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[studyguy]

Basically slept on my Roth IRA I set up something like 3 years ago, I checked it maybe once a year and only now realize I was bled out for something like 2 grand over the course of maybe a year over some abysmal performance. I'm feeling like I fucked it hard and need to move now, sitting with Franklin Templeton with like 12k at the moment and looking into rolling it over to another company.

Curious if rolling it before April would impact my my tax returns at all?

 

[Randolph Freelander]

Curious if rolling it before April would impact my my tax returns at all?

I'm not saying don't move it, but the market was basically flat last year and has given up ~10% so far this year. For that matter, it didn't finish 2014 all that well, though the year itself was up. Are you sure your abysmal performance isn't in line with the market? And if it isn't, is Franklin Templeton to blame, or is it your own allocation of funds? If you're being hit with high administrative fees that you could avoid by moving, then I'm not going to argue. If you are in line with the market or your allocation could use some tweaking (get out of high expense managed funds, into index funds, or into the right index funds), then you can do that without moving your entire IRA.

That said, as long as it's a transfer from one Roth to another, there should not be any adverse tax implications. Someone more knowledgeable than me might be able to tell you if it will create an additional step in your filing, but even then, it should be for the 2016 tax year, not this one, provided that you aren't still contributing towards your 2015 limit.

 

[Walter White Walker]

Basically slept on my Roth IRA I set up something like 3 years ago, I checked it maybe once a year and only now realize I was bled out for something like 2 grand over the course of maybe a year over some abysmal performance. I'm feeling like I fucked it hard and need to move now, sitting with Franklin Templeton with like 12k at the moment and looking into rolling it over to another company.

Curious if rolling it before April would impact my my tax returns at all?

Around 4 years ago I moved my Roth IRA from Principal Funds to Schwab and there were no tax implications. I'm no expert but if you're just moving from one custodian to another I don't see why there would be a tax impact. I didn't have any extra steps come filling out my taxes time.

 

[kutthoat5150]

So I'm starting to save up for my 6 month emergency fund and my question is if a savings account at my bank is the most efficient way to store this. Does anybody have any other recommendations on where to open up an account at? I see that Vanguard has an option to open up an emergency fund account but I'm wondering what the primary differences would be between that and a general savings account.

 

[chaosblade]

So I'm starting to save up for my 6 month emergency fund and my question is if a savings account at my bank is the most efficient way to store this. Does anybody have any other recommendations on where to open up an account at? I see that Vanguard has an option to open up an emergency fund account but I'm wondering what the primary differences would be between that and a general savings account.

Savings account with a good interest rate is the best bet. Liquid, and good interest can help with inflation a little.

Personally, I have an Ally savings account that gets 1% interest. Haven't seen anything better that seemed as reputable or didn't require dumb amounts of money to be stashed away.


Of course, some will argue you don't need emergency funds anyway. You can invest your cash for potentially greater gains and sell to pay for the emergency, and use credit for anything immediate that you have to pay for before you can finish the sell transaction. Whether that's right for you depends on your risk tolerance and how much available credit you have for an immediate emergency expense.

 

[Damerman]

Basically slept on my Roth IRA I set up something like 3 years ago, I checked it maybe once a year and only now realize I was bled out for something like 2 grand over the course of maybe a year over some abysmal performance. I'm feeling like I fucked it hard and need to move now, sitting with Franklin Templeton with like 12k at the moment and looking into rolling it over to another company.

Curious if rolling it before April would impact my my tax returns at all?

As long as you don't take money out of the retirement fund there should be no tax implications. Where I work, I deposit rollover checks for new customers. The only thing I've seen were transfer fees that ranged from 40 to 200 bucks

 

[kutthoat5150]

Of course, some will argue you don't need emergency funds anyway. You can invest your cash for potentially greater gains and sell to pay for the emergency, and use credit for anything immediate that you have to pay for before you can finish the sell transaction. Whether that's right for you depends on your risk tolerance and how much available credit you have for an immediate emergency expense.

Yes I was wondering if I'm maxing out my Roth and 401 every year, are savings accounts even necessary. But my investments are currently in my Roth, don't you incur penalties for selling these early to earn the gains?

 

[chaosblade]

Yes I was wondering if I'm maxing out my Roth and 401 every year, are savings accounts even necessary. But my investments are currently in my Roth, don't you incur penalties for selling these early to earn the gains?

