Well you were lucky then. But someone that didn't invest at all last year missed out bigly.
Either way if you're in for the long haul it shouldn't make that much of a difference. The really bad idea is to sell.
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Retirement-Era |OT| How to Invest For Retirement
- Thread starter TheTrinity
- Start date
- OT
Either way if you're in for the long haul it shouldn't make that much of a difference. The really bad idea is to sell.
I front loaded last year and then the market dipped. I decided this year to setup automatic monthly contributions for myself and my wife and just forget about it altogether. Setup my kids 509s to do the same.
I both have and don't have money to frontload because this is a "find money for renovations" year. Sucks because I had to hold onto a bunch of it last year too and covid delays meant I could not just use it to buy at the bottom.
In the end, I'm sure it all.. evens out.. right?
In the end, I'm sure it all.. evens out.. right?
I mainly front load to get it done and over with, but I also use the opportunity to look over the investments and adjust according if necessary.
But yeah, I don't see any wrong with any strategy, "as long as you invest in your retirement, you're good" I say.
But yeah, I don't see any wrong with any strategy, "as long as you invest in your retirement, you're good" I say.
We are perpetually in unique situations. As soon as the election is over, the next unique situation will be whether a larger stimulus bill is passed. Then the unique situation will be the broader vaccine rollout. And don't forget the unique situation of Biden's flurry of executive orders in his first 100 days.
In the last 2 months we had a Presidential regime change, vaccines approved, major COVID outbreaks in many countries, and a Brexit deal - all of which you could argue are bigger deals for economic outlooks than the Georgia Senate run-offs.
If you want to do DCA, that's fine. But I think if your strategy is "wait until things become more normal to make a lump sum contribution", you might end up waiting a long time.
Nah, not like this though IMO. Once in lifetime... 100-year pandemic...
I'll take my chances on potential opportunities that arise from short-term volatility after a potential change to the dynamic in congress. And no, this won't leave me waiting for the next unique event because I've already see the market not care much about most of the items listed above.
I briefly questioned going ahead and maxing my IRA for the year, but I pretty quickly just decided it's not worth trying to time the market and just wanted to get the money in there. I don't really understand the stock market trends, they might as well be completely random to me, so it's better to just have the money invested than not.
So now the saving for next year starts.
So now the saving for next year starts.
I don't even try to save up for a lump sum really since I just invest as I receive paycheques with autopayments into roboadvisor. So I don't know if that even counts as DCA lol. Mimics dca, but is my frontloading as I get money.
I make too many mistakes, delays, or impulse buys otherwise when I do it manually.
Though I do move taxable company stock into TFSA every end of year when there seems to be a predictable drop so I can claim losses before it hobbles back up the next year.
I make too many mistakes, delays, or impulse buys otherwise when I do it manually.
Though I do move taxable company stock into TFSA every end of year when there seems to be a predictable drop so I can claim losses before it hobbles back up the next year.
OP
OP
Jealous of all you guys being able to front-load it in. I have the cash on hand (and more) but we have some uncertainty on what we're spending on house upgrades in the near future as well as paying off our car as quickly as possible.
Soon though!
Soon though!
Would you all recommend investigating in anything other than Vanguard 500 Index Fund Admiral Shares (VFIAX) for my 401(k)? These are the new options and I am likely going to increase my contribution to max annual amount. This is the only index fund I am currently invested it for my 401(k). I have investments in VTSAX and VTIAX n my Roth IRA.
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So I'm new to this investing thang and I've been fiddling around on Robinhood (don't worry I'm not dumping money willy nilly on stocks).
I am wondering though, is it a good idea investing into ETFs like the Vanguard S&P 500 through the app? I don't think it's something I would continue to do long term but I'm wondering if it's not worth doing rn instead of other methods of investing in ETFs.
Also any other ETF recs other peeps got?
I am wondering though, is it a good idea investing into ETFs like the Vanguard S&P 500 through the app? I don't think it's something I would continue to do long term but I'm wondering if it's not worth doing rn instead of other methods of investing in ETFs.
Also any other ETF recs other peeps got?
I see no reason why you wouldn't just open a regular account at Vanguard, Fidelity, Schwab or wherever...
Mostly because my understanding before I looked into it more was that vanguard etfs require $1k+ initial investments?
