http://www.dailyfinance.com/2012/11/14/retirement-savings-by-age-how-do-you-compare/
This is a survey. So, hopefully the people actually responded truthfully.
I really don't think this will provide you with any useful info because the majority of people aren't close to where they should be in terms of retirement savings. The average likely has quite a bit of catching up to do.
You can do that in the settings. Go under Balance and Holdings and then click on the customize this page link on the upper right corner.
Awesome, it had a hide zero balance option. Thanks, my page looks so much cleaner without all of those zero balance accounts. I can't believe in all the time I spent looking and I never noticed that stupid customize this page link. -_-*
I've got a question for y'all. I'm 26 and contribute the max amount to my Roth IRA possible every year. My company sucks and doesn't offer a 401k, I'm actively looking for a new job but that's another story. I live relatively frugal and have extra money saved up but I'm not sure what to do with it. What additional investments should I look into that are relatively safe? I'm looking for something I can place my money into once I max my IRA out every year.
I've got a question for y'all. I'm 26 and contribute the max amount to my Roth IRA possible every year. My company sucks and doesn't offer a 401k, I'm actively looking for a new job but that's another story. I live relatively frugal and have extra money saved up but I'm not sure what to do with it. What additional investments should I look into that are relatively safe? I'm looking for something I can place my money into once I max my IRA out every year.
Well, if you have an HRA (health care account) or the option of getting one you can put your investments in that. Other then that, the only other option is a taxable account. Personally, I follow the same strategy in my taxable as I do in my 401k/IRA accounts - all stock - US/International split, but you need to do what you are comfortable with.
I think having a taxable account is useful since you can save up for long term purchases like a house, new car, trip around the world, etc without all the restrictions and penalties of a 401k/IRA.
If you have kids, you can also stick the money into a 529 plan for their college.
Deadly Cyclone
Pride of Iowa State
What's the interest rate on credit and loans? If it's higher than 6-8% (assuming it is) those have priority.
Well, feel free to ask any questions that you have. I think what probably scares off most people from learning more about this is the jargon. The concept of index investing is actually rather simple. However, to understand any concept you first need to understand the terms.
^^
Like Pie says, Index investing is braindead simple, there are really only two concepts that you need to understand.
First is compounding yield, which shows you that even the smallest initial capital investment can grow into a huge sum of money over a long enough time. This means that saying 'I only have X amount to invest, so it's not really worth it' is the wrong way to think about things.
The second important thing is the idea that over the long term the vast majority companies make a profit. If they didn't they would go out of business. Using this idea you don't have to pick which companies will win, you just buy a little piece of all of them. This is the idea of the index.
Just knowing these two principles should enable anyone to build enough capital for retirement or whatever they want to do with their life with a relatively painless amount of financial sacrifice.
Thanks guys. The credit card is the priority now, and having the girlfriend move in plus paying off my car next year should do wonders to help get that taken care of.
For retirement we have Vanguard, and I've been here 3 years and probably have around $8k in that account because I'm paying the minimum in. I'm starting to feel like I need to change it, but as I said, I don't really "get" these index things, etc. If I just up my pay in to the max my company covers (12% I think?) and keep at it like that will I end up sitting decently? Or should I move some of that around?
I need to get onto the Vanguard site and check it out.
Ape Gone Insane
Member
Is there any benefit in investing in stuff like the FTSE index funds if they are already reaching their all-time highs? Wouldn't these funds have been good in retrospect rather than now?
Is there any benefit in investing in stuff like the FTSE index funds if they are already reaching their all-time highs? Wouldn't these funds have been good in retrospect rather than now?
If the market goes up (which, on average, it does ~7-9% a year) then indexes will be hitting their all-time highs every year, on average. Not quite that simple, but these all-time highs happen all the time because, again, the market trends upwards.
You can find anything that "would have" been a good investment when looking backwards. It's something you have to not dwell on when investing (I still struggle with this, GoPro...god dammit I wanted to get in on that but for some reason didn't).
Is there any benefit in investing in stuff like the FTSE index funds if they are already reaching their all-time highs? Wouldn't these funds have been good in retrospect rather than now?
Funds reach all time highs all the time, doesn't make it a bad idea to invest in them after reach a new all time high.
It just means it would have been better if you had done it sooner.
Holding out of the market waiting for optimum timing to buy is a classic mistake though, you can never truly know whether a new all time high is a peak or just the start of an even bigger rise, and over a long enough time period an increase is pretty much inevitable. As mentioned, unprofitable companies don't remain in the index long typically, so on average the index will be made up of profitable companies and should tend to increase in value over time.
It should be noted that long term means decades, not years. It is entirely possible for there to be a 10-15 year period of no or negative growth in stock price if valuations happen to get especially optimistic (a bubble), but eventually profitable businesses will increase in value, it's pretty much basic math. If a company is making a profit, it's valuation has to keep increasing on average or eventually it's material assets will exceed it's market cap.
thoseAREmySHOES
Member
I got sick of putting my money into my checking account each month and putting off dumping it into an index fund because of the $3k minimum. I got up to about $4,800 in checking and just now dumped $3k into VTSMX. I'm thinking ~$1500 is enough to keep on hand.
I got sick of putting my money into my checking account each month and putting off dumping it into an index fund because of the $3k minimum. I got up to about $4,800 in checking and just now dumped $3k into VTSMX. I'm thinking ~$1500 is enough to keep on hand.