I think you can sell gains in your Roth without penalties, but you can't sell the principle you put in. But using that as emergency savings is extremely risky since your "savings" will be directly tied to the gains and losses of your Roth. If the market tanks your emergency savings are shot, and that's one of the likeliest times you will need those emergency savings, due to potential layoffs.

 

[kutthoat5150]

I think you can sell gains in your Roth without penalties, but you can't sell the principle you put in. But using that as emergency savings is extremely risky since your "savings" will be directly tied to the gains and losses of your Roth. If the market tanks your emergency savings are shot, and that's one of the likeliest times you will need those emergency savings, due to potential layoffs.

Yea my BOA savings has a pretty lousy interest rate compared to yours. There's also Vanguards prime money market which is their emergency fund account but that is in my Roth IRA and I'm using the money in there to automatically fund my investments. I'll check out Ally's as 1.00% is pretty high from all others I've seen. Are there any drawbacks to it?

 

[scurker]

I think you can sell gains in your Roth without penalties, but you can't sell the principle you put in.

It's actually the other way around. Your contributions can be withdrawn at any point, while gains are taxed and penalized before 59 1/2.

Yea my BOA savings has a pretty lousy interest rate compared to yours. There's also Vanguards prime money market which is their emergency fund account but that is in my Roth IRA and I'm using the money in there to automatically fund my investments. I'll check out Ally's as 1.00% is pretty high from all others I've seen. Are there any drawbacks to it?

I haven't used Ally, but have you checked out a local credit union? Rates tend to be as good if not better than most national banks. The credit union I'm in currently has an APY of 1.0%, but obviously your mileage may vary.

 

[giga]

I use Ally for both savings and checking and it's great. Highly recommended.

 

[Drkirby]

I feel I need to get more put into retirement, but at least I got something set up now. It will likely be easier to do once my Car and Student Loans are paid down. Right now I have the equivalent of 10% of my pay being put into my 401k each paycheck (6% of my pay out of my check, with a max 4% company match). Right now the account is at $4200, and it has a 60/30/10 split between American/International/Bonds.

On top of that I also got about $250 going to my HSA every month, and its set up so it will be maxed out by the end of the year. While not retirement, it'll be nice to have money put away for Medical when I end up in the hospital again.

I really need to get an Emergency fund set up though. I only have about $1400 put away into Savings, which isn't going to go far if something big comes up.

 

[Oxn]

I feel I need to get more put into retirement, but at least I got something set up now. It will likely be easier to do once my Car and Student Loans are paid down. Right now I have the equivalent of 10% of my pay being put into my 401k each paycheck (6% of my pay out of my check, with a max 4% company match). Right now the account is at $4200, and it has a 60/30/10 split between American/International/Bonds.

On top of that I also got about $250 going to my HSA every month, and its set up so it will be maxed out by the end of the year. While not retirement, it'll be nice to have money put away for Medical when I end up in the hospital again.

I really need to get an Emergency fund set up though. I only have about $1400 put away into Savings, which isn't going to go far if something big comes up.

How old are you>. But yea you eill need to up your contributions.

 

[nhlducks35]

Also Barclays Online Savings gives 1% APY

 

[tokkun]

I think you can sell gains in your Roth without penalties, but you can't sell the principle you put in. But using that as emergency savings is extremely risky since your "savings" will be directly tied to the gains and losses of your Roth. If the market tanks your emergency savings are shot, and that's one of the likeliest times you will need those emergency savings, due to potential layoffs.

You make it sound as if putting the money in a Roth account means it has to go in stocks. If you are worried about volatility, just put it in a Total Bond Market index fund. Currently the yield for Vanguard's fund is 2.2% (very low by historical standards, but still double that of high-interest savings accounts) and you don't have to pay taxes on the growth. The advantage is therefore quite significant for very little risk.

From my perspective, the only real drawback to putting emergency savings in a Roth is that there is bookkeeping involved if you want to withdraw, so you will only want to use it for actual emergencies and not to pay for the sort of regular unexpected expenses that may occur every few months.

 

[giga]

You make it sound as if putting the money in a Roth account means it has to go in stocks. If you are worried about volatility, just put it in a Total Bond Market index fund. Currently the yield for Vanguard's fund is 2.2% (very low by historical standards, but still double that of high-interest savings accounts) and you don't have to pay taxes on the growth. The advantage is therefore quite significant for very little risk.

