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[Cyan]

Do you guys buy into any particular index fund, or is that not allowed to be talked about on here?

I already have a strong relationship with Fidelity through my company 401k. I am considering dumping my extra money into their FUSEX fund, IVV, and IVE Ishare funds.

I've got a Roth and a regular brokerage account with Schwab, and buy Schwab funds in those. (I go total US rather than S&P500 matching, along with bond and international indices.) In my 401k, I buy Vanguard funds.

Vanguard funds are typically highly recommended due to their low fees and the company structure.

 

[clav]

Should we include talk about HSAs?

They can also be part of a retirement vehicle.

 

[Wellington]

Two other questions:

1) why is Vanguard generally considered the cheapest when for similar fund in a lot of cases Fidelity's fee/expense ratio is actually lower? For example, .17% for VFINX versus .10% for FUSEX? I'm on,y using Fidelity as an example since that is what I am used to.

More importantly tho, and I was going to start a separate thread but I figure I'll lump it in here:

2) What are the thoughts here on Robo-Advisors like Betterment, Wealth Front, Acorns, etc? I understand that the fees are a little higher but for some of the novices in here with regards to indexes and the like, would it be worth jumping into one of these services rather than struggling along on my own?

I currently have an Acorns account and I only use it for the roundup feature... Haven't put any additional funds in it aside from an initial $5.

 

[Randolph Freelander]

1) why is Vanguard generally considered the cheapest when for similar fund in a lot of cases Fidelity's fee/expense ratio is actually lower? For example, .17% for VFINX versus .10% for FUSEX? I'm on,y using Fidelity as an example since that is what I am used to.

Well, I haven't checked the fine print lately, but generally when they make that claim, they're comparing themselves to similar, competing funds, some of which will be actively managed. They do not typically say they have the cheapest fund you can find, just funds that are on average x% cheaper than what else is out there.

 

[GhaleonEB]

Two other questions:

1) why is Vanguard generally considered the cheapest when for similar fund in a lot of cases Fidelity's fee/expense ratio is actually lower? For example, .17% for VFINX versus .10% for FUSEX? I'm on,y using Fidelity as an example since that is what I am used to.

More importantly tho, and I was going to start a separate thread but I figure I'll lump it in here:

2) What are the thoughts here on Robo-Advisors like Betterment, Wealth Front, Acorns, etc? I understand that the fees are a little higher but for some of the novices in here with regards to indexes and the like, would it be worth jumping into one of these services rather than struggling along on my own?

I currently have an Acorns account and I only use it for the roundup feature... Haven't put any additional funds in it aside from an initial $5.

I haven't used those services in particular, but my general advice is to avoid fees to the greatest extent possible. For a new or inexperienced investor, you can learn what you need to invest wisely with a little bit of effort, and then avoid those fees (investing them instead). I used Bogleheads to get up to speed myself, particularly on index investing.

 

[embalm]

What are the general thoughts on dividend paying funds? Something like the aristocrat dividend funds suggested by MMM.

What's the advantages/disadvantages to targeting dividend paying stocks compared to an Index?

If they are smiled upon what stock or fund indexes do you recommend specifically?

 

[sazabirules]

Two other questions:

1) why is Vanguard generally considered the cheapest when for similar fund in a lot of cases Fidelity's fee/expense ratio is actually lower? For example, .17% for VFINX versus .10% for FUSEX? I'm on,y using Fidelity as an example since that is what I am used to.

More importantly tho, and I was going to start a separate thread but I figure I'll lump it in here:

2) What are the thoughts here on Robo-Advisors like Betterment, Wealth Front, Acorns, etc? I understand that the fees are a little higher but for some of the novices in here with regards to indexes and the like, would it be worth jumping into one of these services rather than struggling along on my own?

I currently have an Acorns account and I only use it for the roundup feature... Haven't put any additional funds in it aside from an initial $5.

The Admirals share version of VFINX has an expense ratio of .05%. I'm not sure whether Fidelity offers something similar.

