Support NeoGAF

[iamblades]

It was a quick and imperfect model, I admit, and inflation impacts not only your cash savings (negatively), but also your ability to save in certain approved retirement vehicles (positively). The Fed is having a tough time hitting an inflation target of 2% at the moment, but if we back that 2% out of the rate of growth to account for inflation and hold inflation-adjusted returns at 7%, the model changes to the following, with and without employer matching and Roth.

Years	FV	        Per Year	Premium
20	$737,918.86 	$36,895.94 	$18,895.94 
10	$248,696.06 	$24,869.61 	$6,869.61 
5	$103,513.30 	$20,702.66 	$2,702.66 
1	$18,000.00 	$18,000.00 	$0.00 

With Roth and Employer Matching
Years	FV	        Per Year	Premium
20	$1,250,362.52 	$62,518.13 	$39,018.13 
10	$421,401.66 	$42,140.17 	$18,640.17 
5	$175,397.54 	$35,079.51 	$11,579.51 
1	$30,500.00 	$30,500.00 	$7,000.00

Still not shown above would be how being able to invest would impact your tax liability due to the potential of deferred income. Any taxes that are avoided is money in your pocket and would actually increase your "premium" requirement.

You wouldn't back the 2% inflation out of the yield for comparison's sake though, as what matters for this comparison is not how much you beat inflation by, but how much you beat the hypothetical scenario (no investing) by.

If anything inflation would increase the gap, as equity prices are positively correlated to inflation. When things go up in price, it is nice to own things that are not fixed to the currency, like equities.

I would think there must be a way to get some decent investment portfolio going though, even in a shitty situation like Dunan has going on. Shit, worst case scenario I would form a corporation and use it to do my investments for me, since just because I can't open an account at another financial institution that shouldn't prevent a company I own from doing so(not knowing anything about the legalities of corporation in Japan, but I guess you would incorporate stateside anyway).

Point is, you should find a way to do it within the law and the rules of your employer, but you shouldn't just give up because it will be worth the hassle in the long run.

 

[Randolph Freelander]

You wouldn't back the 2% inflation out of the yield for comparison's sake though, as what matters for this comparison is not how much you beat inflation by, but how much you beat the hypothetical scenario (no investing) by.

That's true, at the end of the period (however long it is), you're left with X vs. Y, and neither are (likely to be) worth what X and Y are worth today. If I were to apply 2% negative growth to the cash only strategy, then the series of 20 years of saving $18K only amounts to $299K in today's dollars, for example.

 

[iamblades]

He will still have to report this to his employer on an annual basis and it may not get approved through compliance.

I'm not sure he would though, he wouldn't need to report it if he bought a house to rent out. Not sure what kinds of 'compliance' issues a bank in Japan would have with one of their employees having a DRIP plan with Coca-Cola or something.

But if that's the case that's where incorporation or something comes into play. There has to be a way for him to put his money to some kind of productive use. Just a matter of how many hoops he's going to have to jump through.

 

[greendomo's ghost]

Term insurance is dirt fucking cheap. At a minimum, get it.

My wife and I got some term life insurance policies last year before our first child was born. We decided on term life essentially under the principle that we are insuring against a possible risk, not trying to make money on insurance.

Thanks for the replies and clarifications. Definitely going to get term insurance for my wife and I, while also continuing to work on saving for retirement.

 

[Dunan]

This is some great advice from you all. Until late 2012, I hadn't really been worried because the steady increase in the value of the yen (which saw no inflation at all) had offset any inflation in the US dollar, so my savings, while not generating anything, had at least been holding their value. Now with this inflation-obsessed prime minister and Bank of Japan head in charge, the yen is plummeting almost daily and prices are zooming upward. Anyone -- not just me -- who holds lots of cash is going to get its value stolen from them.

I'm not sure he would though, he wouldn't need to report it if he bought a house to rent out.

You figured it out! That's exactly what my plan was (and is, for now): as soon as I had the price of a decent apartment, in cash -- immigrants cannot generally get housing loans -- I bought a home to live in. I had begun saving very aggressively as soon as I realized the predicament I was in, and when my savings hit ¥14,000,000 (about $130k then; three years' pre-tax wages after about ten years in the work force), I bought an apartment for that much, and am typing this answer from it right now.

Once again my savings are approaching that number -- quicker this time, since I no longer pay rent -- and I'm thinking about a second apartment to rent out. Taxable here and presumably reportable to the IRS also (though my income is nowhere near being taxable by them), but not in conflict with any broker-related rule.

Apartments decline in value here; they are considered consumable goods. But the rent I would take in would pay for the apartment in about 10-15 years; a 10% pre-maintenance-expenses return is standard here.

