Maybe keep that but the next time you contribute to your IRA split it between VFIAX and VGTSX - an International stock fund. That's basically what I do.
Is your index fund in a Roth IRA or a non tax-advantaged account?
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Retirement-Era |OT| How to Invest For Retirement
- Thread starter TheTrinity
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Maybe keep that but the next time you contribute to your IRA split it between VFIAX and VGTSX - an International stock fund. That's basically what I do.
Is your index fund in a Roth IRA or a non tax-advantaged account?
I don't have an IRA. It's a brokerage account. Bought the shares directly in VFIAX.
Does she have earned income? If not you can't set up a Roth IRA under her name. Unless you mean you'll have the Roth IRA in your name and use it to pay for her educational expenses. Also the 529 can be used regardless of what state she goes to college in.
Also there's always a possibility they'll change the rules for anything, including Roth IRAs. I doubt it would happen, though, but who knows.
Then I'd consider taking $5.5k and opening a Roth. You can even put it in VFIAX again, but the earnings would be tax free.
Actually, does anyone know the tax implications here of moving the funds from this index fund to a Roth? Would the $5.5k be added to this year's taxable income?
The market has been too good for too long. I think what we're seeing now is a series of corrections and will continue to see them. Drops a bit, stabilizes, drops a bit more, stabilizes again. Overall it's a slow decline but not necessarily a fall-off-the-cliff catastrophe like 2008.
It makes it a bit tricky for stock investors. It takes a bit of work for fund managers and individuals to keep making money but it's definitely doable. Even the buy and hold strategy should be safe if you've got the right stocks. All of the large cap companies are not going to suddenly go bankrupt. They will continue to grow and make money. The diversification of index funds and a lot of ETFs is really good at dealing with market corrections. I wouldn't worry too much, but just don't expect to keep getting the record returns enjoyed over the last decade.
If you are expecting another 2008 and feeling a little nervous then any warning sign is probably going to be significant and continuous drop of a lot of large cap stocks. I took a loss back then but got out when I didn't like what was happening. Lessons learned from the dot.com crash. Held cash for awhile and bought again when the market showed recovery. That is the point of stop-loss orders and the whole sell high, buy low strategy. But even the long term buy and hold people didn't crash and burn. It all worked out in the long run.
Nah she's 11 months old so no income. We were going to open one in my wife's name since I use my own for retirement. But I saw an article that there was some kind of work around for a child's account that allowed you to contribute as the manager of the account. I'll try to find it again but I guess it doesn't matter, my wife has a Roth IRA to burn. And thanks for the heads up on the 529; I hadn't done any research on them yet but I was under the impression they were tied to the state you're in. I guess I'll just proceed as planned.
What you probably saw was that you can open a custodial account for your kids - I did so for both of mine. But it's a regular taxable brokerage account rather than any type of IRA. I manage these for them and at age 18 or 21 they will transfer to their control depending on your state. In the meantime if anything is taken out it has to be for the child's use alone.
I use ynab and the ease of connecting it to my counts is magical.
OP
OP
I 'use' Mint and have it connected to everything. To be honest I just have it because I like looking at charts and numbers and it conveniently adds numbers together for me. I have the Budgets set up in it but I don't actually use it for budgeting (We don't use anything for budgeting).
Basically just for historical review of what we're spending per year, or how much we spend per month on groceries, that kind of stuff.
I separately use Portfolio Slicer in PowerBI for investment specific charting and another personal spreadsheet for tracking contributions and calculating buys. Oh yeah, and I also use Wealthica which is kind of like Personal Capital, but unfortunately it can't connect to one of our accounts.
Yeah, I don't actually need to set myself any budgets... I just want greater visibility to exactly what I'm spending on what.
I recently came into possession of a sum of money (a sale of commercial real estate by my family) and I'm trying to decide how I should balance investing it vs allotting those funds towards the purchase of a new home.
To give a bit more background, I currently live in an apartment condo with my wife that I own outright. Now that we're married, we're planning to move to the suburbs and buy a house. I'm planning to keep the condo and rent it out, and the sum of money is currently in diversified mutual funds. I'm trying to decide how much of the sum of money I should put towards the house as it relates to considering the home purchase a long term investment.
Any advice, opinions, or (especially) help with modeling this financial decision would be greatly appreciated. My family/friends are very biased towards real estate investment over other types of long terms investment, so I'm looking for a greater variety of opinions.