From my perspective, the only real drawback to putting emergency savings in a Roth is that there is bookkeeping involved if you want to withdraw, so you will only want to use it for actual emergencies and not to pay for the sort of regular unexpected expenses that may occur every few months.

This is my main issue, as I rarely keep much in my regular checking and move all excess over to my savings, which is pretty liquid and seamless in transfers. Is this an issue for you or do you just deal with it?

Another issue I have is that I can only contribute $5500 to my Roth, which I like to keep pretty aggressive.

 

[chaosblade]

You make it sound as if putting the money in a Roth account means it has to go in stocks. If you are worried about volatility, just put it in a Total Bond Market index fund. Currently the yield for Vanguard's fund is 2.2% (very low by historical standards, but still double that of high-interest savings accounts) and you don't have to pay taxes on the growth. The advantage is therefore quite significant for very little risk.

From my perspective, the only real drawback to putting emergency savings in a Roth is that there is bookkeeping involved if you want to withdraw, so you will only want to use it for actual emergencies and not to pay for the sort of regular unexpected expenses that may occur every few months.

That's true, plus I had the Roth withdrawal backwards. So what I said can pretty well be ignored.

 

[tokkun]

This is my main issue, as I rarely keep much in my regular checking and move all excess over to my savings, which is pretty liquid and seamless in transfers. Is this an issue for you or do you just deal with it?

When I said bookkeeping I wasn't talking about liquidity, I was talking about tax filing. When you take a distribution from your IRA you need to report it on your taxes and you need to keep track of whether the distribution is taxable or not. That is not a big deal if you keep the balance in your IRA relatively high compared to the size of the withdrawals, but if you were frequently draining it, the paperwork would become a big headache if you got audited. That's why I recommend using it as an emergency fund, but not as if it were a checking account.

On the topic of liquidity, though, I think it is pretty overrated. My expenses fall into two categories:
1. Rent & utilities
2. Credit card bills (i.e. everything else)

In both cases I know exactly when they are due, I have several weeks to pay them, and I often know how much they will be for a month or more in advance. That does not require savings account levels of liquidity. The place for savings / checking accounts is when you have bills that need to be payed in < 3 days without prior notice. Best to keep in mind that you pay for that level of liquidity in the form of lower return rates, so you are wasting money if you don't actually need it.

Another issue I have is that I can only contribute $5500 to my Roth, which I like to keep pretty aggressive.

I am fortunate to have a 401K plan that offers the Mega Backdoor Roth IRA option. This allows me to contribute as much as an additional $26K per year to my Roth IRA. Probably this will get banned at some point in the future, but until then I am going to pump as much of my money into it as possible.

Most people don't have that luxury. In your case, you would probably be better off taking the money you are keeping in savings and putting it in a taxable account. You can use your aggressive allocation there and switch the IRA to a more conservative holding with more bonds. This is idea from a tax standpoint, because you won't have to pay taxes on the distributions from the bonds and if you have to sell the stocks in the taxable account at a loss, you are eligible for tax loss harvesting.

 

[Yaboosh]

My fidelity tax form for my IRA doesn't show my 2015 contribution because I made it in January. Fidelity says it will send an updated tax form by the end of May.

How am I supposed to deduct my IRA contribution if i don't get the correct form until well after the deadline?

 

[Randolph Freelander]

My fidelity tax form for my IRA doesn't show my 2015 contribution because I made it in January. Fidelity says it will send an updated tax form by the end of May.

How am I supposed to deduct my IRA contribution if i don't get the correct form until well after the deadline?

Are you filing online? You should be able to provide the relevant data absent the form (I believe it should be self-explanatory, though I've never filed with a traditional IRA). It may ask you if the form is amended, to which you would answer yes. If you're truly concerned, I'm sure you can contact Fidelity's support, but I see you have also asked over in the tax thread, so hopefully you'll get an answer.

Filing offline? Join us in the year 2016!

 

[simplayer]

Does anyone know how to convert a Roth IRA to a traditional IRA on vanguard.com? The only thing I can see is about re-characterization, which isn't my situation. I bought a Roth IRA early in 2015, but I'm beyond the Roth income limit.

Thanks for any help

 

[chaosblade]

Does anyone know how to convert a Roth IRA to a traditional IRA on vanguard.com? The only thing I can see is about re-characterization, which isn't my situation. I bought a Roth IRA early in 2015, but I'm beyond the Roth income limit.

