PflargBlarg
Member
He's going to make equities great again.
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How to Invest for Retirement
- Thread starter Piecake
- Start date
He's going to make equities great again.
ClosingADoor
Member
If Trump had put his money at the start in index funds, I think he would have more money now then he actually has. Wasn't that a story some time back?
Randolph Freelander
Member
Canadian visa. It's the only way.
Lol. He wants to tank the market because he knows that is the only way he has a chance of winning.
For the Canadians here - what do you use for your direct investing?
I have regular banking accounts with both RBC and TD, and am thinking of using TD for my direct investing (Vanguard stuff etc.), and basically having day-to-day stuff at RBC and everything retirement related at TD. I already have the e-series at TD, and might eventually switch all day-to-day stuff over to TD and close my RBC account. They both seem to charge the same fees for trades, but I've also heard of Questrade that doesn't charge a fee for purchases.
I'm leaning towards using TD right now, for the simplicity and familiarity, though I would have to move away from monthly contributions due to the $10 purchase fee adding up. That makes the no fee purchases at Questrade a bit appealing as well.
I have regular banking accounts with both RBC and TD, and am thinking of using TD for my direct investing (Vanguard stuff etc.), and basically having day-to-day stuff at RBC and everything retirement related at TD. I already have the e-series at TD, and might eventually switch all day-to-day stuff over to TD and close my RBC account. They both seem to charge the same fees for trades, but I've also heard of Questrade that doesn't charge a fee for purchases.
I'm leaning towards using TD right now, for the simplicity and familiarity, though I would have to move away from monthly contributions due to the $10 purchase fee adding up. That makes the no fee purchases at Questrade a bit appealing as well.
ZackieChan
Member
I currently have my Roth IRA in a Schwab investment account, but should I be using something like Betterment instead? It seems way easier to use. If I pull the small amount of money in my Schwab Roth out and move it to Betterment, will that incur a penalty? Or should I just start over (not a huge deal).
IMO, it's not worth putting your IRA in Betterment or Wealthfront. You'll have to pay the extra fees, but because it's a tax advantaged account, you don't get the tax loss harvesting benefit. If you want something easy, just put your money in a Target Date fund.
ZackieChan
Member
OK, that's basically what I'm doing now. I just get lured in by the sexy apps and site.
Domino Theory
Crystal Dynamics
Anyone know if Vanguard's VFFVX (Target 2055 Retirement Fund) is traditional or Roth?
I don't have a ton of money to invest but I want to drop a grand on SOMETHING retirement related then leave it alone until I make more money.
I don't have a ton of money to invest but I want to drop a grand on SOMETHING retirement related then leave it alone until I make more money.
Mutual funds don't distinguish traditional or roth. The retirement account itself is what can be traditional or Roth. So you can get your $1000 of VFFVX and place it in either an IRA or Roth IRA, depending on which you prefer.
There is a Canadian investing link in the OP. If that doesn't answer your questions hopefully a Canadian will see this or you can PM the poster that wrote that up.
PflargBlarg
Member
Yeah, you've got some options. One of the benefits of staying at TD is that you retain access to the TD e-series as you can't buy them through any other broker. I just had to recheck how Questrade does their fees, so yeah they do it only when you sell instead of when you buy. Their calculation involves a charge per share sold as well as value based fees. It's a bit more complicated to calculate than a flat 9.99 but it almost certainly still ends up being cheaper.
If you feel up to moving over, there's no problem with using Questrade. The only reason I'm not using it myself is that I got used to using Scotia iTrade when I had my mortgage with Scotiabank and I mostly do large purchases of $5000+ instead of monthly contributions so I don't care too much about the transaction fee.
I also promised myself I would sell this stupid GGF70236 when it hit at least 17.50. I bought it years ago when I had no idea what I was doing. Should be about a 200 dollar loss so that doesn't matter too much. I've gotten sick of looking at it.
