PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[wilked]

Is there a difference between a Health Savings Account and a flex spending account? My wife (teacher) had her annual meeting this morning, and she did get clarification: it is in fact a use it or lose it account. This is our only chance to put money in, and we have to put it all in now. And then anything we don't use, they simply TAKE from us. We lose it forever.

How can this be possible? Is there another avenue for us to take given the circumstances?

Flex spending accounts suck unless you KNOW you're going to use it.. because of the lose it nature of it.

the HSA (if you have a high deductible insurance) by comparison is the greatest account ever invented because it's triple tax protected... no tax going in, no tax on the gains if you invest any of it, and no tax on the way out.

since it's nearly a lock you'll spend money on some sort of health care over the course of your life on either eye care, dentistry, or medicine... there's no reason to not max this type of an account out almost every year.

Yep, FSAs suck. We've used ours before and on two different occasions found ourselves with money left and the end of the year approaching. We had to stock up on OTC stuff to spend the money. Now they have limited a lot of that as well.

We no longer use it. Health spending has just been too unpredictable in our family.

Just to illustrate... If you earmark $3k for FSA, but only spent $2k... You didn't actually lose any money. Food for thought...

Are you talking due to the tax implications? My effective rate ends up being somewhere around 15% so it's way less than you're suggesting, isn't it?

Regardless, our only predictable health care costs are $10 prescriptions monthly for my wife and son. We have an HMO w/ no deductible. Nobody has glasses, too early for braces, etc. I wish we had an HSA option. I'd be all over it. Until then, I'm okay with missing out on the occasional year where it would help if it means I don't have the stress of forcing spending to use my money.

Sounds like a good strategy... Yes, my example was based upon a 30%ish tax rate

 

[wilked]

BTM--> Sounds like you would be doing an FSA for the braces then

 

[BeTheMatch]

BTM--> Sounds like you would be doing an FSA for the braces then

OK, so then our challenge is the timing between our very limited window to fund the FSA vs. when we find out he'll need braces and when. We'd have to make the decision on the FSA right now, this week. We might find out, say, this summer that he'll need braces. But he might not. Or they might say the next year. So I suppose our only option would be to wait until the orthodontist says he needs them and then put it off until we can fund it. But I bet Dentist won't think that's a good idea if it leads to putting it off 11 months or something (worst case).

 

[BeTheMatch]

Thanks, as always, for all the help/info in here, guys!

 

[Dentist]

BTM--> Sounds like you would be doing an FSA for the braces then

OK, so then our challenge is the timing between our very limited window to fund the FSA vs. when we find out he'll need braces and when. We'd have to make the decision on the FSA right now, this week. We might find out, say, this summer that he'll need braces. But he might not. Or they might say the next year. So I suppose our only option would be to wait until the orthodontist says he needs them and then put it off until we can fund it. But I bet Dentist won't think that's a good idea if it leads to putting it off 11 months or something (worst case).

braces are optional. No one needs them for biological survival.

possibly for social survival, but that's a different subject.

I see no issue with waiting until you can afford

 

[wilked]

BTM--> Sounds like you would be doing an FSA for the braces then

OK, so then our challenge is the timing between our very limited window to fund the FSA vs. when we find out he'll need braces and when. We'd have to make the decision on the FSA right now, this week. We might find out, say, this summer that he'll need braces. But he might not. Or they might say the next year. So I suppose our only option would be to wait until the orthodontist says he needs them and then put it off until we can fund it. But I bet Dentist won't think that's a good idea if it leads to putting it off 11 months or something (worst case).

braces are optional. No one needs them for biological survival.

possibly for social survival, but that's a different subject.

I see no issue with waiting until you can afford

+1

Delaying them 6-9 months would not be a big deal. Especially to save multiple thousands

 

[BeTheMatch]

OK, cool. Thanks

 

[17seconds]

Is there a difference between a Health Savings Account and a flex spending account? My wife (teacher) had her annual meeting this morning, and she did get clarification: it is in fact a use it or lose it account. This is our only chance to put money in, and we have to put it all in now. And then anything we don't use, they simply TAKE from us. We lose it forever.

How can this be possible? Is there another avenue for us to take given the circumstances?

They are quite different.