Thanks for any help

Are you sure recharacterizing isn't what you are looking for?

Also not sure what the benefit is, you already paid taxes on the money in a Roth. What happens if you convert it to a traditional? Do you get the taxes you paid back? Or are you double taxed?

 

[simplayer]

Are you sure recharacterizing isn't what you are looking for?

Also not sure what the benefit is, you already paid taxes on the money in a Roth. What happens if you convert it to a traditional? Do you get the taxes you paid back? Or are you double taxed?

Not sure, maybe it is. I thought re-characterization was only for Traditional->Roth->Traditional. I'm only Roth->Traditional.

Since I'm beyond the income limits for Roth, I have to pay 6% over-age charges.

 

[chaosblade]

Not sure, maybe it is. I thought re-characterization was only for Traditional->Roth->Traditional. I'm only Roth->Traditional.

Since I'm beyond the income limits for Roth, I have to pay 6% over-age charges.

Could you not leave it as is and open a traditional IRA? I'm not sure if Vanguard lets you do that or not. You can also do go with the backdoor Roth option if you prefer Roth to traditional.

 

[simplayer]

Could you not leave it as is and open a traditional IRA? I'm not sure if Vanguard lets you do that or not. You can also do go with the backdoor Roth option if you prefer Roth to traditional.

I could, but then I'd owe the the overage charges. Using a traditional will only help me for 2016 and beyond. I can't do a backdoor Roth either since I'm beyond the income limit.

 

[tokkun]

I could, but then I'd owe the the overage charges. Using a traditional will only help me for 2016 and beyond. I can't do a backdoor Roth either since I'm beyond the income limit.

There is no income limit on doing a backdoor Roth.

It sounds like what you want to do is a recharacterization of your contribution to make it a non-deductible IRA contribution. Then wait a little while and roll the money over into your Roth account.

 

[Ether_Snake]

I asked in another thread, I bet I even asked this before but I forget. Any idea why long term bonds such as the BLV ETF seems to have an inverted correlation to the DOW/S&P?

 

[tokkun]

I asked in another thread, I bet I even asked this before but I forget. Any idea why long term bonds such as the BLV ETF seems to have an inverted correlation to the DOW/S&P?

They are both correlated with monetary policy. When stocks are doing poorly, the Fed will cut interest rates. If interest rates go down, then long-term bonds become more valuable because they pay at the older, higher rate. When stocks are hot, the opposite happens.

There's probably also a psychological component. When you're in a bull market, people are willing to take more risks. When things get choppy, they flee to lower volatility investments.

 

[Ether_Snake]

They are both correlated with monetary policy. When stocks are doing poorly, the Fed will cut interest rates. If interest rates go down, then long-term bonds become more valuable because they pay at the older, higher rate. When stocks are hot, the opposite happens.

There's probably also a psychological component. When you're in a bull market, people are willing to take more risks. When things get choppy, they flee to lower volatility investments.

I see, makes sense. Thanks!

 

[Shagwell]

Can someone confirm I did this correctly so I can rest easy?

I opened a Roth IRA brokerage account with Vanguard, connected my bank, and invested the money I was able to put in my Roth IRA for the time being VANGUARD TARGET RETIREMENT 2055 INVESTOR CL (mutual fund?).

Now can I just sit back and forget about it 'til next year, as with most retirement investments?

 

[TylerD]

I just did some addition to see how much I have put towards killing my student loans vs investing since I moved and started my new job in 09/2013

Loans: 22K now with ONLY 1.3K remaining!
401K (4% match not included) + Rollover + Roth IRA: 19K

Pretty excited to get that student loan monkey off of my back and pour a ton more into my retirement. I'll increase my car payment to 500 a month from 318 and finish it off in a year and will be completely debt free. That will be paid off a lot faster if I can move in with my girlfriend and reduce my rent + utilities cost around 500-600 a month.

 

[RumblingRosco]

-

 

[hwateber]

Can someone confirm I did this correctly so I can rest easy?

I opened a Roth IRA brokerage account with Vanguard, connected my bank, and invested the money I was able to put in my Roth IRA for the time being VANGUARD TARGET RETIREMENT 2055 INVESTOR CL (mutual fund?).

Now can I just sit back and forget about it 'til next year, as with most retirement investments?