 

[Husker86]

The Admirals share version of VFINX has an expense ratio of .05%. I'm not sure whether Fidelity offers something similar.

They do, they're called Advantage class. Once you go over $10,000 in a fund it switches you to those.

This brings up a quick question, it says net expense ratio is 0.05%, but gross is 0.07% (FUSVX, the advantage class version of FUSEX).

The Net ratio is all you should care about, right?

 

[RumblingRosco]

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[Walter White Walker]

I've got a Roth and a regular brokerage account with Schwab, and buy Schwab funds in those. (I go total US rather than S&P500 matching, along with bond and international indices.) In my 401k, I buy Vanguard funds.

Vanguard funds are typically highly recommended due to their low fees and the company structure.

I do essentially the same on my Roth and brokerage accounts with Schwab (I don't have access to a 401k so brokerage it is), splitting between SCHB, SCHF, and SCHZ. Can't get lower cost than that as far as I am aware.

As for HSA's, I have one I use as a retirement fund and have invested in VEIPX (best choice that's currently available). It's great for me - because of how my situation is I get a return of about $1200 on my federal taxes for the $3300 I put into it. That's awesome.

 

[kyongwon]

day trade all day ere day

 

[Piecake]

I do essentially the same on my Roth and brokerage accounts with Schwab (I don't have access to a 401k so brokerage it is), splitting between SCHB, SCHF, and SCHZ. Can't get lower cost than that as far as I am aware.

As for HSA's, I have one I use as a retirement fund and have invested in VEIPX (best choice that's currently available). It's great for me - because of how my situation is I get a return of about $1200 on my federal taxes for the $3300 I put into it. That's awesome.

I've always been intrigued by HSAs, but my employer only offers an HRA (which seem worse in all facets). One thing that I have noticed is that the fees associated with HSAs are pretty brutal, likely because no big player like Vanguard of Fidelity is in the game.

 

[Walter White Walker]

I've always been intrigued by HSAs, but my employer only offers an HRA (which seem worse in all facets). One thing that I have noticed is that the fees associated with HSAs are pretty brutal, likely because no big player like Vanguard of Fidelity is in the game.

Mine only has a $24 annual "recording fee", and of course the fees on VEIPX. The tax deduction is "above the line" so dollar for dollar off your income, grow tax deferred, never taxed for qualified medical expenses, and can be spent on whatever after age 65 as ordinary income. I put the $3300 in and just pay my (minimal knock on wood) medical expenses out of pocket so the money in the HSA can grow.

 

[Herpes Reasons]

I am thinking of taking the money I would normally put into my 401k and moving everything after the 18k cap into a roth IRA (so like 2-3k a year). Thoughts?

Only do what your employer is going match. Nothing more. Anything more will affect you tax wise in retirement. Better options available like those in the tax free bucket.

 

[Herpes Reasons]

With 401k just remember what happened in 2008. Many lost 40% ore more of their worth. Don't put all or most of your cards in that. If the focus is RETIREMENT then you want assurance and more conservative options. Investing in the market should only be done when you have the asset protection and retirement already taken care of. Consider it like going to Vegas. Vegas is for spending money where if you lose it it's not gonna really hurt. Same with investing in the market. Do you want peace of mind that you will be able to never run out of money in retirement? If so then spread the risk over tax deferred (401k, IRA, social security), taxable (Roth, personal broker account, etc.), and tax free buckets.

If you have further questions definitely feel free to PM me.

 

[Cyan]

With 401k just remember what happened in 2008. Many lost 40% ore more of their worth. Don't put all or most of your cards in that. If the focus is RETIREMENT then you want assurance and more conservative options. Investing in the market should only be done when you have the asset protection and retirement already taken care of. Consider it like going to Vegas. Vegas is for spending money where if you lose it it's not gonna really hurt. Same with investing in the market. Do you want peace of mind that you will be able to never run out of money in retirement? If so then spread the risk over tax deferred (401k, IRA, social security), taxable (Roth, personal broker account, etc.), and tax free buckets.

