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[Y2Kev]

I debated putting some money into my company stock fund. My company's stock is kind of a dog, but I've become optimistic we'll do better. Only 5%.

All of my schooling (and even logic) says this is a bad sense. There's no growth in my industry anymore and I am simply taking away from some other category where I could be doing better.

But I want to own some company stock. I'm dumb.

The REIT fund I hopped into on Smooth's recommendation is doing gangbusters this year. Well, until I got into it. lol.

 

[GhaleonEB]

I debated putting some money into my company stock fund. My company's stock is kind of a dog, but I've become optimistic we'll do better. Only 5%.

All of my schooling (and even logic) says this is a bad sense. There's no growth in my industry anymore and I am simply taking away from some other category where I could be doing better.

But I want to own some company stock. I'm dumb.

The REIT fund I hopped into on Smooth's recommendation is doing gangbusters this year. Well, until I got into it. lol.

I'm similar with my company stock. I hold a decent amount of it, though I get it partly as grants (i.e. income) and partly purchases at a discount. Some of my coworkers dump them right away and take the profit, but - despite everything I know about diversification - I like the idea of holding some stock in the company. 5% seems like a small enough, sensible allocation that it's not going to blow things up one way or the other. (I'm well over that, but it's gliding down since we capped the # of shares we own.)

 

[Smiley90]

I debated putting some money into my company stock fund. My company's stock is kind of a dog, but I've become optimistic we'll do better. Only 5%.

All of my schooling (and even logic) says this is a bad sense. There's no growth in my industry anymore and I am simply taking away from some other category where I could be doing better.

But I want to own some company stock. I'm dumb.

The REIT fund I hopped into on Smooth's recommendation is doing gangbusters this year. Well, until I got into it. lol.

I did the same thing, more for kicks than anything. (Not my company stock, but an ETF for my home country's industry). Just a bit, money I'm more than ready to lose, but I just wanted to have it.

 

[Randolph Freelander]

I move the funds out of company stock the day after it hits. I'm having nothing (extra) tied up in the company. It's already a sizable component of the S&P 500 index fund, no need to double dip with that blue chip.

 

[harriet the spy]

Hey GAF,

I am generally bad with money and I'll admit I am kind of uninterested in the whole affair (which I am sure I'll come to regret when I am old ).

Long story short- I am quitting my current job in the US and going for a few years abroad. I have some amount of money in a 401k at fidelity. It seems I should move it outside of the 401k after I leave (the money is staying in the US). I could leave it at fidelity. My main bank is bank of america (where I have some separate savings), so it might make sense for me to consolidate my stuff at merrill edge (from what I understand, into some kind of IRA).

Main question... is either of those options terrible? I am tempted to go with Merrill Edge, but I am always skeptical that the financial advisors are wholly uninterested in my financial interest and only in screwing me over.

I like being able to choose at a high level how to invest the money (in terms of risk/growth tradeoff, for instance), but that's where it stops (so any investment which requires a significant time investment on my part is not really what I am looking for).

 

[Darren870]

Hey GAF,

I am generally bad with money and I'll admit I am kind of uninterested in the whole affair (which I am sure I'll come to regret when I am old ).

Long story short- I am quitting my current job in the US and going for a few years abroad. I have some amount of money in a 401k at fidelity. It seems I should move it outside of the 401k after I leave (the money is staying in the US). I could leave it at fidelity. My main bank is bank of america (where I have some separate savings), so it might make sense for me to consolidate my stuff at merrill edge (from what I understand, into some kind of IRA).

Main question... is either of those options terrible? I am tempted to go with Merrill Edge, but I am always skeptical that the financial advisors are wholly uninterested in my financial interest and only in screwing me over.

I like being able to choose at a high level how to invest the money (in terms of risk/growth tradeoff, for instance), but that's where it stops (so any investment which requires a significant time investment on my part is not really what I am looking for).

As an EX-Merrill Employee, an ex-merrill account holder, and as an expat, don't. When I left the US I rolled everything into Vanguard. I had about 7 different accounts and I closed them all and rolled everything to Vanguard. You can roll your 401k to an IRA at vanguard. It takes like 10 mins. From their pick your funds with very low fees.

Merrill used to charge me $350 per year just to have a stock account with them, this was before I was an employee.

Not to say Merrill Lynch isn't a good company, they are. But you probably don't have much in your 401k to make it worth it. They are good when it comes to major cash.

