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[Randolph Freelander]

Thanks for the explanation! I will have to step up my game. I will try to double that. That should be enough.

You're really going to need to think more about this, and perhaps check those links provided in FliXFantatier's post.

Going with your original goal of retiring by 50, $12000 per year does not get you there. With a 9% compounded return over 20 years, you get to a bit over 600K. You need a much, much larger nest egg unless your expenses are just crazy low. $12K per year does set you up nicely to retire at 65, where you will have accumulated assets (based on the 9%) of nearly 2.6 million.

Frankly, I don't know what a good target is for accumulated assets for someone wanting to retire at 50. But to get to the same nearly 2.6 million, you would need to invest 50K per year for 20 years (with the same returns mentioned before).

 

[tokkun]

Frankly, I don't know what a good target is for accumulated assets for someone wanting to retire at 50.

The whole idea of setting something like a 4% withdrawal target at age 50 seems quixotic to me. Over a 40 or 50-year time horizon in retirement there is too much uncertainty in your annual expenses because it depends so much on individual factors (like your health) and societal factors (like taxes and social services) that are unpredictable this far in advance.

Just try to imagine someone in 1976 trying to accurately estimate how much they would be spending today. I think they would be lucky to be within a factor of 2X in either direction.

 

[Walter White Walker]

This thread is really good. I was reading up on investing.

I'm 30 and I have a good job (finally). My dream is to retire early. (around 45-50).

I want to invest at least 6000 per year to do that. Will I be able to retire early by then or do I need to save up and invest more?

Also what type of account(s) are you investing in. 401k's and IRA have a penalty if you withdraw before 59 1/2.

 

[otake]

I've been asking myself this question lately:

Should I make extra payments towards my mortgage or open a roth ira?

Both are illiquid. Mortgage rate at 3.6 which is higher than a 30 year treasury bond.

I guess it comes down to whether I believe I can average more than 3.6% returns on the stock market..

 

[NewFresh]

I've been asking myself this question lately:

Should I make extra payments towards my mortgage or open a roth ira?

Both are illiquid. Mortgage rate at 3.6 which is higher than a 30 year treasury bond.

I guess it comes down to whether I believe I can average more than 3.6% returns on the stock market..

I'm actually in the same situation. Would love to hear some thoughts on this.

 

[Chris R]

I think it depends.

Are you still paying PMI?

 

[Randolph Freelander]

I've been asking myself this question lately:

Should I make extra payments towards my mortgage or open a roth ira?

Both are illiquid. Mortgage rate at 3.6 which is higher than a 30 year treasury bond.

I guess it comes down to whether I believe I can average more than 3.6% returns on the stock market..

Roth.

Your mortgage is a 15-30 year thing. Over long timescales, the market is going to far outpace the interest you're paying, so you might as well keep paying it so that you have more money to invest at higher rates of return.

To dive just a tad deeper, I'm going to assume that you itemize your deductions at tax time and include your mortgage interest, which is going to reduce your real interest rate by whatever marginal tax you happen to avoid. So let's say you're in the 25% bucket at the top end of your taxable income, your mortage interest paid is $5000, which means you'll get back $1250 of it. Your effective interest rate therefore was not 3.6%, it was 2.7%, which goes to illustrate that the spread between average market rates of return and your mortgage interest is going to be higher still.

Go with the Roth, and generally prefer investing over escalated mortgage payments. It's the better financial play for the average person over long timescales.

 

[anonymous_abc]

600K.

That'd work for me.

 

[Randolph Freelander]

That'd work for me.

Not in these here United States of America, it wouldn't. But you're only potentially temporarily of that ilk, if my recollection is correct.

 

[GhaleonEB]

I've been asking myself this question lately:

Should I make extra payments towards my mortgage or open a roth ira?

Both are illiquid. Mortgage rate at 3.6 which is higher than a 30 year treasury bond.

I guess it comes down to whether I believe I can average more than 3.6% returns on the stock market..

If you are going at this from a purely financial angle, take Randolph's advice; it's not even close, really. Go with the IRA.

