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46 minutes ago, Lion to myself said:

Or you could take $100k once and place it into a hybrid policy that will give you $400k in benefits.  And then blow the other $300k on the grandkids while your alive or at the very least ensure that they get it when you pass.
 

Not a knock on your strategy just trying to illustrate how Hybrid are a form of self funding and asset protection combined. 

I see the example in the article which is conveniently right in line with what I was thinking as far as LTC needs.  I wish they would've given the clients age.  If its say 60, that's a tough call there.  I financially plan (not saying that's how long I'll make it) to live until 100 and the break even point for that policy would be 88.  Now if instead if it was 70 where she's getting that quote, that's a different story.  I do like the idea of the one lump sum payment.   Another downside of LTC is the premium increases which can be significant and its not like you can just switch to another policy late in life b/c the quote you'd get would be significantly higher due to your age.  But definitely something to look into further.   :thanks: 

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Well, today we paid off the last 22 years of our mortgage.  We sold/closed our investment property last week that we bought in 2013.  We did well on it and rolled that money up with some savings and p

Can't really talk about it with RL friends and most of it is pre-tax, but sat down with the wife and figured out that the household is officially in the two comma club. Ten years ago I was unemployed

My big win was in getting educated on personal finance, getting organized, and making a plan. Details: 1. Learned the value of an HSA and contributed for 2019 and 2020. 2. Got my wife’s

Just starting out investing and seeking out some advice. Any advice is appreciated. Currently 26. Have 2 employers. Roth will be through Fidelity. Plan on getting bonds as get older.

Roth IRA: Will max out. Looking at 80/20 split. FZROX (80) Fidelity Zero Total Stock Market Index Fund / FZILX (20) Fidelity Zero International Index Fund. (I've considered 60/20/20 including FSSNX Fidelity Small Cap Index Fund as the other 20% but looking at putting it into Deferred Comp instead).

HSA thru employer #1 via Optum Bank: Will Max out. 100% VITSX Vanguard Total Stock Market Index Fund in all likelihood. Anyone had experience with Optum Bank investing? (Is new with employer). Investment options: https://imgur.com/nLRrvnh

Deferred Comp employer #1 thru Nationwide: FXAIX (60) Fidelity 500 Index Fund, FSSNX Fidelity Small Cap Index Fund (20), FSMDX Fidelity Mid Cap Index Fund (20). I don't believe a "Total Market Fund" is available. I am debating whether to substitute FSPSX Fidelity International Fund here (but have International Fund in Roth). Would prefer to keep 3 prong approach here but very open to suggestions.

Employer #2 does offer 50% of 4% (or 2% match). May look into that up to the match but not crazy about the company handling it (OneAmerica). All the funds look to have really high expense ratios. https://imgur.com/ex5HuJV

Have employer pension as well but don't believe I'm able to determine what invest in. 

May get into individual stocks once I get the above going.

Thanks for any input!

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13 minutes ago, D'OHtis said:

Employer #2 does offer 50% of 4% (or 2% match). May look into that but not crazy about the company handling it (OneAmerica). All the funds look to have really high expense ratios.

Your overall approach looks good to me.  I’d put the 4% in to get the 2% from the employer regardless of expenses.  You will be getting a 50% return on your money right off the bat.  
 

If it’s not too much trouble, take a picture of the expense ratios next to the fund names.  

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45 minutes ago, Lion to myself said:

Your overall approach looks good to me.  I’d put the 4% in to get the 2% from the employer regardless of expenses.  You will be getting a 50% return on your money right off the bat.  
 

If it’s not too much trouble, take a picture of the expense ratios next to the fund names.  

Thanks for help! I updated link with expense ratios and posted below as well. 

The funds from this employer leave a lot to be desired IMO but hard to turn down free money. https://imgur.com/ex5HuJV

Will probably wind up doing but likely only up to match.

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2 minutes ago, D'OHtis said:

Thanks for help! I updated link with expense ratios and posted below as well. 

