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On ‎4‎/‎25‎/‎2016 at 1:47 PM, Sand said:

:yes:

And you will be paying for account closures - EJ will make sure to take their lb. of flesh on the way out.  Still probably worth it.  If you have losers you will at least be able to offset those a bit.

That figures. I guess those are sunk costs though and it's good to get out ASAP. EJ sucks.

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Wonder if anyone knows off the top of their head (too lazy to research at this moment).

My current situation: have acorns account put in 15/day and pay a fee + vanguard mutual fund fees.

Positives: It's a recurring investment so don't have to go through compliance (work at investment firm and it's annoying to go through compliance before every buy sell including ETFs), can buy fractional shares.  Negatives the acorns fee on top of vanguard fees.  The fee isn't all that high, but as I have more $ it gets higher so would like to get out before I pay a lot in fees.

So the question is there a way to replicate this through Vanguard without paying the extra fee?  Meaning can I set up recurring investment and buy fractional ETFs in whatever percent I decide?  e.g. I want 25% vanguard whatever fund 42% 2nd vanguard fund and 33% 3rd Vanguard fund.  And just have it set up so I never change anything it just does that for me daily or weekly?

Thanks if you know off the top of your head, if not I'm sure I'll have the motivation to research soon.

 

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re-fi question.

I have not gotten an official appraisal on my home yet, but trying to estimate my equity and possible savings.  If I need to take PMI, am I correct that the PMI is essentially an additional interest rate?  So if I don't have the 20-22% equity, I will essentially be paying an additional percentage of the loan?  Like hopefully under 1%.  And if I add that rate to the new possible interest rate on the mortgage, that would effectively be my new interest rate?

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4 minutes ago, Long Ball Larry said:

re-fi question.

I have not gotten an official appraisal on my home yet, but trying to estimate my equity and possible savings.  If I need to take PMI, am I correct that the PMI is essentially an additional interest rate?  So if I don't have the 20-22% equity, I will essentially be paying an additional percentage of the loan?  Like hopefully under 1%.  And if I add that rate to the new possible interest rate on the mortgage, that would effectively be my new interest rate?

It's typically 0.5 to 1.0% but not considered interest. It will be shown separate on your statements and your annual 1099 come tax time.

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14 minutes ago, Long Ball Larry said:

re-fi question.

I have not gotten an official appraisal on my home yet, but trying to estimate my equity and possible savings.  If I need to take PMI, am I correct that the PMI is essentially an additional interest rate?  So if I don't have the 20-22% equity, I will essentially be paying an additional percentage of the loan?  Like hopefully under 1%.  And if I add that rate to the new possible interest rate on the mortgage, that would effectively be my new interest rate?

If you're that close do everything you can to stay out of PMI land.  It is just money thrown down the toilet from your point of view.

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On 4/25/2016 at 2:36 PM, Dentist said:

I don't think i have any ideas that i haven't already spouted in this thread or in another related investment thread.

Otis could always post a question about a specific investment or even post his entire portfolio and get enough good advice from me or many other incredibly knowledgeable posters in this thread and get as good of advice as he could pay for.

Having said that, Otis also has some unique challenges to high net worth individuals with tax management, estate planning, etc that many people don't have.

 

Here is something for you to peruse Otis...  it's a finance site for doctors,  but really it could be for anyone with a medium to high net worth

http://whitecoatinvestor.com/8-reasons-you-should-be-your-own-advisor/

Nothing in Otis' posting history suggests that he will do this or stick with it.  Indeed, he has posted several similar requests over the year.  I don't think a fee only advisor will cut it for him either; he seems like exactly the type that should go for a commission based advisors.  He would love the hot-tips, IPO/private equity options, and perks like free tickets to sporting events.  He doesn't want to save on fees, he wants to feel like the premium client he is.  As long as he gets the tax and estate planning advise he probably really needs along with it all, he will come out much better than before. 

So my sincere advise to Otis would be to ask partners or other senior people at his firm who their "guy" is and enjoy being schmoozed until he picks one.

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1 minute ago, Slapdash said:

Nothing in Otis' posting history suggests that he will do this or stick with it.  Indeed, he has posted several similar requests over the year.  I don't think a fee only advisor will cut it for him either; he seems like exactly the type that should go for a commission based advisors.  He would love the hot-tips, IPO/private equity options, and perks like free tickets to sporting events.  He doesn't want to save on fees, he wants to feel like the premium client he is.  As long as he gets the tax and estate planning advise he probably really needs along with it all, he will come out much better than before. 

