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I borrrowed against my 401k and paid myself back at 0.5% over prime. Most say never do this but I did anyway and worked out ok - fully repaid 50k over 5 years. This prevented me from getting a jumbo loan. I missed out on some pretty good gains with that # but just a portion of our retirement was effected. We did buy right about 6 years ago so price paid was great value.
Company stock (F) has more volatility than the index funds I'd move it to. I may try to go bigger blocks - I hate feeling like I'm selling low, but we have been going lower for the past 3 years. I'm going to dealer/corporate meeting in Scottsdale tomorrow and Wednesday - let me see how bad morale is before I make a decision.
Yep - volatility is higher. Maybe a few chunks over six months or so? Whatever helps you sleep at night. F and the markets are going to be highly correlated if the bottom falls out, so its likely (as much as you can say "likely" in the markets) that they'd move together at that point.
I assume this is a second home? Why can't you do an HELOC from existing house?
I did something along the lines of what you're thinking. In 2010 after the Florida housing market bottomed, we wanted to buy a rental but lacked the on-hand cash. We withdrew about 10K from the Roth (not a loan) taken from the principal so there were no fees or tax implications. Seven years later, the Roth is fine--we always keep plugging in the max amount each year, and the house has appreciated almost 100%. Easily the best investment I've ever made (except for Mansion). I'm sure most folks would maintain that the Roth should be sacred but I see the option to get at your principal as a key feature. It is not just for retirement.
Cool. I assume I can edit/customize the bank accoint items too. Like when I do a transfer for my mortgage etc.
What if you lost money on that house, would you call it the worst investment you ever made? If you made 100% on it you could argue that even a big cash advance on a credit card would have been a great financial decision.
works great, no issues. I don't have to fix much on MInt at all.. the worst is checks and "uncategorized" expenses.
What do your teenagers want to do with that savings? Do they want to save it for retirement?
I'd like to have them save some of it for retirement and some for upcoming expenses, car/college etc.
I looked in to this, I believe they need earned income of at least of the amount that gets placed in the IRA. For my oldest, this will be only a small amount currently, hopefully more once he gets a part time job this fall.
Gotcha. I think general consensus leans to Vanguard. I use Fidelity b/c that's where all me and my wife's benefits are located.
Personally don't like the Vanguard website, so I'm at Fidelity. Honestly either of those three will work fine.
I think TD Ameritrade has the best collection of commission free ETF's including vanguard and ishares, which are great for people with small amounts to invest. TD Ameritrade works with HSA Bank - so i have experience there with my HSA investments. It's easy to use.
Fidelity has 80 of those, Vanguard 70. Which is awesome - hard to make a poor choice among the big brokerages for a basic account like this.
Not sure if it is the case for everyone but I was able to contribute to 401k when I had my loan. I agree that it can put you in a bind if you are not financially set and there has to be a major savings to do so. Obviously not the smartest to buy larger if the money isn't saved but it can be used to prevent a jumbo loan or avoiding pmi. These would be situations where it should be considered. I could have paid my loan back quicker or shifted into HELOC but I used it as the safe portion of my 401k paying myself back at 4.75%. (prime +0.5)
Man I feel stupid, I want to start them out in something basic, was reading about the three fund portfolio. Any suggestions on what funds to start out on? I want to keep fees as low as possible, hopefully they will continue to add to this and build some wealth for the future. I have some reading to do (ETF's, mututal funds, ishares???)
yeah, don't make it hard on yourself.. just sign up for an account, fund it, and buy 100% VTI - vanguard total stock market and be done with it.rick6668 said:
Thanks! If only I had the balls to pull everything out of my financial advisor's hands and do it myself.
the market does what the market does.. no financial advisor is going to save you from that
FWIW, I would max Roth and Backdoor Roth prior to 457 b/c you're taking a hit on the taxes now vs. later with the 457. You will be taxed on the pension revenue, so it spreads the tax risk out a little bit.Charlie Harper said:
Totally agree. Perhaps add VEA for some international exposure. VTI is what I like as well.
We have discussed it in the past, we are going to have a discussion tonight. It's their money, we will talk about it and they will make the decision. Good question.
So not too hard to figure about what your salary is here.Charlie Harper said:
What age can you start collecting your pension at 60%? That's going to be one nice retirement.Charlie Harper said:
Can you cash out earlier than that? It sounds like with just the pension, you'll have a very nice amount. Then you also have the 457 which at your income you'll be able to max out. Do you also get SS?
Not sure if I can cash out earlier. I hope I can max it out, but living the Silicon Valley/SF Bay Area is expensive and I'd like to own a home at some point. I believe I should get SS.
If my tax burden will either be the same or lower at retirement why would funding the ROTH be more advantageous? Is that in case the tax rate goes up?
Ah, that does change things some. The nice thing about living in a high cost of living area is that pension is going to translate nicely to a lower cost of living area when you retire.
There is always that possibility, though it would really have to spike to put this money at a higher tax bracket with your likely retirement income. For these reasons it's not a bad idea to have some money in all three pots. (though I'd prioritize tax sheltered accounts higher as their earning potential is so much higher over 30 years. )
My understanding is that you can't. As soon as you hit 18k in a calendar year your employer will just stop deducting from your paycheck.
If you're eligible for an IRA that's a transparent move. Just don't lose out on the match and you're good. BTW, the value of monies in a tax sheltered account are much higher than the 60 basis points that they're scalping you on. It's still worth it to shovel money into the 401k.
Quick question as I've heard both ways...if you have an Inherited IRA that you take the distribution over expected lifetime does it effect the ability to do a backdoor Roth contribution? Also if you have both would they conflict with setting up a Simple IRA as well?
This is correct. The problem however is if you get a match, they stop that as well once you hit $18k.
Based on your original post you said you would probably be in the same or one lower tax bracket with the pension payout. B/c pension is taxed at regular income, my thought process would be you would have two retirement streams: (1) Pension that will be taxed (2) Roth that wouldn't be taxed. It spreads the risk out a little bit b/c nobody can predict what tax brackets will be in 25 years. If you put it all in 457, then you're looking at all of your retirement income subject to taxes.....if tax rates do go up a lot, you could be exposed.