Should be able to yeah, especially since you put it all in a target date fund. They're designed for investors who want to just set it and forget it

 

[Shagwell]

Should be able to yeah, especially since you put it all in a target date fund. They're designed for investors who want to just set it and forget it

Yep. That's the plan.

Cheers folks. Much obliged.

 

[PS3GamerKyle]

what are y'all opinions on REIT exposure in your Roth account?

I've been reading up on them and have become more and more interested. The fact that they disperse 90% or more of their income as dividends or capital gains is tempting.

Vanguard has a REIT index fund and REIT ETFs. Not sure which route to go. Suggestions?

 

[tokkun]

what are y'all opinions on REIT exposure in your Roth account?

I've been reading up on them and have become more and more interested. The fact that they disperse 90% or more of their income as dividends or capital gains is tempting.

Vanguard has a REIT index fund and REIT ETFs. Not sure which route to go. Suggestions?

They seem to be positively correlated with the stock market and don't provide historically better returns, so I've never really seen the point, but then again I consider simplicity to be a virtue in portfolios.

Even among people who like to slice and dice, it seems like most limit their REIT holdings to around 10%.

 

[Daante]

Hi guys,

I would like to get some outside perspective on my situation.

I have now streamlined my needs, and economy to basically being able to live &#8220;good&#8221; having 25% of my monthly net income in fixed expenses.

On a yearly basis I can now easily save/invest 20k us dollars, yet being able to buy and do all the things that I feel I want.

Currently I have about 10k us dollars saved, 1k us dollars in index funds, and around 3-5k us dollars in retirement savings through previous and current employments. I also have at least 100k us dollars in pure assets/money (after taxes) the day I decide to sell my current real estate.

If we count 5 years ahead from now, I could by then have paid off all of my current mortgages, and get at least 200k us dollars in pure assets/money (after taxes) the day I decide to sell my current real estate. I can ignore to pay off my mortgages and go down the investment route 100% but im very sceptical if this money will have grown significantly 5 years from now. I feel its more risk compared to reward. Being totally mortgages free would be a huge reward/dream in my book.

In this equation I have not put in the possibility to become a father, and the expenses that comes with it. Technically me and my girlfriend could raise a child (read child in 0-2 years old) in my current real estate.
We both feel that if we will have kid/kids in the future, it might be time to look for something else, and with that im afraid the mortgage/a new mortgage would be increased compared to now.

Im in my mid 30:s, and career and salary wise, realistically 5 years down the road i can increase my yearly gross salary by at least 10% , and by even/much more as I move up the ranks in my industry.

This would yearly net me around these figures.

2016 - 2,5 k us dollar more compared to yearly net salary now (this years salary negotiation haven&#8217;t been held yet)
2017 - 7 k us dollar more compared to yearly net salary now
2018 - 9,7k us dollar more compared to yearly net salary now
2019 &#8211; 20k us dollar more compared to yearly net salary now
2020 &#8211; 30k us dollar more compared to yearly net salary now

My hardest thing I have to deal with a few times/year is that I get into this mood and really feel its time to sell my current real estate, cashing in the profits and move to another place. Iv been living there for many, many years now, so a big part inside me feels this need to move. Its kinda hard to describe but I will admit that iv been very close to putting serious offers up on the table for a new home.

The thing is that my current real estate basically ticks most of the boxes for what I consider I actually need in a home (without kids). On top of this the real estate market in my country is absolutely crazy now, with advertised prices going up at least 20-25% in general (sometimes even more), and the mortgage rate being extremely low. Its kinda normal for people here to on average have 400-500k us dollars in mortgages, and as long as the mortgage rate is this low it is of course no panic. Yet at the same time every week forecasts says that the rate will go up in the future.

My goal is to being able to live purley on the return from investments 20 years from now , (before im 55), and by that time basically being able to unplugg myself from the Matrix, 8-5 mon-fri.

Any thoughts, tips or mindsets on my situation?
Thanks

 

[tokkun]

Hi guys,

I would like to get some outside perspective on my situation.

...

My goal is to being able to live purley on the return from investments 20 years from now , (before im 55), and by that time basically being able to unplugg myself from the Matrix, 8-5 mon-fri.

Any thoughts, tips or mindsets on my situation?
Thanks

When you have a specific retirement goal in mind, I think it helps to figure out what you need for that goal and then work your way backward in time to figure out the milestones you need to hit to stay on track.