FSA is use or lose money. There is regular FSA (used for health-related stuff. Can be used for a surgery, or braces, or lasik, or just plain ol doctor bills). Then there is Dependent Care FSA, used for day care or preschool. Essentially you set a dollar amount once a year for each, it is taken out of your paycheck (pre-tax), and you get reimbursed for the qualified expenses. It is USE OR LOSE. Before you get upset about that, though, recognize that using those pretax dollars is like a 30% off coupon. So long as you plan well it should not be an issue.

HSA is used with a high deductible health care plan. It is not use or lose. Think of it as a Roth for your health care expenses (it is a nice deal if available to you)

My employer actually has a high deductible health care plan and only an FSA. Sucks. I've never had money left over in the FSA though.

A little known thing about FSAs is that you get all of the money immediately. If you quit your job it is legal for you to spend all your FSA money before you leave even if you haven't contributed yet. That's why they put a cap on it and did some other changes recently. People were dropping thousands at Walgreens on OTC stuff and then selling it for pure profit.

 

[Steve Tasker]

Is there a difference between a Health Savings Account and a flex spending account? My wife (teacher) had her annual meeting this morning, and she did get clarification: it is in fact a use it or lose it account. This is our only chance to put money in, and we have to put it all in now. And then anything we don't use, they simply TAKE from us. We lose it forever.

How can this be possible? Is there another avenue for us to take given the circumstances?

They are quite different.

FSA is use or lose money. There is regular FSA (used for health-related stuff. Can be used for a surgery, or braces, or lasik, or just plain ol doctor bills). Then there is Dependent Care FSA, used for day care or preschool. Essentially you set a dollar amount once a year for each, it is taken out of your paycheck (pre-tax), and you get reimbursed for the qualified expenses. It is USE OR LOSE. Before you get upset about that, though, recognize that using those pretax dollars is like a 30% off coupon. So long as you plan well it should not be an issue.

HSA is used with a high deductible health care plan. It is not use or lose. Think of it as a Roth for your health care expenses (it is a nice deal if available to you)

My employer actually has a high deductible health care plan and only an FSA. Sucks. I've never had money left over in the FSA though.

A little known thing about FSAs is that you get all of the money immediately. If you quit your job it is legal for you to spend all your FSA money before you leave even if you haven't contributed yet. That's why they put a cap on it and did some other changes recently. People were dropping thousands at Walgreens on OTC stuff and then selling it for pure profit.

I believe you can contribute to an HSA even if it is not sponsored by your employer, as long as you have an HDHP.

 

[wilked]

Steve, good lookin out!

If you do not already have one, ask your employer about enrolling in a health savings account (HSA), or a health reimbursement arrangement (HRA). If you are eligible, but your employer doesn’t offer an HSA, you can open an account with a local bank (or online).

http://www.fairhealthconsumer.org/reimbursementseries/high_deductible.aspx

 

[Dentist]

Is there a difference between a Health Savings Account and a flex spending account? My wife (teacher) had her annual meeting this morning, and she did get clarification: it is in fact a use it or lose it account. This is our only chance to put money in, and we have to put it all in now. And then anything we don't use, they simply TAKE from us. We lose it forever.

How can this be possible? Is there another avenue for us to take given the circumstances?

They are quite different.

FSA is use or lose money. There is regular FSA (used for health-related stuff. Can be used for a surgery, or braces, or lasik, or just plain ol doctor bills). Then there is Dependent Care FSA, used for day care or preschool. Essentially you set a dollar amount once a year for each, it is taken out of your paycheck (pre-tax), and you get reimbursed for the qualified expenses. It is USE OR LOSE. Before you get upset about that, though, recognize that using those pretax dollars is like a 30% off coupon. So long as you plan well it should not be an issue.

HSA is used with a high deductible health care plan. It is not use or lose. Think of it as a Roth for your health care expenses (it is a nice deal if available to you)

My employer actually has a high deductible health care plan and only an FSA. Sucks. I've never had money left over in the FSA though.

A little known thing about FSAs is that you get all of the money immediately. If you quit your job it is legal for you to spend all your FSA money before you leave even if you haven't contributed yet. That's why they put a cap on it and did some other changes recently. People were dropping thousands at Walgreens on OTC stuff and then selling it for pure profit.