I kept my Bank of America checking account though. Converted it to online only since they started to charge once I didn't do direct deposit anymore.

Edit: If I recall fidelity has pretty low fees. It might be worth comparing. If so just ask Fidelity to convert the cash into an IRA.

 

[Randolph Freelander]

Merrill used to charge me $350 per year just to have a stock account with them, this was before I was an employee.

$350? Were those possibly just trading fees? Their setup now is no maintenance fee and $6.95 trades, but you can get 30 free trades per month if you meet some combined minimum balance between your brokerage and standard BofA accounts (well, I suppose you should know this, given your ex-employment status).

I'm looking at Merrill for when I open my Roth later this year (have to go to settlement on my house first), since I bank with BofA, have done some trading with Merrill Edge, and it just seems more convenient. They don't have maintenance fees on IRAs, but I still need to do some research on fund selections.

 

[blastprocessor]

My view is avoid funds and invest into stocks yourself. I personally only invest in FTSE 100 & FTSE 250 and reinvest the dividends. I may on occasion invest in AIM as a few growth stocks are good to have in a portfolio of already established companies.

I also top up an ISA every year, which is ultimately going to top up my pension. I don't intend on increasing pension contributions as rather spread my my money around.

 

[Darren870]

$350? Were those possibly just trading fees? Their setup now is no maintenance fee and $6.95 trades, but you can get 30 free trades per month if you meant some combined minimum balance between your brokerage and standard BofA accounts (well, I suppose you should know this, given your ex-employment status).

I'm looking at Merrill for when I open my Roth later this year (have to go to settlement on my house first), since I bank with BofA, have done some trading with Merrill Edge, and it just seems more convenient. They don't have maintenance fees on IRAs, but I still need to do some research on fund selections.

Nope, no trading fees. It was stocks I inherited and I never even used the account. This was ages ago though, before it was BOA & ML. I had rolled it all over before I started working for them.

You sure about that no fees? You just need to make sure you meet all the criteria...

Merrill Lynch (Edge) ROTH/Traditional/IRA Rollover/SEP/Simple/401(k) IRA Accounts Fees

IRA setup fee: $0
Annual IRA fee: $0
IRA termination fee: $75
Account maintenance fee: $25/quarter, waived if $50,000 balance or make 15 trades in quarter
Mutual funds Self-Directed Short-Term Redemption fee if held less than 90 days: 0.75% gross proceeds, $50 minimum, $250 maximum

Source: http://www.ira-reviews.com/ira-accounts/merrilledge-ira-review.aspx

 

[Randolph Freelander]

Nope, no trading fees. It was stocks I inherited and I never even used the account. This was ages ago though, before it was BOA & ML. I had rolled it all over before I started working for them.

You sure about that no fees? You just need to make sure you meet all the criteria...

Hmmm, well, I suppose I still have more research to do. This is what I had seen:

Retirement accounts

Annual custodial fee $0
Minimum initial funding requirement $0
Full account transfer or closeout fee $49.95

I might not be looking in the right spot, but I can't find information on what you posted. Edit: Oh, nevermind, it's linked from a different source. I'll check that out.

 

[Randolph Freelander]

...

Well, that's interesting. It would presumably be better if I'm just using their vehicle but avoiding their product, correct? But still, the fee information (which I still can't find on Merrill's own site) is disturbing.

I was giving them first look based on convenience factor. But if I have to look elsewhere for lower fees, that's what I'll do.

 

[Darren870]

Hmmm, well, I suppose I still have more research to do. This is what I had seen:



I might not be looking in the right spot, but I can't find information on what you posted. Edit: Oh, nevermind, it's linked from a different source. I'll check that out.

I can't seem to find it, but my browser is acting up and wont let me open the page I think its on.

Edge started to compete with Online Trade accounts, such as etrade and such. As SomewhatGroovy said, they are run by sales people. I've never had any dealings with Edge, and kind of forgot about it. I am guessing though its just like all the other online accounts. You see a giant image of a low price with * symbols everywhere because you have to meet certain criteria to get those prices.

The wealth management side of the house is run by financial advisers, but that is for accounts with major money. Which I am guessing no one here has.

That's why I've always liked vanguard, low fees and its right in your face.

 

[Darren870]

I completely understand the ease of having one account. Being able to log in and have it all their. Trust me, its a constant headache for me.