I see now that's not the case apparently so I'll def be using it for ETFs going forward, just no fractional stocks like Robinhood does :-(
+ RH's slick interface and the active trading reptile brain thing kicking in :p
Should I also use Vanguard brokerage over RH? I'm guessing yeah long term it's better to get with the big boys but I'm wondering if for short term stock fiddling it matters as much.
I've never used RH. And don't do any day trading. That said as long as you are on solid ground and your long term goals/investments are set there is nothing wrong with having some playmoney in RH to daytrade with...
Anything you want to invest for the long haul, just put it into vanguard/fidelity/etc.
That'd be my recommendation anyway.
Thanks for the input, wanna do it the right away before I really start putting money into some kind of etf investment vehicle rather do it through a service that isn't really built for that kind of long term planning.
Speaking of frontloading, that's exactly what I did in the beginning of the year over the weekend. I just maxed out my Roth contribution immediately and now I'm hoping for the best. It has paid off so far after 4 days lol. Hopefully I can say the same for the rest of the year.
Unless something is looming again that could really hurt the market I think that will be my plan every year if I can do it. It sucks being nearly 38 and trying to play catch up. I just want 5 or 10 years to pass already so I can see a sizeable growth from all my accounts. Being at basically the beginning is never fun(I do have a nearly 10 year old 401k which I don't really count because I didn't contribute that much to it)
Unless something is looming again that could really hurt the market I think that will be my plan every year if I can do it. It sucks being nearly 38 and trying to play catch up. I just want 5 or 10 years to pass already so I can see a sizeable growth from all my accounts. Being at basically the beginning is never fun(I do have a nearly 10 year old 401k which I don't really count because I didn't contribute that much to it)
The main considerations are:
- If you think your tax rate now is higher than your tax rate will be in retirement, then the tax benefit of traditional is higher.
- If your employer offers matching contributions based on a percentage of your contributions (not your salary), you can contribution faster with traditional.
- Because the contribution limits are the same, and because Roth dollars have a higher future value (because they will not be taxed again), Roth lets you effectively contribute more if you are able to max out your contributions.
- Roth contributions provide you with more flexibility, since the basis can be withdrawn without penalty before you hit retirement age. This is useful for doing early retirement or if you want to use your Roth account as part of your emergency fund planning. They also give you more ability to manipulate your taxable income in retirement.
In terms of generic advice:
For the average middle- / working-class person, I would recommend 100% traditional.
For FIRE, you probably want to do 100% Roth.
It's also a perfectly reasonable strategy to do a 50 / 50 split to hedge your bets against changes in your personal financial situation or in tax laws in the future.
My company contributions & match will ALWAYS be traditional, even if I choose my own contributions to be Roth. I chose Roth, which at my current company levels means I'm roughly at a 1/3 traditional, 2/3 Roth split.
Hard to say vs. tax rates now/in the future, but I like your 3rd and 4th points a lot.
I thought Roth 401k withdrawals were also penalized if made before 59.5 years old?
When you leave your job you can roll a Roth 401K over into a Roth IRA without any tax. Five years after the rollover, you can withdraw the basis tax and penalty-free, regardless of age.
Really?
Withdrawals from a Roth IRA you've had more than five years.
If you're under age 59½ and your Roth IRA has been open five years or more,[SUP]1[/SUP] your earnings will not be subject to taxes if you meet one of the following conditions:
- You use the withdrawal (up to a $10,000 lifetime maximum) to pay for a first-time home purchase.
- You use the withdrawal to pay for qualified education expenses.
- You use the withdrawal for qualified expenses related to a birth or adoption.
- You become disabled or pass away.
- You use the withdrawal to pay for unreimbursed medical expenses or health insurance if you're unemployed.
- The distribution is made in substantially equal periodic payments.[SUP]1[/SUP]
EDIT: I see now that an additional exception might be that the CONTRIBUTIONS can be withdrawn, just not the earnings, but i'll need to find more info on that:
Correct. When I said "basis" I was referring to the contributions.
The logic behind the rule is that you have already paid taxes on the basis, but have not paid taxes on the gains.