Hello retirement gaf! I need some advice I want to open up a Roth ira. I was looking at possibly using ally bank for this as they have better rates and there is no minimum starting deposit. I'm just unsure if it is smart idea or instead I should use a credit union or one of the big banks for this purpose. I would like to use my ira for investments too (index funds). I'm very new to all of this and a bit nervous and it's quite a lot to take in.
Wellington
BAAAALLLINNN'
Hey bud, you should check out the OP. We are all big fans of Vanguard here due to their low fees.
Wondering what people's thoughts are about 401(k)s that don't do matching. I'm contributing 3% right now, half is in a blend "target retirement" fund and the other half is in a NASDAQ index fund. Along with my HSA this lowers my taxable income but not sure that it's a greater benefit to having the post-tax leverage of a Roth IRA accounts. It's not clear to me if (or when) my employer could offer matching.
chaosblade
Unconfirmed Member
Unless the fees are lower than what you could get elsewhere, I would max out an IRA elsewhere before contributing to a non-matching 401K.
I think most stocks have an ETF you can buy which has no minimum fee. Just buy that and once you hit the minimum deposit, I believe you should be able to convert it to the investor share. The Vanguard Total Stock Market Index Fund, Vanguard Total International Stock Index Fund, and Vanguard Total Bond Market Index Fund listed in the OP all have ETFs you can buy if you can't afford the minimum deposit of the investor shares.
For example, you could buy Vanguard Total Stock Market ETF which has no minimum payment and I believe once you hit the $3,000 minimum deposit you can convert it to (although I think vanguard will do it automatically after a period of time too) Vanguard Total Stock Market Index Fund Investor Shares.
Domino Theory
Crystal Dynamics
Okay so I opened a Roth IRA Brokerage Account within Vanguard today and transferred 1k. Do I just keep it in that account or do I then invest in a retirement fund WITHIN the Roth IRA Brokerage Account I just made?
chaosblade
Unconfirmed Member
You invest in a fund in your IRA. Not investing in a fund will probably just put your money in a savings account that will ultimately lose money to inflation.
With 1K you will probably need to invest in ETFs, since I think all the mutual funds have $3000 minimums (or higher). ETFs have no minimum beyond the share price.
The core differences are that ETFs have lower fees than investor share mutual funds (the ones with lower minimums), but you have to buy full shares. Investor shares have slightly higher fees until you can convert to admiral shares at 10k, but you can invest any amount rather than being tied to a share price. There are also some differences in how they are traded but I don't remember the details nor do I recall them being terribly important for someone just starting out.
nillapuddin
Member
I'm 25, I am on board for a 6-7 year project (I'm a contractor) so barring physical injury I have a very stable income for the foreseeable future.
My total life expenses come out to basically $900/month, I put that into my joint "bills" account with my gf (we both put in 900). That covers groceries, rent, insurances, phone, etc etc.
For right now I make $1000 a week after taxes (so like $1355 before), contracted to go up during each phase of our project (there are 5 phases) each will likely take a year+ to complete.
I lost almost all my lifes savings in a previous venture so I was really starting from scratch (last month when the project began). However, I have zero debts to any entity or person, starting last week I am officially putting money away just to stare at it.
My employer is going to setup a 401k and I want to participate to the fullest extent that I can. I dont have to full details on the program yet, but we are going to get more info this month. All I know is that the max I can put in annually is $18K.
So in my mind (baring an unforeseen accident or lifestyle change)
Week 1 - $1000 to Bills Account
Week 2 - $1000 to 401k
Week 3 - $500 to 401k, $500 to _____
Week 4 - $1000 to _____
I want to build up my savings at first, but once its a sufficient amount of money, I dont really know what to do with it. I have always been a saver, I would just work and work and work and never spend the money, which is good because its helped me through tough times getting to here, but now I sort of have a roadmap and I want to make the most of this guaranteed income that I have coming in for the next few years.
Ive read through OP a few times and quite a number of pages, so I already see alot of ideas and avenues to research. Mostly just posting this for my own record and so I can see if anything might apply to me in particular that isnt covered in OP.
I really appreciate any help or tips, and I will be sure to consult the collective when I get employer 401k details. Thanks in advance everyone.