There are other reasons to pay down a mortgage early, but those are more life style and goal driven rather than pure financial. My situation is, we're paying down the mortgage fast (which still contributing heavily to our 401k, just not as much as we could otherwise) because I want the flexibility having the mortgage paid down will afford us (change jobs/careers, free up cash flow for other things, ect.). It's a negative ROI from a long term play, but it will mean we get to do different things in the meantime. At this point in my life, that's more important.

But that's a very specific situation. For most, it will be better to focus on retirement.

 

[Randolph Freelander]

I was going to add something about the intangible value of peace of mind, and say something snarky about peace of mind being bad finance, but Ghaleon's post covers more about advantages that might also be important, depending on your situation.

I'm not saying don't throw a few extra bucks at your mortgage ever, but if you ever want to think like a robot, then prefer the investment when you have the opportunity.

I will note that I don't behave like a robot, either. I paid off my car ~18 months early, which is in reality a bad financial choice. But I did it anyway because I don't really know.

 

[anonymous_abc]

Not in these here United States of America, it wouldn't. But you're only potentially temporarily of that ilk, if my recollection is correct.

2k a month wound easily cover our basic expenses.

 

[Randolph Freelander]

2k a month wound easily cover our basic expenses.

Wait until you factor in inflation and the escalating cost of healthcare! The math changes a bit if the nest egg is after or before tax, though, but still, 600K really doesn't go far, and certainly not if you're retiring at 50, at least not for the average person's lifestyle. Certainly, some people can make a buck go farther.

 

[GhaleonEB]

* I should note we only started paying down the mortgage at a very accelerated rate after saving for retirement for nearly 20 years. When we calculated where we were on our desired retirement savings trajectory, we're actually a bit ahead. So we could do it without derailing our long term goals, and get some peace of mind / flexibility along the way.

I would not advise paying down a mortgage quickly if you are pretty early in your retirement savings, under any circumstance I can think of. Those early years make an enormous difference in the long term; don't short circuit that curve.

 

[Randolph Freelander]

Because I like typing formulas into Excel, I guess (and I like illustrating things with real world values), I ran the numbers on a hypothetical Roth vs. escalated mortgage paydown. I held market rate of return to 9%, mortgage interest at 3.6% (fixed). I used a $200,000 loan over 30 years, which equated to monthly payments (principal and interest) of $909.29.

If we just pay the minimum and invest $5500 per year (going in monthly at $458.33), we obviously pay off the mortgage after 30 years, and the Roth IRA balance grows to $839,090.76.

Alternately, we could forego the Roth, apply the extra $458.33 per month to the mortgage, which makes the payment $1367.62. This payment will eliminate the mortgage in just over 16 years, or 192.798673 months (decimal places...). After this, we can invest the full $1367.62 into the market each month. Doing so for the remainder of the 30 year period allows your investments to grow to $453,679.77.

The robot prefers the minimum monthly payment on the mortgage. Not even mentioned in the above is the tax break you'll get from the mortgage interest, and the tax advantage you'll have with the Roth when you start making tax-free withdrawals (the second scenario couldn't be pure Roth, so part of the balance would have taxable capital gains).

 

[Cyan]

I think between Ghaleon and Randolph they pretty much nailed it. It's always important to consider your own state of mind in financial decisions, but it's also important to look at the math.

 

[Mrbob]

Selling BRK B and going into SPY is fine. Selling and waiting on a correction to go into SPY is not. Move your funds or don't, but don't try to time the market.

Yeah I hear ya, late at night when typing before poor choice of words. I meant pullback since SP500 is near all time highs, and if it doesn't breach those highs it'll probably go back a bit before going back up.

 

[Piecake]

Yeah I hear ya, late at night when typing before poor choice of words. I meant pullback since SP500 is near all time highs, and if it doesn't breach those highs it'll probably go back a bit before going back up.

Why are you worrying about all time highs?

All time highs are constantly breached by the market. If all time highs werent then we would all be horribly horribly screwed

Worrying about all time highs and devising strategies around that is a form of market timing. Market timing doesnt work. Sitting out of the market and waiting for a pushback from a market's all time high means that you will be out of the market for an indeterminate period of time. And the number one reason why people do poorly in the market is because they are out of the market and lose out on gains and get in at a less than optimal time because market timing is impossible.

