Retirement-Era |OT| How to Invest For Retirement

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TheTrinity

TheTrinity

Member
Oct 25, 2017
255
Yes, as a Canadian I also use ETFs. If there were similarly priced mutual funds I would use those instead, but it is what it is. It's almost the same, just missing out on buying partial shares so I always have cash sitting around after a buy.
 

vypek

Member
Oct 25, 2017
3,867
Yes, as a Canadian I also use ETFs. If there were similarly priced mutual funds I would use those instead, but it is what it is. It's almost the same, just missing out on buying partial shares so I always have cash sitting around after a buy.
The cash sitting around after a buy is one of the reasons I'm interested in mutual funds. The money is doing absolutely nothing so it feel like a waste. I know it isn't a ton and wouldn't really make a lot elsewhere but I'd feel better about having that money doing something rather than just sitting around until I can do something with it.
 

feline fury

Member
Dec 8, 2017
457
Yes, as a Canadian I also use ETFs. If there were similarly priced mutual funds I would use those instead, but it is what it is. It's almost the same, just missing out on buying partial shares so I always have cash sitting around after a buy.
I did a buy order for an ETF today that perfectly used up every cent in my account. Feels good 😁

What is everyone's thoughts/opinions on VOO vs VTI? Cursory research says the difference is that VTI includes small cap stocks while VOO is large cap only. How important is it to have exposure to small caps?
 

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
3,307
Los Angeles
I did a buy order for an ETF today that perfectly used up every cent in my account. Feels good 😁

What is everyone's thoughts/opinions on VOO vs VTI? Cursory research says the difference is that VTI includes small cap stocks while VOO is large cap only. How important is it to have exposure to small caps?
Diversification is important. Winners rotate. Check the image at the end of the OT.
 

tokkun

Member
Oct 27, 2017
1,364
I did a buy order for an ETF today that perfectly used up every cent in my account. Feels good 😁

What is everyone's thoughts/opinions on VOO vs VTI? Cursory research says the difference is that VTI includes small cap stocks while VOO is large cap only. How important is it to have exposure to small caps?
It is nice to have the extended market exposure if you can get it at a reasonable price. If you can't (for instance due to limited options in a 401K), it's not a huge deal. Since VTI is cap-weighted, its about 80% large cap by weight, so the total returns are going to be pretty similar.

https://etfdb.com/tool/etf-comparison/VOO-VTI/#performance
 

filkry

Member
Oct 25, 2017
632
I know I'm not supposed to time the market, but I am sad that I seem to have a habit of buying more ETFs right before these plunges (bought last monday).
 

vypek

Member
Oct 25, 2017
3,867
I know I'm not supposed to time the market, but I am sad that I seem to have a habit of buying more ETFs right before these plunges (bought last monday).
In a similar vein of market timing, I have an urge to try and shift money around so I can buy up more than I normally would on Friday. But I'm trying to just stay the course with my regular contributions
 

Smiley90

Member
Oct 25, 2017
2,387
a) -1.5% really isn't a big deal
b) why y'all are checking your retirement accounts anyway if you're not retiring for another 20/30+ years! This is a drop in the bucket :)
 

vypek

Member
Oct 25, 2017
3,867
a) -1.5% really isn't a big deal
b) why y'all are checking your retirement accounts anyway if you're not retiring for another 20/30+ years! This is a drop in the bucket :)
What does the -1.5% reference? The entire market?
I just like to take a look at different stocks and ETFs, even the ones that aren't part of my holdings. Its interesting to watch them fluctuate. I'm not obsessed with them or even really worried about them at this point. But when I saw that big drops they had I couldn't help from thinking "Maybe I can capitalize on this to help me even more in the long run" lol
 

filkry

Member
Oct 25, 2017
632
a) -1.5% really isn't a big deal
b) why y'all are checking your retirement accounts anyway if you're not retiring for another 20/30+ years! This is a drop in the bucket :)
My household is on track for ~10 years. I do like to watch, and so far I have avoided any action whatsoever in response to market changes. Just makes me sad or happy when things are down or up.
 

Failburger

Member
Dec 3, 2018
216
Cool, should I be worry about any extra fees I may be paying without knowing? Fidelity website is very cryptic.
 