I believe you can contribute to an HSA even if it is not sponsored by your employer, as long as you have an HDHP.

yes, and look for one with low cost investment options because if you're going to overload it with dough, you don't want your money to erode to inflation, a good conservative investment policy is prudent.. you don't need the money to grow big necessarily like a 529 plan or a retirement plan, but you sure as hell want to give yourself a way above average shot at at least beating inflation.

Look at HSA Bank http://whitecoatinvestor.com/choosing-an-hsa-provider/

 

[wilked]

My two cents on HSA... Max it out each year and do not spend it. I personally would lump it in with all other investments in your portfolio, no need to classify it separately (disagree with you there Dentist).

I have an HSA account, and don't plan on using it until I am an old man. If you spend it right away you essentially turn it into an FSA

 

[Dentist]

My two cents on HSA... Max it out each year and do not spend it. I personally would lump it in with all other investments in your portfolio, no need to classify it separately (disagree with you there Dentist). I have an HSA account, and don't plan on using it until I am an old man. If you spend it right away you essentially turn it into an FSA

I'd say plenty of people would agree with you on that Wilked. That's fine.. the main problem with these types of accounts is that they are earmarked for health expenses. Now maybe I'll regret in the long run spending some of the money now.. but i'd rather get my breaks on the money now. If my tax rate is lower in retirement than now... then the money would've had more value to me now. For my personal situation.. my wife's school account has the HSA, it's just in a bank, earning almost no interest. I can set up my own HSA and then roll the money over to another HSA if i want to invest it. I told myself I'd do that once the account got over 10K. Well, the wife has had a lot of health issues lately and thus the account has never gotten there. Maybe i'm optimistic, but i'm hoping not to have massive needs for medical spending.... Oh well.. . i have the money earmarked for medical, and that's where i'll use it.

 

[Tom Hagen]

My two cents on HSA... Max it out each year and do not spend it. I personally would lump it in with all other investments in your portfolio, no need to classify it separately (disagree with you there Dentist). I have an HSA account, and don't plan on using it until I am an old man. If you spend it right away you essentially turn it into an FSA

I'd say plenty of people would agree with you on that Wilked. That's fine.. the main problem with these types of accounts is that they are earmarked for health expenses. Now maybe I'll regret in the long run spending some of the money now.. but i'd rather get my breaks on the money now. If my tax rate is lower in retirement than now... then the money would've had more value to me now. For my personal situation.. my wife's school account has the HSA, it's just in a bank, earning almost no interest. I can set up my own HSA and then roll the money over to another HSA if i want to invest it. I told myself I'd do that once the account got over 10K. Well, the wife has had a lot of health issues lately and thus the account has never gotten there. Maybe i'm optimistic, but i'm hoping not to have massive needs for medical spending.... Oh well.. . i have the money earmarked for medical, and that's where i'll use it.

Maybe I'm not understanding the bolded part. You get the tax deduction in the year the contributions are made even if you leave the money in the HSA and pay the medical costs with other funds. You can allow the HSA to build tax deferred and then take the money out after turning 65 penalty free. It works very similar to a traditional IRA.

Of course you need to have enough other funds to pay the high deductible each year.

 

[17seconds]

Steve, good lookin out!

If you do not already have one, ask your employer about enrolling in a health savings account (HSA), or a health reimbursement arrangement (HRA). If you are eligible, but your employer doesn’t offer an HSA, you can open an account with a local bank (or online).

http://www.fairhealthconsumer.org/reimbursementseries/high_deductible.aspx

That's pretty awesome - thanks I'll check that out. Our health year starts July 1 so good timing for me to switch from FSA to HSA.

 

[Dentist]

My two cents on HSA... Max it out each year and do not spend it. I personally would lump it in with all other investments in your portfolio, no need to classify it separately (disagree with you there Dentist). I have an HSA account, and don't plan on using it until I am an old man. If you spend it right away you essentially turn it into an FSA

I'd say plenty of people would agree with you on that Wilked. That's fine.. the main problem with these types of accounts is that they are earmarked for health expenses. Now maybe I'll regret in the long run spending some of the money now.. but i'd rather get my breaks on the money now. If my tax rate is lower in retirement than now... then the money would've had more value to me now. For my personal situation.. my wife's school account has the HSA, it's just in a bank, earning almost no interest. I can set up my own HSA and then roll the money over to another HSA if i want to invest it. I told myself I'd do that once the account got over 10K. Well, the wife has had a lot of health issues lately and thus the account has never gotten there. Maybe i'm optimistic, but i'm hoping not to have massive needs for medical spending.... Oh well.. . i have the money earmarked for medical, and that's where i'll use it.