The easiest way to solve that issue is not to time the market and make decisions based on which investment has the best prospects for your timeframe, goal, and risk tolerance, and not care when you invest. Just invest.

I would obviously go with SPY, but it is pretty obvious that I think index investing is the only way to go.

 

[tokkun]

If market timing worries you, you can always consider dollar-cost-averaging - splitting your planned investment into chunks, and investing each chunk at regular intervals over some longer time span.

Statistically, DCA does worse on average than just putting all of the money in at the beginning, but it's better than being paralyzed by fear and never investing at all. Everyone is susceptible to being swayed by emotion into making bad investment decisions. Smart investors are the ones who recognize their own limitations and come up with strategies to compensate for them.

 

[Cyan]

Yeah I hear ya, late at night when typing before poor choice of words. I meant pullback since SP500 is near all time highs, and if it doesn't breach those highs it'll probably go back a bit before going back up.

This is still trying to time the market, amigo.

 

[nextgeneration]

So, I read an article saying that you should not contribute the maximum to your 401k and that would be a huge mistake if you were to do so. Reason being is that when it comes time for retirement, that 401k will be taxed at the ordinary income tax rate, which would be crazy high, assuming your 401k is worth a lot. I just looked it up and if you have $466,950 in your 401k, that will be taxed at a crazy high 39.60% when you withdraw that money at retirement, which is freaking ridiculous!

So, the better alternative is to only contribute up to the company match for your 401k, and whatever money you have left over to invest, put that money elsewhere, like a ROTH IRA, HSA, and even stocks.

Anyone have any opinions on this?

 

[Mrbob]

Last couple years when the SP500 hits this level it retraces back to 1900, and it's happened twice already. I understand what you guys are saying but are the fundamentals there right now to break a new high and stay there? I question that at the moment.

Perhaps I have a slightly different philosophy where I don't mind waiting to see a 5 to 10% dip from highs in the market before putting money in.

I honestly couldn't tell you why I care this much for the SPY investment as I put money into a Betterment account every month and barely look at it. It is not like I plan on using this money right away anyway, I plan on investing in SPY 30+ years like I am at Betterment. If the SP500 is still at 2100 30 years from now there are bigger issues at hand. Maybe it is just an ego thing where I want to try and maximize when I invest.

Now that I think about it, am I over diversifying myself putting money into Betterment (which spreads the money out into like 8 etfs) and SPY...perhaps I should just stick with putting the money into betterment.

 

[tjohn86]

So, I read an article saying that you should not contribute the maximum to your 401k and that would be a huge mistake if you were to do so. Reason being is that when it comes time for retirement, that 401k will be taxed at the ordinary income tax rate, which would be crazy high, assuming your 401k is worth a lot. I just looked it up and if you have $466,950 in your 401k, that will be taxed at a crazy high 39.60% when you withdraw that money at retirement, which is freaking ridiculous!

So, the better alternative is to only contribute up to the company match for your 401k, and whatever money you have left over to invest, put that money elsewhere, like a ROTH IRA, HSA, and even stocks.

Anyone have any opinions on this?

You don't empty the 401k all at once. You take out small amounts and balance taxable vs untaxable income throughout your retirement to keep taxes low.

Oversimplified:

50K from 401k + 50K from a roth IRA = 50k taxable income but 100K to live on.

 

[Cyan]

So, I read an article saying that you should not contribute the maximum to your 401k and that would be a huge mistake if you were to do so. Reason being is that when it comes time for retirement, that 401k will be taxed at the ordinary income tax rate, which would be crazy high, assuming your 401k is worth a lot. I just looked it up and if you have $466,950 in your 401k, that will be taxed at a crazy high 39.60% when you withdraw that money at retirement, which is freaking ridiculous!

So, the better alternative is to only contribute up to the company match for your 401k, and whatever money you have left over to invest, put that money elsewhere, like a ROTH IRA, HSA, and even stocks.

Anyone have any opinions on this?

Distributions from your 401k will be taxed at ordinary income rates, yes. Not the full amount. In fact, it's quite possible you'll pay a lower tax rate in the future on your 401k distributions than you are now on regular income, depending on how much you will be withdrawing compared to your current earnings.

It's possible that putting money in a Roth is a good idea, but it's never going to be the case that a taxable account is preferable to a 401k, barring some bizarre circumstance I've never heard of.