The funds from this employer leave a lot to be desired IMO but hard to turn down free money. https://imgur.com/ex5HuJV

I’d go with the American Fund’s Growth Fund of America in an effort to stay under 1% expense ratio.  At least it’s actively managed so you can justify paying more.  The State Street index fund would be fine too.  But to your point, you are there for the “free money”. 

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5 minutes ago, Lion to myself said:

I’d go with the American Fund’s Growth Fund of America in an effort to stay under 1% expense ratio.  At least it’s actively managed so you can justify paying more.  The State Street index fund would be fine too.  But to your point, you are there for the “free money”. 

Thanks again. I was between American Fund or the State Street Index as well & will go with one of those. 

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2 hours ago, D'OHtis said:

Employer #2 does offer 50% of 4% (or 2% match).

So got some updated information from our Benefits team (below). So will definitely do at least 3%. Trying to decide what to do beyond that. Thinking somewhere from 5-10% initially at least. (Single with very minimal expenses as WFH/no debt outside of mortgage).

Nothing is really preventing from contributing more outside of not being in love with the available funds (but I'd like to take as much free money as possible). 50% match of anything over 3% actually sounds like a pretty good deal anyway (This is my first time investing at all so might be ignorance speaking).

I'd like to eventually try my hand at individual stocks a little but want to have a fallback. 

Quote

Matches 100% up to 3% employee contribution.  50% match to any contributions over 3%.  For example if you are contributing 5%, Will match 100% of the contribution up to 3% and a 50% match for the remaining 2%.

 

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27 minutes ago, D'OHtis said:

So got some updated information from our Benefits team (below). So will definitely do at least 3%. Trying to decide what to do beyond that. Thinking somewhere from 5-10%. (Single with very minimal expenses/no debt outside of mortgage).

If there is no cap on how much the will match then sky’s the limit. Do what’s comfortable budget wise.  I think 15% to 20% all in (employee and employer) towards retirement is a great place to be.   

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7 minutes ago, Lion to myself said:

If there is no cap on how much the will match then sky’s the limit. Do what’s comfortable budget wise.  I think 15% to 20% all in (employee and employer) towards retirement is a great place to be.   

I thought the cap was 50% of up to 4%.  If that’s the case, the minimum he should invest is 4%.  We all like free money.  :shrug: 

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3 hours ago, D'OHtis said:

Just starting out investing and seeking out some advice. Any advice is appreciated. Currently 26. Have 2 employers. Roth will be through Fidelity. Plan on getting bonds as get older.

Roth IRA: Will max out. Looking at 80/20 split. FZROX (80) Fidelity Zero Total Stock Market Index Fund / FZILX (20) Fidelity Zero International Index Fund. (I've considered 60/20/20 including FSSNX Fidelity Small Cap Index Fund as the other 20% but looking at putting it into Deferred Comp instead).

HSA thru employer #1 via Optum Bank: Will Max out. 100% VITSX Vanguard Total Stock Market Index Fund in all likelihood. Anyone had experience with Optum Bank investing? (Is new with employer). Investment options: https://imgur.com/nLRrvnh

Deferred Comp employer #1 thru Nationwide: FXAIX (60) Fidelity 500 Index Fund, FSSNX Fidelity Small Cap Index Fund (20), FSMDX Fidelity Mid Cap Index Fund (20). I don't believe a "Total Market Fund" is available. I am debating whether to substitute FSPSX Fidelity International Fund here (but have International Fund in Roth). Would prefer to keep 3 prong approach here but very open to suggestions.

Employer #2 does offer 50% of 4% (or 2% match). May look into that up to the match but not crazy about the company handling it (OneAmerica). All the funds look to have really high expense ratios. https://imgur.com/ex5HuJV

Have employer pension as well but don't believe I'm able to determine what invest in. 

May get into individual stocks once I get the above going.

Thanks for any input!

At your age I’d go much heavier into small and mid-caps. More volatility but more growth.