Maybe I'm not understanding the bolded part. You get the tax deduction in the year the contributions are made even if you leave the money in the HSA and pay the medical costs with other funds. You can allow the HSA to build tax deferred and then take the money out after turning 65 penalty free. It works very similar to a traditional IRA.

Of course you need to have enough other funds to pay the high deductible each year.

I've got to spend money on the health care at some point.

Either I pay for it now with money that I pay a 30% tax rate with.

Or I pay for it later with money in a possibly higher, possibly lower tax rate.

Wilked puts money in his HSA... he gets his tax deduction, but turns around and pays for health care expenses with taxed dollars.

So he's choosing to pay the taxes now on his health care money.

I put the money in my HSA and get my benefit now.

Wilked will have a lot more HSA money than me in the future... and if he gets good gains on his money may incur no "out of pocket" medical expenses in his later years.

Now.. maybe i'll have a lower tax rate in the future.. making the decision to pay it now look slightly better.

It's all pretty academic and definitely a rich person's first world problem.

I'm aided by the fact that my family won't incur any dental expenditures or braces expenditures as generally orthodontists do referring dentists' children for next to nothing.

 

[dancingbones]

Just looked into my options with my HSA account (HSA Bank). They have an option to link to a TD Ameritrade account, which will give me access to Vanguard ETFs (which is what I've been looking for). I just changed my payroll deductions to max this account out for the rest of the year (last year I only contributed about 1/2 of the limit. Now, I've been spending most of what I put in there, so I'll have to build it up a bit before really using it as an investment vehicle - but I like the idea of tax free contributions, growth, & withdrawal.

Thanks again the contributors here. I've paid more attention to my 401K since opening this thread than I have in the past 12 years.

 

[Britney Spears]

This is really a great thread. Can we change the title to something more generic?

 

[Britney Spears]

Seems like I could benefit from both an FSA (for childcare, thanks Wilked) and an HSA/HDHP (for general medical expense).

Anyone have both?

 

[JoeSteeler]

Seems like I could benefit from both an FSA (for childcare, thanks Wilked) and an HSA/HDHP (for general medical expense).Anyone have both?

i dont think you can have both.

 

[wilked]

Seems like I could benefit from both an FSA (for childcare, thanks Wilked) and an HSA/HDHP (for general medical expense).

Anyone have both?

i dont think you can have both.

This is not accurate Joe.

If I have a Dependent Care FSA, am I still HSA eligible?

A Dependent Care FSA does not affect your eligibility for an HSA. You can have both accounts without creating any conflict of benefits.

 

[JoeSteeler]

Seems like I could benefit from both an FSA (for childcare, thanks Wilked) and an HSA/HDHP (for general medical expense).

Anyone have both?

i dont think you can have both.

This is not accurate Joe.If I have a Dependent Care FSA, am I still HSA eligible?A Dependent Care FSA does not affect your eligibility for an HSA. You can have both accounts without creating any conflict of benefits.

Thanks for correcting. I didn't see the "for childcare" part.

 

[Britney Spears]

Seems like I could benefit from both an FSA (for childcare, thanks Wilked) and an HSA/HDHP (for general medical expense).

Anyone have both?

i dont think you can have both.

This is not accurate Joe.If I have a Dependent Care FSA, am I still HSA eligible?A Dependent Care FSA does not affect your eligibility for an HSA. You can have both accounts without creating any conflict of benefits.

Thanks for correcting. I didn't see the "for childcare" part.

I am building up a pretty giant list of things to change here.

 

[Fruitbat]

How often should I be re balancing the funds in my retirement accounts...we have a 401(k) and 403(b) which I haven't revisited in a while.