Last couple years when the SP500 hits this level it retraces back to 1900, and it's happened twice already. I understand what you guys are saying but are the fundamentals there right now to break a new high and stay there? I question that at the moment.

Perhaps I have a slightly different philosophy where I don't mind waiting to see a 5 to 10% dip from highs in the market before putting money in.

I honestly couldn't tell you why I care this much for the SPY investment as I put money into a Betterment account every month and barely look at it. It is not like I plan on using this money right away anyway, I plan on investing in SPY 30+ years like I am at Betterment. If the SP500 is still at 2100 30 years from now there are bigger issues at hand. Maybe it is just an ego thing where I want to try and maximize when I invest.

Now that I think about it, am I over diversifying myself putting money into Betterment (which spreads the money out into like 8 etfs) and SPY...perhaps I should just stick with putting the money into betterment.

This seems like a case where knowing your own psychology can help you make better decisions. If you'll find it easy to put money into Betterment whenever, but investing directly in ETFs yourself makes you freeze up because you want to find just the right moment, then absolutely put it in Betterment.

 

[nextgeneration]

You don't empty the 401k all at once. You take out small amounts and balance taxable vs untaxable income throughout your retirement to keep taxes low.

Oversimplified:

50K from 401k + 50K from a roth IRA = 50k taxable income but 100K to live on.

Ah, I thought I had to cash out the entire 401k at time of retirement. Ok, this makes it much better, then. Thanks!

Distributions from your 401k will be taxed at ordinary income rates, yes. Not the full amount. In fact, it's quite possible you'll pay a lower tax rate in the future on your 401k distributions than you are now on regular income, depending on how much you will be withdrawing compared to your current earnings.

It's possible that putting money in a Roth is a good idea, but it's never going to be the case that a taxable account is preferable to a 401k, barring some bizarre circumstance I've never heard of.

Cool, thanks!

 

[tokkun]

Last couple years when the SP500 hits this level it retraces back to 1900, and it's happened twice already. I understand what you guys are saying but are the fundamentals there right now to break a new high and stay there? I question that at the moment.

Two events is a coincidence, not a pattern.

 

[voOsh]

I want to max out my 401k at work (through Fidelity) but I'm concerned about over contributing. I can do the math to work out the contribution % I need to hit the annual limit but it's not going to be exact. Will Fidelity stop taking my contributions when I hit the limit or do I have to micro-manage this?

 

[Cyan]

I want to max out my 401k at work (through Fidelity) but I'm concerned about over contributing. I can do the math to work out the contribution % I need to hit the annual limit but it's not going to be exact. Will Fidelity stop taking my contributions when I hit the limit or do I have to micro-manage this?

Unless there's something weird about the way your company manages their 401k, they'll stop when you hit the limit. The last paycheck will have a contribution that reaches the max, and then until the end of the year no further contributions will be taken out of your paychecks.

 

[greyshark]

Because I like typing formulas into Excel, I guess (and I like illustrating things with real world values), I ran the numbers on a hypothetical Roth vs. escalated mortgage paydown. I held market rate of return to 9%, mortgage interest at 3.6% (fixed). I used a $200,000 loan over 30 years, which equated to monthly payments (principal and interest) of $909.29.

If we just pay the minimum and invest $5500 per year (going in monthly at $458.33), we obviously pay off the mortgage after 30 years, and the Roth IRA balance grows to $839,090.76.

Alternately, we could forego the Roth, apply the extra $458.33 per month to the mortgage, which makes the payment $1367.62. This payment will eliminate the mortgage in just over 16 years, or 192.798673 months (decimal places...). After this, we can invest the full $1367.62 into the market each month. Doing so for the remainder of the 30 year period allows your investments to grow to $453,679.77.

The robot prefers the minimum monthly payment on the mortgage. Not even mentioned in the above is the tax break you'll get from the mortgage interest, and the tax advantage you'll have with the Roth when you start making tax-free withdrawals (the second scenario couldn't be pure Roth, so part of the balance would have taxable capital gains).

Another factor to consider in any loan repayment plan is the interest rate on the loan. With mortgage rates at historic lows it's usually not a good idea to make extra payments since you're not saving yourself as much on unpaid interest. Go back to the 12% rates we had in the 80's though and I wonder how different the math would look.