So my sincere advise to Otis would be to ask partners or other senior people at his firm who their "guy" is and enjoy being schmoozed until he picks one.

probably true.   I just think of all the money that would get sunk into financial advice... most of which could be found just by posting in this thread.... and it makes me want to be a financial advisor instead of a dentist.

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1 hour ago, Niles Standish said:

Wonder if anyone knows off the top of their head (too lazy to research at this moment).

My current situation: have acorns account put in 15/day and pay a fee + vanguard mutual fund fees.

Positives: It's a recurring investment so don't have to go through compliance (work at investment firm and it's annoying to go through compliance before every buy sell including ETFs), can buy fractional shares.  Negatives the acorns fee on top of vanguard fees.  The fee isn't all that high, but as I have more $ it gets higher so would like to get out before I pay a lot in fees.

So the question is there a way to replicate this through Vanguard without paying the extra fee?  Meaning can I set up recurring investment and buy fractional ETFs in whatever percent I decide?  e.g. I want 25% vanguard whatever fund 42% 2nd vanguard fund and 33% 3rd Vanguard fund.  And just have it set up so I never change anything it just does that for me daily or weekly?

Thanks if you know off the top of your head, if not I'm sure I'll have the motivation to research soon.

 

First, answer this:

-What money is being invested into Acorn?  Is it after-tax $$s, say from a savings or checking acct?

-Do you max your 401K (~$18K/yr)?

-Do you max your Roth ($5.5K/yr)?

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1 hour ago, eoMMan said:

It's typically 0.5 to 1.0% but not considered interest. It will be shown separate on your statements and your annual 1099 come tax time.

Understood, but if I were trying to estimate monthly savings, and my current rate is 5.75% and say I could a new loan at 3.75%, could I use a 4.5% rate (for example) in a savings calculator to simplify the savings calculation?

1 hour ago, Sand said:

If you're that close do everything you can to stay out of PMI land.  It is just money thrown down the toilet from your point of view.

Understood from a long-term perspective, but in all likelihood, I will try to sell this property in a couple years.  If I could get the monthly payment down a decent amount, wouldn't that be worth it?

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2 hours ago, Niles Standish said:

Wonder if anyone knows off the top of their head (too lazy to research at this moment).

My current situation: have acorns account put in 15/day and pay a fee + vanguard mutual fund fees.

Positives: It's a recurring investment so don't have to go through compliance (work at investment firm and it's annoying to go through compliance before every buy sell including ETFs), can buy fractional shares.  Negatives the acorns fee on top of vanguard fees.  The fee isn't all that high, but as I have more $ it gets higher so would like to get out before I pay a lot in fees.

So the question is there a way to replicate this through Vanguard without paying the extra fee?  Meaning can I set up recurring investment and buy fractional ETFs in whatever percent I decide?  e.g. I want 25% vanguard whatever fund 42% 2nd vanguard fund and 33% 3rd Vanguard fund.  And just have it set up so I never change anything it just does that for me daily or weekly?

Thanks if you know off the top of your head, if not I'm sure I'll have the motivation to research soon.

 

You can do automatic investment on a Vanguard account.  I have monthly contributions made to IRAs I have there.  

I am bored today at work, so I looked some stuff up.  

You can't buy fractional shares of ETFs at Vanguard.  You can do dividend reinvestment on current holdings and have fractional shares that way.

But it's Vanguard, so just do a the corresponding mutual fund.  Their ETFs are just a separate share class of their mutual funds, so they're all the same.

I logged in and you can do AIPs every week.  The other options are every two weeks, twice a month or monthly.  You can pick any number of funds and allocate by dollar amount or by percentage.

You should be able to roll the ETFs to Vanguard.  But you can't exchange them for a fund share class.  The only option would be to sell the ETF and buy the Vanguard fund (which could lead to a taxable event).  To buy a Vanguard fund, you have to meet the minimum, which is usually $1,000 (retirement accounts) or $3,000 (for taxable accounts).  

