PBS Frontline : The Retirement Gamble, sorta Must See (2 Viewers)

[Doctor Detroit]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

 

[mquinnjr]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

I do something similar in terms of allocation in my Roth IRA, and I like your allocations. I bolded the expense ratio because if your average amongst all of your allocations is 2.7/10 of 1% in an employer provided 401k with that match, because that's awesome and super low cost, just pound away at that. I think the average of the ETF's I'm into in my Roth IRA is .07%, and are in Schwab Small Cap, Large Market, International Equity, and US TIPS ETF's (They're very low cost and I'm comfortable with the past performance/strategies/expense and active management historically). For my 401k, it's in-house proprietary funds so there's less of a profit motive, which I'm a fan of. My fees there are 0.07% for our Russel 3000 index, 0.07% for company stock, 0.15% for fixed income, so average amongst my allocation of 0.088% which is up to my company match, and just letting that grow with a eye on our stock price, which is a part of my job.

I'm no expert on this, but I think you're doing just fine with what you have above. Maybe shave a little off the top of US Large cap and International (5% or so each) and throw it at treasury and fixed income, respectively. Re-allocate more towards treasury and fixed income and away from equities as you progress towards retirement, whatever risk appetite (equities %) you're comfortable with really as you move along.

 

[wilked]

Najeh: I personally think paying more than 1% is way too much. Gruecd made a great point though in that the percentage charged is highly dependent upon your company's size and plan.

If you list your choices, along with their respective ER%, people can advise on what might be good choices

If all of the funds in a company's plan are 1+%, wouldn't they just be better off only contributing till the match ends? Then put the rest in an IRA where you can get some reasonable fees.

There is a breakeven, but I don't think it happens until you get close to 2%.

Before you go there, I would look at the possibility of in-service withdrawals (aka rolling money from your 401k into an IRA.) Some companies allow this.

Even bad 401ks are usually still worth it, the tax savings cannot be ignored

 

[wilked]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

Many use the rule of thumb of 'age in bonds'. It looks like you are a little more aggressive than that. Really if this is only a quarter of your portfolio, though, it is impossible to recommend anything without knowing the other part of the pie.

If that is representative of your whole portfolio, though, I would consider adding fixed income (bonds) and reducing equities 5-10%, but that is a personal decision on how much risk you are comfortable with.

 

[Random]

This article says that paying more than 1% expense ratio in your 401K is too much - do folks agree that <=1% is acceptable?

http://www.forbes.com/sites/stuartrobertson/2012/07/09/see-how-your-companys-401k-plan-stacks-up-in-three-simple-steps/

If you’re one of the many business owners with a 401(k) plan, you probably just received an important 401(k) plan fee disclosure document from your plan administrator that reveals, in greater detail than ever before, just how much you and your employees are paying in fees.

And while that document provides a lot of answers, it may also beg a few important questions including:

- Is my business paying too much?

- What are the most competitively priced plans charging in fees?

- How can we go about switching providers?

Answers to all of these questions can be found in three simple steps:

1. Calculate Your Employee Expenses

Using the new fee disclosure document that was sent to you by your provider, take the total amount of investment fees paid (total of fund expenses and all other investment fees) and divide that number by your plan’s assets. Ideally, use the average balance of your plan over the last year or your calculation will likely understate your fees.

2. Compare Costs of Plans Offered by Other 401(k) Providers

Now that you’ve calculated your employee fees, if that rate is greater than one percent, you know you’re in a higher priced plan – and that can cost your employees a very material and sizeable chunk of their retirement over a career. You’ll likely want to do some shopping around for a better deal. Some providers will create a custom cost comparison at no charge or obligation to help you see how different plans stack up.

3. Make the Switch if You’re Paying Too Much

How do I interpret this?

Benefits under the plan are provided through a trust fund. Plan expenses were $308,929. These expenses included $1,649 in administrative expenses and $307,280 in benefits paid to participants and beneficiaries. A total of 87 persons were participants in or beneficiaries of the plan at the end of the plan year.

The value of the plan assets, after subtracting liabilities of the plan was $6,846,868, as of December 31,2012.......

So are our expenses $308,929 (4.5%) or $1,649 (.0002%)?

 

[Random]

Najeh: I personally think paying more than 1% is way too much. Gruecd made a great point though in that the percentage charged is highly dependent upon your company's size and plan.

If you list your choices, along with their respective ER%, people can advise on what might be good choices

Name/Inception Date Asset Class Category Gross Expense Ratio** Shareholder Fees

DODGE & COX STOCK (DODGX)01/04/1965 Stock Investments Large Cap 0.52% No additional fees apply.

MAINSTAY LGCP GR R1 (MLRRX)04/01/2005 Stock Investments Large Cap 0.89% No additional fees apply.

SPTN 500 INDEX ADV (FUSVX)02/17/1988 Stock Investments Large Cap 0.07% No additional fees apply.

TURNER MID CP GR INV (TMGFX)10/01/1996 Stock Investments Mid-Cap 1.29% No additional fees apply.