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47 minutes ago, D'OHtis said:

So got some updated information from our Benefits team (below). So will definitely do at least 3%. Trying to decide what to do beyond that. Thinking somewhere from 5-10% initially at least. (Single with very minimal expenses as WFH/no debt outside of mortgage).

Nothing is really preventing from contributing more outside of not being in love with the available funds (but I'd like to take as much free money as possible). 50% match of anything over 3% actually sounds like a pretty good deal anyway (This is my first time investing at all so might be ignorance speaking).

I'd like to eventually try my hand at individual stocks a little but want to have a fallback. 

 

Out of curiosity, why the interest in individual stocks?  Would you also plan to diversify by investing in mutual funds?

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Just now, fred_1_15301 said:

I thought the cap was 50% of up to 4%.  If that’s the case, the minimum he should invest is 4%.  We all like free money.  :shrug: 

Yeah that's what the mailer we got last year regarding our 401k plan indicated (50% up to 4%). 

I emailed our benefits earlier today and they specifically indicated 100% match up to 3%....then 50% match anything after 3%. I did make sure to print the email :) I am getting further clarification this in fact has changed. 

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2 minutes ago, D'OHtis said:

Yeah that's what the mailer we got last year regarding our 401k plan indicated (50% up to 4%). 

I emailed our benefits earlier today and they specifically indicated 100% match up to 3%....then 50% match anything after 3%. I did make sure to print the email :) I am getting further clarification this in fact has changed. 

Wow that changes a lot.  If that’s the case, I agree that you invest the max that you can afford and are comfortable with.  That is a great benefit.

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8 minutes ago, fred_1_15301 said:

Out of curiosity, why the interest in individual stocks?  Would you also plan to diversify by investing in mutual funds?

I don't have a great deal of interest TBH (re: individual stocks). I realize that'd probably entail me having to read financial statements. Would be just to try something different (I am pretty content on have small pieces in everything). DIS is one stock that I really like for future with their streaming service (I know it's probably not the smartest to get locked into one stock/company). I'm not going to invest heavily into any 1 stock. The whole penny stock fad doesn't really invest me either. (Not saying it won't/wouldn't work out but too much gambling risk/work for my taste)

I'm locked into index funds everywhere. I'm not against mutual funds but from my little investigating with these you're relying more on someone else (paying more as result) to have them try to beat the market. My little investigating = reading and watching Youtube the last few months. I will definitely look into them more and open for any suggestions from folks with more experience.

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Rental guys, I'm trying to build out an excel cash flow/ROI calculator.  Found a few online and they had the following categories with pre-filled percentages.  Anything missing?  And do these percentages seem about right?

Vacancy Rate:  8%

Repairs & Maint:  13%

Property Mgmt:  10%

Property Taxes:  I can find

Property Insurance:  I can find an estimate

Rent Insurance:  $250-$400/year

@Shula-holic, @BassNBrew, @CR69, I know we have several around here with rentals.

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43 minutes ago, SFBayDuck said:

Rental guys, I'm trying to build out an excel cash flow/ROI calculator.  Found a few online and they had the following categories with pre-filled percentages.  Anything missing?  And do these percentages seem about right?

Vacancy Rate:  8%

Repairs & Maint:  13%

Property Mgmt:  10%

Property Taxes:  I can find

Property Insurance:  I can find an estimate

Rent Insurance:  $250-$400/year

@Shula-holic, @BassNBrew, @CR69, I know we have several around here with rentals.

What is rent insurance? Is that different than renters insurance?

 

I think that repair multiple is based on your rent collected. I personally wouldn’t do that. I’d base it off the house value (not house plus land). Assume 1-2% of the house value (maybe use 2% to be conservative, vary it based on the type of renter you get. Ie. college kid vs professional). 
 

 

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10 minutes ago, wilked said:

What is rent insurance? Is that different than renters insurance?

 

I think that repair multiple is based on your rent collected. I personally wouldn’t do that. I’d base it off the house value (not house plus land). Assume 1-2% of the house value (maybe use 2% to be conservative, vary it based on the type of renter you get. Ie. college kid vs professional). 
 