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1 hour ago, Long Ball Larry said:

Understood, but if I were trying to estimate monthly savings, and my current rate is 5.75% and say I could a new loan at 3.75%, could I use a 4.5% rate (for example) in a savings calculator to simplify the savings calculation?

Understood from a long-term perspective, but in all likelihood, I will try to sell this property in a couple years.  If I could get the monthly payment down a decent amount, wouldn't that be worth it?

If you're going to sell it in a couple years, then it's not worth refinancing due to the closing costs.

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4 hours ago, Dentist said:

probably true.   I just think of all the money that would get sunk into financial advice... most of which could be found just by posting in this thread.... and it makes me want to be a financial advisor instead of a dentist.

The FAs that make the most money are the guys I mention though.  A lot of people just don't want to take the (insanely small) amount of time to do it themselves.  Or, even more pertinent, are too stressed out in their daily lives to invest that time.  @Otis certainly has enough wiggle-room that it won't really hurt him much in the long run to give up 100bps+.  Most people aren't dealing with his margins or lack of self-control in these specific areas.  Biggest thing is just having a plan.

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46 minutes ago, Slapdash said:

The FAs that make the most money are the guys I mention though.  A lot of people just don't want to take the (insanely small) amount of time to do it themselves.  Or, even more pertinent, are too stressed out in their daily lives to invest that time.  @Otis certainly has enough wiggle-room that it won't really hurt him much in the long run to give up 100bps+.  Most people aren't dealing with his margins or lack of self-control in these specific areas.  Biggest thing is just having a plan.

At some point in the monthly equation my time becomes worth more than more money. 

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4 hours ago, wilked said:

First, answer this:

-What money is being invested into Acorn?  Is it after-tax $$s, say from a savings or checking acct?

-Do you max your 401K (~$18K/yr)?

-Do you max your Roth ($5.5K/yr)?

I do not max, this is my student loan repayment fund.  I know it's risky but it's going to take around 15 years at the rate I have going assuming I make decent interest and 20+ if I don't so not entirely risky (interest is very low on the loans but variable so when rates go up I will probably dump from acorns and pay off as much as I can).  Hopefully between now and interest rates going up I will make a good bit more money and do well in the market and be able to knock them out.  It is after-tax $ from a checking acct, I put about 15% into retirement so I feel like I'm doing enough there considering my debt.  Some in roth some in standard.

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3 hours ago, Andrew74 said:

You can do automatic investment on a Vanguard account.  I have monthly contributions made to IRAs I have there.  

I am bored today at work, so I looked some stuff up.  

You can't buy fractional shares of ETFs at Vanguard.  You can do dividend reinvestment on current holdings and have fractional shares that way.

But it's Vanguard, so just do a the corresponding mutual fund.  Their ETFs are just a separate share class of their mutual funds, so they're all the same.

I logged in and you can do AIPs every week.  The other options are every two weeks, twice a month or monthly.  You can pick any number of funds and allocate by dollar amount or by percentage.

You should be able to roll the ETFs to Vanguard.  But you can't exchange them for a fund share class.  The only option would be to sell the ETF and buy the Vanguard fund (which could lead to a taxable event).  To buy a Vanguard fund, you have to meet the minimum, which is usually $1,000 (retirement accounts) or $3,000 (for taxable accounts).  

Thanks for looking, I just realized that to avoid compliance I need to have a managed account not just auto buys.  So skipping the middle man doesn't seem to help me anymore.  The only ones beating my current fees are other robo advisors it looks like.  And those are only beating me by a bit unless I get to 100K in my account then one of them has .15%.  Schwab has a free robo advisor but they have a decent cash position which cuts gain (7% or so) and higher fees on average (.25% in aggressive).  I'd say after fund fees and acorns fees I'm paying .4-.45% too lazy to figure out exactly.  Schwab is a higher price assuming 5% average gain a year on stocks due to cash cost unfortunately because I like the idea of a free robo advisor.

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3 hours ago, BeTheMatch said:

If you're going to sell it in a couple years, then it's not worth refinancing due to the closing costs.

I understand that if you pay them upfront, but you can roll the closing costs into the loan, right?  Which may change the interest rate, but again, if all I want is a short term reduction, as long as the rate is lower, it seems worth it.

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Crystal Ball type question here..but I figured I'd throw it out there for discussion.

