And you were looking at a Roth 401(k), which of course won't have tax implications when you withdraw.
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
How to Invest for Retirement
- Thread starter Piecake
- Start date
And you were looking at a Roth 401(k), which of course won't have tax implications when you withdraw.
You'd likely have to roll it over into a traditional IRA and then do a back-door Roth (might want to check that), but you can definitely get it into an IRA of some sort.
The annual limits do not apply and they do not cout towards your annual contribution limit.
Thanks for the help, everybody. I'll probably be frequenting this thread semi-regularly because setting up my retirement properly is really important.
My Vanguard account (for my Roth IRA) is still being verified - this is taking much longer than I anticipated. My buddy who works there has been recommending I get ETFs instead of traditional index funds, but I've never even heard of them. They're advertised heavily on the site, with the claim that they have 1/4th the costs of funds. I should just get a standard index fund instead, right?
My Vanguard account (for my Roth IRA) is still being verified - this is taking much longer than I anticipated. My buddy who works there has been recommending I get ETFs instead of traditional index funds, but I've never even heard of them. They're advertised heavily on the site, with the claim that they have 1/4th the costs of funds. I should just get a standard index fund instead, right?
Admiral share index funds and etfs have the same expense ratio.
I personally prefer funds because I think they are easier to deal with, do not leave any left over change in my money market account, and just make better sense for a dollar-cost average or periodic/yearly retirement investor (at least I think so).
ETFs are certainly cheaper until you have 10k invested in the fund and you have the freedom to buy it during the day (I dont think this matters at all for retirement investing).
Really, I think it mostly personal preference. Even if you don't have 10k to invest in a fund to make fund and ETF expenses equal, you eventually will, and that short 1-3 year window of .1% or so higher expense ratios is not going to matter much.
Sounds like I should do funds, then. I'm not gonna day trade with my retirement account and I should reach admiral this year.
Brolic Gaoler
formerly Alienshogun
My understanding is that if you withdrawl before 59 1/2 that you WILL be taxed on earnings. Pretty damned sure I read that on my Roth 401k info sheet that I went through with my TSP.
Right. I was speaking to qualified withdrawals, in retirement. Not early withdrawals.
Brolic Gaoler
formerly Alienshogun
Gotcha. In my situation I'm forced retirement though FERS at 57, but can also draw SS I do believe. I'll wait the two years to avoid incurring taxes if can want to let that TSP brew as long as possible.
Some people don't wait though, that's why I brought it up.
You can take out your contributions without penalty in a Roth. So, basically, over the course of the time you are investing for retirement, you contributed 200k and you end up with a balance of 500k, you can take out that 200k without penalty.
Obviously, it is better not to do that because the longer you leave it in there, the more interest and more money you will likely have.
Brolic Gaoler
formerly Alienshogun
Yeah, absolutely. How much and what to buy each month out of whatever account you choose.
Randolph Freelander
Member
I know Fidelity has it, and suspected Vanguard would, as well. The answer is yes. https://personal.vanguard.com/us/whatweoffer/accountservices/banking
https://personal.vanguard.com/us/AutomaticInvestmentOptionsController?Action=add
Can't deduct any Roth contributions; Roth accounts use after-tax money to invest.
It took me two days.
hipbabboom
Huh? What did I say? Did I screw up again? :(
In the last two months, I've put in $1200 in my IRA and have lost $1800. I just hope I come out even this year otherwise I'm going to feel like a huge sucker 
Yes to the IRA. It depends on your income level whether a Roth makes more sense.
Open it at Fidelity or Vanguard, not BoA.
In the last two months, I've put in $1200 in my IRA and have lost $1800. I just hope I come out even this year otherwise I'm going to feel like a huge sucker
Retirement investing is for the long term. Don't worry about how the market has dipped in the past month. 10-20 years from now, it won't even be a blip. Keep investing regularly (dollar cost averaging) and you'll come out of the downturn ahead.