For early retirement, it's important that you are not drawing down the balance of your savings much, because they will deplete pretty quickly if your withdrawal rate is much larger than the rate at which it generates income. Start by thinking about how optimistic you are about the real return on the investment mix you want to have as a retiree (often this will be a more conservative holding than many people have when they are young). This is going to vary based on inflation in your country and the return on your investment opportunities, but in the US I would say that people typically estimate a rate somewhere in the range of 3-5%. If your withdrawal rate is 3-5%, then you will need 20-33X as much money invested at the start of retirement as you plan to withdraw each year.

Think about what sort of lifestyle you want to live in retirement, and make an estimate on the yearly expenses for that lifestyle. Multiply it by 20-33X depending on your level of optimism and risk tolerance, adjust for the tax rate you expect to have in retirement, factor in any additional retirement income you might have like pensions or government assistance, and you have the amount of savings you need to accrue (in today's dollars).

Once you find a specific target amount, you can find any number of online retirement calculators that will let you figure out what sort of investment rate you need to be on track to meet it.

 

[anonymous_abc]

Hi guys,

I would like to get some outside perspective on my situation.

I have now streamlined my needs, and economy to basically being able to live “good” having 25% of my monthly net income in fixed expenses.

On a yearly basis I can now easily save/invest 20k us dollars, yet being able to buy and do all the things that I feel I want.

Currently I have about 10k us dollars saved, 1k us dollars in index funds, and around 3-5k us dollars in retirement savings through previous and current employments. I also have at least 100k us dollars in pure assets/money (after taxes) the day I decide to sell my current real estate.

If we count 5 years ahead from now, I could by then have paid off all of my current mortgages, and get at least 200k us dollars in pure assets/money (after taxes) the day I decide to sell my current real estate. I can ignore to pay off my mortgages and go down the investment route 100% but im very sceptical if this money will have grown significantly 5 years from now. I feel its more risk compared to reward. Being totally mortgages free would be a huge reward/dream in my book.

In this equation I have not put in the possibility to become a father, and the expenses that comes with it. Technically me and my girlfriend could raise a child (read child in 0-2 years old) in my current real estate.
We both feel that if we will have kid/kids in the future, it might be time to look for something else, and with that im afraid the mortgage/a new mortgage would be increased compared to now.

Im in my mid 30:s, and career and salary wise, realistically 5 years down the road i can increase my yearly gross salary by at least 10% , and by even/much more as I move up the ranks in my industry.

This would yearly net me around these figures.

2016 - 2,5 k us dollar more compared to yearly net salary now (this years salary negotiation haven’t been held yet)
2017 - 7 k us dollar more compared to yearly net salary now
2018 - 9,7k us dollar more compared to yearly net salary now
2019 – 20k us dollar more compared to yearly net salary now
2020 – 30k us dollar more compared to yearly net salary now

My hardest thing I have to deal with a few times/year is that I get into this mood and really feel its time to sell my current real estate, cashing in the profits and move to another place. Iv been living there for many, many years now, so a big part inside me feels this need to move. Its kinda hard to describe but I will admit that iv been very close to putting serious offers up on the table for a new home.

The thing is that my current real estate basically ticks most of the boxes for what I consider I actually need in a home (without kids). On top of this the real estate market in my country is absolutely crazy now, with advertised prices going up at least 20-25% in general (sometimes even more), and the mortgage rate being extremely low. Its kinda normal for people here to on average have 400-500k us dollars in mortgages, and as long as the mortgage rate is this low it is of course no panic. Yet at the same time every week forecasts says that the rate will go up in the future.

My goal is to being able to live purley on the return from investments 20 years from now , (before im 55), and by that time basically being able to unplugg myself from the Matrix, 8-5 mon-fri.

Any thoughts, tips or mindsets on my situation?
Thanks

Plug your numbers in cfiresim.
Understand the trinity study.
Go join the Forums at Mr Money Mustache.
Welcome to the world of early retirement.

 

[Barkley's Justice]

OK, I think I want to stop this bleeding and move my money out of my Vanguard SEP IRA. What are my options?

I am thinking perhaps something like a no risk investment, like a high-yield savings account. I don't expect better than 1% return...Adjusted for 3% inflation a 1% return is like -2%...Still, that's better than taking the huge losses I've been looking at for the last 6 months.

Maybe Vanguard has a savings account/money market fund? Anyone know how the taxes work with a SEP IRA?