VANG MDCPVAL IDX INV (VMVIX)08/24/2006 Stock Investments Mid-Cap 0.24% No additional fees apply.

ALZGI OPPORTUNITY IS (POFIX)03/31/1999 Stock Investments Small Cap 0.96% No additional fees apply.

CRM SM CAP VALUE INV (CRMSX)09/29/1995 Stock Investments Small Cap 1.09% No additional fees apply.

HARBOR INTL INST (HAINX)12/29/1987 Stock Investments International 0.78% No additional fees apply.

INVS INTL GROWTH R5 (AIEVX)03/15/2002 Stock Investments International 1.00% No additional fees apply.

FID FREEDOM 2000 (FFFBX)10/17/1996 Blended Investment* N/A 0.44% No additional fees apply.

FID FREEDOM 2005 (FFFVX)11/06/2003 Blended Investment* N/A 0.54% No additional fees apply.

FID FREEDOM 2010 (FFFCX)10/17/1996 Blended Investment* N/A 0.59% No additional fees apply.

FID FREEDOM 2015 (FFVFX)11/06/2003 Blended Investment* N/A 0.60% No additional fees apply.

FID FREEDOM 2020 (FFFDX)10/17/1996 Blended Investment* N/A 0.64% No additional fees apply.

FID FREEDOM 2025 (FFTWX)11/06/2003 Blended Investment* N/A 0.69% No additional fees apply.

FID FREEDOM 2030 (FFFEX)10/17/1996 Blended Investment* N/A 0.71% No additional fees apply.

FID FREEDOM 2035 (FFTHX)11/06/2003 Blended Investment* N/A 0.75% No additional fees apply.

FID FREEDOM 2040 (FFFFX)09/06/2000 Blended Investment* N/A 0.75% No additional fees apply.

FID FREEDOM 2045 (FFFGX)06/01/2006 Blended Investment* N/A 0.76% No additional fees apply.

FID FREEDOM 2050 (FFFHX)06/01/2006 Blended Investment* N/A 0.77% No additional fees apply.

FID FREEDOM 2055 (FDEEX)06/01/2011 Blended Investment* N/A 0.78% No additional fees apply.

FID FREEDOM INCOME (FFFAX)10/17/1996 Blended Investment* N/A 0.44% No additional fees apply.

MIP CL 109/07/19897 day yield as of03/31/2013 1.02% Bond Investments Stable Value 0.71% No additional fees apply.

PIMCO TOT RETURN ADM (PTRAX)09/08/1994 Bond Investments Income 0.71% No additional fees apply.

 

[guru_007]

Let me ask the personal finance geniuses around here about asset allocation. 10% treasury index15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)40% U.S. Large Cap (S&P 500)15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index) Expense ratio is current .027% 17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%. They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

I've started to warm up to the idea of lifecycle funds to be honest with you. No need to re-balance on your own, and they tend to lessen the overall risk of your portfolio as you age (although your portfolio seems pretty conservative to me)But, my God, you didn't mention the expense ratio of the lifecycle funds!!!!!!!1 God forbid you pay more than 1%, that's just throwing your money away.

 

[Dentist]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

you mean 0.27% right?

i've never ever seen something as low as 0.02%

The lowest thing i've EVER seen is the schwab ETFs which are 0.05%, which for all intents and purpose is free

 

[wilked]

Random.

If it were me...I would go 50/50 on that Spartan LgCap and Vanguard MidCap for stocks, and use the Pimco fund for bonds. Go roughly age in bonds, and you are set. As an example, if you were 40, go

40% Pimco (0.71%)

30% Spartan LgCap (0.07%)

30% Vangaurd MidCap (0.24%)

That said, if you have a Roth, you would be better served sticking your bonds there as possible and get a lower cost bond fund

 

[Random]

Random.

If it were me...I would go 50/50 on that Spartan LgCap and Vanguard MidCap for stocks, and use the Pimco fund for bonds. Go roughly age in bonds, and you are set. As an example, if you were 40, go

40% Pimco (0.71%)

30% Spartan LgCap (0.07%)

30% Vangaurd MidCap (0.24%)

That said, if you have a Roth, you would be better served sticking your bonds there as possible and get a lower cost bond fund

Thanks. That is pretty close to what I have, but with 10% in the international.

 

[inca911]

I don't understand the statement someone made that 401(k) and Roth IRA are roughly the same, so to clarify: ...

You are right- you didn't understand the statement. Hint: I never said a 401K and a Roth IRA are the same thing.

Your exact statement was: "401K and IRA are basically the same thing." They aren't, so I clarified. You don't think that you could have made a more clear statement to that other poster? I think stating that they are "basically the same thing" is basically wrong.

 

[NajehHejan]

Najeh: I personally think paying more than 1% is way too much. Gruecd made a great point though in that the percentage charged is highly dependent upon your company's size and plan.

