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How to Invest for Retirement
- Thread starter Piecake
- Start date
So my TFSA lost 5 % of its value over the course of 18 days.
Looking at graphs and such, I could not have chosen a worst date than December 30th 2015, where everything was at a peak before the January Tumble Down.
Considering the awful 2.46 % MER the bank gave me, I think I might just take the loss and take it back and then reinvest it in Vanguard ETF in the upcoming days/weeks.
Looking at graphs and such, I could not have chosen a worst date than December 30th 2015, where everything was at a peak before the January Tumble Down.
Considering the awful 2.46 % MER the bank gave me, I think I might just take the loss and take it back and then reinvest it in Vanguard ETF in the upcoming days/weeks.
I apologize in advance if the questions I am about to ask have already been covered but before I make a decision I thought I'd run it by here.
Wife and I are aggressively saving towards purchasing a house. Savings aside from our combined income, I have money in pension plans from my 3 previous employers. Nothing substantial but enough that it would nicely boost our potential on a decent down payment if I were able to withdraw.
Here is my question. Currently my previous plans are still in their original plans. I know I can consolidate all into 1 and have it either migrated to my new employer's 403 plan or move to an independent firm into an IRA account. The benefit of moving it to an IRA being that if I qualify as a first time house buyer, I can withdraw the money without penalty.
Anyone here do this? What are the drawbacks of doing something like this? I spoke with TIAA-CREF and they make it sound simply. Move all 3 accounts into their IRA account and when/if needed I can withdraw towards the purchase of a house.
Also how does a ROTH IRA account differ and does that make any sense over a regular IRA?
Further information which might help: I am in my early 30s, married with a baby, no substantial financial knowledge (reason I am asking here), and both want to save for retirement and as a short term goal buy a house.
Appreciate any and all help in advance.
Wife and I are aggressively saving towards purchasing a house. Savings aside from our combined income, I have money in pension plans from my 3 previous employers. Nothing substantial but enough that it would nicely boost our potential on a decent down payment if I were able to withdraw.
Here is my question. Currently my previous plans are still in their original plans. I know I can consolidate all into 1 and have it either migrated to my new employer's 403 plan or move to an independent firm into an IRA account. The benefit of moving it to an IRA being that if I qualify as a first time house buyer, I can withdraw the money without penalty.
Anyone here do this? What are the drawbacks of doing something like this? I spoke with TIAA-CREF and they make it sound simply. Move all 3 accounts into their IRA account and when/if needed I can withdraw towards the purchase of a house.
Also how does a ROTH IRA account differ and does that make any sense over a regular IRA?
Further information which might help: I am in my early 30s, married with a baby, no substantial financial knowledge (reason I am asking here), and both want to save for retirement and as a short term goal buy a house.
Appreciate any and all help in advance.
I'm not familiar with the process of converting to an IRA and then using the funds to purchase a home, but my advice is to think ahead to how you plan to fund retirement after you purchase the home. IRA's have a low annual contribution limit, currently $5,500 per person. You don't want to pull money from a tax advantaged account in such volume that you can't put it back, and thus set back your retirement.
The generally advice for retirement savings is to contribute to your employer 401k up to your employer match, then max out the IRA (due to more options / lower costs than offered in most 401k's), then direct any remaining retirement savings to the 401k.
With such a low contribution limit for IRA's, it's easy to pull money from them but it takes a lot of time to put that money back. If you will be directing all your retirement savings into a 401k, then it's not an issue. But if the IRA is a big part of your retirement plan, then it's a bottleneck to your ability to get money into tax advantaged accounts, and it may be worth looking at alternate funding sources for the home purchase.
(Unless there's some rule about being able to return money you withdraw for the home down payment; again, not familiar with the process, but that's what I'd look into were I in the situation.)
Darren870
Member
Those limits don't apply for rollovers though, which is what he would be doing. So yes, if you want to roll over all your pensions into an IRA that would make sense.