 

[Wellington]

I want to max out my 401k at work (through Fidelity) but I'm concerned about over contributing. I can do the math to work out the contribution % I need to hit the annual limit but it's not going to be exact. Will Fidelity stop taking my contributions when I hit the limit or do I have to micro-manage this?

My company uses Fidelity and they stop your contributions. I called them and verified this is the case (with my company).

The real reason I called was along these lines - once I hit the limit and my contribution no longer goes in, my company does not put any further money into the pot until I start contributing again. For most of the year I contribute at a rate that would exceed the $18k at the end of the year because I want to put my money in as fast as possible to maximize on divs and compounding. I do the math to see where in the year I should dip back to only the 5% my company matches so I get all of what's coming to me for free.

That difference at the end of the year I then set aside for my next year IRA contribution. This system worked well for me last year and I am executing the same plan again.

TLR - Contribute at least the company max match amount each pay period to reap that delicious 100% ROI.

 

[SephiZack]

So I'm a 20 years old European student and I've read the first post and some of the UK related posts and I don't know if I understood it well. I know it's still early for me because I won't have a job until at least after university which is like in at least 5 years, but I want to at least get information now so that I'm prepared when I start working and from what I've read, thanks to the power of maths and exponentials, the earlier I start investing the better it is. I've also told my girlfriend to think about this, regardless of whether we'll still be together by the time we're retired.

When I'll start working, I'll probably work in UK (unless brexit makes it too difficult) and from what I've read here and online I can't buy index funds by myself? (sorry for my ignorance, they don't teach us this stuff in school) Is there an easy way to do everything by myself on a computer? Or do I have to go around and look for a broker? What I'm interested in is growth, by how much would my funds grow each year and what is the best way to achieve higher and safer growth?

 

[anonymous_abc]

When I'll start working, I'll probably work in UK (unless brexit makes it too difficult) and from what I've read here and online I can't buy index funds by myself? (sorry for my ignorance, they don't teach us this stuff in school) Is there an easy way to do everything by myself on a computer? Or do I have to go around and look for a broker? What I'm interested in is growth, by how much would my funds grow each year and what is the best way to achieve higher and safer growth?

What makes you think you cannot buy ETF index funds by yourself? All you need is a brokerage account at a bank.
And why not start now? Even if it is just 50 pounds a month, it gets you into the habit and you get to dip your toes into the idea.

Higher and safer growth are oxymoron.
I this thread we do not believe in higher risk = higher reward. Most of us are 100% passive investors who set a course and just sail the winds as they come. The worst thing you can do is panic and sell when things are looking bad and try to time the market when buying into or selling out of the market.

 

[Miles Quaritch]

Yeah, you can invest yourself. There's no real barrier to getting and doing as said above.

I currently use - http://www.tddirectinvesting.co.uk/ - there might be better options, in fact I'm like 90 per cent sure there are, but they've been pretty good for me so far. No real hassles. My uncle helped me out when I first started and i just stuck with it. I should probably start to look around at other options though.

By the way, anyone subscribe to Sharewatch? http://www.scsw.co.uk/

Worth the price?

 

[anonymous_abc]

By the way, anyone subscribe to Sharewatch? http://www.scsw.co.uk/

Worth the price?

Unlikely we are all passive index buy and hold investors not stock pickers.

 

[SephiZack]

Thank you for your replies, it looks like I had some misconceptions about stuff.
Actually I think I used the wrong wording when I said "high growth and safe". I'm not thinking about beating the market and stuff, what I mean is that I've read somewhere in this thread about 7% increase (don't know if before or after taking into account inflation) and for me a 5% increase would already be high.

Are ETF index funds the same low cost index funds that the OP talks about? I wondered what type of growth I could expect from them.

The reason why I don't start now is because I still rely on my parent's money and I don't get an allowance, it's a "if you need something, ask us for money" situation and having a small language barrier between me and them (Chinese parents but I was born in Italy, they don't understand Italian well and I can't speak Chinese well apart from simple conversations) it would be difficult for me to explain them this thing but as soon as I get money from relatives' gifts and stuff I will definitely start investing it.