To give a bit more background, I currently live in an apartment condo with my wife that I own outright. Now that we're married, we're planning to move to the suburbs and buy a house. I'm planning to keep the condo and rent it out, and the sum of money is currently in diversified mutual funds. I'm trying to decide how much of the sum of money I should put towards the house as it relates to considering the home purchase a long term investment.
Any advice, opinions, or (especially) help with modeling this financial decision would be greatly appreciated. My family/friends are very biased towards real estate investment over other types of long terms investment, so I'm looking for a greater variety of opinions.
There are many good calculators to determine how much money you'll need to retire comfortably. It seems like your situation is overall really good, especially with this new lump sum in-hand. If it were me, I'd postpone or curtail my house purchase in order to make sure my retirement is gonna be set, given how much money it seems like you've come into.
So, with that in mind, stack those index mutual funds high and deep so that the compounding will be more than enough to retire in X years and put retirement concerns away for the rest of your life. The remainder can go to the house.
One thing to keep in mind is how much risk your willing to take, interest rate, return rate and where you are located (regulation where you are/real estate trends).
I'll give you the example of what I have been doing with a situation similar to yours.
I sold my house in the US and moved back to Canada and end up with a fairly large sum of money from the equity. So I bought my new house and pay most of it with the equity and financed the balance. Then within a year I bought a rental property, use a mortgage on the rental for the large portion and use a line of credit on my home to pay the rest.. In Canada, the equity on your primary home is capital gain-free but the interest and taxes are not tax-deductible (unlike in the US). However, for rental property it the reverse, the capital gain is taxed but the interest and taxes are not..
So my goal with this was to have most of the interest on my primary property to be also tax deductible (since that line of credit is used only for the financing of the rental property it now deductible). In addition this is what is call leveraging, since if you have enough funds, you're borrowing a large sum in the guise of mortgage on rental property and on line of credit, in the hope that the return on the investment is larger than the interest/costs you pay.
Also, instead of repaying my house and rental fast, I am using the extra cash to invest for later (retirement funds, tax free saving, kids education funds) and I am keeping my mortgage and line of credit at high level.
At the time I bought the house and rental, the real estate prospect were good so even if there is a market correction in the future I am still well ahead.
Because right now the interest rate is still low and the return are larger, I am generating a fair bit of money on 'borrowed' money.
So if you are disciplined financially, and your local prospect are good, I would consider mortgaging your condo if you are planning to rent it out. That mortgage will be tax deductible (i.e. the interest and fee you pay on your condo can be deducted from the rent it generate instead of paying the taxes on the full amount). Then use the money you get out of the mortgage to pay a large down payment of your new home and invest your lump sum you just got (or if you are in the US and your mortgage is deductible from your primary house as well, invest that money as well ).
Warning: this is NOT for everyone and it does pose some financial risk but it sounds like your in a situation where this could work. I would certainly check with local law and prospect before doing that.
Also be aware that how A LOT of rich people get rich. They borrow large sums and reaps the profit over the margins. You just need to stay within a acceptable level of risk, Don't overstretch yourself.
Borrowing itself isn't bad, what you want is low interest rate (like mortgage do) and a large positive net worth in assets that generate return.
For example, it you have 500k in investments and rental property and have a 250k in low interest loan (mortgage/line of credit), if your return is 8% and your interest is 4%, your are generating 40k in return and 10k in interest so 30 k net growth.If you had no loan, you only would have 250k invested so you would generate 20k instead. This is just an example how with the same amount of money you can generate more income leveraging.
A little confused.
My tax guy is telling me that I can't take advantage of retirement accounts (Roth IRA and Individual 401k) and do the Foreign Income Exclusion (due to living outside the US for over 330 days) at the same time. Doing the latter will save me about $15,000 in taxes, I think. But then I'd be paying taxes on about $16000 or so on 401(k) contribution. So I guess I should stick with the foreign exemption and just put the $30k + I plan to put away for retirement into a regular taxable brokerage account? Anyone been in a situation like this? Probably only fellow digital nomads, and I'm not sure we have many here.