You can withdraw up to $10k from your IRA for your first home at that point. I think with a ROTH IRA you run into more issues, so I would probably advise against that. Unless you have the Roth IRA for more then 5 years before you withdraw.
You also have to pay tax on the withdrawal, whatever your tax rate is.
You can withdraw up to $10k from your IRA for your first home at that point. I think with a ROTH IRA you run into more issues, so I would probably advise against that. Unless you have the Roth IRA for more then 5 years before you withdraw.
You also have to pay tax on the withdrawal, whatever your tax rate is.
This is good to know, I was unaware the annual contribution limits did not apply to rollover IRA's.
Yep, this is pretty much just a blip on the radar right now. Don't look at your accounts and don't worry. Most of us probably have 25-30 years to go.
I intend to retire in my 30s, so this is not going according to keikaku
401k contributions should be in one of the sections of your W-2, and I recall entering that each year when I file my taxes online (H&R). But that's about it, really, unless you had some more complex transactions.
Randolph Freelander
Member
I would think your existing funds would be fine, barring some future legislation that would undermine our present system.
Just as an exercise, did you test your tax situation under the pre-tax system that you would use going forward? If you had used it in 2015, would it have helped you avoid the AMT?
Yes. I'm just barely over and the bogey is small. But I expect it to increase going forward as I make more and my state taxes go up further. THANKS OBAMA
I moved into the next marginal bracket this year anyway so I see no point in doing a Roth and paying the high rate. It's hard to imagine my marginal rate in retirement reaching 33%+. If it does, honestly I've done a really good job saving.
FrenchMovieTheme
Member
Is now a good time to max out my Roth Ira $5500 yearly limit?
Moving on up
No time like the present.
This is my situation. In 2014 I started Roth 401k contributions. In January 2015 I did some analysis and realized it made sense to move to the traditional. So we left the Roth as is, and started the traditional. They sit side by side now.
Legit question-- what % of AGI can you really claim you gave to charity without having receipts? I donated a ton of clothing (including expensive suits, etc) without receipts. I'm not expecting to get 100% of the value of the suits, but could I claim .5% of AGI as charitable without receipts?
Do we have a tax preparation thread? lol
Four_Chamber
Member
Wow my personal investments are getting hammered so far this year. These investments are with me for the long run so I'm not too worried- gonna ride it out and try to not lose sleep over it.
My old work 401k isn't a lot but I'm currently in the red with that as thats a Vanguard Target Fund (2045 or something I forget). Since I work for the state, my current retirement plan is being matched for free without having to worry about the market so at least I have that going.
My old work 401k isn't a lot but I'm currently in the red with that as thats a Vanguard Target Fund (2045 or something I forget). Since I work for the state, my current retirement plan is being matched for free without having to worry about the market so at least I have that going.
lemmykoopa
Junior Member
One of the quotes I see popping up a lot during crashes or bear markets is that one shouldn't worry because the markets will recover. Well the Japan index never recovered from the crash in the late 80's.
Is it possible something like that could happen with the s&p500 in future times? Could anyone offer some perspective?
Is it possible something like that could happen with the s&p500 in future times? Could anyone offer some perspective?
One of the quotes I see popping up a lot during crashes or bear markets is that one shouldn't worry because the markets will recover. Well the Japan index never recovered from the crash in the late 80's.
Is it possible something like that could happen with the s&p500 in future times? Could anyone offer some perspective?
I don't know too much about the Nikkei crash in the 80's but someone more well-versed might be able to elucidate some similarities and discrepancies between the situation in Japan before the crash and the US/world economy now. My gut tells me the two situations are vastly dfifferent, though.
also, the Nikkei didn't start in 88, just something to also keep in mind. if you look at it over the last 60 years, it looks a bit more positive. still atypical to not have recovered though, indeed.
One of the quotes I see popping up a lot during crashes or bear markets is that one shouldn't worry because the markets will recover. Well the Japan index never recovered from the crash in the late 80's.