Would it be easy to get a brokerage account as a Italian student in UK?

 

[anonymous_abc]

The 7% that are always thrown around are usually based on the historic arithmetic mean of the MSCI World. Some years are gangbuster, some years are bust. on average 7%.

 

[iamblades]

Thank you for your replies, it looks like I had some misconceptions about stuff.
Actually I think I used the wrong wording when I said "high growth and safe". I'm not thinking about beating the market and stuff, what I mean is that I've read somewhere in this thread about 7% increase (don't know if before or after taking into account inflation) and for me a 5% increase would already be high.

Are ETF index funds the same low cost index funds that the OP talks about? I wondered what type of growth I could expect from them.

The reason why I don't start now is because I still rely on my parent's money and I don't get an allowance, it's a "if you need something, ask us for money" situation and having a small language barrier between me and them (Chinese parents but I was born in Italy, they don't understand Italian well and I can't speak Chinese well apart from simple conversations) it would be difficult for me to explain them this thing but as soon as I get money from relatives' gifts and stuff I will definitely start investing it.

Would it be easy to get a brokerage account as a Italian student in UK?

It all depends on your definition of safe. In this thread our definition of safe is 'will go up substantially over a period of 20-30 years barring an economic apocalypse that makes money pointless anyway' which is where index investing comes into play. The only bet we are making is that on average, companies are profitable over the long term. We don't try to pick which companies, we don't try to pick when they will be profitable, we just buy them all and assume that on average they will make money over the long term because businesses that lose money don't tend to stick around.

The institutional and traditional definition of safe is that the principal can never go down. If you use this definition of safe it is very difficult to even beat inflation, much less get high returns.

ETF index funds can be low cost, or they can be high cost, it depends on what the particular ETF is.. An ETF is just a packaging format really, it allows you to buy a mutual fund as you would buy an individual stock, so you don't need thousands of dollars to get started. Check the prospectus on the fund to see the investment strategy and fees and shop around to find the best one.

Should be relatively easy to get a brokerage account in the UK, but the Euro guys will have more information, I don't know what kind of tax implications that will have.

 

[SephiZack]

I came across a robo advisor called MoneyFarm which is available to Italian and UK residents (perfect for me from that point of view, as I often move between Italy and UK). Is using these robo advisors a reliable way to invest money?
The fees sound convenient (although I could be wrong, being inexperienced): https://www.moneyfarm.com/uk/pricing

 

[Oni Jazar]

I'm looking to diversify my geographic investments. Right now I've been putting some money into VGTSX (Vanguard Total International Stock Index Fund) but the performance really isn't that great even over 10 years. Are there any other suggestions?

 

[Randolph Freelander]

I'm looking to diversify my geographic investments. Right now I've been putting some money into VGTSX (Vanguard Total International Stock Index Fund) but the performance really isn't that great even over 10 years. Are there any other suggestions?

Not really, if diversification is your goal. International markets have been anemic for a while. Blame austerity.

 

[Piecake]

I came across a robo advisor called MoneyFarm which is available to Italian and UK residents (perfect for me from that point of view, as I often move between Italy and UK). Is using these robo advisors a reliable way to invest money?
The fees sound convenient (although I could be wrong, being inexperienced): https://www.moneyfarm.com/uk/pricing

Those fees will cost you a significant amount of money over the long term.

https://www.daveramsey.com/blog/investment-calculator/#/entry_form

You can play around with that calculator to see for yourself. Since you are so young it will likely be over a 40 year period and I would assume a 7% return for convenience sake. How much you invest each year on average will be up to you obviously, but if you want to find how much that program costs, just drop that return from 7% to 6.4-6.6%. That's a lot of money for that program doing something that you could easily do with a bit more research and confidence.

The investment strategy is very very simple. All you have to do is find an online broker like Vanguard or some other broker that does business in England, open up an account, (then open up any retirement vehicles that England has if you qualify), and then buy and start putting money into an index fund/s (can either be a mutual fund or ETF - Doesnt matter).