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
3,307
Los Angeles
Cool, should I be worry about any extra fees I may be paying without knowing? Fidelity website is very cryptic.
Depends on what Funds you are invested in. If you go for the standard funds commonly recommended around here Fidelity is currently actually cheaper than Vanguard.

Full disclosure, I have most of my stuff with Fidelity now, as that is where my employer 401k was set up.
 

TMC

Member
Oct 27, 2017
305
What do you guys think is an acceptable amount to keep in a savings account? I have a taxable account generating roughly 8% and it seems silly to keep an excess in savings where I am only earning ~2%. I currently have 10k remaining (recently moved out quite a bit to my taxable account) in savings, but I think this still might be too much? I am thinking of transferring another 5k to my taxable account, but was wondering what you guys recommend. How much do you all prefer to have available immediately?
 

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
3,307
Los Angeles
What do you guys think is an acceptable amount to keep in a savings account? I have a taxable account generating roughly 8% and it seems silly to keep an excess in savings where I am only earning ~2%. I currently have 10k remaining (recently moved out quite a bit to my taxable account) in savings, but I think this still might be too much? I am thinking of transferring another 5k to my taxable account, but was wondering what you guys recommend. How much do you all prefer to have available immediately?
I have nothing in savings accounts and 1-1.5 months expenses on my regular checking account.
 

Marz

Member
Oct 30, 2017
1,230
What do you guys think is an acceptable amount to keep in a savings account? I have a taxable account generating roughly 8% and it seems silly to keep an excess in savings where I am only earning ~2%. I currently have 10k remaining (recently moved out quite a bit to my taxable account) in savings, but I think this still might be too much? I am thinking of transferring another 5k to my taxable account, but was wondering what you guys recommend. How much do you all prefer to have available immediately?
If you can keep 6 months of expenses in a savings account, that's generally the recommended option.
 

TMC

Member
Oct 27, 2017
305
I have nothing in savings accounts and 1-1.5 months expenses on my regular checking account.
I was considering that as well, but was thinking it might be just a bit too aggressive for me. What would you do in the event you eventually needed more than that 1-1.5 month of expenses? Withdraw from a taxable account?

If you can keep 6 months of expenses in a savings account, that's generally the recommended option.
Yeah, that's why I remember leaving 10k in there to begin with. I'm not a big fan of keeping this substantial amount in savings earning 2%, but I guess it's better to be safe than sorry. Just difficult to come to terms with that 10k earning 2% when it could be earning substantially more.
 

Smiley90

Member
Oct 25, 2017
2,387
What do you guys think is an acceptable amount to keep in a savings account? I have a taxable account generating roughly 8% and it seems silly to keep an excess in savings where I am only earning ~2%. I currently have 10k remaining (recently moved out quite a bit to my taxable account) in savings, but I think this still might be too much? I am thinking of transferring another 5k to my taxable account, but was wondering what you guys recommend. How much do you all prefer to have available immediately?
I have about 1-2 months worth of expenses in a savings account only...

I also have critical illness insurance though, otherwise I'd probably keep a bigger emergency fund.
 

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
3,307
Los Angeles
I was considering that as well, but was thinking it might be just a bit too aggressive for me. What would you do in the event you eventually needed more than that 1-1.5 month of expenses? Withdraw from a taxable account?



Yeah, that's why I remember leaving 10k in there to begin with. I'm not a big fan of keeping this substantial amount in savings earning 2%, but I guess it's better to be safe than sorry. Just difficult to come to terms with that 10k earning 2% when it could be earning substantially more.
If push comes to shove have credit cards for short term expenses, say an urgent car repair. Depending on the size I might consider selling some taxable investments to cover the cost, but it’s not something I would (have to) do at short notice.
 

Marz

Member
Oct 30, 2017
1,230
I was considering that as well, but was thinking it might be just a bit too aggressive for me. What would you do in the event you eventually needed more than that 1-1.5 month of expenses? Withdraw from a taxable account?



Yeah, that's why I remember leaving 10k in there to begin with. I'm not a big fan of keeping this substantial amount in savings earning 2%, but I guess it's better to be safe than sorry. Just difficult to come to terms with that 10k earning 2% when it could be earning substantially more.
I guess it depends on personal factors such as if you have kids, a house, etc.

Like if the market took a dump and you had something major come up could you still handle it?
 