Is it possible something like that could happen with the s&p500 in future times? Could anyone offer some perspective?
Anything can happen in the future, however the signs of what happened in Japan are not present right now.
The Japanese crash was fueled by a massive asset bubble and exacerbated by a demographic crisis that slowed GDP growth. Stock valuations in the US are currently considered high, but their P/E ratio is only about 1/3 of Nikkei valuations in the late 80s. In fact, as of the start of the year Japan's CAPE valuation was still higher than the US, despite that 30 years.
Randolph Freelander
Member
Good luck with that, but I think tax preparation software might have a thing or two to say on the topic. I've never claimed goods, always money that could be traced if anyone asked. Though it's not like I had to attach receipts to my filings, either.
anonymous_abc
Member
lemmykoopa
Junior Member
Thanks.
I recently opened a traditional IRA with Vanguard, my plan is to invest in a mix of their index funds. I don't have the 10k to invest into their Admiral shares so my plan is to invest into their ETF versions of the indexes.
But I have noticed on their site that when you choose 'Contribute to my IRA' it only allows you to pick Mutual Funds or their Admiral Indexes. I imagine its the same for automatic contributions as well.
Now I can do a search for the ETF I want and buy under my IRA and that looks like it should work.
Is there some reason why I can't automate the contributions to ETFs? Is it ok to buy ETF's in an IRA?
But I have noticed on their site that when you choose 'Contribute to my IRA' it only allows you to pick Mutual Funds or their Admiral Indexes. I imagine its the same for automatic contributions as well.
Now I can do a search for the ETF I want and buy under my IRA and that looks like it should work.
Is there some reason why I can't automate the contributions to ETFs? Is it ok to buy ETF's in an IRA?
When I opened my account they asked if I wanted a mutual fund account or a brokerage account. Only the brokerage account can buy ETFs. I did get a notification from them a little while back that they were planning on getting rid of this limitation and moving to a single account type, but I'm not sure if that has gone through yet.
Hmm ok. Sounds like I need to call them to switch it over.
PflargBlarg
Member
The best time is always right now.
LordOfChaos
Member
Can anyone speak to the TD E series mutual funds that often come up on Canadian investing subreddits and forums? I know ETFs have lower fees but the E series is also pretty low fee for an actively managed fund.
I have a bit saved in my TFSA, but the return rate is pretty garbage with inflation. Want to move it into an E series mutual fund.
I just realized these questions may be pretty Canada specific and this thread isn't.
The US Total Stock Market and Total International Market mentioned in the OP are available in the E series funds too.
I have a bit saved in my TFSA, but the return rate is pretty garbage with inflation. Want to move it into an E series mutual fund.
I just realized these questions may be pretty Canada specific and this thread isn't.
The US Total Stock Market and Total International Market mentioned in the OP are available in the E series funds too.
Randolph Freelander
Member
It looks like some of those funds are index funds, which carry lower expenses, and some are actively managed. For example, the DJIA fund has a MER of 0.33%, which matches the selling point found on the e-Series home page, but if you were to look at the TD Managed Index Aggressive Growth Portfolio - e fund, you would notice its MER is a much less attractive 1.34%.
So I would say pay attention to what you buy, as always. Passively managed index funds are going to be lower cost than actively managed funds, and this series offers both types. (Not being versed in Canadian fund options, I have no idea if the 0.33% MER on the DJIA index fund is attractive or not. It certainly isn't by US index fund standards.)
LordOfChaos
Member
This I'm curious about, it could well be that I'd pay lower tax now. I mean, I'm 24 right now, maybe my income after retirement could be higher than now...
Though on the other hand, that would also be decades of lost opportunity cost on that money saved going back into investing.