For those that do the backdoor roth every year...do you do it at the same time every year or try to time the market somehow?

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On ‎4‎/‎27‎/‎2016 at 0:52 PM, Dentist said:

probably true.   I just think of all the money that would get sunk into financial advice... most of which could be found just by posting in this thread.... and it makes me want to be a financial advisor instead of a dentist.

I know Financial Advisors that make crazy money. Doing a loan right now for a FA. Entered his income in at $500K. Though to be fair, through the discussion the income over the last few years has been as low as $300K on a bad year.

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53 minutes ago, pantherclub said:

What's the book?

white coat investor

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1 hour ago, Tiger Fan said:

Crystal Ball type question here..but I figured I'd throw it out there for discussion.

For those that do the backdoor roth every year...do you do it at the same time every year or try to time the market somehow?

i do the backdoor roth at the same time every year...  but when I choose to put the money into play sometimes varies.   mostly i just invest it all immediately,  but occasionally i've waited for a big down day.

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31 minutes ago, Chadstroma said:

I know Financial Advisors that make crazy money. Doing a loan right now for a FA. Entered his income in at $500K. Though to be fair, through the discussion the income over the last few years has been as low as $300K on a bad year.

I do imagine to make that kind of scratch that you would have to deal with some needy high net worth types who would furiously call/text you on a big market down week in a panic.  I could really see some hassle/BS that may make the job less easy than I think it is.

Not to mention the marketing dollars, or time spent marketing to get new accounts is probably tough for those that really do well with things.   And I'm sure you have to have some thick skin before people irrationally tell you that your plan sucks and they are pulling their assets when it is way beyond your control what the market does.

Then again, I certainly make less than 300k and have to deal with a lot of needy crappy people also.. so there's that

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2 minutes ago, Dentist said:

I do imagine to make that kind of scratch that you would have to deal with some needy high net worth types who would furiously call/text you on a big market down week in a panic.  I could really see some hassle/BS that may make the job less easy than I think it is.

Not to mention the marketing dollars, or time spent marketing to get new accounts is probably tough for those that really do well with things.   And I'm sure you have to have some thick skin before people irrationally tell you that your plan sucks and they are pulling their assets when it is way beyond your control what the market does.

Then again, I certainly make less than 300k and have to deal with a lot of needy crappy people also.. so there's that

Part of the reason why I never pursued this course in my career is this. I have dealt with more than a few people who think that they can treat people however they wish because they make a lot of money and are paying you for a service. They tend to be "new money" types because "old money" is already tied in with people that the family has had and "new money" types are the ones that typically hard to work with.

I spoke with a wealth management guy for private banking a few months back. I dug into this with him. He basically said it is was like any other business where you have good people to work with and bad to work with but there is a high level of expectation in general as these people are paying you money to do a job well and have options. He said as long as you are doing your job well then you really don't have issues. These guys make very good money too but they are a whole different world than your typical FA. They work in teams with specializations and many (most) have professional degrees and designations (CPA, MBA, JD, PhD, etc)

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Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

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53 minutes ago, Chadstroma said:

Part of the reason why I never pursued this course in my career is this. I have dealt with more than a few people who think that they can treat people however they wish because they make a lot of money and are paying you for a service. They tend to be "new money" types because "old money" is already tied in with people that the family has had and "new money" types are the ones that typically hard to work with.

I spoke with a wealth management guy for private banking a few months back. I dug into this with him. He basically said it is was like any other business where you have good people to work with and bad to work with but there is a high level of expectation in general as these people are paying you money to do a job well and have options. He said as long as you are doing your job well then you really don't have issues. These guys make very good money too but they are a whole different world than your typical FA. They work in teams with specializations and many (most) have professional degrees and designations (CPA, MBA, JD, PhD, etc)

do wealth mgt people only deal with minimum net worths?

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11 minutes ago, Statcruncher said:

Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

You can buy 15% discount stock, but it has to be through 401K?  Is that right?

 

What sector?  Appx market cap?

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8 minutes ago, Tiger Fan said:

do wealth mgt people only deal with minimum net worths?

poverty management seems more difficult. 

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15 minutes ago, Statcruncher said:

Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

Max out ESPP after 401k match assuming you are able to sell shares.

15% discount = 17.6% margin worst case scenario if you sell immediately. Use ESPP proceeds to fund Roth or other. 