Ooooooh, boy. The industry has changed! I had to report all passive and active income to my employer! They have to keep track of it to avoid conflict of interest. When I get rental residuals from property in Dubai, I had to tell my former employer (a bank married to a B/D), every single dime I made. It's like this everywhere. I also could not open an outside account with any other firm and what little I could invest in with my employer had to be off an approved list.

My employer is just like yours except that I don't think I have to tell them about any passive income. I'm forbidden from making any active income from anywhere else, technically, and I had violated this unknowingly a few times. So I'm reticent about ever knowingly violating any rules.

There IS a workaround per IRS regulations for Dunan's situation.

Dunan: do you, CAN you I should say, make any trips back to the U.S on an annual basis? If so, how long?

Every year at Christmas time. Maybe 8-10 days each time. Good old fashioned traveler's checks to be deposited in my old US bank, perhaps?

 

[Cyan]

Man. No retirement plan and not allowed to invest at all? Frankly, I'd just quit.

Do they bar you from buying life insurance plans? Maybe we need that crazy guy back in the thread.

 

[Cyan]

I'm right here.

Not you. Maybe you missed the guy a few pages back who jumped in to tell us that 401ks are a scam, investing in the market is gambling, and whole life insurance is the best possible retirement vehicle.

 

[Cosmic Dreams]

Subscribing. Thanks.

 

[RumblingRosco]

-

 

[Dunan]

If they provided me a starting salary that was equivalent to what I expect to make once I finish my Ph.D., gave me a raise equal to inflation every year, and another raises equal to 10% of my salary each year on top of the inflation raise, I'd take the job. Let's say I'm making $100,000 my first year. My cumulative earnings within 10 years would be $1.8 million. Within 20 years it'd be $7.6 million. My cumulative earnings at 30 years would be $26.6 million. At 35 years, I'd be making ~$5.5 million a year and have had a total earnings, pre-tax, of almost $50,000,000.

So, basically, if they give me an annual raise equal to roughly (or, hell, a bit higher in this case) the annual average growth of the stock market, I'd take the job.

Now that's a scenario that no traditionalist Japanese boss (and I like my boss; he's a great guy and easy to work for, it must be admitted) would ever consider!

I am paid exactly in line with what anyone else my age is paid, and there are only three non-managerial salary grades. I'm at the top one, and got put there a year or two younger than some of my peers. So nothing to complain about compared to the people around me.

I should add that my co-workers, who still face the six-month wait before they can sell, tend not to invest in stocks -- no one wants to read the finance pages for pleasure after working with the same stuff all day -- and tend to buy nice homes and then steadily pay off their mortgages. Nice and safe... if you can get a mortgage.

Now tell me where you're expecting to earn $100,000 in your first year, and get me hired too!

 

[RumblingRosco]

-

 

[embalm]

Dunan, as a Nigerian prince, I will happily let you send me your money to invest in whatever ways you suggest to me. Please send me your banking and routing information at first convenience.

Jokes aside, is it possible to gift money to a trusted family member for them to invest for you?


Edit: Soka is tripping me out. I'm reading the Hearthstone OT and this at the same time and he posted last in both. I got really confused for a minute.

 

[RumblingRosco]

-

 

[Husker86]

Jokes aside, is it possible to gift money to a trusted family member for them to invest for you?

That was going to be my suggestion.

$14,000 a year can be given as a gift to unlimited number of individuals. That means they don't have to claim it (or at least not pay tax on it).

Definitely would have to be a person who you trust without question, though.

 

[Mr.Mike]

So I figure I really ought to do something with my money. I currently have almost 14 thousand CAD in a savings account at 1.3%, which while an amazing rate for a savings account in Canada, is below inflation. I hate to see my money losing value like this. And now the CAD has fallen to about 88 cents, which kinda sucks, although I'm told this is good for my province. At the same time I have 10k in student loans, and I'll be taking on more. (I'm currently a second CS year student). Interest won't start accruing on these loans until either 6 months after I graduate or I get a job after school, and even then the there's a tax credit for 20% of interest paid on student loans. So right now it doesn't make any sense for me to pay back my student loans when I could be gaining interest on my money.

I've decided to take that money and put it into a TFSA to invest. My current plan is to invest in either a bond index or an equity index., but I'm not sure which. The way I see it I can either.

1) Commit to saving that money for the long term and thus put it into stocks. I figure this would work out better if I am able to quickly find a job after school, and in the future I'd probably be very happy I started saving so early.
2) Be protective of that money in case I need it after I graduate, putting it into bonds instead. I figure this would work out better for me if I have trouble finding work after school, as I'd be able to take this out of the TFSA to pay off my loans.

It's probably worth mentioning that I'm currently living with my parents, and don't have any real expenses. So I suppose I have some amount of risk tolerance since I have secure housing and food.