Depends on your expenses.
Why not just buy ETFs instead of mutual funds with mandatory minimums?
I don't own a single traditional mutual fund and I don't understand why anyone would unless they are in a 401k where that is the only thing they can buy.
ETFs are just way more convenient IMO, plus they have tax advantages because in kind redemptions can lessen the amount of cap gains realized.
RumblingRosco
Member
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I work under the assumption that 1: I won't want to retire till my employer forces me out the door kicking and screaming, and 2: I'll drop dead long before that happens anyways.
I slap a months worth of bills into a savings account every month for a rainy day fund, spend the rest. I could go three years right now without a job, and stay up on my bills without any trouble.
I slap a months worth of bills into a savings account every month for a rainy day fund, spend the rest. I could go three years right now without a job, and stay up on my bills without any trouble.
RumblingRosco
Member
I work under the assumption that 1: I won't want to retire till my employer forces me out the door kicking and screaming, and 2: I'll drop dead long before that happens anyways.
I slap a months worth of bills into a savings account every month for a rainy day fund, spend the rest. I could go three years right now without a job, and stay up on my bills without any trouble.
There's nothing wrong with expecting to work until you die, but I think you're making a wise decision by also stashing some money as a "just in case" option. You could probably find a higher return option for that money that would still be very safe if you wanted to try and earn a bit extra from that 3 year's worth of rainy day money.
http://www.cbsnews.com/news/stocks-soar-and-most-americans-just-dont-care/
I found this to be an interesting article. Keep on investing, ladies and gentlemen. Mutual funds that follow the market are seeing great gains as well, so you don't need to invest in individual stocks to reap benefits of this run-up.
I think it is a misleading article. She seems to suggest that the reason why many Americans are not investing in the stock market is because they recession and stock market crash scared them off, meaning that they are too stupid and scared to invest. While I think this is a part of it, I think the bigger issue is that many American families simply can't afford to invest in the market. I mean, how can 1/3rd to 1/2 of Americans invest when they are living paycheck to paycheck?
RumblingRosco
Member
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Yes, I'd agree that the reasoning for their observation is inaccurate, but I still find it interesting (and not in a good way) that so many are completely out of the market.
Yep, that is pretty much the reason why I think why we will see a retirement crisis fairly soon. I mean, I don't know how accurate these numbers are or the methodology they used, but they said that average 55-64 year old with a retirement account had 120k saved up. That isnt good. The real problem is that the average 55-64 year old in general had 12k saved for retirement. That is INSANE. The average elderly person will be living in poverty...
thoseAREmySHOES
Member
Depends on your expenses.
Why not just buy ETFs instead of mutual funds with mandatory minimums?
I don't own a single traditional mutual fund and I don't understand why anyone would unless they are in a 401k where that is the only thing they can buy.
ETFs are just way more convenient IMO, plus they have tax advantages because in kind redemptions can lessen the amount of cap gains realized.
The only reason I chose the index fund over the ETF is the ease of adding money each month. I can automatically throw money in with no fee for a trade. Kind of a "set it and forget it" mentality.
The only reason I chose the index fund over the ETF is the ease of adding money each month. I can automatically throw money in with no fee for a trade. Kind of a "set it and forget it" mentality.
I personally prefer mutual funds as well. They are easier to deal with and I like dealing with whole numbers. The extra change sitting in my money market account when I used etfs just bugged the crap out of me.
RumblingRosco
Member
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Right, between this and the education/college loan bubble, shit will be rough for a while for a whole lot of people. And those numbers are scary; my fiancee and I are sitting here at 25 calculating that we need around $3,000,000 to retire comfortably, so I cannot see how people with less than $100,000 expect to last more than a few years in retirement... Which is I guess why many people are working later and later into their lives.
That can't be right. Are you taking into account social security? If you wait until you are 70 you will be probably be getting about 2500-3000 bucks a month. If both of you do that, thats somewhere around 60k guaranteed to live on.
Also, I think many people make the mistake of thinking that their retirement investments will stop growing after retirement. I mean, I guess if you just stuck them in bonds they won't grow all that much, but it's not like you are going to put your 3 million under a mattress.
thoseAREmySHOES
Member
Is it possible to open a Vanguard account and invest $100? I want to put away $100/month into investments, but it seems all of their index funds start at $1000-$3000.
Most funds are going to have a minimum of $3000... but you should be able to take that $100 and buy some shares of the ETF of the same fund. Keep in mind, though, with the price of a trade (I don't know what Vanguard's is on the top of my head, exactly) you could be using 10% of that $100 just to throw the money in.
EDIT: See Piecake's post below me, Vanguard ETFs are free! Go to town, buddy!
Is it possible to open a Vanguard account and invest $100? I want to put away $100/month into investments, but it seems all of their index funds start at $1000-$3000.
Your only option would be to invest in the ETF version of those funds. Go the the index fund that you are interested in investing in, and near the top of the page should be a link to that funds' admiral shares and ETF version.
Most funds are going to have a minimum of $3000... but you should be able to take that $100 and buy some shares of the ETF of the same fund. Keep in mind, though, with the price of a trade (I don't know what Vanguard's is on the top of my head, exactly) you could be using 10% of that $100 just to throw the money in.
Vanguard ETFs are also free