If you have further questions definitely feel free to PM me.

wat

 

[Randolph Freelander]

Only do what your employer is going match. Nothing more. Anything more will affect you tax wise in retirement. Better options available like those in the tax free bucket.

Are you for real? You're going to need to be specific, because right now, it sounds like you're suggesting he dump what could be the lion's share of ~20K into a tax free account. Are you meaning Roth (complete with its 5.5K limit and income restrictions)? Where is the rest going? If Roth, why would it be preferable to pay what could be 25, 28, or higher percentages in taxes now versus what a future rate might be?

Edit: Oh, saw your last post. I think you might be off your rocker, no offense.

 

[Herpes Reasons]

wat

Care to go into more depth than 'wat'?

 

[Husker86]

With 401k just remember what happened in 2008. Many lost 40% ore more of their worth. Don't put all or most of your cards in that. If the focus is RETIREMENT then you want assurance and more conservative options. Investing in the market should only be done when you have the asset protection and retirement already taken care of. Consider it like going to Vegas. Vegas is for spending money where if you lose it it's not gonna really hurt. Same with investing in the market. Do you want peace of mind that you will be able to never run out of money in retirement? If so then spread the risk over tax deferred (401k, IRA, social security), taxable (Roth, personal broker account, etc.), and tax free buckets.

If you have further questions definitely feel free to PM me.

The people who lost 40% were either not near retirement, or not allocating their funds correctly if in/near retirement.

On top of that, those people would all be back ahead at this point.

 

[Herpes Reasons]

Are you for real? You're going to need to be specific, because right now, it sounds like you're suggesting he dump what could be the lion's share of ~20K into a tax free account. Are you meaning Roth (complete with its 5.5K limit and income restrictions)? Where is the rest going? If Roth, why would it be preferable to pay what could be 25, 28, or higher percentages in taxes now versus what a future rate might be?

Edit: Oh, saw your last post. I think you might be off your rocker, no offense.

Care to explain? Also, seems you folks are focusing on two tax buckets and ignoring the tax free bucket. Ok.

 

[RayMaker]

I think I will just buy gold.

 

[Herpes Reasons]

The people who lost 40% were either not near retirement, or not allocating their funds correctly if in/near retirement.

On top of that, those people would all be back ahead at this point.

Lost 40% of their 401k, not their overall worth. And no, people shouldn't put more money into a 401k than what their employer will match.

 

[Randolph Freelander]

Care to explain? Also, seems you folks are focusing on two tax buckets and ignoring the tax free bucket. Ok.

This tax free bucket of yours, what is it. The general understanding is Roth, tax free in retirement. If you mean something else, please be specific.

 

[Husker86]

Lost 40% of their 401k, not their overall worth. And no, people shouldn't put more money into a 401k than what their employer will match.

I mean, I agree with that much only because I can't max my IRA.

If you have decent funds, why not defer taxes?

If you max your IRA, what other options are there for accounts with tax benefits?

 

[Cyan]

Care to go into more depth than 'wat'?

Nothing about your post made any sense:

With 401k just remember what happened in 2008. Many lost 40% ore more of their worth. Don't put all or most of your cards in that.

A 401k is a type of account, not an investment in itself. This advice is therefore nonsensical.

If the focus is RETIREMENT then you want assurance and more conservative options. Investing in the market should only be done when you have the asset protection and retirement already taken care of.

Investing in the market is what gets you enough resources to be able to retire. "Don't invest until you've already taken care of retirement" is, again, nonsensical. What are you putting your money in instead, savings accounts?

Consider it like going to Vegas. Vegas is for spending money where if you lose it it's not gonna really hurt. Same with investing in the market.

See above.

Do you want peace of mind that you will be able to never run out of money in retirement? If so then spread the risk over tax deferred (401k, IRA, social security), taxable (Roth, personal broker account, etc.), and tax free buckets.

This at least makes a little sense, as hedging your tax risks with multiple types of accounts is a good idea... but that has no connection to the first sentence here.