Fuhgeddit

Member
Oct 27, 2017
2,541
Anyone have a retirement fund with transamerica/t r.owe price? Looking to put away some funds into one of the t rowe price retirement funds.
 

TMC

Member
Oct 27, 2017
305
If push comes to shove have credit cards for short term expenses, say an urgent car repair. Depending on the size I might consider selling some taxable investments to cover the cost, but it’s not something I would (have to) do at short notice.
I also use credit cards for the majority of my expenses regardless of whether or not they're unexpected.

I was planning to use the emergency fund more in the event if I lost my source of income and was unable to find a new job quickly. I'm literally using it for 6 months worth of expenses if that unfortunately event occurred. I don't imagine it would take anywhere close to 6 months in my line of work though. Is that not what people use savings accounts for when they refer to "6 months of expenses"? I could easily cut it in half if it truly is meant for unexpected expenses

I guess it depends on personal factors such as if you have kids, a house, etc.

Like if the market took a dump and you had something major come up could you still handle it?
Yeah, I'm a single guy renting an apartment with no kids. Unexpected expenses can always be covered by credit cards. It's what I currently do. Like aforementioned, I plan to utilize this emergency fund in the unfortunate event that I lost my source of income for any reason. For that purpose, I wonder if 6 months is just too much.
 
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Oct 27, 2017
4,965
I learned something interesting today. I remember at some point in this thread or at the old place some people saying that when you invest internationally you're taking a currency risk. As it turns out that's not the case. Vanguard, Schwab, Fidelity et al hedge currency risks in their international funds, the cost of which is rolled into the fund's expense. They don't do hedging in the conventional sense of trying to guess what's going to happen in the future, but rather just so that currencies going up and down against one another don't affect the fund's return.
 

Smiley90

Member
Oct 25, 2017
2,387
I learned something interesting today. I remember at some point in this thread or at the old place some people saying that when you invest internationally you're taking a currency risk. As it turns out that's not the case. Vanguard, Schwab, Fidelity et al hedge currency risks in their international funds, the cost of which is rolled into the fund's expense. They don't do hedging in the conventional sense of trying to guess what's going to happen in the future, but rather just so that currencies going up and down against one another don't affect the fund's return.
By hedging you're simply speculating that the currency your fund is in DOESNT lose value compared to others. This is especially relevant for us Canadians investing in US funds. A large chunk of my gains the last few years have been because the CAD nose-dived against the USD, and hedging would've prevented those gains.

It's a double-edged sword, but generally speaking NOT hedging is better AFAIK, since that way you're not biasing/picking your favourite currency.

(Though Vanguard Canada also offers CAD-hedged index funds)
 

vypek

Member
Oct 25, 2017
3,867
I was feeling kind of bad that I didn't do a buy with prices as what they are since a payday is usually a day I also buy. But I had been planning for a while to apply what is essentially an "extra" paycheck since its the 3rd one of this month to my student loans. Made a big payment against them which will save some interest. I think it was pretty worthwhile.

Also, I'm a lot less disturbed at my portfolio than I thought I would be for when I experience the first dive. Just going to keep going along with the same contribution plan I've had since the start of the year.
 
OP
OP
TheTrinity

TheTrinity

Member
Oct 25, 2017
255
Yeah, kind of sad that I can't keep buying right now but we're saving up a downpayment so that's the priority at the moment. So tempting to plow the money into investments haha!
 

MrBob

Member
Oct 25, 2017
2,392
I was feeling kind of bad that I didn't do a buy with prices as what they are since a payday is usually a day I also buy. But I had been planning for a while to apply what is essentially an "extra" paycheck since its the 3rd one of this month to my student loans. Made a big payment against them which will save some interest. I think it was pretty worthwhile.

Also, I'm a lot less disturbed at my portfolio than I thought I would be for when I experience the first dive. Just going to keep going along with the same contribution plan I've had since the start of the year.
The best course of action is just to consistently make your regular contributions. I split up a monthly contribution to weekly contributions through vtsax and vtiax on vanguard since I can buy fractional shares of these funds (the mutual fund equivalent of VTI and vxus).

Prices will probably be cheaper next week more than likely but it's near impossible to time the market unless you are super lucky, so just stick with the regular contribution game plan.
 