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11 minutes ago, Tiger Fan said:

do wealth mgt people only deal with minimum net worths?

Yes. Depending on the bank and the program etc... something like $500K or million in investable assets etc. They are services for high net worth customers.

With the changes in banking over the years making consumer banking unappealing to banks- a lot have focused on building their private banking business. Pretty much all the big and regional banks have them now and even more than a couple small banks too. The specifics of what they require to get in and services provided will vary bank to bank.

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22 minutes ago, Statcruncher said:

Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

The 15% discount means you are starting off with that investment at a 15% return. Hard to beat that but yes, more risk for you. As a cautionary tale- an old employer of mine had that and I took advantage of it. They went bankrupt and I lost it all. :X I would take advantage of it for sure but don't go overboard. Diversify away from it in your investment options for the 401k and Roth. The 10/90 split to me sounds more than reasonable.

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7 minutes ago, wilked said:

You can buy 15% discount stock, but it has to be through 401K?  Is that right?

 

What sector?  Appx market cap?

Don't want to get too specific but the market cap is between 150 and 200 billion. And it's not through their 401K, I believe it is a straight ESPP.

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36 minutes ago, Statcruncher said:

Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

I'm not sure if we have the same situation.  But I have something similar.  We are allowed to buy up to the IRS max allowed of company stock at 15% discount.  So I buy the IRS max 25K each year.  We only have to hold the stock for about a month after the buy date, and I sell the earliest allowed date.  It means it's ordinary income not LTCG, but I'll take it.  Any income tax I pay on it means I made money.  There's almost no risk because of the holding period.  Things would have to really tank for me to lose money in that short of a time.  If you have to hold for a year or two there is a lot more risk and I wouldn't put too much of your net worth into one stock for a longer period.  But if you can sell off quickly I'd buy as much as you can.  And if it's a pretty small percent of your worth (say less than 5%) that you're holding at a given time I wouldn't be too worried about a year + holding period either.  I certainly wouldn't hold longer for preferential tax treatment though.  It's a benefit but not enough to justify more risk unless this is just a tiny percent of your worth.

Edited by Niles Standish
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20 minutes ago, Chadstroma said:

The 15% discount means you are starting off with that investment at a 15% return. Hard to beat that but yes, more risk for you. As a cautionary tale- an old employer of mine had that and I took advantage of it. They went bankrupt and I lost it all. :X I would take advantage of it for sure but don't go overboard. Diversify away from it in your investment options for the 401k and Roth. The 10/90 split to me sounds more than reasonable.

It is a 17.6% return on a 15% discount, assuming the stock goes down during ESPP period.  I have been in 3 companies with ESPP programs.. usually you get 15% off the lowest price of either the opening date or closing date prices.  So the 17.6 is worst case scenario assuming you can sell more or less immediately.

The key is selling it (or most of it) asap.

Edited by matuski
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25 minutes ago, matuski said:

It is a 17.6% return on a 15% discount, assuming the stock goes down during ESPP period.  I have been in 3 companies with ESPP programs.. usually you get 15% off the lowest price of either the opening date or closing date prices.  So the 17.6 is worst case scenario assuming you can sell more or less immediately.

The key is selling it (or most of it) asap.

that's my initial thought - is there something preventing you from buying as much as you can and selling it quickly?

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5 minutes ago, FUBAR said:

that's my initial thought - is there something preventing you from buying as much as you can and selling it quickly?

All 3 I have been a part of have been a buy in over a period of 6 months (deducted from paycheck), at the end of the 6 months your money buys stock at 15% of the lesser of the two dates' stock price, then you have to wait for insider trading windows to open (usually a month).

25k annual maximum per IRS.  

Pretty good deal and a LOT of people don't do it because they don't understand it.  If you can defer having that money for 6 months it is a no brainer.

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You don't actually reach the $25k limit though because it is based on the un-discounted stock price.. effectually ~$21k if I recall.

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2 hours ago, Chadstroma said:

Part of the reason why I never pursued this course in my career is this. I have dealt with more than a few people who think that they can treat people however they wish because they make a lot of money and are paying you for a service. They tend to be "new money" types because "old money" is already tied in with people that the family has had and "new money" types are the ones that typically hard to work with.