Sometimes, you can't though. And sometimes its worth having a separate account to avoid the hidden fees, the hassles and the questions. Even if it is easy to open.

MerrillEdge could be good for you, just make sure you look into all angles of it before rolling over an account or committing.

Well, that's interesting. It would presumably be better if I'm just using their vehicle but avoiding their product, correct? But still, the fee information (which I still can't find on Merrill's own site) is disturbing.

I was giving them first look based on convenience factor. But if I have to look elsewhere for lower fees, that's what I'll do.

I continued to look and it looks like the IRA fee might be gone. Its probably best to call them though.

 

[Randolph Freelander]

Thanks guys, I'll continue to research it. I'm still a month+ away from opening an account, have to wait on my mortgage settlement.

 

[harriet the spy]

Thanks for the answers, and man, what a headache. I have no idea what to do, really. I have enough money on my bofa account to waive most of the fees, I think - but I am a bit worried that they are indeed pushing the MESP that somewhatgroovy said is shit.

The alternative is to close all my things with bofa and put the money elsewhere. But i need an american bank account (not just an investing account).

The ironic thing is that while I know BOFA is a bunch of bastards, they are the only bank/financial institution that didn't fuck me over terribly while I was a graduate student (even my university FCU did).

Spoiler

fuck chase so much

 

[iamblades]

As an EX-Merrill Employee, an ex-merrill account holder, and as an expat, don't. When I left the US I rolled everything into Vanguard. I had about 7 different accounts and I closed them all and rolled everything to Vanguard. You can roll your 401k to an IRA at vanguard. It takes like 10 mins. From their pick your funds with very low fees.

Merrill used to charge me $350 per year just to have a stock account with them, this was before I was an employee.

Not to say Merrill Lynch isn't a good company, they are. But you probably don't have much in your 401k to make it worth it. They are good when it comes to major cash.

I kept my Bank of America checking account though. Converted it to online only since they started to charge once I didn't do direct deposit anymore.

Edit: If I recall fidelity has pretty low fees. It might be worth comparing. If so just ask Fidelity to convert the cash into an IRA.

This is what I would do certainly. The issue with the bigger traditional investment banks/brokerages is that unless you have a lot of capital invested with them, is it really not in their interest to help you at all. Fidelity or almost any discount brokerage will provide the same or better customer service at much lower fees, and probably aren't going to try and sell you some bullshit along the way.

 

[Darren870]

Thanks for the answers, and man, what a headache. I have no idea what to do, really. I have enough money on my bofa account to waive most of the fees, I think - but I am a bit worried that they are indeed pushing the MESP that somewhatgroovy said is shit.

The alternative is to close all my things with bofa and put the money elsewhere. But i need an american bank account (not just an investing account).

The ironic thing is that while I know BOFA is a bunch of bastards, they are the only bank/financial institution that didn't fuck me over terribly while I was a graduate student (even my university FCU did).

Spoiler

fuck chase so much

I've been overseas for 5 years and have been a BOA customer for 10. I've never had any issues with them and I don't think there is a reason you should close the account. Just make sure you wont be charged any fees once you remove direct deposit, which I am assuming you have setup for work. Then just roll over your 401k to an IRA with fidelity.

You will need a checking account, trust me. There is probably an online one of some sort, but I preferred BOA because of its network overseas and because of its network in the US.

Also, don't forget you have to do tax returns every year, even if you don't work in the US. Also you can't contribute to retirement accounts (as easily), so I would put the whole amount you can in your ROTH.

Where are you going, do you know?

 

[Shadow780]

One of the best threads on GAF. I try to read up as much as I can but there's still so much to learn.

I was recently enrolled in Fidelity's 401k plan (10% contribution since my company will match 50% of that 10%).

I'm wondering which Funds should I invest in?

Funds and fees

My preference is that of "set it and forget it" kind of person, maybe check once per month see how it's going.

Any help is appreciated.

 

[Husker86]

One of the best threads on GAF. I try to read up as much as I can but there's still so much to learn.

I was recently enrolled in Fidelity's 401k plan (10% contribution since my company will match 50% of that 10%).

I'm wondering which Funds should I invest in?

Funds and fees

My preference is that of "set it and forget it" kind of person, maybe check once per month see how it's going.

Any help is appreciated.

Spartan 500 fund for sure.