Edit: also, classing Roths as "taxable" alongside ordinary brokerage accounts doesn't make any sense.

 

[James Sawyer Ford]

Lost 40% of their 401k, not their overall worth. And no, people shouldn't put more money into a 401k than what their employer will match.

You absolutely should contribute more than the match if you can.

The tax benefits are superb.

 

[Randolph Freelander]

Lost 40% of their 401k, not their overall worth. And no, people shouldn't put more money into a 401k than what their employer will match.

Are you trolling us? I mean for real?

 

[Herpes Reasons]

This tax free bucket of yours, what is it. The general understanding is Roth, tax free in retirement. If you mean something else, please be specific.

Depends on your net worth obviously. Tax free bucket includes municipal bonds and certain types of life insurance that have lifetime income benefit riders which are tax free. Much more conservative but well worth it in addition to your taxable and tax deferred options.

 

[Herpes Reasons]

You absolutely should contribute more than the match if you can.

The tax benefits are superb.

Sure. Until you're retiring. If you know what your tax rate will be at that time then good for you. I for one don't.

 

[Randolph Freelander]

Depends on your net worth obviously. Tax free bucket includes municipal bonds and certain types of life insurance that have lifetime income benefit riders which are tax free. Much more conservative but well worth it in addition to your taxable and tax deferred options.

What funds am I buying these municipal bonds with? Funds I have or have not paid taxes on?

 

[Herpes Reasons]

http://www.thinkadvisor.com/2014/03/04/xxx-how-to-get-tax-free-retirement-income-with-lif

As I said, tax free bucket that when working with the other options is quite beneficial.

 

[Herpes Reasons]

What funds am I buying these municipal bonds with? Funds I have or have not paid taxes on?

Life insurance is after tax money. Because of how the IRS sees life insurance and has for almost 200 years the distributions via loans or LIBR is tax free.

 

[Herpes Reasons]

http://www.rothira.org/bucket-approach-retirement-planning.html

This too. There's a reason so many business owners set up plans that are heavy on life insurance and one chief reason is the tax advantages.

 

[Chumly]

http://www.thinkadvisor.com/2014/03/04/xxx-how-to-get-tax-free-retirement-income-with-lif

As I said, tax free bucket that when working with the other options is quite beneficial.

I'm confused what your point is. This is one option for tax free benefits but a much better one is maxing your Roth IRA every year. This is at free at distribution and provides a significantly greater return than something withdrawing from a life insurance policy.

Again your point that you shouldn't invest beyond the employer match does not make any sense. People SHOULD be investing additional money in individual roth or normal IRAs.

 

[Herpes Reasons]

I'm confused what your point is. This is one option for tax free benefits but a much better one is maxing your Roth IRA every year. This is at free at distribution and provides a significantly greater return than something withdrawing from a life insurance policy.

Again your point that you shouldn't invest beyond the employer match does not make any sense. People SHOULD be investing additional money in individual roth or normal IRAs.

Roth IRA, IRA yes. Going above the 401k match, no. Much better off taking the money you'll max out your 401k and pitting it in a Roth IRA. Never disputed that.

 

[Randolph Freelander]

http://www.rothira.org/bucket-approach-retirement-planning.html

This too. There's a reason so many business owners set up plans that are heavy on life insurance and one chief reason is the tax advantages.

Well, I'm reading up on that permanent life insurance strategy, and so far, I must say I do not like what I'm seeing, though I'm not saying I have done exhaustive research. Though I will leave this early nugget I found. Maybe a bonus one, too.

 

[Walter White Walker]

I'm confused. Has this been a life insurance sales pitch? For retirement? Really?

 

[Herpes Reasons]

Well, I'm reading up on that permanent life insurance strategy, and so far, I must say I do not like what I'm seeing, though I'm not saying I have done exhaustive research. Though I will leave this early nugget I found. Maybe a bonus one, too.