That is basically it. It is very simple and requires you to do very little. Buy index funds (in a retirement vehicle if you qualify), stick more money in those index funds throughout the years, re-balance throughout the years when necessary, and then retire when a nice chunk of change.

https://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy

These videos might help

 

[tokkun]

I'm looking to diversify my geographic investments. Right now I've been putting some money into VGTSX (Vanguard Total International Stock Index Fund) but the performance really isn't that great even over 10 years. Are there any other suggestions?

If the international market hasn't performed well over the past decade, maybe it means that it is currently undervalued and likely to outperform the US market in the next decade. Or maybe the US economy is just that much better.

In any case, you shouldn't go profit-chasing. Pick the index that performed the best over the last decade and it probably won't in the next.

 

[GhaleonEB]

If the international market hasn't performed well over the past decade, maybe it means that it is currently undervalued and likely to outperform the US market in the next decade. Or maybe the US economy is just that much better.

In any case, you shouldn't go profit-chasing. Pick the index that performed the best over the last decade and it probably won't in the next.

Thanks for this. I've resisted re-balancing away from the international index, but it was getting mighty tempting the past few years. This is good perspective to have.

 

[Piecake]

Thanks for this. I've resisted re-balancing away from the international index, but it was getting mighty tempting the past few years. This is good perspective to have.

It would be nice though if they stopped spitting themselves in the face with all this austerity and started making adjustments to the structure of the EU financial system

 

[iamblades]

I came across a robo advisor called MoneyFarm which is available to Italian and UK residents (perfect for me from that point of view, as I often move between Italy and UK). Is using these robo advisors a reliable way to invest money?
The fees sound convenient (although I could be wrong, being inexperienced): https://www.moneyfarm.com/uk/pricing

Generally any brokerage that charges a monthly fee is not worth it for what we are discussing here. The only reason I say generally and not always is that there may be tax issues that a managed solution like that can help you manage, but I don't know that.

I would research the tax situation first and if there are no issues, open an account at a discount brokerage(a discount brokerage is a firm that doesn't charge you a percentage of capital, they only charge for transactions, and they typically trade certain things free of charge).

One thing I will note is that is seems impossible to find a place that lets you open a SIPP or an ISA tax advantaged retirement account without annual fees, which is super annoying. Here in the US there are seemingly dozens of brokerages that offer fee free retirement accounts. Trading fees are substantially lower as well.

The two places I'm seeing pop up on google with the best deals I can find are Halifax Share Dealing and Barclays stockbrokers. They both charge reasonable transaction fees and only charge a (relatively) small flat rate annual fee for management of an ISA. You should read the fee schedule in detail to make sure they don't have any nasty fees hidden in the fine print though.

Someone in the UK may have better options for you though.

 

[nextgeneration]

For the people who have ROTH IRA's, what did you invest in for your ROTH? I'm currently invested in VFINX, an index fund that tracks closely to the S&P. I'm thinking of adding NOBL into my ROTH also, an ETF that has performed remarkably well so far this year.

 

[giga]

For the people who have ROTH IRA's, what did you invest in for your ROTH? I'm currently invested in VFINX, an index fund that tracks closely to the S&P. I'm thinking of adding NOBL into my ROTH also, an ETF that has performed remarkably well so far this year.

vtsax 100%

 

[Wellington]

For the people who have ROTH IRA's, what did you invest in for your ROTH? I'm currently invested in VFINX, an index fund that tracks closely to the S&P. I'm thinking of adding NOBL into my ROTH also, an ETF that has performed remarkably well so far this year.

Don't fall for recency bias.

Took a cursory look at your ETF - interesing that it's a dividend aristocrat fund but has a lower yield than the above mentioned VTSAX.

 

[Makai]

For the people who have ROTH IRA's, what did you invest in for your ROTH? I'm currently invested in VFINX, an index fund that tracks closely to the S&P. I'm thinking of adding NOBL into my ROTH also, an ETF that has performed remarkably well so far this year.

VTSMX, then upgraded to VTSAX

 

[PflargBlarg]

For the people who have ROTH IRA's, what did you invest in for your ROTH? I'm currently invested in VFINX, an index fund that tracks closely to the S&P. I'm thinking of adding NOBL into my ROTH also, an ETF that has performed remarkably well so far this year.

Just so you recall the advisories that are posted pretty much everywhere

Past performance is not an indicator of future performance

It means nothing that this ETF did well this year.