 

[Yaboosh]

OK, I think I want to stop this bleeding and move my money out of my Vanguard SEP IRA. What are my options?

I am thinking perhaps something like a no risk investment, like a high-yield savings account. I don't expect better than 1% return...Adjusted for 3% inflation a 1% return is like -2%...Still, that's better than taking the huge losses I've been looking at for the last 6 months.

Maybe Vanguard has a savings account/money market fund? Anyone know how the taxes work with a SEP IRA?

How long until you need the money?

 

[Randolph Freelander]

OK, I think I want to stop this bleeding and move my money out of my Vanguard SEP IRA. What are my options?

I am thinking perhaps something like a no risk investment, like a high-yield savings account. I don't expect better than 1% return...Adjusted for 3% inflation a 1% return is like -2%...Still, that's better than taking the huge losses I've been looking at for the last 6 months.

Maybe Vanguard has a savings account/money market fund? Anyone know how the taxes work with a SEP IRA?

Dude. Take a step back and don't be crazy. The markets fluctuate. Don't take kneejerk actions for your long term retirement planning based on short term fluctuations.

Your losses over the last few months shouldn't be considerable, and they're inconsequential unless you are very close to retiring. Let's take another look, OK? You say "huge losses," but reality is the S&P is looking at low single-digit losses over 3 months, is actually up from 6 months ago, but is overall low single-digit losses from 1 year ago. It's up 50% from 5 years ago, and it's up 54% from 10 years ago, which was before the financial collapse. Your investments, assuming they are properly allocated, are fine. You're fine. Leave your money in your IRA.

That said, if you want to talk further about how your money is allocated within your IRA, we can certainly help, but the most basic advice for you would be to find the Vanguard target date fund closest to your anticipated retirement window and put your funds there. If you want more active self-management of your funds, we can help you find funds that suit your particular risk tolerance, but based on what you just said, I think the target date fund would suit you well (and then you had best set it and forget it for a while).

 

[Yaboosh]

Are target funds worth the extra expense?

The recommended fidelity target fund has an expense ratio of 0.75% while the index funds i currently have range from 0.07% to 0.17%.

 

[Randolph Freelander]

Are target funds worth the extra expense?

The recommended fidelity target fund has an expense ratio of 0.75% while the index funds i currently have range from 0.07% to 0.17%.

A target fund at 0.75% is something to avoid. I'm surprised Fidelity is that high, given that they are competitive on their index funds.

The Vanguard Target Retirement 2050 fund is at 0.16%.

Edit: A quick glance at Morningstar, it seems that Fidelity uses their managed funds to back the target funds, whereas Vanguard uses their index funds. It's a different strategy, but not one I would prefer to use (and I am with Fidelity, but I just use the index funds and manage the allocations on my own).

 

[Earthstrike]

OK, I think I want to stop this bleeding and move my money out of my Vanguard SEP IRA. What are my options?

I am thinking perhaps something like a no risk investment, like a high-yield savings account. I don't expect better than 1% return...Adjusted for 3% inflation a 1% return is like -2%...Still, that's better than taking the huge losses I've been looking at for the last 6 months.

Maybe Vanguard has a savings account/money market fund? Anyone know how the taxes work with a SEP IRA?

Don't play the loser's game. The objective is to buy low, sell high. Right now, you would be selling low, and forgoing an opportunity to buy low for what I can only describe as no good reason whatsoever.

 

[chaosblade]

Don't play the loser's game. The objective is to buy low, sell high. Right now, you would be selling low, and forgoing an opportunity to buy low for what I can only describe as no good reason whatsoever.

Being relatively young, I like to think more about the number of shares I am accumulating. The value isn't import yet.

 

[Oxn]

Is 37k so far in my 401k fine if im closing in on 31?

 

[Yaboosh]

Is 37k so far in my 401k fine if im closing in on 31?

That isnt a question that can be answered without saying how much you make, when you want to retire, how much you want to retire with etc.

There are lots of retirement calculators out there that can tell you if you are on track, behind, ahead.

 

[Oxn]

That isnt a question that can be answered without saying how much you make, when you want to retire, how much you want to retire with etc.

There are lots of retirement calculators out there that can tell you if you are on track, behind, ahead.

But is it?

 

[Flo_Evans]

Is 37k so far in my 401k fine if im closing in on 31?

Rough goal for 30's is to have 1x your annual salary in savings. So you could be doing good or bad.