Isn't that where the conversion ladder comes in?
www.madfientist.com
How to Access Retirement Funds Early
Find out how you can access retirement funds early (without paying any penalties) and learn the best withdrawal strategy for early retirees!
www.madfientist.com
Isn't that where the conversion ladder comes in?
How to Access Retirement Funds Early
Find out how you can access retirement funds early (without paying any penalties) and learn the best withdrawal strategy for early retirees!
I think conversions ladders are mostly for people who take joy in min-maxing their tax efficiency, rather than for those who are just looking for a comfortable retirement.
Just wondering, is there some kind of math that would give me a good idea of how much money I'd need to retire. Say if I have 1 million bucks(after taxes) by the time I'm 60 in the year 2043. Assuming I live another 25 years, could I reliably stretch that out without being a super minimalist? Just wondering if there is some kind of formula for this. With the kind of money my wife and I make, I know we're not going to have a ton of money or retire super early. But I figure we should be able to just not work and support ourselves for the rest of our lives barring any major medical problems.
When I see these retirement calculators they always seem unrealistic. I figure by then a mortgage won't be a thing. Although inflation will go up, it can't be that bad if I'm just paying for utility bills and internet the majority of the time. So unless there are major medial issues or other bad surprises, shouldn't one be able to live on 2-3k a month comfortably assuming a mortgage isn't in the picture anymore?
And yes, I'm not talking about living in a expensive city. Just that typical lower middle class life or whatever 60-80k household income is considered nowadays.
When I see these retirement calculators they always seem unrealistic. I figure by then a mortgage won't be a thing. Although inflation will go up, it can't be that bad if I'm just paying for utility bills and internet the majority of the time. So unless there are major medial issues or other bad surprises, shouldn't one be able to live on 2-3k a month comfortably assuming a mortgage isn't in the picture anymore?
And yes, I'm not talking about living in a expensive city. Just that typical lower middle class life or whatever 60-80k household income is considered nowadays.
A rule of thumb (at least in the FIRE community) is the 4% rule. So on average you can withdraw 4% from your broad market invested portfolio in perpetuity without depleting it. The idea is that on average the market has historically risen ~7% per year.
so with one million invested you can live off 40k a year.
Create a spreadsheet where you collect the TER for each. That will give you an idea as to how big the bite is that fees take out. Also look up 3-fund portfolio on boggle heads.Would you all recommend investigating in anything other than Vanguard 500 Index Fund Admiral Shares (VFIAX) for my 401(k)? These are the new options and I am likely going to increase my contribution to max annual amount. This is the only index fund I am currently invested it for my 401(k). I have investments in VTSAX and VTIAX n my Roth IRA.
OK that feels me feel more confident about being able to retire in my early 60's. We're late when it comes to focusing on retirement and neither of us makes that much money either. But when looking at the math, it really doesn't seem that hard to retire in 22-25 years assuming we keep contributing a decent amount and don't plan on living a lavish life style afterwards.
I know I won't be able to compete with many of my siblings and cousins who will be taking many more vacations than me and have a much nicer retirement home. But I'm OK as long as I have a roof over my head and the internet lol. I can't wait to reach that day when I know I no longer have to go to work anymore. If only I knew about all this in my early 20's, I would have definitely aimed to try and retire in my 50's instead.
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Just keep in mind that you can't forget about medical expenses. Those WILL be larger later in life, both routine and accident/emergencies. Saying "2k per month is enough for me" might be forgetting about that, you probably want to have a buffer there. And that doesn't account for if you/your partner might need intensive care due to declining physical or mental health.
Don't get me wrong, I'm not being delusional about that stuff. The plan will change if we have issues in the coming decades. And 2k would be like the bare minimum but definitely not the norm. I I think I can get to something more like 4k+ for the next 25 years after I retire. So in a best case scenario in which we never have major health issues, social security is still a thing(lol), and I have the amount that I think I will have by retirement then I think I'll be pretty satisfied.
Remember that even if SS "goes bust," it'll still bring in enough revenue to pay out over 70% of benefits.
Usually people consider that accounted for in the 4% rule.
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I plan on keeping withdrawals super simple and only milk from my taxable account for as long as possible, then only take the required minimal distributions from the tax-advantaged accounts.
I have a quick question that popped into my head while I was doing some projecting on Excel.