If you list your choices, along with their respective ER%, people can advise on what might be good choices

Quick summary - my weighted average expense ratio is 1.27 - we are a small company, so we must not have much bargaining power. My mix is 80% stocks and 20% bonds - there is a fund that does 75% stocks and 25% bonds - is it a no brainer that i switch to this, since the ratio is .9? (the 1 yr, 3 yr, 5 yr returns are very comparable)

 

[NajehHejan]

this thread has been so eye opening - now I know I have to do an IRA after my 401k match is maxed, then put any extra back into the 401. I have been struggling with the Roth IRA versus traditional IRA. great calculator i found:

http://www.dinkytown.net/java/RothvsTraditional401k.html

 

[wilked]

Najeh: I personally think paying more than 1% is way too much. Gruecd made a great point though in that the percentage charged is highly dependent upon your company's size and plan.

If you list your choices, along with their respective ER%, people can advise on what might be good choices

Quick summary - my weighted average expense ratio is 1.27 - we are a small company, so we must not have much bargaining power. My mix is 80% stocks and 20% bonds - there is a fund that does 75% stocks and 25% bonds - is it a no brainer that i switch to this, since the ratio is .9? (the 1 yr, 3 yr, 5 yr returns are very comparable)

Can you list all of your choices?

 

[NajehHejan]

Najeh: I personally think paying more than 1% is way too much. Gruecd made a great point though in that the percentage charged is highly dependent upon your company's size and plan.

If you list your choices, along with their respective ER%, people can advise on what might be good choices

Quick summary - my weighted average expense ratio is 1.27 - we are a small company, so we must not have much bargaining power. My mix is 80% stocks and 20% bonds - there is a fund that does 75% stocks and 25% bonds - is it a no brainer that i switch to this, since the ratio is .9? (the 1 yr, 3 yr, 5 yr returns are very comparable)

Can you list all of your choices?

Hope this copy/pastes ok.....

Cash Equivalents Expense Ratio Transamerica Stable Value Compass Option (Perf. Incp.: 01/20/2010) N/A N/A Bond Expense Ratio Short Term PIMCO Low Duration Ret Opt 1.21 Barclays Govt/Credit 1-5 Yr TR USD N/A Intermediate Term Loomis Sayles Investment Grade Bond Ret Opt 0.94 Barclays US Govt/Credit 5-10 Yr TR USD N/A High Yield Bond Expense Ratio Transamerica Partners High Yield Bond Ret Opt 1.05 BofAML US HY Master II TR USD N/A Hybrid Expense Ratio Balanced American Funds Balanced Ret Opt 0.9 Morningstar Moderately Aggr Target Risk N/A Target Maturity Series American Century LIVESTRONG Income Ret Opt (Perf. Incp.: 08/30/2004) 1.17 Morningstar Lifetime Moderate Income N/A American Century LIVESTRONG 2015 Ret Opt (Perf. Incp.: 08/30/2004) 1.2 Morningstar Lifetime Moderate 2015 N/A American Century LIVESTRONG 2020 Ret Opt (Perf. Incp.: 05/29/2008) 1.23 Morningstar Lifetime Moderate 2020 N/A American Century LIVESTRONG 2025 Ret Opt (Perf. Incp.: 08/30/2004) 1.26 Morningstar Lifetime Moderate 2025 N/A American Century LIVESTRONG 2030 Ret Opt (Perf. Incp.: 05/29/2008) 1.28 Morningstar Lifetime Moderate 2030 N/A American Century LIVESTRONG 2035 Ret Opt (Perf. Incp.: 08/30/2004) 1.31 Morningstar Lifetime Moderate 2035 N/A American Century LIVESTRONG 2040 Ret Opt (Perf. Incp.: 05/29/2008) 1.35 Morningstar Lifetime Moderate 2040 N/A American Century LIVESTRONG 2045 Ret Opt (Perf. Incp.: 08/30/2004) 1.38 Morningstar Lifetime Moderate 2045 N/A American Century LIVESTRONG 2050 Ret Opt (Perf. Incp.: 05/29/2008) 1.4 Morningstar Lifetime Moderate 2050 N/A Large/Mid Value Equity Expense Ratio Large Cap BlackRock Equity Dividend Ret Opt 1.22 Russell 1000 Value TR USD N/A Mid Cap American Century Mid Cap Value Ret Opt (Perf. Incp.: 03/30/2004) 1.41 Russell Mid Cap Value TR USD N/A Large/Mid Blend Equity Expense Ratio Large Cap Thornburg Value Ret Opt 1.35 Russell 1000 TR USD N/A Transamerica Partners Stock Index Ret Opt 0.58 Russell 1000 TR USD N/A Mid Cap Invesco Mid Cap Core Equity Ret Opt 1.17 S&P MidCap 400 TR N/A Large/Mid Growth Equity Expense Ratio Large Cap Fidelity Advisor New Insights Ret Opt (Perf. Incp.: 07/30/2003) 1.34 Russell 1000 Growth TR USD N/A Mid Cap Nuveen Mid Cap Growth Opportunities Ret Opt 1.55 Russell Mid Cap Growth TR USD N/A Small Company Equity Expense Ratio Blend Royce Value Ret Opt 1.77 S&P MidCap 400 TR N/A Vanguard Small-Cap Index Ret Opt 0.85 Russell 2000 TR USD N/A International Equity Expense Ratio American Funds EuroPacific Growth Ret Opt 1.12 MSCI ACWI Ex USA NR USD N/A Specialty Expense Ratio BlackRock Health Sciences Ops Ret Opt 1.49 DJ US Health Care TR USD N/A Oppenheimer Developing Markets Ret Opt 1.53 MSCI EM NR USD N/A Prudential Jennison Natural Resources Ret Opt 1.44 S&P North American Natural Resources TR N/A

I think I should go:

80% into Transamerica stock index Russell 1000 with 0.58

20% into Transamerica high yield bond with 1.05

Make sense?