Term is valuable for many reasons but the reason it's cheap is because as the video shows insurance companies know you'll most likely not die. It's definitey important though as I have a lot of it. It's good for convertibility options, accelerated benefit riders, etc. But perm depending on the type does more (ignoring variable which is terribleness). But hey, I'm not saying to ONLY do permanent. I'm saying it should be part of everyone's package. I know first hand the value of life insurance both for those who have it and those who were saved by it.

 

[Darren870]

Life Insurance? Really?

You are saying people lost 40% in their 401k, yet the same risks existed in every type of account that had any ties to the market and wasn't managed well.

Anyways, the rule I followed was:

401k Contribution to get employers Match
Roth IRA to Max
Then 401k

Life Insurance is overall a scam for most people. Its good for the extremely rich to get around certain taxes, which may or may not exist in 40 years, and for anyone whose family may be dependent on one individuals income. For the latter though you should never put any investments into life insurance, it should simply be a normal plan you take out.

I'm confused. Has this been a life insurance sales pitch? For retirement? Really?

He must have heard a pitch recently, but sadly its not uncommon. I had one that my dad took out. I got rid of it pretty fast.

 

[clav]

I'm confused. Has this been a life insurance sales pitch? For retirement? Really?

For some people, it can work, but usually participants are in high income families or wealthy backgrounds (i.e. people who were born with retirement plans).

I don't think it works for GAF (i.e. middle class or low class).

 

[Herpes Reasons]

I'm confused. Has this been a life insurance sales pitch? For retirement? Really?

Whose selling anything? Me describing the value of life insurance for retirement purposes is just that, showing the value. Don't like it? Fine with me.

 

[Herpes Reasons]

Life Insurance? Really?

You are saying people lost 40% in their 401k, yet the same risks existed in every type of account that had any ties to the market and wasn't managed well.

Anyways, the rule I followed was:

401k Contribution to get employers Match
Roth IRA to Max
Then 401k

Life Insurance is overall a scam for most people. Its good for the extremely rich to get around certain taxes, which may or may not exist in 40 years, and for anyone whose family may be dependent on one individuals income. For the latter though you should never put any investments into life insurance, it should simply be a normal plan you take out.



He must have heard a pitch recently, but sadly its not uncommon. I had one that my dad took out. I got rid of it pretty fast.

Life insurance is a scam? Ok.

 

[Chumly]

Roth IRA, IRA yes. Going above the 401k match, no. Much better off taking the money you'll max out your 401k and pitting it in a Roth IRA. Never disputed that.

Ok so your saying we shouldn't invest beyond the match due to fees and stuff? Most people would agree with you and move into traditional and roth IRA's. That was not what you seemed to be indicating earlier.

Also I still highly disagree with the life insurance. It would be a terrible investment option for likely everyone in this forum except someone in the 40's making 200k+. I don't think there are many people like that here. There is no reason to do anything other than all stock investments unless you are 50+ and you want to start bringing down your risk.

 

[Herpes Reasons]

Ok so your saying we shouldn't invest beyond the match due to fees and stuff? Most people would agree with you and move into traditional and roth IRA's. That was not what you seemed to be indicating earlier.

Also I still highly disagree with the life insurance. It would be a terrible investment option for likely everyone in this forum except someone in the 40's making 200k+. I don't think there are many people like that here. There is no reason to do anything other than all stock investments unless you are 50+ and you want to start bringing down your risk.

$300 a month for a 36 year old for 30 years equating to guranteed income annual tax free at retirement of $50k. For life. It offers a way to PLAN. That plus Social Security, retirement accounts, etc. is a way to plan ones future. And yes, these are actual numbers. Again, don't like it? Fine. But scam? No. Only for top earners? No.

10% rate of return in market 30 years compound interest = around $260k on $110 investment. 6 years of life insurance payout exceeds it. 12% is about 11 years. No guarantee of what the market will have done over that 30 year period. If you want to guarantee 10% annual rate of return or big years that offset poor ones. Ok.

 

[Darren870]

Life insurance is a scam? Ok.