 

[wilked]

I do it about twice a year. Usually once around tax time (when I fill our Roth IRAs), and once around my birthday (roughly 6 months after). R

 

[17seconds]

Turns out I can't do an HSA. At least that's what my HR manager says, and her previous job was in health care.I have a high deductible plan but it is an HRA - a Health Reimbursement Account. The deductible is $3,000 and my company pays $2,000 so I'm responsible for $1,000. It seems to be eligible for an HSA you need to have a $1,500+ deductible responsibility.

 

[BeTheMatch]

Turns out I can't do an HSA. At least that's what my HR manager says, and her previous job was in health care. I have a high deductible plan but it is an HRA - a Health Reimbursement Account. The deductible is $3,000 and my company pays $2,000 so I'm responsible for $1,000. It seems to be eligible for an HSA you need to have a $1,500+ deductible responsibility.

That sounds similar to what we have through my wife's school district.

 

[NajehHejan]

This is really a great thread. Can we change the title to something more generic?

wilked's guide to beating the man at his own game

 

[Britney Spears]

This is really a great thread. Can we change the title to something more generic?

wilked's guide to beating the man at his own game

Approve.

 

[Doctor Detroit]

I do it about twice a year. Usually once around tax time (when I fill our Roth IRAs), and once around my birthday (roughly 6 months after). R

Are you balancing your account or are you changing your contribution allocations based on how your account looks?

Example

Your contributions have 40% to X, 30% to Y, 15% to Z and 15% to M going in as this is what you want your allocations to be

Your balances show 43% to X, 29% to Y, 14% to Z and 14% to M.

What are you doing in that circumstance? If that doesn't make sense (I think it does) tell me what exactly you are changing if anything. Or what you are specifically looking for. TIA.

 

[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

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.

All right - almost ready to take the leap on this.

So, having nothing to go on other than being good at math, reading this thread, and poking around the internet a bit....

Decided to go with TD Ameritrade. I downloaded a list of all their commission-free ETFs into excel. I filtered down to only those funds with an expense ratio <=%0.20, and a Morningstar rating of 4 or 5. Then I took that list and went top-down (from least expensive to most expensive) picking funds until I filled out the 9-box [small/Mid/Large]x[Value/Blend/Growth] with one fund in each box. That gave me:

sym fund Gr Exp Ratio Rating Morningstar categoryVIG Vanguard Dividend Appreciation ETF 0.13% 5 Large BlendVB Vanguard Small Cap ETF 0.10% 4 Small BlendVBK Vanguard Small Cap Growth ETF 0.10% 4 Small GrowthVUG Vanguard Growth ETF 0.10% 4 Large GrowthVYM Vanguard High Dividend Yield Index ETF 0.10% 4 Large ValueVXF Vanguard Extended Market Index ETF 0.14% 4 Mid-Cap Blend That filled up 6 of the 9 boxes. Then, I just ignored morningstar rankings, and took the cheapest funds to fill the other 3 spots:

VOT Vanguard Mid-Cap Growth ETF 0.10% 3 Mid-Cap GrowthVOE Vanguard Mid-Cap Value ETF 0.12% 3 Mid-Cap ValueVBR Vanguard Small Cap Value ETF 0.20% 3 Small Value ....and, figuring I need a little foreign mix, I added the 2 cheapest foreign funds:

VEA Vanguard Tax-Managed International Fund ETF Shares 0.12% 3 Foreign Large BlendVEU Vanguard FTSE All-World ex-US ETF 0.15% 3 Foreign Large Blend So I'm thinking of throwing cash at these 11, split up evenly between each fund, and dropping some cash in monthly going forward.

That's the most thought I've ever put into actually picking funds or stocks.

All opinions welcome...

 

[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.

All right - almost ready to take the leap on this.

So, having nothing to go on other than being good at math, reading this thread, and poking around the internet a bit....

