Was also wrong because apparently you don't necessarily need to file if it's a Roth contribution. But if it's the difference in qualifying for the savers credit or not, it could still be worth filing an amended return.
I personally don't feel like I'm going to stay past a year at the job so committing to the 401k when it takes 2-3 years to keep a % of the match is a waste. So it seems like I would have to do a ROTH IRA. Any tips on how I can get started with that?That's a pretty crummy match. How long do you have to be there before the match vests? Surely you don't have to be with the company until retirement.
I wouldn't bother with Merrill over Vanguard or Fidelity for an IRA.
Chances are, the advice will be to still follow the typical investment path. Contribute to your 401K to get the maximum company match, then put further investments in a personal IRA up to the maximum. You can (and generally should) have both. Even if the match isn't good it should still be free money, and if you do end up with the company long enough for it to vest you'll be glad to have it. Unless your 401K fund options are just really bad, you shouldn't lose out on much if you don't get the match and roll it over.
If you're very confident you won't get the match, and/or your fund options are just abysmal, you may want to forgo the 401K, but it's not often that someone would want to do that.
I personally don't feel like I'm going to stay past a year at the job so committing to the 401k when it takes 2-3 years to keep a % of the match is a waste. So it seems like I would have to do a ROTH IRA. Any tips on how I can get started with that?
I did research on them both and I kind of have no idea what I'm looking for. I think I'm leaning towards Vanguard.Visit vanguard or fidelity or another site and open account. You still have until April 15 to co tribute for 2018.
I did research on them both and I kind of have no idea what I'm looking for. I think I'm leaning towards Vanguard.
The differences are pretty negligible for someone looking to passively invest. Both are well respected and have good funds to invest in with low fees. I'm not sure what the split is on Era but I'd guess it leans slightly toward Vanguard.I did research on them both and I kind of have no idea what I'm looking for. I think I'm leaning towards Vanguard.
If you expect to have a lower income after retirement then in most situation, IRA are better than ROTH. There are exception based on actual income (there are calculator on the web that can help figure out in in you are in these.I'm having a hard time trying to figure out the point of using a roth IRA over a traditional IRA. Unless you are very early in your career it seems that most people would expect to have a lower income in retirement than higher, and thus the traditional IRA would be better. The other scenario seems to be a hedge against higher tax rates enacted in the future, but this seems more on the speculation side of things for this thread. So sounds like for a family with $80k yearly income why would I pick a roth?
Short answer: deposit $5,500 into Vangaurd, invest in VTI or VTSAX.
Thanks, I definitely want to be hands off for now.The differences are pretty negligible for someone looking to passively invest. Both are well respected and have good funds to invest in with low fees. I'm not sure what the split is on Era but I'd guess it leans slightly toward Vanguard.
Depending on how hands-off you want to be you can either invest in a target date fund and have everything managed for you but with a slightly higher (but still acceptably low) fees, or manually control your allocations and invest in total market funds.
If you manage it yourself, Total US Market is a good starting point. Eventually you will want to add Total Bond Market to balance your risk. And opinions differ on Total International Market but it's another way to diversify.
Thanks, I definitely want to be hands off for now.
Question here:
Dividends and capital gains
Reinvest
or
Transfer to your money market settlement fund
I'm having a hard time trying to figure out the point of using a roth IRA over a traditional IRA. Unless you are very early in your career it seems that most people would expect to have a lower income in retirement than higher, and thus the traditional IRA would be better. The other scenario seems to be a hedge against higher tax rates enacted in the future, but this seems more on the speculation side of things for this thread. So sounds like for a family with $80k yearly income why would I pick a roth?
Whats the diff between a Roth IRA and me just opening a Brokerage acct from Fidelity?1. Traditional accounts charge a penalty for withdrawing money before age 59.5. For Roth accounts, there is no penalty on withdrawals of the principle. This makes Roth better if you want to retire before 60.
2. Roth is better as an emergency fund because of #1 and because you don't pay tax on withdrawals.
3. Having a traditional IRA balance can prevent you from being able to do the Backdoor Roth IRA method, in the event that your income increases enough that you would want to.
4. You say "The other scenario seems to be a hedge against higher tax rates enacted in the future, but this seems more on the speculation side of things for this thread". I would argue that one of the fundamental tenets of investing is that one must be compensated for risk. If two investments have the same expected return but one has more risk, you should always choose the less risky one. All other things being equal, the fact that there is less uncertainty in the future value of a Roth account is something that is valuable and may be worth sacrificing some expected return.
An IRA is tax sheltered.Whats the diff between a Roth IRA and me just opening a Brokerage acct from Fidelity?
You mean on the interest accrued?
Well assuming it is invested the capital gains, not technically interest. But yes.
That's a good illustration of the power of compound interest, but I think it focuses a bit too heavily on $100k as some sort of landmark when it's really just an arbitrary figure plucked out of the air for illustrative purposes. "Net worth goes crazy after the first $100k" is a bit reductive, really. If you're saving $1k a year or $50k a year the effect of compound interest is the same, it's just the final figure that scales (assuming that the amount being saved remains constant, of course).Taking a read through this was pretty insightful: https://fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/
That's a good illustration of the power of compound interest, but I think it focuses a bit too heavily on $100k as some sort of landmark when it's really just an arbitrary figure plucked out of the air for illustrative purposes. "Net worth goes crazy after the first $100k" is a bit reductive, really. If you're saving $1k a year or $50k a year the effect of compound interest is the same, it's just the final figure that scales (assuming that the amount being saved remains constant, of course).
Roll it over to your new 401(k) plan. Easy.So I figured I could here for advice. So, my first job out of college had me start my 401(k) with them which I invested in for a year.