Loomis with the 0.94 has much lower returns….

Why is the Russell 1000 TR USD listed as N/A ??? It has the best return of all stock funds.

The BofAML US HY Master II TR USD (high yield bond) is also listed as N/A. Has the highest yield of all bond funds.

Me thinks these are low cost index funds that my plan doesn't want me to invest in? Less money for them?

 

[Doctor Detroit]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

you mean 0.27% right?

i've never ever seen something as low as 0.02%

The lowest thing i've EVER seen is the schwab ETFs which are 0.05%, which for all intents and purpose is free

Yeah, .027%.

The TSP expense ratio represents the amount that participants' investment returns were reduced by TSP administrative expenses, net of forfeitures.

Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2012 expense ratio of .027% is 2.7 basis points. Expressed either way, this means that expenses charged to each TSP account in 2012 were approximately 27 cents per $1,000 of investment

.

 

[Slapdash]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

you mean 0.27% right?

i've never ever seen something as low as 0.02%

The lowest thing i've EVER seen is the schwab ETFs which are 0.05%, which for all intents and purpose is free

Yeah, .027%.

>The TSP expense ratio represents the amount that participants' investment returns were reduced by TSP administrative expenses, net of forfeitures.

Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2012 expense ratio of .027% is 2.7 basis points. Expressed either way, this means that expenses charged to each TSP account in 2012 were approximately 27 cents per $1,000 of investment

.

Very nice. Wish all were like this.

 

[wilked]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

 

[NajehHejan]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

 

[Doctor Detroit]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

I do something similar in terms of allocation in my Roth IRA, and I like your allocations. I bolded the expense ratio because if your average amongst all of your allocations is 2.7/10 of 1% in an employer provided 401k with that match, because that's awesome and super low cost, just pound away at that. I think the average of the ETF's I'm into in my Roth IRA is .07%, and are in Schwab Small Cap, Large Market, International Equity, and US TIPS ETF's (They're very low cost and I'm comfortable with the past performance/strategies/expense and active management historically). For my 401k, it's in-house proprietary funds so there's less of a profit motive, which I'm a fan of. My fees there are 0.07% for our Russel 3000 index, 0.07% for company stock, 0.15% for fixed income, so average amongst my allocation of 0.088% which is up to my company match, and just letting that grow with a eye on our stock price, which is a part of my job.

I'm no expert on this, but I think you're doing just fine with what you have above. Maybe shave a little off the top of US Large cap and International (5% or so each) and throw it at treasury and fixed income, respectively. Re-allocate more towards treasury and fixed income and away from equities as you progress towards retirement, whatever risk appetite (equities %) you're comfortable with really as you move along.

So Guru007 thinks I'm too conservative and you and Wilked think I'm a bit too aggressive, interesting. Wilked's noted rule of bonds=age is something I'll probably consider a bit but I think being a little aggressive is fine for now. When the markets slid in 2008 (think it was '08) I moved some off the large cap and international and into fixed income but once the market bounced back a little I reallocated thinking the market would rebound some.

I think my main issue right now is just putting more in. I'm at 8% now but would like to get up to 10% sooner than later and increase up to the max (13%-15% depending on how much I put into my Roth up to IRS contribution max) by the time I'm 10 years out from first possible retirement date. I have two house payments though and maintenance costs on a third, so it is not easy at the moment.

Thanks for the fee explanations and that's cool that your in-house plan is among the best out there. Obviously making a profit is what financial service is about but cutting costs for employees as an extra benefit of employment is wise.

 

[Fruitbat]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

 

[Dentist]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

who are you going to use to open your roth with?

it doesn't matter how you diversify within that one account.. only your entire portfolio (which is admittedly very difficult at times especially if you have good options for an asset class in one place, and not in another).

My 401k has pretty decent stock options, but the bond options suck, and i have no access to any alternative asset classes.

so i use my roth and cash management account for those things.

 

[Dentist]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

you sounds like you need a roth ira or cash management account.

check out Schwab or TD Ameritrade... they are who i'd use unless i was a platinum plus account at Bank of America.

You can get commission free ETFs at both of them which are cheap and diversified.

http://etfdb.com/type/commission-free/charles-schwab/

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp

TD ameritrade has S&P 500 AVV and Bond AGG - that's a good start already

 

[NajehHejan]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

who are you going to use to open your roth with?

it doesn't matter how you diversify within that one account.. only your entire portfolio (which is admittedly very difficult at times especially if you have good options for an asset class in one place, and not in another).