So GAF, should I invest in stocks or bonds? Or perhaps I should put some thought into a mix of stocks and bonds?

 

[Darren870]

I too am an American working overseas for a Bank, though I do IT so I'm not as restricted with trading like you are. I always like to here others situations on how to get over these hurdles.

I know I'm not allowed to invest in retirement options at home. So what I've always done is opened retirement accounts locally. I have a pension in the UK and a Super in Australia. I also have my Roth IRA and IRA rollover (from old 401k) in the US. Its used to be a bigger headache as I used to have multiple accounts in each place. Thankfully the US and Aus are consolidated and I am working on the UK now.

Can you not open a retirement account in Japan? Does Japan not have mandated retirement account?

I think also you are allowed to send money home and invest in retirement accounts once you are over the tax free threshold and have to start paying US tax. I think this is above $97k? Since the money is now taxed you are allowed to put it into a retirement account. Or if you make less then that you can choose not to claim credit and then be subject to tax on that money.

From there I think then you should be able to invest in munis or index funds since you have no control over the investments. However, this all depends on the bank you work for and the regulations. The 2 banks I worked for allowed us to do this with out clearing it ahead of time.

I don't send money home anymore though. I decided to just use the retirement accounts locally. I got 10% in the UK and AUS with not contributions so there isn't that much of a reason to send money home. I am 29 now and I don't even know where I will be in 5 years, let alone in 35 years when I retire.

 

[simplayer]

So GAF, should I invest in stocks or bonds? Or perhaps I should put some thought into a mix of stocks and bonds?

It really depends on what you're comfortable with. I would say that being a CS major you do have a leg up in being able to find employment quickly though.

 

[Learn2read]

So I figure I really ought to do something with my money. I currently have almost 14 thousand CAD in a savings account at 1.3%, which while an amazing rate for a savings account in Canada, is below inflation. I hate to see my money losing value like this. And now the CAD has fallen to about 88 cents, which kinda sucks, although I'm told this is good for my province. At the same time I have 10k in student loans, and I'll be taking on more. (I'm currently a second CS year student). Interest won't start accruing on these loans until either 6 months after I graduate or I get a job after school, and even then the there's a tax credit for 20% of interest paid on student loans. So right now it doesn't make any sense for me to pay back my student loans when I could be gaining interest on my money.

I've decided to take that money and put it into a TFSA to invest. My current plan is to invest in either a bond index or an equity index., but I'm not sure which. The way I see it I can either.

1) Commit to saving that money for the long term and thus put it into stocks. I figure this would work out better if I am able to quickly find a job after school, and in the future I'd probably be very happy I started saving so early.
2) Be protective of that money in case I need it after I graduate, putting it into bonds instead. I figure this would work out better for me if I have trouble finding work after school, as I'd be able to take this out of the TFSA to pay off my loans.

It's probably worth mentioning that I'm currently living with my parents, and don't have any real expenses. So I suppose I have some amount of risk tolerance since I have secure housing and food.

So GAF, should I invest in stocks or bonds? Or perhaps I should put some thought into a mix of stocks and bonds?

Mix of both.

Check out http://canadiancouchpotato.com/. The same author put out a book that summed things up in a very easy to digest (and encouraging!) book, http://www.amazon.ca/MoneySense-Guide-Perfect-Portfolio-2013-ebook/dp/B00G2FGMQ8/ref=sr_1_1?ie=UTF8&qid=1416533479&sr=8-1&keywords=moneysense+guide+to+the+perfect+portfolio

Basically go for low-cost index funds. Watch out the management fees. Transaction fees are also important (go with virtual brokers and questrade which allow for free etf purchasing).

 

[acksman]

That was going to be my suggestion.

$14,000 a year can be given as a gift to unlimited number of individuals. That means they don't have to claim it (or at least not pay tax on it).

Definitely would have to be a person who you trust without question, though.

We are gifting some land to my brother, which is in my parents name. I had them do 4 gifts so there would be no tax implications. 2 gifts, one from my mother then father activated on Dec 31st this year. The last 2 gifts activate Jan 1st 2015. Looks like this will work out well.

If you have a larger amount to gift this is the time to do it and spread it between this year and next.

 

[PflargBlarg]

Mix of both.

Check out http://canadiancouchpotato.com/. The same author put out a book that summed things up in a very easy to digest (and encouraging!) book, http://www.amazon.ca/MoneySense-Guide-Perfect-Portfolio-2013-ebook/dp/B00G2FGMQ8/ref=sr_1_1?ie=UTF8&qid=1416533479&sr=8-1&keywords=moneysense+guide+to+the+perfect+portfolio

Basically go for low-cost index funds. Watch out the management fees. Transaction fees are also important (go with virtual brokers and questrade which allow for free etf purchasing).