Decided to go with TD Ameritrade. I downloaded a list of all their commission-free ETFs into excel. I filtered down to only those funds with an expense ratio <=%0.20, and a Morningstar rating of 4 or 5. Then I took that list and went top-down (from least expensive to most expensive) picking funds until I filled out the 9-box [small/Mid/Large]x[Value/Blend/Growth] with one fund in each box. That gave me:

sym fund Gr Exp Ratio Rating Morningstar categoryVIG Vanguard Dividend Appreciation ETF 0.13% 5 Large BlendVB Vanguard Small Cap ETF 0.10% 4 Small BlendVBK Vanguard Small Cap Growth ETF 0.10% 4 Small GrowthVUG Vanguard Growth ETF 0.10% 4 Large GrowthVYM Vanguard High Dividend Yield Index ETF 0.10% 4 Large ValueVXF Vanguard Extended Market Index ETF 0.14% 4 Mid-Cap Blend That filled up 6 of the 9 boxes. Then, I just ignored morningstar rankings, and took the cheapest funds to fill the other 3 spots:

VOT Vanguard Mid-Cap Growth ETF 0.10% 3 Mid-Cap GrowthVOE Vanguard Mid-Cap Value ETF 0.12% 3 Mid-Cap ValueVBR Vanguard Small Cap Value ETF 0.20% 3 Small Value ....and, figuring I need a little foreign mix, I added the 2 cheapest foreign funds:

VEA Vanguard Tax-Managed International Fund ETF Shares 0.12% 3 Foreign Large BlendVEU Vanguard FTSE All-World ex-US ETF 0.15% 3 Foreign Large Blend So I'm thinking of throwing cash at these 11, split up evenly between each fund, and dropping some cash in monthly going forward.

That's the most thought I've ever put into actually picking funds or stocks.

All opinions welcome...

You're on the right track.

expense ratio is important. Morningstar ratings less important.

proper diversification and asset allocation is better than the absolute lowest fee. i mean when we're talking about the difference between 0.2% and 0.1%.. it's really splitting hairs.. we're already doing great on fees.

I don't like your plan.

This would be much easier:

IVV - I-Shares S&P 500 index fund - 0.07% expense ratio - 50% Or VTI Vanguard Total Stock Market 0.05%

VEU - Vanguard FTSE All-World Except US - 0.15% - 30%

AGG - I-Shares Bond Market - 0.08% - 20%

if you want to slice down IVV and add in some mid-cap or small cap funds, so be it.

This is ultra cheap, really diverse, easy to manage, and fits a lazy portfolio pretty well.

Don't be obsessed with the Vanguard name.. they have nice products.. but they are just index funds... all S&P 500 funds perform about the same.. the only difference is expense ratio.. I-Shares is a good company also... so are the people who own the SPDR series.

 

[wilked]

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

 

[wilked]

I do it about twice a year. Usually once around tax time (when I fill our Roth IRAs), and once around my birthday (roughly 6 months after). R

Are you balancing your account or are you changing your contribution allocations based on how your account looks? ExampleYour contributions have 40% to X, 30% to Y, 15% to Z and 15% to M going in as this is what you want your allocations to beYour balances show 43% to X, 29% to Y, 14% to Z and 14% to M. What are you doing in that circumstance? If that doesn't make sense (I think it does) tell me what exactly you are changing if anything. Or what you are specifically looking for. TIA.

If it is tax time I will simply buy whatever I am lacking via my Roth purchase. If it is the off-cycle, I might trade funds (all tax advantaged, so no tax consequences). If I am repeatedly 'steering off course' then I will change percentages in my 401k. I am only looking to stay roughly at my numbers though. Plus / minus 5 % is not of much consequence in the short term.

 

[BeTheMatch]

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

I know they always say that, but more and more I'm seeing people say that's probably too conservative, especially given that we are working and living longer now.

 

[Fruitbat]

All right - almost ready to take the leap on this.So, having nothing to go on other than being good at math, reading this thread, and poking around the internet a bit....

Decided to go with TD Ameritrade. I downloaded a list of all their commission-free ETFs into excel. I filtered down to only those funds with an expense ratio <=%0.20, and a Morningstar rating of 4 or 5. Then I took that list and went top-down (from least expensive to most expensive) picking funds until I filled out the 9-box [small/Mid/Large]x[Value/Blend/Growth] with one fund in each box. That gave me:

sym fund Gr Exp Ratio Rating Morningstar categoryVIG Vanguard Dividend Appreciation ETF 0.13% 5 Large BlendVB Vanguard Small Cap ETF 0.10% 4 Small BlendVBK Vanguard Small Cap Growth ETF 0.10% 4 Small GrowthVUG Vanguard Growth ETF 0.10% 4 Large GrowthVYM Vanguard High Dividend Yield Index ETF 0.10% 4 Large ValueVXF Vanguard Extended Market Index ETF 0.14% 4 Mid-Cap Blend That filled up 6 of the 9 boxes. Then, I just ignored morningstar rankings, and took the cheapest funds to fill the other 3 spots:

VOT Vanguard Mid-Cap Growth ETF 0.10% 3 Mid-Cap GrowthVOE Vanguard Mid-Cap Value ETF 0.12% 3 Mid-Cap ValueVBR Vanguard Small Cap Value ETF 0.20% 3 Small Value ....and, figuring I need a little foreign mix, I added the 2 cheapest foreign funds:

VEA Vanguard Tax-Managed International Fund ETF Shares 0.12% 3 Foreign Large BlendVEU Vanguard FTSE All-World ex-US ETF 0.15% 3 Foreign Large Blend So I'm thinking of throwing cash at these 11, split up evenly between each fund, and dropping some cash in monthly going forward.

That's the most thought I've ever put into actually picking funds or stocks.

All opinions welcome...

You're on the right track.

expense ratio is important. Morningstar ratings less important.

proper diversification and asset allocation is better than the absolute lowest fee. i mean when we're talking about the difference between 0.2% and 0.1%.. it's really splitting hairs.. we're already doing great on fees.

I don't like your plan.

This would be much easier:

IVV - I-Shares S&P 500 index fund - 0.07% expense ratio - 50% Or VTI Vanguard Total Stock Market 0.05%

VEU - Vanguard FTSE All-World Except US - 0.15% - 30%

AGG - I-Shares Bond Market - 0.08% - 20%

if you want to slice down IVV and add in some mid-cap or small cap funds, so be it.

This is ultra cheap, really diverse, easy to manage, and fits a lazy portfolio pretty well.

Don't be obsessed with the Vanguard name.. they have nice products.. but they are just index funds... all S&P 500 funds perform about the same.. the only difference is expense ratio.. I-Shares is a good company also... so are the people who own the SPDR series.

so in other words, I'm trying too hard, making things more complex than they need to be. I tend to do that.

Wasnt really obsessed with the Vanguard name, just those are the ones that bubbled to the top in my logic.

Also, I completely ignored/forgot looking for index funds specifically...I just looked at the whole list and compared ratings and expenses.

any particular reason you pick VEU over VEA? what is a "tax managed fund"?

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

OK thanks. didnt consider bonds either when i picked out my list.

so "equity" = "stocks"?

 

[wilked]

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

I know they always say that, but more and more I'm seeing people say that's probably too conservative, especially given that we are working and living longer now that the stock market just hit all time highs and the bond market is languishing a bit.

Fixed the above for you.

Everything will come around...it always does. And when it does, people will be beating the drum about how of course you need age in bonds.

FWIW I do roughly Age in Bonds - 5

 

[Fruitbat]

wait a sec...am I confusing myself? are ALL ETFs based on some sort of index logic? or just those with "index" in the name?

Also, I completely ignored/forgot looking for index funds specifically...I just looked at the whole list and compared ratings and expenses.

 

[wilked]

Fruitbat - yes, equities = stocks pretty much.

Go with a simple portfolio, it will make life much easier. Remember, if guys working 80 hour weeks on Wall St can't beat the market, you have to ask yourself what chance you have. Better to just buy the entire market at the lowest price (ie a Total Stock Market Index fund, a Total Bond Index Fund, etc)

 

[Dentist]

wait a sec...am I confusing myself? are ALL ETFs based on some sort of index logic? or just those with "index" in the name?

Also, I completely ignored/forgot looking for index funds specifically...I just looked at the whole list and compared ratings and expenses.

aside from a precious few active management etfs that arent in your menu, the entire etf industry is about low cost indexing. now some of the indexes are stupid like individual sector or country indexes. but the regular russell or s and p 500 ones are great products and cheapu dont need the tax managed fund in an ira for international. forget that

 

[BeTheMatch]

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

I know they always say that, but more and more I'm seeing people say that's probably too conservative, especially given that we are working and living longer now that the stock market just hit all time highs and the bond market is languishing a bit.