Can't say about the others since I can't see the expense ratios. But I know the Spartan 500 index has low fees (0.05% net expense ratio since you'll automatically get Advantage Class). That should be the larger base of your allocations anyway.

 

[Randolph Freelander]

One of the best threads on GAF. I try to read up as much as I can but there's still so much to learn.

I was recently enrolled in Fidelity's 401k plan (10% contribution since my company will match 50% of that 10%).

I'm wondering which Funds should I invest in?

Funds and fees

My preference is that of "set it and forget it" kind of person, maybe check once per month see how it's going.

Any help is appreciated.

The only index fund I see there is the S&P 500, which is a good one to get. Depending on how much stock you want to hold, I'd go heavily into that one. 60-70%. I'd say grab something international, but the expense ratios on your international options are horrible. Eh, other folks will offer opinions, but to be quite honest, your mid and small cap fund options are also high expense. I'd want to get some exposure to mid, small, and international stock for diversification, but I think S&P 500 (large cap) should comprise a significant portion of your portfolio.

Mix in bonds and other instruments if you want to hedge a bit.

Spartan 500 fund for sure.

Can't say about the others since I can't see the expense ratios. But I know the Spartan 500 index has low fees (0.05% net expense ratio since you'll automatically get Advantage Class). That should be the larger base of your allocations anyway.

Check the second tab (bottom of screen).

 

[Husker86]

The only index fund I see there is the S&P 500, which is a good one to get. Depending on how much stock you want to hold, I'd go heavily into that one. 60-70%. I'd say grab something international, but the expense ratios on your international options are horrible. Eh, other folks will offer opinions, but to be quite honest, your mid and small cap fund options are also high expense. I'd want to get some exposure to mid, small, and international stock for diversification, but I think S&P 500 (large cap) should comprise a significant portion of your portfolio.

Mix in bonds and other instruments if you want to hedge a bit.



Check the second tab (bottom of screen).

Oops!

Shadow, are you planning on having any other retirement accounts like an IRA?

You could diversify between accounts. Say, put everything into Spartan 500 mutual fund in your 401k, and then add international and small/mid cap exposure in an IRA where you'll be able to pick any fund you want.

The other stock funds in your 401k list have pretty high fees, though, is it just me or are those target retirement fund past performances really good?

edit: Nevermind, a lot of them start right at the 2008 crash haha.

 

[Shadow780]

Spartan 500 fund for sure.

Can't say about the others since I can't see the expense ratios. But I know the Spartan 500 index has low fees (0.05% net expense ratio since you'll automatically get Advantage Class). That should be the larger base of your allocations anyway.

The only index fund I see there is the S&P 500, which is a good one to get. Depending on how much stock you want to hold, I'd go heavily into that one. 60-70%. I'd say grab something international, but the expense ratios on your international options are horrible. Eh, other folks will offer opinions, but to be quite honest, your mid and small cap fund options are also high expense. I'd want to get some exposure to mid, small, and international stock for diversification, but I think S&P 500 (large cap) should comprise a significant portion of your portfolio.

Mix in bonds and other instruments if you want to hedge a bit.



Check the second tab (bottom of screen).

Thanks for the suggestions, you guys mean Spartan® 500 Index Fund right?

I guess I'll put the rest in MFS® International Value Fund Class R4,

You guys wouldn't recommend those blended funds? My Benefit person was trying to upsell on those.

 

[Husker86]

Thanks for the suggestions, you guys mean Spartan® 500 Index Fund right?

I guess I'll put the rest in MFS® International Value Fund Class R4,

You guys wouldn't recommend those blended funds? My Benefit person was trying to upsell on those.

The blended funds (target retirement funds, look at the year, FID FREEDOM K 2050 is targeted for people who will retire around 2050) are the most "hands off" as they reallocate over time (less stocks as you get closer to target date), but they may be too conservative for you, depending on what you want.

The bigger problem is, if you aren't retiring for a while, those funds, which have around 0.66% expense ratio, are going to have the majority of holdings domestic stocks, something that you can get in your own program for 0.07% (Spartan 500 Index Fund).

 

[Shadow780]

The blended funds (target retirement funds, look at the year, FID FREEDOM K 2050 is targeted for people who will retire around 2050) are the most "hands off" as they reallocate over time (less stocks as you get closer to target date), but they may be too conservative for you, depending on what you want.