My total life expenses come out to basically $900/month, I put that into my joint "bills" account with my gf (we both put in 900). That covers groceries, rent, insurances, phone, etc etc.
Video games and Chick-fil-a come out of my personal, but I am very stingy
For right now I make $1000 a week after taxes (so like $1355 before), contracted to go up during each phase of our project (there are 5 phases) each will likely take a year+ to complete.
I lost almost all my lifes savings in a previous venture so I was really starting from scratch (last month when the project began). However, I have zero debts to any entity or person, starting last week I am officially putting money away just to stare at it.
My employer is going to setup a 401k and I want to participate to the fullest extent that I can. I dont have to full details on the program yet, but we are going to get more info this month. All I know is that the max I can put in annually is $18K.
So in my mind (baring an unforeseen accident or lifestyle change)
Week 1 - $1000 to Bills Account
Week 2 - $1000 to 401k
Week 3 - $500 to 401k, $500 to _____
Week 4 - $1000 to _____
I want to build up my savings at first, but once its a sufficient amount of money, I dont really know what to do with it. I have always been a saver, I would just work and work and work and never spend the money, which is good because its helped me through tough times getting to here, but now I sort of have a roadmap and I want to make the most of this guaranteed income that I have coming in for the next few years.
Ive read through OP a few times and quite a number of pages, so I already see alot of ideas and avenues to research. Mostly just posting this for my own record and so I can see if anything might apply to me in particular that isnt covered in OP.
I really appreciate any help or tips, and I will be sure to consult the collective when I get employer 401k details. Thanks in advance everyone.
Domino Theory
Crystal Dynamics
Thanks, I'm looking at the VFFVX which has a 1k minimum investment.
demosthenes
Member
My thoughts:
First, set a goal. Where do you want to be in 5 years, or possibly at the end of this project?
Second, think of it differently than you are now. Don't think of it like week 1 = x, week 2 = y. Calculate your take home pay per month. Split that to your required like you did (900/month) and other costs. Then figure out what your 401k is going to be. I suggest fudning your 401k to what your company matches. If they'll match dollar for dollar up to 4%, then contribute 4% for the employer match. Then, get a savings account with 3-6 months of expenses, what ever you feel comfortable with. After that, take $458/month and put it into a Roth IRA or traditional IRA account. $458/month will had up to the max Roth/IRA you can do a year. Additionally, beyond this if you want to invest more, open a Vanguard account and invest. This is better than maxing your 401k I believe when you're just 25. Reasons: you have no saftey net yet. Even if you have 3-6 months expenses, I would prefer more. I don't believe it's ever good to take money against your 401k, just my personal preference. If you open a Vanguard account and invest that way you can: 1) get lower expense ratios than your 401k as they are usually much higher in 401k plans and 2) your money is free to move if you need it. I have about 40k in a Vanguard account that I treat as 'dead' money to me. I refuse to touch it unless I'm literally dying or something. I check it once every 2 months to see how it's doing and reassess. Sorry for the run on, let me know what you think!
chaosblade
Unconfirmed Member
Didn't know the target date funds had 1K minimums. That's a great choice since the target date funds are entirely hands off, and Vanguard's target date funds have low fees.
nillapuddin
Member
Thanks for the reply, great points
First, well I expect to get married within 2 years from now and buy a house within 2-3 years. I rent a condo right now and just extended my lease til June of next year, we might look to move then, not sure yet. My car is dependable and paid off (2005 Tiburon), I also do not have to drive it to work or pay for gas (company vehicle) so I expect it to last through the duration of the project and further (I maintenance it well). Based on where my gf and I are in our careers and what we want out of life, in 4-5 years I expect to also start a family. So I expect a very small bump in overall expenses on a gradual incline, but nothing Im gritting my teeth about.
I come from very humble folk, and I am probably the least needy or materialistic person I've ever known, all I really want is to be comfortable. I live in SW-FL, I would say the cost of living is very manageable here really, so from what I see we could have a satisfying home and amenities without burying ourselves.