I made roughly about 50k if that helps. Also, any reason as to why not go for BoA?
chaosblade
Unconfirmed Member
I'm not very familiar with BoA but probably higher fees.
What did you invest in?In the last two months, I've put in $1200 in my IRA and have lost $1800. I just hope I come out even this year otherwise I'm going to feel like a huge sucker
They're evil?
With Vanguard and Fidelity, you get a large number of low cost index funds (more at Vanguard than Fidelity) and no fees, and excellent online tools. I can't actually find what the investment options are at BoA; it looks like they partner with Merrill Edge for their IRA service, and from there I wasn't able to find information about fees or options with some searching. Be sure to find those out first.
Also, BoA is evil.
Well, if your bank is Bank of America, it might be worth having everything under one roof.
All banks of evil, Bank of America is at least unlikely to fall to pieces any time soon
Well, if your bank is Bank of America, it might be worth having everything under one roof.
All banks of evil, Bank of America is at least unlikely to fall to pieces any time soon
This gets into investing and purchasing philosophy in general, but if you are just starting out with an IRA now, I don't find it a major inconvenience to have a separate account. On Vanguard's side, they have the largest selection of low cost index funds, a unique corporate ownership and governance structure that is beneficial to fund owners, a no-fee IRA and excellent online tools. They're also a champion of pushing the investment industry to be more transparent on costs and for working on behalf of their investors/shareholders. On BoA's side, he may have an account there already. It's currently unknown what their fees and accounts are, but assuming parity for a moment, they're also the company that helped crash the global economy and is, well evil in general (even by large bank standards).
Personally, that's enough to swing me away from them, but from the standpoint of opening a new IRA, Vanguard is definitely the way to go if you are just starting out and can meet their minimums, which he can.
hipbabboom
Huh? What did I say? Did I screw up again? :(
- 15% - VANGUARD TOTAL BOND MARKET ETF
- 06% - SPDR S&P 600 SMALL CAP ETF
- 15% - VANGUARD FTSE DEVELOPD MKT ETF
- 03% - VANGUARD INDEX FDS REIT ETF
- 18% - VANGUARD MID-CAP ETF
- 13% - VANGUARD GROWTH ETF
- 06% - VANGUARD EMERGING MARKET ETF
- 24% - VANGUARD HIGH DIVD YIELD ETF W
womfalcs3
Banned
Well I got my hands on a bit of extra money. I already have a significant amount invested in Islamic bonds, which typically generate low returns. I'm thinking of buying silver.
I typically don't like commodities because of their price volatility and the fact they don't do anything but sit there. On the other hand, silver prices are way off ther historical highs and it seems the demand for silver is expected to grow faster than its supply growth. Plus this would just be a part of a larger financial portfolio.
I typically don't like commodities because of their price volatility and the fact they don't do anything but sit there. On the other hand, silver prices are way off ther historical highs and it seems the demand for silver is expected to grow faster than its supply growth. Plus this would just be a part of a larger financial portfolio.
My IRA contribution was denied because my bank has a policy against transferring money out of savings accounts. I can just move it to my checking account and transfer from there, but Vanguard won't let me add another account for a month. Whoops.
I still got a huge 20% ROI on contemplating the move thanks to the Savers Credit (I'll make the contribution for real before April). Really crazy that I got to put money into a Roth IRA tax free.
I still got a huge 20% ROI on contemplating the move thanks to the Savers Credit (I'll make the contribution for real before April). Really crazy that I got to put money into a Roth IRA tax free.
Randolph Freelander
Member
Index investors, another rough January. Snapshot of the month (US domestic):
S&P 500, -3.10%
S&P Midcap 400, -1.18%
Russell 2000, -3.25%
VTSMX, -2.77%
Last year was similar, with the Vanguard total market index being down 3.11%.
Oh well, here's to a better February.