The bigger problem is, if you aren't retiring for a while, those funds, which have around 0.66% expense ratio, are going to have the majority of holdings domestic stocks, something that you can get in your own program for 0.07% (Spartan 500 Index Fund).

Thanks for the analysis, yeah it looks like I should open up a Roth account at Vanguard as well for better fund option. I will keep subbing this thread for more knowledge.

 

[Husker86]

Thanks for the analysis, yeah it looks like I should open up a Roth account at Vanguard as well for better fund option. I will keep subbing this thread for more knowledge.

Not sure if Fidelity NetBenefits would merge with a normal Fidelity account, but they have great funds as well if you want to keep it all in the same company.

Honestly there isn't a huge reason to want everything with the same company, but Fidelity is a great option for IRA as well.

 

[Shadow780]

Not sure if Fidelity NetBenefits would merge with a normal Fidelity account, but they have great funds as well if you want to keep it all in the same company.

Honestly there isn't a huge reason to want everything with the same company, but Fidelity is a great option for IRA as well.

That's actually a good point, I will find out.

Vanguard seem like the favorite here and it's easier to refer this thread for reference.

 

[demosthenes]

Not sure if Fidelity NetBenefits would merge with a normal Fidelity account, but they have great funds as well if you want to keep it all in the same company.

Honestly there isn't a huge reason to want everything with the same company, but Fidelity is a great option for IRA as well.

401(k) is w/ Nationwide through work.

IRA and some investments w/ Scottrade.

Non 401k/IRA retirement investments (meaning I will not touch these until I'm 60+) are w/ Vanguard.

 

[Jeels]

So graduated college currently I do the max amount to a 401k that my employer will match towards. Is that enough? Should I do max 401k + max Ira?

 

[Husker86]

So graduated college currently I do the max amount to a 401k that my employer will match towards. Is that enough? Should I do max 401k + max Ira?

Do what you can comfortably. I currently don't choose to max my Roth right now because that would limit my fun money.

I would try to have an IRA in addition to your 401k, though.

What percentage of your salary goes into your 401k (including match)?

 

[Jeels]

Do what you can comfortably. I currently don't choose to max my Roth right now because that would limit my fun money.

I would try to have an IRA in addition to your 401k, though.

What percentage of your salary goes into your 401k (including match)?

8 percent and employer matches half that.


Thanks, since this is my first year working like this I havent really thought about this stuff. Ill start a Roth going into next year and enjoy my disposable income for now...

 

[Husker86]

8 percent and employer matches half that.

That's a good total percentage. I think common advice is ~15% of your salary should go to retirement.

Being just out of college, you're off to a good start. If you can convince yourself to divert some disposable income to a Roth IRA, then do that. Sooner the better, but you have some time to figure it out.

 

[Jeels]

That's a good total percentage. I think common advice is ~15% of your salary should go to retirement.

Being just out of college, you're off to a good start. If you can convince yourself to divert some disposable income to a Roth IRA, then do that. Sooner the better, but you have some time to figure it out.

Thanks. I do have to ask though, how does anyone do it? If 15% is going to your retirement, and people say to have a 6 months of income rainy day fund, and you want to save a certain signficant lump sum for down payments on a home or car, and you want to have a savings account and not just an expense account, and you have money going towards insurance and health care expenses. How does anyone have any extra cash? Like I dont even have a wife and kids and its freaking me out.

 

[Piecake]

Thanks for the analysis, yeah it looks like I should open up a Roth account at Vanguard as well for better fund option. I will keep subbing this thread for more knowledge.

I would personally have 100% into the SP 500 in your 401k and open up an IRA and get small/mid cap and international exposure there. You'll likely be a bit unbalanced, but I would take unbalanced over high fees.

8 percent and employer matches half that.


Thanks, since this is my first year working like this I havent really thought about this stuff. Ill start a Roth going into next year and enjoy my disposable income for now...

Thanks to the magic of compound interest, the more you invest now, the less you will actually have to invest to reach your target goals. Meaning a 100k principal at age 30 will get you a million dollars (total guess), but a 100k principal at age 50 will get you like 250k (total guess). Like I said, total guess, but you get my point. You will save yourself a lot of money if you invest heavily now. Of course, balancing that with enjoying life is important, but if you have money left over it would make 'sense' to put it towards retirement.