My 401k has pretty decent stock options, but the bond options suck, and i have no access to any alternative asset classes.

so i use my roth and cash management account for those things.

I think I’m going with Vanguard for the Roth IRA. Their fees are so low and the returns are very impressive.

 

[wilked]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

I would try and educate yourself so you stop paying your adviser. That itself will be a nice boost to your returns.

You should have an e-fund that is always liquid, and that you don't touch.

If you are looking to set up a taxable acct, no need to get a brokerage account. I recommend buying index funds through Vanguard. I prefer keeping it simple, so use their Total Stock Market Index Funds, Total International Funds, and Total Bond Funds.

Be careful what you call play money. Play money is what you bring to Vegas. If it is hard earned money, I am not sure I would want to lose it as easily as a roulette spin, especially when you mentioned a college fund.

 

[Fruitbat]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

you sounds like you need a roth ira or cash management account.

check out Schwab or TD Ameritrade... they are who i'd use unless i was a platinum plus account at Bank of America.

You can get commission free ETFs at both of them which are cheap and diversified.

http://etfdb.com/type/commission-free/charles-schwab/

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp

TD ameritrade has S&P 500 AVV and Bond AGG - that's a good start already

Thanks. so dumb this down for me. "commission free" -- does that refer to the cost associated with executing a buy/sell? In other words, my actual monthly ongoing purchase would be free? The only thing I am paying is what is reflected in the "expense ratio" -- which is just a percentage of my investment amount?

If that is correct, why would anyone even go the route of paying a commission? Is there just limited options that are commission-free? Sorry I am good at math and basic taxes, just know nothing about investing beyond the basics.

Make too much for a Roth IRA otherwise I'd be jumping all over that. Already maxing out all my pre-tax options as well....401(k), 457

 

[humpback]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

 

[NajehHejan]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

 

[Fruitbat]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

I would try and educate yourself so you stop paying your adviser. That itself will be a nice boost to your returns.

You should have an e-fund that is always liquid, and that you don't touch.

If you are looking to set up a taxable acct, no need to get a brokerage account. I recommend buying index funds through Vanguard. I prefer keeping it simple, so use their Total Stock Market Index Funds, Total International Funds, and Total Bond Funds.

Be careful what you call play money. Play money is what you bring to Vegas. If it is hard earned money, I am not sure I would want to lose it as easily as a roulette spin, especially when you mentioned a college fund.

Thanks!

Just to clarify...the money I am looking to invest is separate from anything we have earmarked for retirement or college...I'm not ready to start managing those on my own (yet).

The pile of money I am talking about is a pile we generically refer to as our "savings". its part emergency fund, part "future big purchase" fund, part "money that will be nice to have if/when we re-finance our mortgage" fund. I'll always leave a good portion of that in a safe spot (i.e. savings account), but I am comfortable taking at least a portion of it and putting it in some sort of lower-risk investment. A portion of that is already being done by my adviser. I want to take another small portion of it and start investing myself. Its dipping my toe in the water I guess. If I got to the point where I could eliminate the adviser that would be great. Not necessarily on my radar (yet).

 

[Dentist]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

who are you going to use to open your roth with?

it doesn't matter how you diversify within that one account.. only your entire portfolio (which is admittedly very difficult at times especially if you have good options for an asset class in one place, and not in another).

My 401k has pretty decent stock options, but the bond options suck, and i have no access to any alternative asset classes.

so i use my roth and cash management account for those things.

I think I’m going with Vanguard for the Roth IRA. Their fees are so low and the returns are very impressive.

i sure wouldn't.. you can use vanguard's products through another broker, like TD ameritrade, also at no cost

Vanguard's account fees when you have under 10K are the suck.

 

[acarey50]

Let me ask the personal finance geniuses around here about asset allocation.

10% treasury index

15% fixed income (To match the performance of the Barclays Capital U.S. Aggregate Bond Index)

40% U.S. Large Cap (S&P 500)

15% U.S. Small Cap (To match the performance of the Dow Jones U.S. Completion TSM Index)

20% International (To match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index)

Expense ratio is current .027%

17 years minimum to retirement, 27 max with this being about 25 to 35% of my retirement portfolio. Employer match is 100% to 3% and 50% for 4/5%.

They also offer the lifecycle funds (e.g. LC 2030, 2040, 2050) but I figure managing my own allocation with the above funds gives me more flexibility both long and short term. Thoughts? More of something, less of something or is everything just right? Any short or long-term suggestions? TIA.

you mean 0.27% right?

i've never ever seen something as low as 0.02%

The lowest thing i've EVER seen is the schwab ETFs which are 0.05%, which for all intents and purpose is free

Yeah, .027%.

>The TSP expense ratio represents the amount that participants' investment returns were reduced by TSP administrative expenses, net of forfeitures.

Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2012 expense ratio of .027% is 2.7 basis points. Expressed either way, this means that expenses charged to each TSP account in 2012 were approximately 27 cents per $1,000 of investment

.

I'm pretty sure that expense ratio is what the plan is charging to each account. Each of the funds within the plan will still have their own expense ratio that needs to be considered.