I'd just like to clarify that while the purchasing is free, you may end up paying more when you sell than a place that has flat commissions for both buying and selling because of the added ECN and exchange fees. For places with commission free buying of ETFs I'd recommend VirtualBrokers over Questrade as they don't charge those fees.

I mean really it probably won't make a significant difference in the long run.

 

[Mr.Mike]

http://canadiancouchpotato.com/2010/11/10/ready-willing-and-able-to-take-risk/ This is a really good article I think.

After giving it some thought I think I'll go with a 60% Canadian bonds, 20% Canadian Equity and 20% US Equity mix while I'm still in school. After school once I have a stable job I'll switch to a more aggressive allocation, the exact details of which I'll figure out then. This way I think I ought to have enough money in the relatively stable bonds in case I need it while still letting me take advantage of the higher returns from equity. If things go south with the equity the bonds ought to last me long enough, if I even need them, for the equity to recover.

 

[Piecake]

Guess what the hedge fund firms are doing now?

Hunting for new, less skeptical customers.

While only those with at least $1 million are allowed to invest in hedge funds, anyone can buy a mutual fund with a hedge fund strategy. Unfortunately, these “alternative” funds come with the same disadvantages hedge funds have: high fees, inconsistent performance and strategies that take a PhD to decipher.

By starting alternative funds, mutual fund companies get a chance to bring in revenue they’re losing to cheap index funds and exchange-traded funds. In a deal announced Nov. 18, Blackstone Alternative Asset Management is coming up with hedge-fund-like products for mutual fund company Columbia Management. They’ll join 11 other U.S. mutual funds and ETFs classified by Bloomberg as "alternative," which together hold $68 billion in assets.

And these blah results don’t come cheap. The MainStay Marketfield Fund has been losing money while charging an expense ratio of 2.6 percent per year...

The typical sales pitch for hedge funds and alternative funds is that, by holding assets other than stocks and bonds, an investor reduces a portfolio's volatility. Theoretically, that cuts down risk while boosting returns.

That doesn't work when strategies turn out to be far riskier than their architects believed. And most alternative mutual funds and ETFs have never been tested in a crisis -- 62 percent were launched since 2010. If expert investors want to diversify, they have cheaper, simpler options, starting with hundreds of specialized ETFs. "It's not as if diversification is all that hard to get," says David Mendels, a planner at Creative Financial Concepts, LLC.

http://www.bloomberg.com/news/2014-...to-be-rich-to-lose-money-in-a-hedge-fund.html

Wonder when we will get to see these beauties in our 401ks. Should be fun.

 

[Randolph Freelander]

http://www.bloomberg.com/news/2014-...to-be-rich-to-lose-money-in-a-hedge-fund.html

Wonder when we will get to see these beauties in our 401ks. Should be fun.

Click through and read the entire article, folks.

And quit any job that adds those funds to your 401K mix.

 

[Husker86]

2.6% expense ratio...holy shit.

The greed is disturbing.

 

[GhaleonEB]

Click through and read the entire article, folks.

And quit any job that adds those funds to your 401K mix.

The global fund my company-contributed retirement funds are in include hedge funds, which is why the expense ratio is so high. The company pitch is the mix was for stability, and it worked, but those costs are insane. Fortunately the 401k where my contributed money is going has the option of the .02% Vanguard fund I mentioned earlier. In January I can flip the former pool over to the Vanguard.

Even some of my coworkers didn't understand why the expense ratio was bad. And I work in finance. Hedge funds moving in on 401k's is bad, bad news.

 

[Randolph Freelander]

Even some of my coworkers didn't understand why the expense ratio was bad. And I work in finance.

It shouldn't surprise me. I work in programming, and quite a number of employed programmers and nearly all programming applicants can't write code, so hearing about finance people getting finance wrong is just par for the course.

 

[PflargBlarg]

Haha, 2.6%, I can't imagine any situation where you would want to invest in that! These guys are nuts.

 

[GhaleonEB]

Each January I review our retirement strategy, in terms of investments, diversification, retirement vehicles and so on and make any adjustments at that time. I'm mulling over a few key decisions and had another question about Roth vs. traditional IRA.

I've already decided to shift from a Roth 401k to traditional 401k, increasing the contributions proportional the tax break (keeping the paycheck the same size). We're well under the limit right now so we can do so without hitting the cap.

On the IRA side, I'm less certain. We fund the Roth IRA's with sales of company stock, which we are granted a few times each year. At the time we get the shares, it's already taxed, so we don't have the option of making the contributions pre or post tax, as we do with regular salary income. We are also already maxing out the contributions to our IRAs so we can't increase the contribution rate even if we made traditional contributions, as with the IRA. The deduction when we file our taxes would have to be invested in a taxed account or put to another use.