My tax guy is telling me that I can't take advantage of retirement accounts (Roth IRA and Individual 401k) and do the Foreign Income Exclusion (due to living outside the US for over 330 days) at the same time. Doing the latter will save me about $15,000 in taxes, I think. But then I'd be paying taxes on about $16000 or so on 401(k) contribution. So I guess I should stick with the foreign exemption and just put the $30k + I plan to put away for retirement into a regular taxable brokerage account? Anyone been in a situation like this? Probably only fellow digital nomads, and I'm not sure we have many here.
Maybe I should get a tax guy :/
I do the FIE and the Roth IRA shit every year. HR Block never tells me I have a problem and I haven't been audited yet.
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As soon as I am going back to Europe I will seek professional advice for precisely that reason. This sounds like a mine field.
I googled it and it sounds like there is a way to do it, but you need to be careful. I'll update after I talk to my guy next week.
Don't care much about the Roth, but I DO care about the 401(k).
Don't know where to ask else because there is no stock thread.
How long should I hold long term Blue Chip - investments? I have large positions and Amazon and Google,
my mid term goal is a trillion market cap for both, but how "big" can these companies get?
Both need another ~30% rise to reach the trillion market cap.
How long should I hold long term Blue Chip - investments? I have large positions and Amazon and Google,
my mid term goal is a trillion market cap for both, but how "big" can these companies get?
Both need another ~30% rise to reach the trillion market cap.
There is a stock thread, but no one knows about it.
https://www.resetera.com/threads/in...ividends-no-tales-from-the-crypto-here.28604/
https://www.resetera.com/threads/in...ividends-no-tales-from-the-crypto-here.28604/
Anyone with Prudential? I've had a 401k since January, and it yielded a 1.5% return. It is a moderate savings goal plan, I was thinking of switching to aggressive thoughts? It would change from this to this? My questions is I know aggressive wipes out guaranteed return, but Im late to the game, and I feel like I need to gamble over the next 20 years thoughts?
First percentage rate is my old allocation, and the second rate is what have changed too just now. I've got 25 year to retirement. Play it safe or gamble?
Current Core Bond Enhanced Index / PGIM Fund Fixed Income 8% 0%
International Growth / Artisan Partners Fund Changed International Stock 10% 12%
Vanguard Developed Markets Index Instl Changed International Stock 10% 12%
Vanguard International Value Inv Changed International Stock 11% 12%
Large Cap Growth / Eaton Vance Fund Changed Large Cap Stock 9% 10%
Large Cap Value / AJO Fund Changed Large Cap Stock 9% 10%
Large Cap Value / Barrow Hanley Fund Changed Large Cap Stock 8% 9%
SA/T. Rowe Price Growth Stock Strategy Changed Large Cap Stock 8% 9%
Mid Cap Value / Robeco Boston Partners Fund Changed Mid Cap Stock 10% 13%
SA/Invesco Small Cap Growth Strategy Changed Small Cap Stock 10% 13%
Guaranteed Income Fund Stable Value 7% 0%
First percentage rate is my old allocation, and the second rate is what have changed too just now. I've got 25 year to retirement. Play it safe or gamble?
Current Core Bond Enhanced Index / PGIM Fund Fixed Income 8% 0%
International Growth / Artisan Partners Fund Changed International Stock 10% 12%
Vanguard Developed Markets Index Instl Changed International Stock 10% 12%
Vanguard International Value Inv Changed International Stock 11% 12%
Large Cap Growth / Eaton Vance Fund Changed Large Cap Stock 9% 10%
Large Cap Value / AJO Fund Changed Large Cap Stock 9% 10%
Large Cap Value / Barrow Hanley Fund Changed Large Cap Stock 8% 9%
SA/T. Rowe Price Growth Stock Strategy Changed Large Cap Stock 8% 9%
Mid Cap Value / Robeco Boston Partners Fund Changed Mid Cap Stock 10% 13%
SA/Invesco Small Cap Growth Strategy Changed Small Cap Stock 10% 13%
Guaranteed Income Fund Stable Value 7% 0%
So right now, I've been putting all my Vanguard contributions into the [retirement year] balanced fund with a default mix of 84% stocks, 13% bonds, 3% short term reserves. Supposedly the YTD return has been 2% but my actual returns have been basically zero (probably due to when my shares were bought? or due to fees? - no idea what a gross expense ratio of 0.45% actually means).