I actually received my quarterly fee disclosures yesterday, and the reason I believe that is the charges in addition to the ER of each fund is that in the fee disclosure section, it points out that all of the administration fees, etc. are paid fully by the company, so the additional expense to employees is 0.00. It goes into how any loads fees paid, commissions etc. are split between the administrator and the company and those that go to the company are used to offset the administration fees, etc.

 

[Dentist]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

I would try and educate yourself so you stop paying your adviser. That itself will be a nice boost to your returns.

You should have an e-fund that is always liquid, and that you don't touch.

If you are looking to set up a taxable acct, no need to get a brokerage account. I recommend buying index funds through Vanguard. I prefer keeping it simple, so use their Total Stock Market Index Funds, Total International Funds, and Total Bond Funds.

Be careful what you call play money. Play money is what you bring to Vegas. If it is hard earned money, I am not sure I would want to lose it as easily as a roulette spin, especially when you mentioned a college fund.

Thanks!

Just to clarify...the money I am looking to invest is separate from anything we have earmarked for retirement or college...I'm not ready to start managing those on my own (yet).

The pile of money I am talking about is a pile we generically refer to as our "savings". its part emergency fund, part "future big purchase" fund, part "money that will be nice to have if/when we re-finance our mortgage" fund. I'll always leave a good portion of that in a safe spot (i.e. savings account), but I am comfortable taking at least a portion of it and putting it in some sort of lower-risk investment. A portion of that is already being done by my adviser. I want to take another small portion of it and start investing myself. Its dipping my toe in the water I guess. If I got to the point where I could eliminate the adviser that would be great. Not necessarily on my radar (yet).

you should look at one of my threads entitled "searching for yield" or something along those lines.

i was in the exact same predicament as you.

had about 50K laying around for future purchases, was sick of getting 0.9% and wanted something better.

Preferred stocks, also known as the poor man's bonds have been an outstanding solution for me.

www.dividendyieldhunter.com

 

[NajehHejan]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

who are you going to use to open your roth with?

it doesn't matter how you diversify within that one account.. only your entire portfolio (which is admittedly very difficult at times especially if you have good options for an asset class in one place, and not in another).

My 401k has pretty decent stock options, but the bond options suck, and i have no access to any alternative asset classes.

so i use my roth and cash management account for those things.

I think I’m going with Vanguard for the Roth IRA. Their fees are so low and the returns are very impressive.

i sure wouldn't.. you can use vanguard's products through another broker, like TD ameritrade, also at no cost

Vanguard's account fees when you have under 10K are the suck.

Thanks for the info - I already have an Ameritrade account – sweet!

 

[acarey50]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

you sounds like you need a roth ira or cash management account.

check out Schwab or TD Ameritrade... they are who i'd use unless i was a platinum plus account at Bank of America.

You can get commission free ETFs at both of them which are cheap and diversified.

http://etfdb.com/type/commission-free/charles-schwab/

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp

TD ameritrade has S&P 500 AVV and Bond AGG - that's a good start already

Thanks. so dumb this down for me. "commission free" -- does that refer to the cost associated with executing a buy/sell? In other words, my actual monthly ongoing purchase would be free? The only thing I am paying is what is reflected in the "expense ratio" -- which is just a percentage of my investment amount?

If that is correct, why would anyone even go the route of paying a commission? Is there just limited options that are commission-free? Sorry I am good at math and basic taxes, just know nothing about investing beyond the basics.

Make too much for a Roth IRA otherwise I'd be jumping all over that. Already maxing out all my pre-tax options as well....401(k), 457

Regarding commission-free, yes, some of it is based on the product, some on the provider. Processing trades, etc. costs money, which is why a lot of the online brokerage places only allow a limited number of free transaction per month when processed online. When you call in and have a broker assist you with the transaction there is generally an additional cost.

Regarding the ROTH IRA, you should see my earlier link to how to do a Backdoor ROTH IRA. Essentially you can make a contribution to a traditional IRA, then immediately recharecterize it as a ROTH IRA. No income limits and you only are responsible for taxes on any gain made between the time you deposit the money and the time you recharacterize it. The link I posted abiove has the details on this from the Bogleheads website

 

[Dentist]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

I answered my own question – the Russell indexes and the one bond fund are shown for comparative purposes – not available to me.

Wilked – I am opening a Roth IRA this week. Good call – I will do all bonds in that fund. Until I build up my Roth, however, I will be about 95% stocks and 5% bonds – is that too risky for a 39 YO? I’m concerned about the stock market eventually dipping…

who are you going to use to open your roth with?

it doesn't matter how you diversify within that one account.. only your entire portfolio (which is admittedly very difficult at times especially if you have good options for an asset class in one place, and not in another).

My 401k has pretty decent stock options, but the bond options suck, and i have no access to any alternative asset classes.

so i use my roth and cash management account for those things.

I think I’m going with Vanguard for the Roth IRA. Their fees are so low and the returns are very impressive.

i sure wouldn't.. you can use vanguard's products through another broker, like TD ameritrade, also at no cost

Vanguard's account fees when you have under 10K are the suck.