I just don't see the benefit to moving to a traditional IRA in this situation. I'm going to get to invest $11k per year (current cap), and it can either be taxed when its withdrawn, or not. Am I thinking about it correctly? I feel like there's an aspect of this I'm not grasping but it's a specific enough situation that I can't find any advice about it in my searching.

 

[Husker86]

Each January I review our retirement strategy, in terms of investments, diversification, retirement vehicles and so on and make any adjustments at that time. I'm mulling over a few key decisions and had another question about Roth vs. traditional IRA.

I've already decided to shift from a Roth 401k to traditional 401k, increasing the contributions proportional the tax break (keeping the paycheck the same size). We're well under the limit right now so we can do so without hitting the cap.

On the IRA side, I'm less certain. We fund the Roth IRA's with sales of company stock, which we are granted a few times each year. At the time we get the shares, it's already taxed, so we don't have the option of making the contributions pre or post tax, as we do with regular salary income. We are also already maxing out the contributions to our IRAs so we can't increase the contribution rate even if we made traditional contributions, as with the IRA. The deduction when we file our taxes would have to be invested in a taxed account or put to another use.

I just don't see the benefit to moving to a traditional IRA in this situation. I'm going to get to invest $11k per year (current cap), and it can either be taxed when its withdrawn, or not. Am I thinking about it correctly? I feel like there's an aspect of this I'm not grasping but it's a specific enough situation that I can't find any advice about it in my searching.

If you make less than $65-70k then traditional can come out ahead at retirement IF you invest the money you get back from tax refund. If you don't, then obviously the Roth would be better, since you're contributing at the cap, Roth vs Traditional will both have the same amount in the actual accounts come retirement.

There are calculators, like the one here that can give you an idea, but again, these assume you invest every single dollar that you get back from taxes if you go the Traditional Route.

Between $60-70k AGI, your deductions of contributions to a traditional IRA are lessened. I think at $70k you can't deduct any. These cases only apply if you're covered by a work retirement plan, which you are.

I was bouncing back and forth (currently I only do Roth) a month or so ago and after doing more research I'm sticking with my Roth. My work account is tax-deferred so this way I have a mix of both.

 

[Mr.Mike]

So I've opened up a Tangerine TFSA with a Balanced Growth Portfolio. The MER is fairly high, but there aren't any fees to buy or sell, so at the scale I'm investing at it's not really a big deal. More importantly, it saves me from having to re balance myself (and I'm worried I would be tempted to "play" with my investment account if I could). When I'm older and have more assets/income I'll switch to ETF's.

Out of about 16 grand in assets I've decided to take 10k and leave that in a savings account for when I move out after school/for my co-op placement. This leaves about 6k I intend to invest with a dollar-cost averaging strategy over the next year, investing weekly (as there are no fees to buy fund units). I've decided to use a DCA strategy because I'm very hesitant to invest my money right now, considering that the TSX is dropping with the price of oil . I figure with a DCA strategy if the market keeps falling I'll be buying more units at the cheaper price, and if oil stabilizes and the markets start to go up again I can just put in the rest of the 6 grand all at once. But perhaps most importantly it'd get me to actually invest my money instead of sitting around being to scared too invest. I suppose at the very least I'm not buying in at the top of the market.

I've also gotten a job as a TA for my school, so that's a bunch more money I'll be able to invest since I have no real expenses right now. (And I expect the benefit of having that work experiene to put on my resume is also very valuable, probably a lot more so than the money I'll be payed). Also, I guess I have a decent credit score, CIBC having pre-approved me for a $1500 monthly limit on a student credit card even though I had 0 income at the time (Which I'm getting mainly to improve my credit utilization ratio), so that's good.

Any criticisms with my plan?

 

[Piecake]

So I've opened up a Tangerine TFSA with a Balanced Growth Portfolio. The MER is fairly high, but there aren't any fees to buy or sell, so at the scale I'm investing at it's not really a big deal. More importantly, it saves me from having to re balance myself (and I'm worried I would be tempted to "play" with my investment account if I could). When I'm older and have more assets/income I'll switch to ETF's.

Out of about 16 grand in assets I've decided to take 10k and leave that in a savings account for when I move out after school/for my co-op placement. This leaves about 6k I intend to invest with a dollar-cost averaging strategy over the next year, investing weekly (as there are no fees to buy fund units). I've decided to use a DCA strategy because I'm very hesitant to invest my money right now, considering that the TSX is dropping with the price of oil . I figure with a DCA strategy if the market keeps falling I'll be buying more units at the cheaper price, and if oil stabilizes and the markets start to go up again I can just put in the rest of the 6 grand all at once. But perhaps most importantly it'd get me to actually invest my money instead of sitting around being to scared too invest. I suppose at the very least I'm not buying in at the top of the market.