 

Thanks.  Rent insurance pays rent if tenant defaults.

Here is the site I got this from:  https://sparkrental.com/rental-property-roi-calculator/

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2 hours ago, D'OHtis said:

So got some updated information from our Benefits team (below). So will definitely do at least 3%. Trying to decide what to do beyond that. Thinking somewhere from 5-10% initially at least. (Single with very minimal expenses as WFH/no debt outside of mortgage).

Nothing is really preventing from contributing more outside of not being in love with the available funds (but I'd like to take as much free money as possible). 50% match of anything over 3% actually sounds like a pretty good deal anyway (This is my first time investing at all so might be ignorance speaking).

I'd like to eventually try my hand at individual stocks a little but want to have a fallback. 

 

Since you are corresponding with them, mention to them about the fees on all the funds.  Layout the case for expense ratios.  Mine is through Securian Retirement and includes some vanguard funds.  None of the expense ratios are over 1 and there is a good selection under .5%

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1 hour ago, SFBayDuck said:

Rental guys, I'm trying to build out an excel cash flow/ROI calculator.  Found a few online and they had the following categories with pre-filled percentages.  Anything missing?  And do these percentages seem about right?

Vacancy Rate:  8%

Repairs & Maint:  13%

Property Mgmt:  10%

Property Taxes:  I can find

Property Insurance:  I can find an estimate

Rent Insurance:  $250-$400/year

@Shula-holic, @BassNBrew, @CR69, I know we have several around here with rentals.

Just to make sure we are apples to apples, your percentage on maintenance is a % of rents, correct?  If so, I think your repairs/maintenance is high based on my experience.  A lot depends on age and condition of your property, how soon until major issues hit like roof/HVAC.  I own some condos and a couple of houses.  For roof jobs, obviously the houses are more of the concern there versus a condo where your condo fee should be going toward a reserve fund to cover that.  I haven't had to do a roof on any rental yet, we had a hail storm that my oldest rental got a new roof from the damage.  So keep in mind when I spit these numbers out, this is with no roof and only maintenance to HVAC and other minor repairs, painting, carpet cleans when new tenant, etc.  I checked my rolled up financials over the past 3 years just to get a rough ballpark, mine looks like 8-9% of rents.  Granted, if you see a roof on the horizon and want to set aside another 3-4% to build a reserve fund for that I wouldn't blame you.

Property management I run anywhere from 8% to 22%.  8% for my units in a college town where I have multiple rentals with the same company, they discount me for that reason.  10% for my houses in a metro area.  The 22% is for a beach property and as with any vacation type place those rates are always higher.  If you are talking residential houses I think 10% is a standard number.

Vacancy you are essentially budgeting 1 month a year.  Obviously you want to beat that but sometimes it can't be helped.  Rarely in my college town units do I have that kind of down time.  Those guys have it down to a science and if I have a tenant "turn" I'm usually down no more than 2 weeks.  I have had gaps as long as 6 weeks in my houses when tenants move and work needs to be done.  Make sure when you have a tenant move out you stay on top it, that the repairs are done timely to get it on the market ASAP.  I think over time you'll be better than 8% but in any one given year that's probably not a bad estimate.  I think over time you might could trend that toward 5% though if you are doing a long range forecast.

I've never bought rent insurance so I don't know about that.  

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1 hour ago, wilked said:

What is rent insurance? Is that different than renters insurance?

 

I think that repair multiple is based on your rent collected. I personally wouldn’t do that. I’d base it off the house value (not house plus land). Assume 1-2% of the house value (maybe use 2% to be conservative, vary it based on the type of renter you get. Ie. college kid vs professional). 
 

 

I think it is typically called landlord insurance to what he is referring to.

Renters insurance is for those paying rent and limited to their personal property, liability and some I think will cover things like moving out for repairs (like you would get in homeowners if your house burned down etc). 