 

[Jeels]

Thanks to the magic of compound interest, the more you invest now, the less you will actually have to invest to reach your target goals. Meaning a 100k principal at age 30 will get you a million dollars (total guess), but a 100k principal at age 50 will get you like 250k (total guess). Like I said, total guess, but you get my point. You will save yourself a lot of money if you invest heavily now. Of course, balancing that with enjoying life is important, but if you have money left over it would make 'sense' to put it towards retirement.

Thanks for the feedback as well. Stocks/funds have interest? I thought that was more for a savings account. I am a little confused now.

 

[Randolph Freelander]

Thanks for the feedback as well. Stocks/funds have interest? I thought that was more for a savings account. I am a little confused now.

Interest is a term used loosely here, it's really just compounded growth/earnings/reinvestment. For brevity, people might say "interest," but it's not really, and certainly not the same as what you would expect on your savings account (or pay on your credit accounts).

 

[demosthenes]

Thanks for the feedback as well. Stocks/funds have interest? I thought that was more for a savings account. I am a little confused now.

If you invest $10,000 today and the stock market grows @ 8% a year in 5 years you will have $14,693.

Your $10,000 turns into $10,800. Then that turns into $11,664 -> $12,597 -> $13,605 and finally $14693. Your money builds on itself. That's why the more you invest now (the bottom layer) the more you have later.

See:

In example 2. The 8% isn't on $5,000 a year but on the new base. So you gain more each successive year.

 

[Jeels]

Alright, now what happens when the market crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

I want to make sure I believe in this before I start doing it...

 

[TangoAlphaLima]

Thanks. I do have to ask though, how does anyone do it? If 15% is going to your retirement, and people say to have a 6 months of income rainy day fund, and you want to save a certain signficant lump sum for down payments on a home or car, and you want to have a savings account and not just an expense account, and you have money going towards insurance and health care expenses. How does anyone have any extra cash? Like I dont even have a wife and kids and its freaking me out.

Wait 'til you have kids and have to start 529 college savings plans too. Brutal.

 

[demosthenes]

Alright, now what happens when the narket crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

If you go back to when the stock market began it has grown on AVERAGE 9% a year (I've seen 9, 10, 11, 12%). Yes some years you will lose. Some years you will gain.

If you invest for retirement you WILL (if you're 20s-30s) go through 6-7 boom and busts. Except this, it is unavoidable. You can try to time it by pulling out your money at the right time (when you think it's high) and then plowing it all back in when you think it's hit rock bottom.

 

[Ace Harding]

Thanks for the feedback as well. Stocks/funds have interest? I thought that was more for a savings account. I am a little confused now.

Interest is paid on debt (including deposits, which is basically debt a bank owes). So if you have bonds in your portfolio you'll earn interest. Stocks can increase in value and the companies that issued the stock can also pay dividends to shareholders.

So compound interest in this case should have just been compound growth. Just think about something getting 10% larger every year. After 20 years, it's 10% on a much higher number than it had been 20 years prior. So in dollar terms the further out you get the more it grows. By investing early you are getting to that higher growth sooner.

 

[Randolph Freelander]

Alright, now what happens when the market crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

I want to make sure I believe in this before I start doing it...

Either it completely craters and the entire world economy goes to pot and there's no use worrying (we're all hosed), or it rebounds over time and there's no use worrying (the losses are recovered and you're fine).

We just went through the worst economy since the Great Depression, as they say. Stock market experienced a historic collapse. From peak to trough, the S&P lost 57% of its value. Today? It's up 24% from that prior peak, and 186% from that trough. It's made all the money back and then some.

tl;dr: Relax and don't "panic sell" in a bad market. Stay in there and you'll be fine in the long run.

Spoiler

Or we're all hosed.

 

[demosthenes]

Either it completely craters and the entire world economy goes to pot and there's no use worrying (we're all hosed), or it rebounds over time and there's no use worrying (the losses are recovered and you're fine).

We just went through the worst economy since the Great Depression, as they say. Stock market experienced a historic collapse. From peak to trough, the S&P lost 57% of its value. Today? It's up 24% from that prior peak, and 186% from that trough. It's made all the money back and then some.

tl;dr: Relax and don't "panic sell" in a bad market. Stay in there and you'll be fine in the long run.

Spoiler

Or we're all hosed.

That's the important thing. If the American economy collapses to a point of no return it won't just be America that is screwed.