I spoke with a wealth management guy for private banking a few months back. I dug into this with him. He basically said it is was like any other business where you have good people to work with and bad to work with but there is a high level of expectation in general as these people are paying you money to do a job well and have options. He said as long as you are doing your job well then you really don't have issues. These guys make very good money too but they are a whole different world than your typical FA. They work in teams with specializations and many (most) have professional degrees and designations (CPA, MBA, JD, PhD, etc)

I work in this area, in a similar level of business as the guy you talked to.  I agree with him, it all depends on the client.  Some are great, some are not.  I will say you can have issues no matter how great of a job you do.  Some clients are just giant PIAs and ##### and moan about every little thing.

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2 hours ago, Statcruncher said:

Alright I'm investing in my 401K enough to get my full employer's match. I'm about to be able to divert more money to retirement and was planning on opening a Roth. Planned on investing in the Roth until I eventually hit max contribution, then switch back to max out the 401K contribution. Recent changes now mean I can buy the company's stock (it's an S&P500) at a 15% discount. I like the thought of free money but hate the lack of diversity. What's the move here? I'm leaning toward putting about 10% of my total investments into the stock and having the other 90% in the diversified 401K and Roth.

I'd put no more than 10% of your assets into the stock.  You don't want to be the guy loading up on stock of the next Enron, Lehman, etc.

If you can sell it, that is great.  The one firm I had an ESPP, we had to wait a year before we could sell.  That really took the fun out of it.

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1 hour ago, matuski said:

All 3 I have been a part of have been a buy in over a period of 6 months (deducted from paycheck), at the end of the 6 months your money buys stock at 15% of the lesser of the two dates' stock price, then you have to wait for insider trading windows to open (usually a month).

That is exactly how it works.

ETA: thanks for the advice guys. Think I will put 10% in and at the end of 6 months I'll hold it for the mandated month. If it goes up or stays the same I'll sell and put it in a Roth. If it dips too much I'll just hold onto it. From then on out every time I can cash out at a fair price I'll keep putting the proceeds into a Roth and hold as little actual stock as possible. Seems like unless the stock drops it's a way to basically put an extra 15% in my Roth. And if that works well I could actually increase above the 10% as long as the stock is doing ok and I have no issues selling it. If the company Enron's I would only be out at most 6 - 12 months worth of investing as I can stop contributing bi-annually. Any flaws in that plan?

Edited by Statcruncher

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55 minutes ago, Andrew74 said:

I work in this area, in a similar level of business as the guy you talked to.  I agree with him, it all depends on the client.  Some are great, some are not.  I will say you can have issues no matter how great of a job you do.  Some clients are just giant PIAs and ##### and moan about every little thing.

True and the wealthier the customer the more often you run into these kinds. I don't so much like that so I have avoided going this route to date.

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What percentage of your current/final income do you guys expect/should you plan for your 401k to replace once you retire?

 

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1 hour ago, Statcruncher said:

That is exactly how it works.

ETA: thanks for the advice guys. Think I will put 10% in and at the end of 6 months I'll hold it for the mandated month. If it goes up or stays the same I'll sell and put it in a Roth. If it dips too much I'll just hold onto it. From then on out every time I can cash out at a fair price I'll keep putting the proceeds into a Roth and hold as little actual stock as possible. Seems like unless the stock drops it's a way to basically put an extra 15% in my Roth. And if that works well I could actually increase above the 10% as long as the stock is doing ok and I have no issues selling it. If the company Enron's I would only be out at most 6 - 12 months worth of investing as I can stop contributing bi-annually. Any flaws in that plan?

while the logic is understandable, I'd recommend not even thinking about the price and just sell at least a large, predetermined amount. take the emotions out of it.

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3 minutes ago, No. 16 said:

What percentage of your current/final income do you guys expect/should you plan for your 401k to replace once you retire?

 

 

Planned on 70% but doing 55% and its working great.  We saved a lot so we didn't see a lot of the income before.

Could handle it a little lower as well.  We still have one in grade school and one starting local college (state school - reasonably priced ...in comparison to alternatives).

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9 minutes ago, No. 16 said:

What percentage of your current/final income do you guys expect/should you plan for your 401k to replace once you retire?