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tokkun

Member
Oct 27, 2017
1,364
I learned something interesting today. I remember at some point in this thread or at the old place some people saying that when you invest internationally you're taking a currency risk. As it turns out that's not the case. Vanguard, Schwab, Fidelity et al hedge currency risks in their international funds, the cost of which is rolled into the fund's expense. They don't do hedging in the conventional sense of trying to guess what's going to happen in the future, but rather just so that currencies going up and down against one another don't affect the fund's return.
That's not true. Here are the overview pages for each of their Total International Stock funds. You will see they all list currency risk as a factor in these funds.

There are *some* hedged international funds, like Vanguard's Total International Bond ETF (BNDX). You can see they clearly state that it is a hedged fund in its description:

There are hedged stock funds out there, but they will tell you explicitly that they are hedged, and they usually have higher fees as a result. Hedging is more common when you are investing in a single foreign country than in multiple.
 

feline fury

Member
Dec 8, 2017
457
I've maxed out my Roth for the year and my 401k contributions are on a regular schedule. So I'm looking to invest some extra cash in a taxable account while the market is down.

If I'm looking at Vanguard ETFs, I might as well buy via Vanguard as well? I'm trying to understand the various fees. Commissions are the fees for each trade while the expense ratios are the annual management fees?

Did this thread come to a consensus re: Fidelity vs Vanguard fees?
 

reKon

Member
Oct 25, 2017
3,799
it sure doesn't feel fun to look at your Personal Capital net worth keep going down slightly even after changing your contributions in a way that will max it out at the end of the year, haha...

what's the typically time period for recessions? I'm still on the path of maxing out my retirement accounts for the next 2-3 years before drastically reducing and saving piling up cash for multiple down payments.
 

tokkun

Member
Oct 27, 2017
1,364
it sure doesn't feel fun to look at your Personal Capital net worth keep going down slightly even after changing your contributions in a way that will max it out at the end of the year, haha...

what's the typically time period for recessions? I'm still on the path of maxing out my retirement accounts for the next 2-3 years before drastically reducing and saving piling up cash for multiple down payments.


Just to be clear, though, a recession refers to negative GDP growth, not to what the stock market is doing.
 

Euphoria

Member
Oct 25, 2017
2,946
Hey all, I’m here because of the millennial financial thread and while doing okay I know I can do better and just looking for for some advice on where to go next.

I currently have around $47k in my 401k. My job matches 33% but only up to a 6% contribution, so I do 6%. This basically get me 8% weekly into my account. I also currently have a $10k loan to pay back to this account as I had home related stuff that required me to get access to some cash without penalty.

Outside of that I own a home that has about $168k remaining on it with an estimated worth of around $240-$250k.

Outside of those I have $2-$3k in some marijuana stocks, around $6k in savings, $2k in my checking and I owe about $20k on a vehicle.


In my home I would say we maybe have an extra $300-$400 per month excess.


What would be my best course of action to get myself to a better place? My goal obviously is to get myself in a position to retire as early as possible.

I am 35.


Thanks in advance and I hope to become a regular in this thread.
 

demosthenes

Member
Oct 25, 2017
4,235
Hey all, I’m here because of the millennial financial thread and while doing okay I know I can do better and just looking for for some advice on where to go next.

I currently have around $47k in my 401k. My job matches 33% but only up to a 6% contribution, so I do 6%. This basically get me 8% weekly into my account. I also currently have a $10k loan to pay back to this account as I had home related stuff that required me to get access to some cash without penalty.

Outside of that I own a home that has about $168k remaining on it with an estimated worth of around $240-$250k.

Outside of those I have $2-$3k in some marijuana stocks, around $6k in savings, $2k in my checking and I owe about $20k on a vehicle.


In my home I would say we maybe have an extra $300-$400 per month excess.


What would be my best course of action to get myself to a better place? My goal obviously is to get myself in a position to retire as early as possible.

I am 35.


Thanks in advance and I hope to become a regular in this thread.
I'll post more when not on a phone but an IRA or Roth IRA.
 

reKon

Member
Oct 25, 2017
3,799


Just to be clear, though, a recession refers to negative GDP growth, not to what the stock market is doing.
yes, I realize - but how often do they correlate? I remember they took a dive during the 2007-2009 recession. Hoping for a nice discount on stocks of the next 2+ years if this going to happen.
 

dragonflys545

Member
Oct 27, 2017
1,571
New York
Okay, so I’m new to this. I have more than 70k in the bank... I’m planning to use this as a down payment for a condo/house later this year. Is it good idea to start investing now even though I’ll need this fund relatively soon?
 

demosthenes

Member
Oct 25, 2017
4,235
Hey all, I’m here because of the millennial financial thread and while doing okay I know I can do better and just looking for for some advice on where to go next.