Second, yeah Im thinking in terms of weeks now just cause I cant really wrap my head around how much money it is, but yeah I wont always be thinking per week, and my living expenses will likely only go up (although a mortgage will likely be cheaper than my rental). I was religiously using Mint since my age ended in "-teen" if that gives yall any indication of how I spend/save my money.
My dad mentioned to me the 6+ months of expenses thing also, that's sort of what I was alluding to, I definitely want to make sure that happens, if something were to happen to me physically and I couldn't work I don't want to be in oh-shit mode.
Good advice about the 401k vs IRA deal, I can see how that would make sense this early on. I guess the final variables of the 401k plan from my employer will also be necessary to see the whole picture.
I like the dead money analogy, that's how I feel, once I come up with an investment plan, I dont even want to acknowledge it, I'm already preparing myself to just say, "I don't make 4000 a month, I make 2000" (or whatever it may be).
It might sound corny to some, or people from wealthier families/areas might not understand, but to even be thinking about this is really important to me, so I want to be as smart and as forward thinking as possible. I really appreciate the insight. I definitely have to go to bed now, but thanks for your comments.
Here are a few arguments for putting the money in a 401K instead:
1. His marginal rate is 25% now and sounds like it is going to be rising to 28%. That's a big cost on that after tax money.
2. Once that money is in an after-tax account you have an additional big drag on growth due to paying taxes on dividends. If the dividend yield for an equity index fund is ~2%, you're losing 0.5% of your annual growth to tax. For someone looking to invest for ~40 years that can have a huge impact on the amount of money they have at the end.
3. It is much easier to readjust your asset allocation in a tax sheltered account. You can completely rebalance your accounts or change your investments for free if your situation changes or you feel like you made a mistake. With after-tax investments you can't get out of funds without paying capital gains tax.
4. People overestimate the need for emergency funds. He has $3K a month in disposable income. If he runs into any kind of emergency that doesn't involve losing his job and costs less than $3K, he can put it on a credit card and pay it off at the end of the month with no cost.
4a. For larger amounts, that's what bank loans are for.
4b. If it does involve losing his job, he gets to roll the 401K into an IRA anyway, so it will be available for withdrawal.
Whether or not funds are cheaper depends entirely on the details of your 401k. For me, 401K funds are cheaper than those in my after tax account. A Vanguard target date in my 401k is 5 bp versus 18 bp in my after-tax and IRA accounts. Depending on the details of your plan, you may also have other options for using it as an emergency fund. Mine allows the option of taking out a loan from my 401k, and the interest gets paid back into my account. That makes it cheaper than taking the money from an after-tax brokerage account because I don't have to pay capital gains tax.
My advice would be to start setting aside after tax money for the downpayment on the house, get a small emergency fund (like a few thousand), and put the rest in tax sheltered accounts.
demosthenes
Member
I'm actually auditing 401k plans now and I just dislike the notion of taking loans against my 401k. Personal preference.
And if he wants a house that will 100% play into his planning as they should try and get 20 down to avoid pmi.
Less a retirement savings question here and more a what would you do scenario.
Wife and I are planning to have a third child next year. We both work full time and daycare is a necessity. We will have 3 children in full time daycare which will put our cost at about 40M next year and 50M the year after. My oldest starts kindergarten after that so it begins to decline thereafter. For the first time we will be spending significantly more money than we earn for consecutive years. We will net spend about 10M next year and 20M the year after in our current scenario.
We have a brokerage account which was designated as our savings/emergency fund with about 70M in it. We can draw this down to fund but it leaves us in a vulnerable position should something happen to either of our incomes. In the years beyond the next few we net save upwards of 20M per year, so really we have a timing issue here of too much expense at one time.
What do you think the optimal way to smooth over the next few years will be?