I have been investing into my 401k and a Roth IRA since the very start of my career, if I contribute the max for the next two years to each and then stop contributing for the rest of my life I would have more than enough to live off of at the age of 65, even assuming conservative 5% or 6% average growth yearly. Have any of you stopped putting money into retirement funds or reduced once you hit certain thresholds? I am going to turn 28 in a month for reference so I have a lot of runway to go.
I'm not necessarily going to do this mind you, just wanted to know if there is precedent.
I have been investing into my 401k and a Roth IRA since the very start of my career, if I contribute the max for the next two years to each and then stop contributing for the rest of my life I would have more than enough to live off of at the age of 65, even assuming conservative 5% or 6% average growth yearly. Have any of you stopped putting money into retirement funds or reduced once you hit certain thresholds? I am going to turn 28 in a month for reference so I have a lot of runway to go.
I'm not necessarily going to do this mind you, just wanted to know if there is precedent.
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There is no reason NOT to do so, especially a Roth, unless you're worried about immediate large expenses coming up.
That's a really good question. And I have considered the implications too. As of now if we added nothing more to our various (tax sheltered) retirement accounts we would also probably be set by the time we can access the money. Overall I think I will just continue maxing out my 401k as it's a known quantity and I want to take advantage of the tax shelter as much as I can.
There are loads of great articles on the subject too.
How Much is TOO MUCH in your 401(k)?
For all of its shortcomings, the traditional retire-at-65 system does have a few cushy benefits in the US. You get low-cost health insurance coverage through Medicare, a reasonable pension through …
www.mrmoneymustache.com
I'm confused - should be putting my fidelity three fund portfolio in an IRA or a regular brokerage account?
what should be going into my IRA? the stuff with the highest growth? ie Tesla, NIO, etc ?
what should be going into my IRA? the stuff with the highest growth? ie Tesla, NIO, etc ?
Assuming it's all for the long haul I'd say it makes no (or little) difference.
for us: within one ira from either my spouse or myself there is just one fund. I'm not trying to mirror the same set up within each account just consistently across all accounts. Make sense?
Not really. What do you mean by "one fund"?
So essentially there's no problem with just stuffing my IRA with fzrox, fzilx and fxnax every year?
So essentially there's no problem with just stuffing my IRA with fzrox, fzilx and fxnax every year?
So let's say for a three fund portfolio I have funds a, b,c.
We would have
Roth IRA 1: fund a
Roth IRA 2: fund b
Traditional Ira 1: fund c
Traditional Ira 2: fund a
401k: a,b,c
Taxable: a,b,c
no need to have abc in all the (smaller) iras.
We would have
Roth IRA 1: fund a
Roth IRA 2: fund b
Traditional Ira 1: fund c
Traditional Ira 2: fund a
401k: a,b,c
Taxable: a,b,c
no need to have abc in all the (smaller) iras.
In general I don't think you should worry about it too much, but if you really are interested in the low-level optimization strategies, here they are:
Traditionally the advice would be put bonds and dividend-focused stocks in your tax sheltered accounts. The rationale is that bond yields and unqualified dividends are taxed as normal income, so these assets tend to generate higher taxes if placed in a taxable account. On the flip side, individual stocks like Tesla that do not pay dividends are better in your taxable account, because they will generate zero taxes (unless you sell them of course). Now, having said that, bond yields are currently historically low - in fact, many are lower than the dividend yield on stock index funds - so if you have bonds in a taxable account it isn't a big deal.
The other piece of advice is that it is generally better to have international stocks in your taxable account. The reason for this is that there is a foreign tax credit you can claim on your income taxes, but only if the stocks were in a taxable account. However, the size of this credit is not particularly big, so again, it's not a huge deal either way.
I'm not sure about the US, but in Canada, losses within a tax-advantaged account can NOT be leveraged against future wins, so that's your trade-off. You might make more money on the tax exemption, but you might lose money if your stocks go down (like Tesla might). So I'd say it's a wash and I just keep the same in both.
I'm terrible. I'm late 30s and never had started a 401k in the last job I had for 20 years.
Got a new job and they auto enrolled me at 4% they match 100%. Probably better this way. Better late than never.
Got a new job and they auto enrolled me at 4% they match 100%. Probably better this way. Better late than never.