S&P 500, -3.10%
S&P Midcap 400, -1.18%
Russell 2000, -3.25%
VTSMX, -2.77%
Last year was similar, with the Vanguard total market index being down 3.11%.
Oh well, here's to a better February.
chaosblade
Unconfirmed Member
RumblingRosco
Member
-
Randolph Freelander
Member
The guilt is obvious.
chaosblade
Unconfirmed Member
Roth contributions aren't tax deductible. You pay the taxes now, but the growth is tax-free so you don't pay when you withdraw.
Using the Roth and the 401K is good if you're getting your match. Your Roth account should have lower fees and more investment options. Whether or not a Roth or traditional IRA would have been better to go along with your 401K might have been worth asking before you jumped in though.
Randolph Freelander
Member
Not necessarily wrong, but that fund has some conservatism built in, and will get progressively more conservative over time. However, if that suits you, it's fine, and at least you don't have to think about managing any stocks-to-bonds ratios on your own, and tweaking them as time goes by. Its expense ratio is relatively low, so their management of the allocation isn't going to eat significantly away at your returns.
Yep, my index fund portfolios went up about 5-6% in January with the loonie tanking hard (-9%) against the USD.
What should I go for if at least in the short term I don't care for conservatism.
Randolph Freelander
Member
Right, the Canadian dollar was down 8.74% against the USD in January. The depreciation of the CAD far exceeded the dip in the US market, so it comes out as a gain in CAD terms. (However, the gain would have been larger if you were just holding USD.)
I may not have done this perfectly, but take 1000 USD on January 1 in the VSTMX. In CAD terms (1 CAD = 0.8608 USD), that was 1161.71 CAD. On January 30 (1 CAD = 0.7856 USD), the value fell to 972.28 USD. However, the value in CAD was 1237.62, which is a gain of 6.5%.
demosthenes
Member
A Roth is not taxed at the moment when you take funds out, that's why you don't get a deduction now, essentially.
If the world were perfect you should fund your 401k at least until what your employer will match, you could do more if you wanted. Additionally in a perfect world you should also max your IRA each year.
Randolph Freelander
Member
That's highly subjective! However, many of us in here favor index based investing in stocks. Whether that's total market, large caps, how much of that is international, etc., that's a personal decision.
Personally? I'd recommend going into the VTSMX fund (Vanguard's total stock market index). As you add more of your own money to your account, you might want to give consideration to how much international exposure you might want, and invest accordingly. I don't know the Vanguard fund offhand, but it has likely been mentioned in here before and, in any event, can be located by searching.
Be wary of selling immediately, though, if you decide to move out of VTIVX. I don't know how Vanguard does it, but Fidelity will charge a fee if you sell out of one of their otherwise "no load" funds too quickly, something like 30 or 90 days. If you have a similar fee, particularly with a starting balance of $1000 (meaning the fee would have real impact to your return), you might want to sit still for a while, and this will give you more time to find your own preference for funds.
I am trying to figure out ETF vs Mutual Funds -- more just the pros vs cons. I can't seem to come up with why anyone would invest in a Mutual Fund. ETF has very low exp ratios, no minimum purchase costs, typically no added transaction fees as seen with MFs.
So I'm not seeing much downside to ETFs. With an ETF and an MF that both follow the S&P 500 index, why would I ever buy the MF version? SPY vs VFINX for example.
So I'm not seeing much downside to ETFs. With an ETF and an MF that both follow the S&P 500 index, why would I ever buy the MF version? SPY vs VFINX for example.
You can buy them in whole numbers and automatically dollar cost average. The advantage of buying in whole numbers is that you don't have change left over in your money market account (plus, it looks purty). I don't know about other places, but I am fairly certain you cannot automate monthly contributions at Vanguard if you own ETFs, but can do that if you have mutual funds.
Vanguard funds also have no added transaction fees if you go through Vanguard and will have an equal expense ratio once you raise your balance in that fund to 10k. The minimum is definitely a disadvantage though.