Thanks for the info - I already have an Ameritrade account – sweet!

look for their commission free ETFs.

you won't have access to EVERY vanguard product, but you will have access to the ones you need.

and for some of the vanguard things they don't have.. they have ISHARES equivalents, which are also very good.

I mean, there's no difference between any companie's S&P 500 index fund... just the cost.

Which is what makes me furious about my 401k because my S&P 500 fund is 0.37% when i know there are ones out there charging 0.07%... what am i getting for that extra 0.3%? not a damn thing

 

[Dentist]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

you sounds like you need a roth ira or cash management account.

check out Schwab or TD Ameritrade... they are who i'd use unless i was a platinum plus account at Bank of America.

You can get commission free ETFs at both of them which are cheap and diversified.

http://etfdb.com/type/commission-free/charles-schwab/

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp

TD ameritrade has S&P 500 AVV and Bond AGG - that's a good start already

Thanks. so dumb this down for me. "commission free" -- does that refer to the cost associated with executing a buy/sell? In other words, my actual monthly ongoing purchase would be free? The only thing I am paying is what is reflected in the "expense ratio" -- which is just a percentage of my investment amount?

If that is correct, why would anyone even go the route of paying a commission? Is there just limited options that are commission-free? Sorry I am good at math and basic taxes, just know nothing about investing beyond the basics.

Make too much for a Roth IRA otherwise I'd be jumping all over that. Already maxing out all my pre-tax options as well....401(k), 457

yes, it's the cost of a buy/sell.

you still pay the expense ratio.

the only way to eliminate expense ratios from your life is to buy stock directly, and that can be a real hassle to get diversification.

yes, there is a limited number of option 100 commission free ETFs and there are nearly 1500 ETFs.

But I can promise you that unless you need something exotic, they have more than you need.

The answer as to why anyone would pay a commission? they didn't look. Most people wouldn't even take the time to read a thread like this let alone a good personal finance book.

 

[humpback]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

Still wouldn't do this. Stocks are going to outperform bonds over the long run, and since the Roth is tax free you'll get more of the tax benefit out of the higher performing asset class.

 

[Random]

Random.

If it were me...I would go 50/50 on that Spartan LgCap and Vanguard MidCap for stocks, and use the Pimco fund for bonds. Go roughly age in bonds, and you are set. As an example, if you were 40, go

40% Pimco (0.71%)

30% Spartan LgCap (0.07%)

30% Vangaurd MidCap (0.24%)

That said, if you have a Roth, you would be better served sticking your bonds there as possible and get a lower cost bond fund

Thanks. That is pretty close to what I have, but with 10% in the international.

Thinking more about this. Shouldn't you be more aggressive in the Roth, since taxes are already paid?

 

[Random]

Well that was good timing.

 

[Dentist]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

Still wouldn't do this. Stocks are going to outperform bonds over the long run, and since the Roth is tax free you'll get more of the tax benefit out of the higher performing asset class.

multiple theories here:

1) you need to achieve total diversification. how you do it within accounts is less important.

2) i've heard what you say.. be more aggressive because the taxes are paid.

3) i've heard be less aggressive because you can't "reload" like you can in a cash management account.

In terms of aggressive to least aggressive i've heard: Cash management > 401k > Roth 401k just has more money in it (in theory if you are double maxing... and especially if you're gambling with more house money - matching).

Roth you get 5K... lose 1/2 and you can't reload and buy more... makes it harder to recoup.

I'm not aggressive in my Roth

 

[Fruitbat]

Regarding the ROTH IRA, you should see my earlier link to how to do a Backdoor ROTH IRA. Essentially you can make a contribution to a traditional IRA, then immediately recharecterize it as a ROTH IRA. No income limits and you only are responsible for taxes on any gain made between the time you deposit the money and the time you recharacterize it. The link I posted abiove has the details on this from the Bogleheads website

Interesting...hadn't heard of that. Found your link and browsed through it. I already have an IRA (rollover from past employer's 401(k)) which is $100k+. Looking at that math on the link makes me think that the backdoor Roth math doesnt work for me due to already having a large traditional IRA balance.

 

[wilked]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

Still wouldn't do this. Stocks are going to outperform bonds over the long run, and since the Roth is tax free you'll get more of the tax benefit out of the higher performing asset class.

As long as he is maintaining his stocks/bonds ratio it really will not matter. $1 in your 401K is $0.70 in your Roth, don't forget. More importantly, the bond fund is now returning half a percent more a year, quite significant.

 

[wilked]

Regarding the ROTH IRA, you should see my earlier link to how to do a Backdoor ROTH IRA. Essentially you can make a contribution to a traditional IRA, then immediately recharecterize it as a ROTH IRA. No income limits and you only are responsible for taxes on any gain made between the time you deposit the money and the time you recharacterize it. The link I posted abiove has the details on this from the Bogleheads website

Interesting...hadn't heard of that. Found your link and browsed through it. I already have an IRA (rollover from past employer's 401(k)) which is $100k+. Looking at that math on the link makes me think that the backdoor Roth math doesnt work for me due to already having a large traditional IRA balance.