I've also gotten a job as a TA for my school, so that's a bunch more money I'll be able to invest since I have no real expenses right now. (And I expect the benefit of having that work experiene to put on my resume is also very valuable, probably a lot more so than the money I'll be payed). Also, I guess I have a decent credit score, CIBC having pre-approved me for a $1500 monthly limit on a student credit card even though I had 0 income at the time (Which I'm getting mainly to improve my credit utilization ratio), so that's good.

That MER is really expensive. That will cost you a significant chunk of change over time.

I know Canada has higher MER's than America, but that is a lot. Do you guys have Target date funds up there? Since you worried about balancing it on your own, target date funds take care of that for you as well and should be a lot cheaper.

I would check the Canada link in the OP and see if there is something useful in there.

As for your credit card, make sure you pay it off every month in full and never carry a balance. Otherwise, using a credit card is stupid. I think the building credit benefits of a credit card are rather negligible, but I still love credit cards because cash back is free money.

 

[Mr.Mike]

That MER is really expensive. That will cost you a significant chunk of change over time.

I know Canada has higher MER's than America, but that is a lot. Do you guys have Target date funds up there? Since you worried about balancing it on your own, target date funds take care of that for you as well and should be a lot cheaper.

I would check the Canada link in the OP and see if there is something useful in there.

As for your credit card, make sure you pay it off every month in full and never carry a balance. Otherwise, using a credit card is stupid. I think the building credit benefits of a credit card are rather negligible, but I still love credit cards because cash back is free money.

I don't think there's much in the way of good target funds in Canada yet, although BMO does offer some. TBH, the "best" fund for me right now would probably be TD's e-series funds, but those are difficult to buy. Maybe I should just put in the effort.

And yeah, I already have 1 credit card that I've been paying off monthly. I don't know if I agree that the credit building benefits are negligible, but what do I know?

 

[XLNC]

That MER is really expensive. That will cost you a significant chunk of change over time.

I know Canada has higher MER's than America, but that is a lot. Do you guys have Target date funds up there? Since you worried about balancing it on your own, target date funds take care of that for you as well and should be a lot cheaper.

I would check the Canada link in the OP and see if there is something useful in there.

As for your credit card, make sure you pay it off every month in full and never carry a balance. Otherwise, using a credit card is stupid. I think the building credit benefits of a credit card are rather negligible, but I still love credit cards because cash back is free money.

1.07% isn't terrible for a managed mutual fund. In Canada anyways.

I would recommend the OP to open a Questrade TFSA and buy free ETFs through them as the best alternative but if he/she wants to stick with a simple managed mutual fund for a year or so or until starting full-time work, that Tangerine fund is fine for the time being. Just consider that on $6000, you'll pay about $50/yr extra from the MER fee compared to going with ETFs.

 

[Mr.Mike]

1.07% isn't terrible for a managed mutual fund. In Canada anyways.

I would recommend the OP to open a Questrade TFSA and buy free ETFs through them as the best alternative but if he/she wants to stick with a simple managed mutual fund for a year or so or until starting full-time work, that Tangerine fund is fine for the time being. Just consider that on $6000, you'll pay about $50/yr extra from the MER fee compared to going with ETFs.

I'll be honest, I am also hesitant to use discount brokerages. Really my fear is probably unfounded. But yeah, that's probably my best option. I suppose I'll open up an account and give them a try. Surely 30 bucks is worth 20 minutes.

EDIT: They also have an option to use USD, which is really nice if I ever work in America. And practice accounts I can play with.

Regardless, I think I'll just stick with Tangerine for the moment and just set it and forget it. Perhaps I'll get around to getting into the e-series funds eventually. When I get a real job I'll "optimize" my investments.

 

[acksman]

This may be the wrong thread, but has anyone tried or looked into the new Robinhood zero fee stock trading app on iPhone?

Wondering if anyone got into the early beta and got to try it out. Would like to hear any impressions.

 

[GhaleonEB]

This may be the wrong thread, but has anyone tried or looked into the new Robinhood zero fee stock trading app on iPhone?

Wondering if anyone got into the early beta and got to try it out. Would like to hear any impressions.

Try the stock trading thread.

www.neogaf.com/forum/showthread.php?t=176332

Unrelated, skimming CNBC headlines this morning, I fell for the clickbait title "Shockingly boring investing secrets of millionaires". What's really shocking is it had good advice, especially for CNBC.