I know I'm supposed to be patient and not to expect crazy growth or anything. But at what point should I consider moving to something a bit more aggressive? When I see posts that talk about 7% annual growth or more in the long run, I'm wondering if sticking to this fund where I'm seeing no growth is the best path. My target retirement is 30-35 years into the future. Yes, I realize 6 months is nothing compared to 30+ years - but I'm not really taking advantage of compound interest when I'm seeing flat returns.
I know I'm supposed to be patient and not to expect crazy growth or anything. But at what point should I consider moving to something a bit more aggressive? When I see posts that talk about 7% annual growth or more in the long run, I'm wondering if sticking to this fund where I'm seeing no growth is the best path. My target retirement is 30-35 years into the future. Yes, I realize 6 months is nothing compared to 30+ years - but I'm not really taking advantage of compound interest when I'm seeing flat returns.
Are you putting this through Vanguard's own website? Or a third-party's? Vanguard only charges 0.15%, not 0.45%.
It's through retirementplans.vanguard.com but I'm noticing some of the funds that have Vanguard's own name have lower ratios (e.g. Vanguard Wellington Fund Admiral is showing 0.17%). The one I'm currently invested in is named after my employer - so probably not the best way to go?
There are some but they're usually only seen completely in hindsight.
If you're saving for retirement don't try and time the market. If you're an older age then you shouldn't have a majority of your portfolio in risky investments.
1) Does your employer offer some sort of matching contribution?
2) When did you start investing in the fund? Like, January 1st or a later date?
3) Six months is nothing. The 7% annual returns are an average, and you won't see that (necessarily) in six months.
I wouldn't focus on the returns concern right now, I'd focus on figuring out why your 0.45% expense ratio is so high and whether you can reduce that.
Yeah, I basically started at the beginning of this year. My employer doesn't match until after a year of employment so right now it's just my contributions.
I ended up changing to three different funds with Vanguard in the name since those have lower expense ratios. One international, two domestic funds.
There's a bunch of stuff I can trade for free at Schwab, primarily Schwab funds & ETFs. I'm sure Vanguard also offers free trading for a bunch of their funds and ETFs.
That looks horribly complicated. Does your plan have funds with reasonable fees that allow you to just invest in the total US, total international developed, total international emerging? Also some of that stuff appears to have fees north of 1% which I find to be completely unreasonable to pay.
As for risk there are many risk tolerance calculators around you can use to see how you should probably be allocated, here's a pretty good one (and nobody from this investment firm will ever contact you for using their calculator) - http://vestory.com/risquiz/
OP
OP
To pile on here, why do you have so many things? Surely there are 2 or 3 normal index funds that you can just pile stuff into at a low fee? I didn't feel like dealing with it at all so 100% of my and my employers contribution goes into a single fund.
I'm not going to bother looking at all these but there's probably substantial overlap among all these funds and they likely also have high fees.
Keep it simple. It's the easiest to maximize your returns.
I chose like those preset plans to be diversity. But yeah its 10 different funds maybe too much.
You can have just as much diversity with a lot fewer funds if you have access to any funds in your 401(k) that invest in like the total US stock market for instance.
Hopefully you have access to Vanguard funds like VGTSX which is their international developed and emerging fund and charges 0.17%, or VTSMX which is their total US stock market fund and charges 0.14%. If you can get those you would have 2 funds instead of 10 which would be a heck of a lot easier and cheaper than what you have now.
If VTWSX is in your plan that offers exposure to the entire global stock market and charges 0.19%. You wouldn't get more diversified than that.
I appreciate the feedback, and I will definitely check. What spurred this on, was I has 2.8 % growth this year while a co-worker of mine had like 8% I was jealous.
Maybe he's got a whole bunch in small caps because the Russell 2000 is up 8.74% on the year while the S&P 500 is just up 3.57%. International developed has been pretty flat and emerging markets are down a bit.
But all that could change tomorrow - who knows. I think my return so far this year is about the same as yours.
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International Growth / Artisan Partners Fund Changed International Stock 10% 12%
Vanguard Developed Markets Index Instl Changed International Stock 10% 12%
Vanguard International Value Inv Changed International Stock 11% 12%
I'd go with the 2nd. It looks like a total international market excl US. Gives you exposure to all with emphasis on large.