Some options I've been mulling:
Stop contributions to retirement (worth about 7K per year)
Loan from 401k (4.5% interest rate, but opportunity cost of growth)
Personal Bank Loan (10+% rate, no opportunity costs)
Draw down brokerage account and use loans as emergency fund (No interest, opportunity cost of growth, tax implications)
We have a HELOC with a few thousand in credit left (used it to add a bathroom a few years ago). Our home equity has substantially increased since opening this LOC though. Is anyone familiar with getting a house revalued for purposes of equity calculation in a HELOC?
Any ideas or considerations much appreciated.
Wife and I are planning to have a third child next year. We both work full time and daycare is a necessity. We will have 3 children in full time daycare which will put our cost at about 40M next year and 50M the year after. My oldest starts kindergarten after that so it begins to decline thereafter. For the first time we will be spending significantly more money than we earn for consecutive years. We will net spend about 10M next year and 20M the year after in our current scenario.
We have a brokerage account which was designated as our savings/emergency fund with about 70M in it. We can draw this down to fund but it leaves us in a vulnerable position should something happen to either of our incomes. In the years beyond the next few we net save upwards of 20M per year, so really we have a timing issue here of too much expense at one time.
What do you think the optimal way to smooth over the next few years will be?
Some options I've been mulling:
Stop contributions to retirement (worth about 7K per year)
Loan from 401k (4.5% interest rate, but opportunity cost of growth)
Personal Bank Loan (10+% rate, no opportunity costs)
Draw down brokerage account and use loans as emergency fund (No interest, opportunity cost of growth, tax implications)
We have a HELOC with a few thousand in credit left (used it to add a bathroom a few years ago). Our home equity has substantially increased since opening this LOC though. Is anyone familiar with getting a house revalued for purposes of equity calculation in a HELOC?
Any ideas or considerations much appreciated.
It's funny you mention this, I've been looking at possibly moving my Betterment Roth to Vanguard while keeping my taxable at Betterment but I just can't do it. The cost structure isn't really that much more over 100k. I mean it is more, but we are looking at 24 basis points for Betterment (service + etf fee) vs 16basis points for Vanguard Retirement fund. It is a personal preference but I prefer the tilts of the Betterment portfolio (value, small, mid, international). Plus investments are like a mutual fund. No money wasted as you can buy fractional shares of the etfs invested in. Perhaps my solution is to create my own portfolio at Vanguard.
I've been throwing around this porftfolio in my head, curious on feedback.
30% vti, 10% mid cap, 10% small cap, 30% international, 10% emerging, 10% bonds. This is still very fluid though trying to work out the details and could change significantly.
Randolph Freelander
Member
KOD, y'all.
Randolph Freelander
Member
Don't do it, Shane. Think of your family.
VTI already includes mid and small-caps. Vanguard's international (depending on which fund you go with) will already include emerging. Adding additional mid- and small-cap exposure and additional emerging market exposure is going to tilt you towards those segments. Mid and small, that's whatever, but I would strongly suggest you not go in deeper on emerging. That's too big of a gamble. With your numbers above (inclusive of mid and small), you're adding considerable volatility and risk to your portfolio, and bumping up your international allocation overall (compared to a Vanguard target fund).
Personally, I would suggest eliminating the additional percentage in emerging, fold that into either domestic or international as you prefer, and also dial it back on mid and small if not totally eliminate them and just go with a 3-fund strategy for domestic, international, and bonds. If you do keep them, I would suggest holding mid and small to a 2:1 ratio (so like 10-5, 8-4, 6-3, etc.) This adds a tilt in their direction while keeping their relative allocations in line with their market overall.
Agreed, but saving for a mortgage downpayment is a specific goal with a specific target value and completion date, as opposed to a general strategy of putting money in after-tax accounts rather than a 401k.
If you already have after-tax money in Betterment, then you probably may as well give them your retirement account. I would say that you could easily roll your own 3-fund version in Vanguard for cheaper, but you would almost certainly run afoul of wash sale rules with Betterment's tax loss harvesting.
As for your portfolio, it looks pretty similar to what's in Target Date, so I would ask whether doing a slight tilt away from large cap domestic and toward emerging markets is worth having 6 funds instead of 1. I don't really have an objection to the tilts, but I question whether the difference in expected return is large enough to warrant the complexity. Complexity breeds bad habits in investors, IMO.