Millionaires make and grow their money the conservative way: by investing in established brand names from within the market's largest sectors and by using broadly diversified mutual funds. That's the overriding message from the CNBC Millionaire Survey.

"They accumulate their wealth by hitting a lot of singles and doubles," said Tom Wynn, director of affluent research at Spectrem Group, which polled 500 affluent Americans with more than $1 million in investable assets in November for CNBC. "And to do that," Wynn added, "they need to have a broad base of mutual funds to capture all of the sectors. In many ways, they are traditional with their investments."

Millionaires are even as "boring" as to use Vanguard Group's low-cost index investments, which are the most popular choice for market exposure among the affluent investors surveyed by CNBC.

Maintaining wealth is a key driver of the conservative investing ethic. "In order to do that, they will have a big portion in the Fidelitys and Vanguards," Wynn said.

 

[lastflowers]

about to hit a major milestone in my investment account! Perfect end of the year celebration when that happens! Might need to chip in a bit from savings so that it makes the end of the year though.

 

[Cloudy]

This may be the wrong thread, but has anyone tried or looked into the new Robinhood zero fee stock trading app on iPhone?

Wondering if anyone got into the early beta and got to try it out. Would like to hear any impressions.

I got my invite and just signed up. App is very slick. I'll post more once my account is approved

 

[PflargBlarg]

So I've opened up a Tangerine TFSA with a Balanced Growth Portfolio. The MER is fairly high, but there aren't any fees to buy or sell, so at the scale I'm investing at it's not really a big deal. More importantly, it saves me from having to re balance myself (and I'm worried I would be tempted to "play" with my investment account if I could). When I'm older and have more assets/income I'll switch to ETF's.

Out of about 16 grand in assets I've decided to take 10k and leave that in a savings account for when I move out after school/for my co-op placement. This leaves about 6k I intend to invest with a dollar-cost averaging strategy over the next year, investing weekly (as there are no fees to buy fund units). I've decided to use a DCA strategy because I'm very hesitant to invest my money right now, considering that the TSX is dropping with the price of oil . I figure with a DCA strategy if the market keeps falling I'll be buying more units at the cheaper price, and if oil stabilizes and the markets start to go up again I can just put in the rest of the 6 grand all at once. But perhaps most importantly it'd get me to actually invest my money instead of sitting around being to scared too invest. I suppose at the very least I'm not buying in at the top of the market.

I've also gotten a job as a TA for my school, so that's a bunch more money I'll be able to invest since I have no real expenses right now. (And I expect the benefit of having that work experiene to put on my resume is also very valuable, probably a lot more so than the money I'll be payed). Also, I guess I have a decent credit score, CIBC having pre-approved me for a $1500 monthly limit on a student credit card even though I had 0 income at the time (Which I'm getting mainly to improve my credit utilization ratio), so that's good.

Any criticisms with my plan?

Well generally I'd say that you should just put it in all at once since playing the market ups and downs is almost a terrible idea. That said, you're right about the oil situation, so I'd say your strategy is fine for now.

I see your reasoning behind choosing a regular mutual fund instead of an index ETF, but I probably still wouldn't do what you're doing. You do have some pretty small numbers in their right now so the high MER won't make a huge difference but I will recommend that you move over to my suggested index ETFs as soon as you feel comfortable with it.

The basic fact that you're investing at your age is a good move overall, so good work on that.

 

[Mr.Mike]

http://www.neogaf.com/forum/showthread.php?t=951388

I made a thread for the proposed Ontario Retirement Pensions Plan.

 

[Piecake]

http://www.neogaf.com/forum/showthread.php?t=951388

I made a thread for the proposed Ontario Retirement Pensions Plan.

Hopefully America begins moving in this direction because the data on how many people save for retirement and the amount they actually saved is pathetic. People suck at saving, investing and long-term planning and this is going to term into one huge fucking disaster pretty soon if we don't get ahead of this problem, like now.

I know some people will bitch and moan about being able to do better on their own, but I don't this is such a simple comparison. The economy is going to take a huge hit and someone is going to have to help all those retirees who can't afford retirement. That costs money, which might eat away and cost Mr awesome more than what he could have earned on his own.

 

[RumblingRosco]

-

 

[anonymous_abc]

I've been thinking a lot about the desired global distribution of my funds and how to rebalance.

I've now decided to aim for the following distribution

WLD 50 % (World - semi global funds)
USA 25 % (USA - might add some general North America to that in time)
EU 10 % (Europe - EU, Euro, UK, etc.)
AP 7 % (Asia Pacific)
EM 5 % (Emerging Markets)
DE 3 % (Germany - Home Bias)

Any comments or recommendations about that?

I will do some appropriate rebalancing in the new year. Mind you rebalancing for me means only to buy for now as I only wan't to practice buy and hold.