VTMNX
As for the others, your choice if you want all growth, all value or a mix. As for the funds, pick one that has a low expense ratio. As for which, I'd go with large and small, or large and mid. Large tends to be more stable since they are the mega companies. Small/mid are companies that have a lot more room to move up or down. If you read up on the difference between value and growth, you'll understand how each works. If you want total exposure you could get Large, Med, and Small.
Right now you are double dipping in a lot of the companies in the market. By allocating to 2 types of Large caps, for example, you are basically buying the same companies in each fund. Add that each fund has an expense ratio, you are basically throwing your money away to management fees.
For how much you should allocate, it's up to you. If you aren't doing a bond fund, you could do something like a 70/30 or 60/40 split between US/International. It's really all on how much risk you want to take.
Lastly, google each fund to see what companies each fund is invested in. And invest at least 10% in the fund.
Vanguard Developed Markets Index Instl Changed International Stock 10% 12%
Vanguard International Value Inv Changed International Stock 11% 12%
I'd go with the 2nd. It looks like a total international market excl US. Gives you exposure to all with emphasis on large.
VTMNX
As for the others, your choice if you want all growth, all value or a mix. As for the funds, pick one that has a low expense ratio. As for which, I'd go with large and small, or large and mid. Large tends to be more stable since they are the mega companies. Small/mid are companies that have a lot more room to move up or down. If you read up on the difference between value and growth, you'll understand how each works. If you want total exposure you could get Large, Med, and Small.
Right now you are double dipping in a lot of the companies in the market. By allocating to 2 types of Large caps, for example, you are basically buying the same companies in each fund. Add that each fund has an expense ratio, you are basically throwing your money away to management fees.
For how much you should allocate, it's up to you. If you aren't doing a bond fund, you could do something like a 70/30 or 60/40 split between US/International. It's really all on how much risk you want to take.
Lastly, google each fund to see what companies each fund is invested in. And invest at least 10% in the fund.
Should I prepay my mortgage?
I have a 10/1 arm at 4.25%. So for 10 years I'll have a rate of 4.25%. It can move after that.
I don't know if I should do it or just invest in the market. I can't see myself staying here for more than 10 years but maybe I will. Does it make sense to prepay? I won't be lowering my payment. And surely money can earn more than 4.25% in the market...
Do I dream of owning multiple properties? But I won't be saving for a down payment. What do I do!
I have a 10/1 arm at 4.25%. So for 10 years I'll have a rate of 4.25%. It can move after that.
I don't know if I should do it or just invest in the market. I can't see myself staying here for more than 10 years but maybe I will. Does it make sense to prepay? I won't be lowering my payment. And surely money can earn more than 4.25% in the market...
Do I dream of owning multiple properties? But I won't be saving for a down payment. What do I do!
Look at my post above (1016). I repaided then remortgage (line of credit) to invest, best of both world in my situation. Send me a pm if you need clarification
It is not necessarily a safe bet that you will do better than 4.25% annualized return over 10 years in the stock market. Historically you would win most of the time, but for instance from late 1998 to early 2002, 10-year annualized nominal returns for the S&P 500 were less than 4.25%.
http://allfinancialmatters.com/wp-c...SandP500_10-Year_Rolling_Returns_with-CPI.pdf
Moreover, that was the only other time in history that stock valuations based on CAPE10 were at the level they are now.
http://www.multpl.com/shiller-pe/
Now CAPE10 is not a perfect metric by any means, so I'm not saying that you should feel absolutely confident 10-year returns are going to be poor either. But if they are, it will not be a case of "no one saw it coming".
Does anyone know of a good calculator I can use to determine what my paycheck will look like if I want to consider upping my pre-tax contributions? I need to be more efficient with my investments and increasing that contribution will help.
My mortgage was 4.25%, we ended up working our asses off to pay it off. It's sooo great not having a mortgage. Even if you can't do that, every little bit is a guaranteed 4.25% return. Which is pretty good as it's 100% guaranteed. Way better than any CD or money market.
You didn't specific which country. If you are Canadian, then https://www.canada.ca/en/revenue-ag...ses/payroll-deductions-online-calculator.html works for all Provinces except Quebec.
Congrats!
Minor nikpick - if someone deducts the interest on their taxes it makes their effective interest rate lower and paying off a mortgage earlier a lower return on investment.
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True, true, but thanks to asshole mcgee this is limited thanks to the SALT limit, because screw homeowners in blue states.
Yep everyone's tax situation is different!
Again, congratulations on your achievement!