Randolph Freelander
Member
Yes. The basic idea is that the higher your top marginal rate(s) today, the more you want to avoid today's taxes. The lower your rates, the more you want to avoid tomorrow's taxes. It's not going to be the same for everyone, however. But if you top out in the 15% bracket, go ahead and pay the tax by contributing to a Roth account (IRA for sure, and 401K if you have the option). If you top out in the 28% bracket (or higher), give serious consideration to traditional pre-tax contributions on the bet that your average tax rate in the future might be lower (as always, future tax rates are subject to the politics of the times).
That would really depend on if you're maxing out your contributions or not, it makes the math a bit trickier since there are more moving parts. But consider if you have $5500 (pre-tax) to invest now and not one dollar more. Let's say your marginal rate is 15% now and your average tax rate is 15% in the future. If that's the case, it makes no difference if you pay the tax now or down the line. If you take 15% off the 5500 and let it grow for 30 years, or if you take the full 5500 and let it grow and tax it at 15% later, the final outcome is the same. It only differs when your tax rate now differs from your tax rate later.
Sold back my TFSA with my bank. That little 20 days adventure cost me 400 bucks. T_T
Well, thats gonna be nothing compared to the MER I save across the years so eh.
After watching through tutorials videos for Questrade, I have placed limit orders GTC for a couple of Vanguard ETFs (VFV, VUN, VDU) a bit below current closing price on Friday. I will try to invest a little bit in all of Vanguards ETFs through 2016 so I can really see the broad side of things.
Except the Asia VA one for now, I guess, with China trouble and all. (and yes, I hear all of you saying dont time the market Guesong bro!).
This is all so alien to me, jesus. Call, put, yada yada. At first I thought it would just put BUY X$ of ETF. Live and learn.
Well, thats gonna be nothing compared to the MER I save across the years so eh.
After watching through tutorials videos for Questrade, I have placed limit orders GTC for a couple of Vanguard ETFs (VFV, VUN, VDU) a bit below current closing price on Friday. I will try to invest a little bit in all of Vanguards ETFs through 2016 so I can really see the broad side of things.
Except the Asia VA one for now, I guess, with China trouble and all. (and yes, I hear all of you saying dont time the market Guesong bro!).
This is all so alien to me, jesus. Call, put, yada yada. At first I thought it would just put BUY X$ of ETF. Live and learn.
This is why "buy and hold" is the right strategy for retirement, FWIW.
I know! As I said I just wish I saw this thread before I went to my bank. Would have saved me that disappointment.
PanicFreak
Member
#firstworldproblems
So I've got one individual stock left, the rest of my portfolio is funds. The stock has lost like 90% of it's value and is worth basically nothing. It's DNR if anyone cares... should I just sell it and take the 100 bucks and make sure I get something out of it before it loses 99% or should I continue hanging onto it in the hopes it goes up? It's not like I need the money or anything but I don't know what to do with it, and don't think it's going back up anytime soon. The worst part is I put in an order to sell it at like 19.30 or something like that a few years ago but it only went up to like 19.25... lol oops.
So yeah, what do you do with a loser stock like this? I don't do individual companies anymore but every other company I bought I was up when I sold it.
So yeah, what do you do with a loser stock like this? I don't do individual companies anymore but every other company I bought I was up when I sold it.
Darren870
Member
Use it to offset any gains you may have when doing taxes. Obviously it's too late for 2015, but you could use it for 2016.
It matters, but I would hesitate to put too much weight on the idea of moving to a different state as part of my retirement plan, especially if retirement is still decades off. A lot can change in that much time, both in terms of where you want to live and in tax laws.
Thanks. I live in DC now which has one of the hire tax rates for my income bracket and I know we'll be moving at least out of state within the next decade and likely out of country for retirement. I wasn't sure if the ~8% i'm paying on taxes here makes any difference since i can fund a regular IRA just as easily.
Edit: Nevermind I just googled and can't deduct anything from an IRA anyway.
ClosingADoor
Member
Some recovery this week for my fund. Hope it continues. Seeing stuff in the red for the whole first year is not that much fun 