Fixed the above for you.

Everything will come around...it always does. And when it does, people will be beating the drum about how of course you need age in bonds.

FWIW I do roughly Age in Bonds - 5

I know, I kind of figured that too. But even Jack Bogle said that.

 

[JoeSteeler]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

 

[Dentist]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

google "online broker review" check that out and see what fits your needs the best.

if this is just a occasional gambling type account that you're going to use for things like tips.. and you don't need an ira and stuff.. any of those td ameritrade, e-trade, fidelity.. most of those are going to be fine

 

[JoeSteeler]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

google "online broker review" check that out and see what fits your needs the best.

if this is just a occasional gambling type account that you're going to use for things like tips.. and you don't need an ira and stuff.. any of those td ameritrade, e-trade, fidelity.. most of those are going to be fine

Thanks for the reply. Right now I am just going to buy this one stock but down the road I want to open an IRA. I just have a 401(k) through my employer and know zero about online brokers.

 

[mquinnjr]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

google "online broker review" check that out and see what fits your needs the best.

if this is just a occasional gambling type account that you're going to use for things like tips.. and you don't need an ira and stuff.. any of those td ameritrade, e-trade, fidelity.. most of those are going to be fine

Thanks for the reply. Right now I am just going to buy this one stock but down the road I want to open an IRA. I just have a 401(k) through my employer and know zero about online brokers.

I just moved to Schwab from E-Trade, and so far I'm a big fan. Will cover taxable trading, Roth IRA, and my checking account. Fee reimbursed ATM transactions and mobile check deposit make the checking worth it as a fringe benefit. Schwab and a few other brokers' (Guggenheim, some PowerShares, SPDR, etc.) ETF's trade commission free in all brokerage accounts, which is why I made the move. I'll stay with them as long as those ETF's perform decently at the expense ratios where they sit (I'm not in anything with them over 0.10%). Gave me 6 months free trades on non-commission free trades, nice little bonus.

 

[wilked]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

You could always just put your money here and save yourself the time

 

[JoeSteeler]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

You could always just put your money here and save yourself the time

yeah that is probably true but what the heck its only a couple hundred $.

 

[wilked]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

You could always just put your money here and save yourself the time

yeah that is probably true but what the heck its only a couple hundred $.

Please fax over a couple hundred to 617-235-2345

 

[JoeSteeler]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

You could always just put your money here and save yourself the time

yeah that is probably true but what the heck its only a couple hundred $.

Please fax over a couple hundred to 617-235-2345

well that wouldn't be any fun.

 

[Dentist]

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

You could always just put your money here and save yourself the time

yeah that is probably true but what the heck its only a couple hundred $.

Please fax over a couple hundred to 617-235-2345

well that wouldn't be any fun.

if he took pictures of hims

Have a slightly OT question. If I want to buy an individual stock where is the best place online to do that? This is just a penny stock a buddy told me about and I want to buy a few thousand shares.

Thanks.

google "online broker review" check that out and see what fits your needs the best.

if this is just a occasional gambling type account that you're going to use for things like tips.. and you don't need an ira and stuff.. any of those td ameritrade, e-trade, fidelity.. most of those are going to be fine

Thanks for the reply. Right now I am just going to buy this one stock but down the road I want to open an IRA. I just have a 401(k) through my employer and know zero about online brokers.

I just moved to Schwab from E-Trade, and so far I'm a big fan. Will cover taxable trading, Roth IRA, and my checking account. Fee reimbursed ATM transactions and mobile check deposit make the checking worth it as a fringe benefit. Schwab and a few other brokers' (Guggenheim, some PowerShares, SPDR, etc.) ETF's trade commission free in all brokerage accounts, which is why I made the move. I'll stay with them as long as those ETF's perform decently at the expense ratios where they sit (I'm not in anything with them over 0.10%). Gave me 6 months free trades on non-commission free trades, nice little bonus.

e-trade is great.

I think that the commission free ETF lineup over at TD Ameritrade makes them my #1 choice though..

Unless you have Platinum Plus status with Bank of America.. then Merrill edge and their 30 free trades a month is the ultimate in flexibility.. because now you can buy any ETF, stock, etc.