I have a rollover IRA as well which prevents me from doing the Backdoor Roth...

 

[wilked]

Random. If it were me...I would go 50/50 on that Spartan LgCap and Vanguard MidCap for stocks, and use the Pimco fund for bonds. Go roughly age in bonds, and you are set. As an example, if you were 40, go 40% Pimco (0.71%)30% Spartan LgCap (0.07%)30% Vangaurd MidCap (0.24%) That said, if you have a Roth, you would be better served sticking your bonds there as possible and get a lower cost bond fund

Thanks. That is pretty close to what I have, but with 10% in the international.

Thinking more about this. Shouldn't you be more aggressive in the Roth, since taxes are already paid?

See above. An expensive bond fund will act as an anchor, negating any question of Roth/401K taxes.

 

[Judge Smails]

This thread is making me want to finally start doing some investing on my own. Got a pile of money that is a "savings" separate from my retirement and college savings. Some of this is in an investment account through my financial adviser, and some is just sitting in a low-interest savings account. Its money than I am willing to play around with and take a little risk with. I would always leave a portion of it in my bank savings account for a true "emergency" fund.

I want to take a chunk of the money in the savings account and move it into low-fee index funds via an online broker. Never done this before. I would anticipate taking about $5k to start with, and setting it up to put $250-$500 more in automatically once per month. Goal would be to get a better return than my savings account, and have an apples-to-apples comparison to the portion being managed by my adviser.

Suggestions on which online broker to use? How to pick the fund(s)? Never bought stocks/funds on my own before. Was planning on just trying to find some low-cost fund(s) with a decent track record. Started researching brokers online and there's a ton of options. Got frustrated.

you sounds like you need a roth ira or cash management account.

check out Schwab or TD Ameritrade... they are who i'd use unless i was a platinum plus account at Bank of America.

You can get commission free ETFs at both of them which are cheap and diversified.

http://etfdb.com/type/commission-free/charles-schwab/

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp

TD ameritrade has S&P 500 AVV and Bond AGG - that's a good start already

Talk to me about this Platinum Plus B of A account

 

[humpback]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

Still wouldn't do this. Stocks are going to outperform bonds over the long run, and since the Roth is tax free you'll get more of the tax benefit out of the higher performing asset class.

As long as he is maintaining his stocks/bonds ratio it really will not matter. $1 in your 401K is $0.70 in your Roth, don't forget. More importantly, the bond fund is now returning half a percent more a year, quite significant.

 

[wilked]

Hump, 401k is pretax, Roth is post tax. The above example presumes 30% tax rate as an example

 

[humpback]

Hump, 401k is pretax, Roth is post tax. The above example presumes 30% tax rate as an example

I know that, but it doesn't really apply here- he's asking what to do with the 6% he's contributing above his company match. He isn't going to contribute 30% more if he goes traditional than he is if he goes Roth.

 

[Dentist]

Talk to me about this Platinum Plus B of A account

have a bank of america checking account?

if you have or can have 25K in assets with them, then the brokerage platform they own (merrill edge) will give you 30 free trades a month in a Roth IRA or cash management account.

i've never used over 6 in a month, and many months i use 1 or none. unless you are a real "trader" that's more than enough.

it means i'm 100% commission and fee free in that account.

it's the only thing keeping me from having a TD ameritrade account - i think their setup is great, but i have commission free ETFs and regular stocks across the board.

not free for things like mutual fund transactions (unless those are already no-load, no transaction fee), or stock options.

but for the basics.. all free.

 

[humpback]

Najeh:

Do you have a Roth IRA?

I would put your bonds into your Roth IRA, and use that stock fund you mentioned. If you don't have enough Roth space for your appropriate bond percentage let me know

Why bonds in the Roth?

I think he said this particulary for me because my 401k lowest cost options are 0.54 for the stock index fund and 0.90 for the bond fund – move bonds to Vanguard for nominal costs

Still wouldn't do this. Stocks are going to outperform bonds over the long run, and since the Roth is tax free you'll get more of the tax benefit out of the higher performing asset class.

multiple theories here:

1) you need to achieve total diversification. how you do it within accounts is less important.

2) i've heard what you say.. be more aggressive because the taxes are paid.

3) i've heard be less aggressive because you can't "reload" like you can in a cash management account.

In terms of aggressive to least aggressive i've heard: Cash management > 401k > Roth 401k just has more money in it (in theory if you are double maxing... and especially if you're gambling with more house money - matching).

Roth you get 5K... lose 1/2 and you can't reload and buy more... makes it harder to recoup.

I'm not aggressive in my Roth

1) Yes, asset allocation is the most important factor, but where the growth occurs can certainly make a big difference

2) I didn't mean to imply to be more aggressive (although you could be), just don't put it all in bonds

3) We aren't comparing a cash management account to a Roth, it's a Roth vs. Traditional- same contribution amounts

He's talking about the money above the company match, so that's not a factor. Neither is "re-loading".