I guess you mean k instead of M. $50k for daycare seems totally insane, but I don't have kids so maybe that's... normal? I mean, it sounds like you know where your costs are. If there's no way to reduce that cost and no way to increase your salary, you don't have a lot of great options. Remember that if you stop contributions to a 401k or standard IRA, you also lose those tax reductions, so you don't save as much as you'd think. I'd never want to borrow at a 10+% rate, but I've also never been in a position where I had to make that choice. Not sure what to tell you. Personally I'd lean towards drawing down the savings a bit, though that's a risky choice.
This is why I have my taxable with Wealthfront currently. For the US they only hold VTI or similar, a dividend targetting fund and XLE. With XLE, I don't hold any VDE and I'm not sure if that would be an issue anyway but I'll stay away. I just sold the VTI in my IRA. At least for now, I think this works for me and I won't generate wash sales.
General question:
My wife and I are now at the point where we are making enough money where we are having to pay some tax bills at the end of the year, even when we have 0 for our withholding. What's the best strategy to avoid taxes?
Our first thought is to maximize both of our 401k contributions to cut our taxable earnings by 36k. Is that the right first step?
My wife and I are now at the point where we are making enough money where we are having to pay some tax bills at the end of the year, even when we have 0 for our withholding. What's the best strategy to avoid taxes?
Our first thought is to maximize both of our 401k contributions to cut our taxable earnings by 36k. Is that the right first step?
Randolph Freelander
Member
Retirement investing needs to be a priority for the mere fact that you need to invest for retirement. The reduced overall tax liability (for traditional contributions to a 401K or IRA) are a nice benefit, but that's not the prime motivator. That also may or may not mean you go from owing at the end of the year to getting a refund, but it will simply mean your tax liability is less than it would have been.
You might also have a withholding problem. If you're filing as a married couple, the tax brackets are different. Combined, you get into the higher marginal rates earlier than you would if you were two independent people filing as single. You could just roll with it if the tax bill is manageable. If it's a burden, one or both of you could each revisit your withholdings, even having them withhold extra per paycheck (if you project owing $1000 and are paid 10 times, you might withhold an extra $100 per pay period).
We've already been putting 6% into both of our 401ks to get the company match. In recent years I have upped mine to 10%. Last year I tried to file separately but it didn't provide benefit as our earnings are similar.
hitsugi
Member
I see a lot of times the advice is to invest in your company 401k up to the match, then open an IRA, etc...
What about 457 plans or maxing one of them out as opposed to going to the match + opening an IRA? I have a 457 plan through my employer and while I'm contributing to the match, I'm far from maxing it (max is $18k). I have some money sitting around and was considering opening a Roth through Vanguard but I don't know if that's a better move than simply upping my contributions at work.
What about 457 plans or maxing one of them out as opposed to going to the match + opening an IRA? I have a 457 plan through my employer and while I'm contributing to the match, I'm far from maxing it (max is $18k). I have some money sitting around and was considering opening a Roth through Vanguard but I don't know if that's a better move than simply upping my contributions at work.
If you are both working you both need to have zero and then use the chart on the back of your W4 to calculate your additional withholding.
That said if you can both cap out your 401k do it since it will at least reduce your tax liability.
It seems some in here are advising against Roth due to the fact that it can make you take a hit to your return, long term. I am currently investing in a Roth 401K at work. My company match gets me right to about $5500.00 so I don't need to open another account for an IRA/Roth IRA. I'm 33 so I have almost 30 years on the nose before I retire.
Am I doing the right thing getting fully taxed on my contributions now? It amounts to about $2500.00 yearly.
Am I doing the right thing getting fully taxed on my contributions now? It amounts to about $2500.00 yearly.
Thanks!
Turns out a friend of mine is using Questrade already and likes it, so this gives me a bit more confidence in it.
I'm confused though. The E-series at TD are good and all, but once you're set up with Vanguard index ETFs is there a reason to keep the e-series stuff? Just for diversity sake? E-series fees are low, but Vanguard beats them by a fair bit still.