I'm also looking for ETF recommendations for emerging markets as I have zip there so far.

 

[Cyan]

That's sort of oddly redundant. EM overlaps with Asia/Pacific, EU includes Germany, World encompasses, well, everything. It's going to result in some odd patterns of overweighting, and isn't something I'd do myself because I wouldn't want to have to work those out, but as long as you're aware of it...

 

[anonymous_abc]

That's sort of oddly redundant. EM overlaps with Asia/Pacific, EU includes Germany, World encompasses, well, everything. It's going to result in some odd patterns of overweighting, and isn't something I'd do myself because I wouldn't want to have to work those out, but as long as you're aware of it...

Yea I am aware of that.
My reasoning is:

• World is just a baseline investment across as much as possible without me giving it much thought.
• AP for me is the more industrialised markets there (Japan, Australia, ...) not what I would consider EM.
• Germany is just because I wanted some DAX in there. I am aware this is home bias. But imho home bias isn't that much of a problem within reason especially not if it's just a minuscule amount of ones portfolio.
• Taking out the World and combining DE/EU gets 50/26/14/10 so more or less what any text book preaches.

 

[GhaleonEB]

I'm going through the thought process for my annual re-balancing as well. I'm limited in flexibility as both of the retirement programs at my employer only have one index fund in it (an S&P500 Vanguard fund), so I have to rely on our IRA's for any further diversification. But the employer side of things is a much larger share of the pie.

Right now the IRA's have a roughly even split of a total US market index, and a global index (both Fidelity). So when combined with the employer funds, I'm over weighted on US large cap stocks by a good margin.

I'm not quite sure how to re-balance right now. My goals are: 1) Keep the allocations simple (2-4 funds, tops), and 2) counter balance the large cap weighting with a small to mid cap index. But I'm not sure what the ideal ratio is there to get myself to a reflection of the market. Any suggestions?

 

[Randolph Freelander]

I'm going through the thought process for my annual re-balancing as well. I'm limited in flexibility as both of the retirement programs at my employer only have one index fund in it (an S&P500 Vanguard fund), so I have to rely on our IRA's for any further diversification. But the employer side of things is a much larger share of the pie.

Right now the IRA's have a roughly even split of a total US market index, and a global index (both Fidelity). So when combined with the employer funds, I'm over weighted on US large cap stocks by a good margin.

I'm not quite sure how to re-balance right now. My goals are: 1) Keep the allocations simple (2-4 funds, tops), and 2) counter balance the large cap weighting with a small to mid cap index. But I'm not sure what the ideal ratio is there to get myself to a reflection of the market. Any suggestions?

Vanguard's total market index fund seems to be weighted ~72/~27 (with a point to spare!) large cap/non, with the non-large at 2:1 mid to small, with it distributed equally at all levels between value, blend, and growth.

http://portfolios.morningstar.com/fund/summary?t=VTSMX&region=USA&culture=en-US

If you were to interested in following that fund's strategy, you might try to find the appropriate small and mid-cap funds in your IRA to offset the S&P 500 in your 401K.

Beyond that, I'm not sure how to split between domestic and international. I've been glaring at my own international index fund in my 401K that has been losing money this year (-1.30% YTD through 11/30, and it's not doing any better in December). I don't know what's recommended, but I'm only allocating 9% towards that fund. It's hard to get a handle, but international has been lagging domestic at every split (1 yr/3/5/etc.) and I just don't have the same confidence in it that others have.

For what it's worth, I have large caps allocated at 67% in my 401K, with that split between the S&P (54%) and the Nasdaq 100 (13%), which overlap to a degree. I'm at 24% on mid- and small-caps (evenly split at 12/12), and then 9% on international, as mentioned. My future allocations don't precisely match that allocation strategy, they're weighted a little higher on S&P 500 and a point lower each on mid and small, but I'll use my employer matches (once moved) to get my fund balances in line. (My Roth IRA balance is fully in the S&P, as well, but I only started that this year and the balance is currently inconsequential, though at least fully funded for the year.)

 

[Randolph Freelander]

Speaking of Roth, you might want to know that I topped mine off two Fridays ago, which of course is what has the market in its current tailspin. It is invariably the case that this would happen. When I joined my new employer's 401K two years ago, the market performed badly shortly thereafter. When I opened this Roth in September, the market tumbled 7% over the next few weeks. And since I topped it off, the market is down nearly 4%.

Heads up to discount investors, I plan to fund my Roth for 2015 in March. Keep that in mind. Sell high, buy back low.

 

[RumblingRosco]

-

 

[Randolph Freelander]

The SEC will nab us for insider trading if we follow this advice, lol.

Pretend to be too big to fail, you'll skate.