 

some guidelines say 80% but that seems too simplistic.  http://www.morningstar.com/advisor/t/92029635/3-approaches-to-income-replacement-ratios-in-retirement.htm

you need to evaluate your lifestyle.

For us, we'll start with the baseline that we currently only spend <70% of our income and invest 30%.  so at least in theory, if we replaced the 70% we wouldn't have to change anything.  BUT we want to do more with it; we want to buy a beach house and live in it half the year while renting it out May-October.  We want to travel more and do other things we aren't doing much of right now. 

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12 minutes ago, Binky The Doormat said:

Planned on 70% but doing 55% and its working great.  We saved a lot so we didn't see a lot of the income before.

Could handle it a little lower as well.  We still have one in grade school and one starting local college (state school - reasonably priced ...in comparison to alternatives).

You are retired with a kid still in grade school?

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12 minutes ago, matuski said:

You are retired with a kid still in grade school?

Yeah, wasn't the plan, but working for big companies ...things happen.  Got hit with layoffs and chose retirement at 55 and a half, I am 58 now.  

I got married late, married 6 years younger girl and started late with kids.  Was 39 with my first and 47 when we adopted our daughter.  

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53 minutes ago, FUBAR said:

while the logic is understandable, I'd recommend not even thinking about the price and just sell at least a large, predetermined amount. take the emotions out of it.

I think this is the smart move.  Get out as quickly as possible and don't even look at the price.  Long-term absent an Enron you will make a lot of money doing this because there isn't a long time for the stock to tank and you need to lose 15% in that month to break even so your odds of making money are very high each time.  The only likely way to lose money is to hold on to the stock a long time (and even then you probably won't really lose money just underperform the other funds you would have been buying.

Think of it this way, pretend the stock is down 15% in that month and you'd rather hold onto the stock until it goes up.  You're essentially buying your company stock instead of whatever you'd buy in your roth.  Not to mention you'd be taxed on any gain which you won't be with the roth and possibly STCG which is as bad as ordinary income in most cases.

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1 hour ago, No. 16 said:

What percentage of your current/final income do you guys expect/should you plan for your 401k to replace once you retire?

 

We're targeting something around 30% and we're comfortable with that. We won't have a mortgage and we don't have any kids. Although we make good money now, we save a lot and we're looking forward to downsizing our lifestyle, not that we spend crazy money today. Most of our expenses are related to our house - mortgage, property taxes, A/C (gets hot here in Texas), lawn service, cleaning service. We're moving to a more reasonable climate where property taxes are much lower and go to a smaller house.

If Social Security is around it's a bonus but we're planning our budget assuming it won't be. We're trying to be conservative with planning since we want to retire in 5-6 years (I'm 41, she's 45).

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2 hours ago, Statcruncher said:

That is exactly how it works.

ETA: thanks for the advice guys. Think I will put 10% in and at the end of 6 months I'll hold it for the mandated month. If it goes up or stays the same I'll sell and put it in a Roth. If it dips too much I'll just hold onto it. From then on out every time I can cash out at a fair price I'll keep putting the proceeds into a Roth and hold as little actual stock as possible. Seems like unless the stock drops it's a way to basically put an extra 15% in my Roth. And if that works well I could actually increase above the 10% as long as the stock is doing ok and I have no issues selling it. If the company Enron's I would only be out at most 6 - 12 months worth of investing as I can stop contributing bi-annually. Any flaws in that plan?

Just my opinion but I'd put all you can afford up to either what your company allows or the IRS max.  With no stock movement in that month you're up 17.6%.  If you're allowed to put 25K (IRS max) you're making somewhere in the range of 3750 gain in a year (you're really putting in 21,250 if no gain or loss).  Sure that's ordinary income so you're paying an extra 1250 in taxes but you're still up 2500 playing that game in an average year.  That's imo way better risk/reward than putting the money in your roth or bank account for 6 months.  The majority of my paycheck doesn't come to me until quarter end, just means you need to have an emergency fund saved up to play the game.

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29 minutes ago, Binky The Doormat said:

Yeah, wasn't the plan, but working for big companies ...things happen.  Got hit with layoffs and chose retirement at 55 and a half, I am 58 now.  

I got married late, married 6 years younger girl and started late with kids.  Was 39 with my first and 47 when we adopted our daughter.  

Impressive that retiring was an option.. nice work! :thumbup:

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