I currently have around $47k in my 401k. My job matches 33% but only up to a 6% contribution, so I do 6%. This basically get me 8% weekly into my account. I also currently have a $10k loan to pay back to this account as I had home related stuff that required me to get access to some cash without penalty.

Outside of that I own a home that has about $168k remaining on it with an estimated worth of around $240-$250k.

Outside of those I have $2-$3k in some marijuana stocks, around $6k in savings, $2k in my checking and I owe about $20k on a vehicle.


In my home I would say we maybe have an extra $300-$400 per month excess.


What would be my best course of action to get myself to a better place? My goal obviously is to get myself in a position to retire as early as possible.

I am 35.


Thanks in advance and I hope to become a regular in this thread.
Not at phone! I'm going to a concert tonight and won't be on again probably until tomorrow but anyone that wants to answer the above will likely want a combination of the below info.
Please answer:
What are the expenses on your 401k plan like?
What is the % on your 401k loan? I assume they stopped withholding on your 401k until you pay your loan back?
What is the % on your car loan? New car / old car, how old is it? How long do you intend to drive it?

"In my home" $300-400 excess. Is this you and your spouse/partner? How much are you contributing to this free cash flow? Are you paying extra on the house/401k loan/car? This is only ~$4,200 a year so it's hard to help with out knowing what you factor into that 'excess' number.

An IRA is an investment vehicle that you can put $6,000/year away in. There are traditional and Roth, but we're a little ways away from that as which is most advantageous for you.
 

SUBZERO-08

Member
Oct 25, 2017
266
I’m going to need help explaining what those are lol xD
HISA is a High Interest Savings Account, which you may already have with your bank.
A GIC is a Guaranteed Investment Certificate, which essentially guarantees you a return on your investment but you have to leave it in for a set term. I'm not sure what the equivalent is called in the USA. Edit: It looks like in the USA it is called a CD (Certificate of Deposit).
 

reKon

Member
Oct 25, 2017
3,799
HISA is a High Interest Savings Account, which you may already have with your bank.
A GIC is a Guaranteed Investment Certificate, which essentially guarantees you a return on your investment but you have to leave it in for a set term. I'm not sure what the equivalent is called in the USA. Edit: It looks like in the USA it is called a CD (Certificate of Deposit).
This is correct for the US. Depending on the term, it would range typically range from 3-5 years that you wouldn't be able to touch it.
 

Euphoria

Member
Oct 25, 2017
2,946
Not at phone! I'm going to a concert tonight and won't be on again probably until tomorrow but anyone that wants to answer the above will likely want a combination of the below info.
Please answer:
What are the expenses on your 401k plan like?

What do you mean by expenses on my 401k? How much it is costing me per week to pay back?

What is the % on your 401k loan? I assume they stopped withholding on your 401k until you pay your loan back?

It is 8.25% but that is technically being paid back to myself. From my understanding I’m not being penalized in any way with the loan.

What is the % on your car loan? New car / old car, how old is it? How long do you intend to drive it?

Car loan is around 4.25%. It is a 2016 Jeep Patriot with 33k miles on it. I intend to hold onto it long term, easily 10+ years. It doesn’t do much long distance driving so I’ll be lucky if it gets 8k miles per year put onto it.

"In my home" $300-400 excess. Is this you and your spouse/partner? How much are you contributing to this free cash flow? Are you paying extra on the house/401k loan/car? This is only ~$4,200 a year so it's hard to help with out knowing what you factor into that 'excess' number.

This is combined. We didn’t spend so wisely lately and working on scaling back to increase that number so we can pay the car off faster before moving towards the mortgage. Combined we make around $110-$120k total pretax.

My check is the one that gets ravaged by benefits and 401k related stuff.


An IRA is an investment vehicle that you can put $6,000/year away in. There are traditional and Roth, but we're a little ways away from that as which is most advantageous for you.
Thank you.

See bolded for responses to your questions.