 

[Husker86]

Alright, now what happens when the market crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

I want to make sure I believe in this before I start doing it...

All of the money won't disappear. If it gets to that (the stock market at zero), you won't be worrying about retirement anyway, and probably wouldn't be able to get your money out of a bank if that's where you stored it.

If you invested everything you had in one lump sum in 2000 (which means you experience two large market crashes), you'd still be ahead today. That's the thing about retirement, you don't have to worry about the next 5 or even 10 years; it's all about the next several decades. It is so unlikely that you won't end up ahead by investing now that it's not worth just shoving the money in a bank.

That doesn't take into account the periodic additions to your accounts, if you were regularly putting money in (which with the 401k at least, you will be), you'd be even more ahead because you'd be investing in cheap stocks during the crash.

Take a look at the S&P 500 chart and see for yourself.

 

[Darren870]

Also, as you get older you also take money out of the market and put it towards bonds, cash and other safe investments.

 

[GhaleonEB]

That's actually a good point, I will find out.

Vanguard seem like the favorite here and it's easier to refer this thread for reference.

Fidelity will put them together into one package for you; you just log into Fidelity.com (same login as Netbenefits) and open an IRA account. It will be linked to your Netbenefits account automatically.

My employer is similar in that they only offer an S&P 500 index at their lone index fund among 401k choices. I use Roth IRA contributions to Fidelity international index to balance it out. Here is a list of Fidelity's index funds.

 

[chaosblade]

Alright, now what happens when the market crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

I want to make sure I believe in this before I start doing it...

Another point that hasn't been made yet is that money in a savings account is going to lose value over time because there are very few savings accounts that have high enough interest to keep up with inflation. Investments are inherently protected against that by their nature.

And when the market goes down that is when it is a good idea to bump up your investments some. You will make a better return on your money that you put in while it's down, basically "buy low sell high."

 

[ThoseDeafMutes]

Are there any Australian experts ITT?

23 is as good an age as any to start I guess.

 

[Smiley90]

Are there any Australian experts ITT?

23 is as good an age as any to start I guess.

You're basically already dead

HI TIDDUMS

 

[Darren870]

Anyone have any advice for a soon to be American that will be spending about 2+ years overseas working? I'm moving to Germany in 1.5 to 2 months and have not been on the ball about investing for retirement. My current plan is to to return to the US and I would like to start seriously investing in retirement but have read some horror stories about getting taxed twice when investing from outside the US.

You have to file two tax returns. Both for the US and likely the other country you are working in. There is a tax free threshold of about 90K (exact amount I can't remember) and after that you have to start paying. I had to pay a few hundred on my last tax return.

As for retirement accounts, you need to talk to an accountant. Basically retirement accounts need to be funded by US earned dollars. Since you wont be making money in the US you can't contribute to retirement accounts. That is unless you make over that tax free threshold.

When I first moved abroad I didn't make over the tax free threshold and couldn't contribute, so I decided to open a retirement account in the UK. I've continued to do this and also opened one now in Australia. I've been able to contribute to my US retirement accounts now, but I only put in a bit since there are other headaches with it all.

This has some good information:

http://taxes.about.com/od/retiremen...ent-Accounts-For-Americans-Working-Abroad.htm

Also regarding investments, its best to keep them in the country. So don't buy american stocks in Germany, you could have to pay double tax. There are certain tax treties, but thats way above my level of knowledge.

This is just all stuff I've learned over the years, I am not an accountant or any kid of advisor.

Are there any Australian experts ITT?

23 is as good an age as any to start I guess.

I opened my Super with ANZ, its their smart super. Their rate was one of the lowest and had good funds. I haven't gone through it all yet though.

 

[Apt101]

Alright, now what happens when the market crashes. All that money I could have had safely in a bank disappears and I'm out of retirement savings?

I want to make sure I believe in this before I start doing it...

You win some years, you lose some. Overall you should see a return, unless some great depression type stuff goes down.

Most retirement funds have the option to invest in different ways, including short term savings that have low returns (2%-ish) but can't lose money. I personally put about $700 into basic stock and bond mixes a month (after employer matching) and another $300 into short term investments. I also drop $250 into just a plain old savings account at the credit union. There are also options like IRA's or savings accounts that offer better returns than traditional ones but are taxed on returns (really only an issue if you're rich and have hundreds of thousands of dollars in multiple accounts).