You focus on one or two words and then reply with nothing. It seems to be a running trait rather then addressing anything else anyone posted.

And yes, wise one. For most people its a very poor way to invest and a scam. Please explain how tying an investment to life insurance if good for anyone in the middle class. A middle class individual with a family should be getting term life insurance. The whole point of life insurance is to provide for your family in the event of the providers death.

Life insurance with investments have the same crappy funds and hi fees that most 401ks do. Why would I open myself to a risk when I want to provide for my family in the event I die.

Like I said though, they can be good tax holes for the extremely rich, which likely don't cater to most people on this message board.

 

[Herpes Reasons]

You focus on one or two words and then reply with nothing. It seems to be a running trait rather then addressing anything else anyone posted.

And yes, wise one. For most people its a very poor way to invest and a scam. Please explain how tying an investment to life insurance if good for anyone in the middle class. A middle class individual with a family should be getting term life insurance. The whole point of life insurance is to provide for your family in the event of the providers death.

Life insurance with investments have the same crappy funds and hi fees that most 401ks do. Why would I open myself to a risk when I want to provide for my family in the event I die.

Like I said though, they can be good tax holes for the extremely rich, which likely don't cater to most people on this message board.

Look up. Also, term insurance when you're 50-60 years old? The cost is often as much as a policy would have been for perm had been one started at 30 or so. Term insurance is renting an apartment. That's fine for some but after the 15-20 years quite a loss. Even if you have a rider of return of premium. Term serves a purpose but to see life insurance as strictly death insurance is quite myopic.

 

[Chumly]

$300 a month for a 36 year old for 35 years equating to guranteed income annual tax free at retirement of $50k. For life. It offers a way to PLAN. That plus Social Security, retirement accounts, etc. is a way to plan ones future. And yes, these are actual numbers. Again, don't like it? Fine. But scam? No. Only for top earners? No.

10% rate of return in market 30 years compound interest = around $260k on $110 investment. 6 years of life insurance payout exceeds it.

Im confused. Now were switching to guaranteed annuities? Who is offering an annuity for 50k for life for 71+ at 300 a month for 35 years? What are you talking about that 6 years of life insurance payout exceeds 10% rate of return in the market for 30 years? I was recently at the insurance office and NOTHING came even remotely close to offering that type of guaranteed return for life insurance withdrawals. So you must have your calculations majorly screwed up or this is some insurance company start up that will be bankrupt within 15 years and be completely useless to me.

 

[Darren870]

Look up. Also, term insurance when you're 50-60 years old? The cost is often as much as a policy would have been for perm had been one started at 30 or so. Term insurance is renting an apartment. That's fine for some but after the 15-20 years quite a loss. Even if you have a rider of return of premium. Term serves a purpose but to see life insurance as strictly death insurance is quite myopic.

I would never get term life insurance at 50-60 years old. Because I wouldn't have any kids that relied on me anymore and I would be able to start withdrawing from my retirement accounts.

10% rate of return in market 30 years compound interest = around $260k on $110 investment. 6 years of life insurance payout exceeds it. 12% is about 11 years. No guarantee of what the market will have done over that 30 year period. If you want to guarantee 10% annual rate of return or big years that offset poor ones. Ok.

Yet if you put $300 monthly amount into an account for 30 years with 10% growth it compounds to $651,413.78

I'll use that to cover my bills after my term runs out.

 

[Herpes Reasons]

Im confused. Now were switching to guaranteed annuities? Who is offering an annuity for 50k for life for 71+ at 300 a month for 35 years? What are you talking about that 6 years of life insurance payout exceeds 10% rate of return in the market for 30 years? I was recently at the insurance office and NOTHING came even remotely close to offering that type of guaranteed return for life insurance withdrawals. So you must have your calculations majorly screwed up or this is some insurance company start up that will be bankrupt within 15 years and be completely useless to me.

Calculations screwed up? Nope. Startup? Nope. Annuity? Nope.

 

[RumblingRosco]

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