I then found another job and have been contributing to a new 401K plan. Problem is, I never did anything with my plan from my previous employer and it seems to have rolled over into an IRA managed by BMO. Since I was only there for a year, the balance is very low and has been gaining almost no interest so i'm not sure what to do with it or where to even begin.
Anyone have any advice? Should I just go to BMO and see what my options are?
That's a good illustration of the power of compound interest, but I think it focuses a bit too heavily on $100k as some sort of landmark when it's really just an arbitrary figure plucked out of the air for illustrative purposes. "Net worth goes crazy after the first $100k" is a bit reductive, really. If you're saving $1k a year or $50k a year the effect of compound interest is the same, it's just the final figure that scales (assuming that the amount being saved remains constant, of course).
Aside from the tax now/tax later, that's one of the general arguments against a Roth. Less taxes now -> invest more -> more compounding returns -> more money. If those contributions are in the 22% bracket that's $1300 in taxes you could be deferring and investing. And if you qualify for a health savings account you could use that as a second tax advantaged account.Re: traditional vs Roth
Assuming I'm looking to max my annual contribution, isn't the Roth the better option by default since that would maximize the amount of post-tax money I can have in tax advantaged accounts? IOW, putting $6k in a Roth would be better than $6k in a traditional + whatever amount I'm saving in taxes upfront into a non-tax-advantaged account, right?
Aside from the tax now/tax later, that's one of the general arguments against a Roth. Less taxes now -> invest more -> more compounding returns -> more money. If those contributions are in the 22% bracket that's $1300 in taxes you could be deferring and investing. And if you qualify for a health savings account you could use that as a second tax advantaged account.
The Shockingly Simple Math Behind Early Retirement was my epiphany.I recommend this MMM article; it helped make sense of some of the retirement math for me.
How to Retire Forever on a Fixed Chunk of Money
https://gj837.app.goo.gl/Z3QY
I showed my husband the networthify.com calculator results from the link in that article. He claims he's never gonna be able to retire. But I showed him that even being ridiculously conservative (2% annual ROI when even our savings account is 2.5%) that we could "retire" in 10 years or less. Thanks for the link to the articles, FliXFantatier and Chaosblade . Makes me (and him) feel a lot better.The Shockingly Simple Math Behind Early Retirement was my epiphany.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
Aside from the tax now/tax later, that's one of the general arguments against a Roth. Less taxes now -> invest more -> more compounding returns -> more money. If those contributions are in the 22% bracket that's $1300 in taxes you could be deferring and investing. And if you qualify for a health savings account you could use that as a second tax advantaged account.
Damn, reading articles like this make me feel bad about my spending habits. I could retire so, so early in life considering I have already saved a decent amount and I am really only at a 25% savings rate over the past four years according to my finance spreadsheet I keep.The Shockingly Simple Math Behind Early Retirement was my epiphany.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
Thanks, I definitely want to be hands off for now.
Question here:
Dividends and capital gains
Reinvest
or
Transfer to your money market settlement fund
You wouldn't happen to know where I can change it?
We did a few pages ago. They're awesome. I just wish I switched to a HSA-compatible plan sooner. Could've done it a few years before we finally did.Has the thread discussed Health Savings Account (HSA)? What are the thoughts on this?
Well, this would not be fun: https://www.businessinsider.com/nex...-percent-drop-by-year-end-john-hussman-2019-4
Exactly, ignore the noise.People have been posting "imminent market crash" articles since I made my Roth and have been watching the retirement thread (around 5 years now). One of them will be right eventually, but I don't put much stock in them.
People have been posting "imminent market crash" articles since I made my Roth and have been watching the retirement thread (around 5 years now). One of them will be right eventually, but I don't put much stock in them.
People have been posting "imminent market crash" articles since I made my Roth and have been watching the retirement thread (around 5 years now). One of them will be right eventually, but I don't put much stock in them.
Pretty solid track record though it seems? https://en.wikipedia.org/wiki/John_Hussman
This year I opened an IRA after realizing that just a 401k that I don't pay attention to is not a good idea. The issue I have right now is understanding asset mix.
I first started buying VTI and more recently have a small amount of BND and VXUS. When I'm in the Vanguard app, I can change the asset mix of stocks, bonds, and short term reserves. Right now it's (foolishly?) at 100% stock which it can't reach cause I have BND in my portfolio.
If I change the percentages, will Vanguard sell some of my stock ETFs and get more of BND; if yes, what if I had multiple bond ETFs, how would it decide? Also, I can't seem to manage the ratio of domestic and international stock percentages. How do I manage this with Vanguard?
So the rebalancing that people do is just them doing buys and sells to keep their preferred ratio?The asset mix they show you is just a target. You can set it to whatever you want, but unless you make any changes to your investments yourself it doesn't do anything. It's just there to give you a visual comparison to "what I want" versus "what I have" to help you direct your investments.
I never changed mine, it shows my target at 90% stock 10% bond, but I have 100% stock since that's all I buy.
Also if you're young, 100% stock is fine. Different people will have different recommendations for how much you should hold in bonds, ranging from conservative ideas like holding a lot of bonds, to holding a number relative to your age, all the way to the aggressive approach of never bothering with bonds ever and just riding stocks into retirement.
Yeah, Vanguard won't rebalance between funds you own, but they do have "funds of funds" that are based around certain asset allocations that do get rebalanced to maintain the desired ratio. Target date funds are the most relevant here, but they also have basic balanced funds like 50/50 stock/bond, 60/40, etc.So the rebalancing that people do is just them doing buys and sells to keep their preferred ratio?
Thank you. I was way off on understanding how that worked. It's great to have some clarification. I'm 28 so I think I'll ride a while longer with having a higher portion of stock.