I'll let the e-series stuff i have stew for a while still at least, but I'm having trouble thinking of why I should do so long term or even put more into those after I finish getting set up with Vanguard stuff.
Randolph Freelander
Member
OK, real quick, the $5500 in your Roth 401K does not impact your ability to also do an IRA. You can contribute up to $18000 of your own funds to a 401K. The employer match is over and beyond that. You can also contribute up to $5500 to an IRA. You can do both of these at the same time, and we encourage folks to do just that if they can.
As for Roth versus traditional for your 401K, it's personal preference to a large extent, but the argument typically goes that if your top marginal rate is on the low side right now (ie., you're not making much money today), then it's beneficial to go ahead and lock in the low tax rate of today and go with a Roth investment strategy. The higher your income now, the higher your top marginal rate is now, the more likely you are to benefit from avoiding taxation now, which suggests following a traditional strategy with the hope of paying a lower average tax rate in the future. The key here is you're betting on future tax rates, which are uncertain, so there are those that would suggest still doing a Roth either way.
But really though, whichever way you go, if you can afford it, do more.
zswordsman
Member
So I joined the military and will have a stable income for the next 6 years at least. Main plan is to do my 20 and get the pension and supplement that with investments plus working until the normal retirement age outside after the military. Currently 24 years old and entering as an E3.
I'll have little to no expenses while at basic and AIT which means I'll have a fair amount of change saved up. so I kinda just want small little tips on what to do to get started once I have free time next year to start investing. Currently got a new account with Navy Federal, should I just go to them and ask about Index Funds and get started? They also offer a lot of CDs and stuff too, is it worth saving into that as well?
I'll have little to no expenses while at basic and AIT which means I'll have a fair amount of change saved up. so I kinda just want small little tips on what to do to get started once I have free time next year to start investing. Currently got a new account with Navy Federal, should I just go to them and ask about Index Funds and get started? They also offer a lot of CDs and stuff too, is it worth saving into that as well?
Randolph Freelander
Member
The reason people often advise to go with an IRA after the employer match is simply because IRAs will have more investment options (the entire world of stocks, bonds, and mutual funds), but certain employer plans are better than others. If you are satisfied with your options (you have a nice blend of diversified, low-expense funds to select from), then simplicity suggests managing one account versus multiple. However, if you're stuck with a bunch of high expense funds, you might look to do an independent IRA on top of your 457 so that you can have less of your retirement savings lost to fees and administrative costs.
Randolph Freelander
Member
It looks like the military is starting a 401K-like thrift savings plan in 2018, if I'm reading this correctly.
http://www.defense.gov/News/Article...lans-benefit-revision-with-blended-retirement
Hopefully, it will have good funds for you. In the interim, I would suggest looking towards opening an IRA. We like Vanguard and Fidelity here, and both have good, low-expense mutual funds to select from (we can offer recommendations), both have good ETFs (Vanguard has their own at no commission, Fidelity offers iShares ETFs commission-free), but Vanguard does offer better target date funds if you would prefer to take such a strategy.
So how much are you guys putting away for investment/saving purpose per month? Right now I have auto-transfer per month that goes into my Questrade investment account and invest in ETF. Hopefully within a few more years I can save up enough and buy a second place and rent one of my places out for some nice passive income. How is everybody else doing here?
hitsugi
Member
Honestly I just threw everything into a Large Cap Equity Fund. There's basically just target date funds, small/mid/large cap equity funds, and a bond fund.. The portfolio operating expenses range from 0.03 to 0.63%. Going to have to do some more reading
zswordsman
Member
Thanks for the info, I had no clue that there would be an overhaul. I guess I have a few months to decide whether to opt in or out of the new system.
Info is low in the military plan, so far I'm leaning with staying with the traditional system of doing 20 years and getting a pension. It seems that the government matches 5% but cuts stuff elsewhere. So confusing :/
Ok so vanguard and fidelity. I'll read up on them.