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3 hours ago, D'OHtis said:

Yeah that's what the mailer we got last year regarding our 401k plan indicated (50% up to 4%). 

I emailed our benefits earlier today and they specifically indicated 100% match up to 3%....then 50% match anything after 3%. I did make sure to print the email :) I am getting further clarification this in fact has changed. 

So got them to send the mailer to me (I trash most mail so probably just overlooked it). End result is better than what I originally thought but not as good as the email I got today that stated "anything over 3% is 50% matched".

It's 100% match to 3% and 50% match up to 5%. So I'll just do the 5%. The fund options are very lackluster but I'll take some free money. I will talk to the plan administrator about the offerings. Thanks for the suggestion and all for assistance.

Edited by D'OHtis
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5 hours ago, SFBayDuck said:

Rental guys, I'm trying to build out an excel cash flow/ROI calculator.  Found a few online and they had the following categories with pre-filled percentages.  Anything missing?  And do these percentages seem about right?

Vacancy Rate:  8%

Repairs & Maint:  13%

Property Mgmt:  10%

Property Taxes:  I can find

Property Insurance:  I can find an estimate

Rent Insurance:  $250-$400/year

@Shula-holic, @BassNBrew, @CR69, I know we have several around here with rentals.

I would say those are closeish. Property management can be lower with more doors or personal relationships but 10% is probably safe to start with. Vacancy rate REALLY depends on the area, the vacancy rate in our area has been below 2% for years now. I don't personally use a vacancy rate when running numbers right now because the way rent has been increasing it's just an opportunity to raise the rent lol. 

For cap-ex you're going to get a LOT of different opinions. In general I use 1% of the value per year (for our area) but will use higher or lower depending on the age, if it's been remodeled recently, etc. Like the ADU we're building right now I'm budgeting $500 a year because with LVP, ductless HVAC, tankless water heater, etc it should be a VERY long time before we have to do any major repairs that aren't covered by warranty or insurance. 

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17 hours ago, D'OHtis said:

I don't have a great deal of interest TBH (re: individual stocks). I realize that'd probably entail me having to read financial statements. Would be just to try something different (I am pretty content on have small pieces in everything). DIS is one stock that I really like for future with their streaming service (I know it's probably not the smartest to get locked into one stock/company). I'm not going to invest heavily into any 1 stock. The whole penny stock fad doesn't really invest me either. (Not saying it won't/wouldn't work out but too much gambling risk/work for my taste)

I'm locked into index funds everywhere. I'm not against mutual funds but from my little investigating with these you're relying more on someone else (paying more as result) to have them try to beat the market. My little investigating = reading and watching Youtube the last few months. I will definitely look into them more and open for any suggestions from folks with more experience.

:lmao::lmao::lmao:

No longer required. Frowned upon, tbh. 

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On 3/1/2021 at 8:59 AM, D'OHtis said:

Just starting out investing and seeking out some advice. Any advice is appreciated. Currently 26. Have 2 employers. Roth will be through Fidelity. Plan on getting bonds as get older.

Roth IRA: Will max out. Looking at 80/20 split. FZROX (80) Fidelity Zero Total Stock Market Index Fund / FZILX (20) Fidelity Zero International Index Fund. (I've considered 60/20/20 including FSSNX Fidelity Small Cap Index Fund as the other 20% but looking at putting it into Deferred Comp instead).

HSA thru employer #1 via Optum Bank: Will Max out. 100% VITSX Vanguard Total Stock Market Index Fund in all likelihood. Anyone had experience with Optum Bank investing? (Is new with employer). Investment options: https://imgur.com/nLRrvnh

Deferred Comp employer #1 thru Nationwide: FXAIX (60) Fidelity 500 Index Fund, FSSNX Fidelity Small Cap Index Fund (20), FSMDX Fidelity Mid Cap Index Fund (20). I don't believe a "Total Market Fund" is available. I am debating whether to substitute FSPSX Fidelity International Fund here (but have International Fund in Roth). Would prefer to keep 3 prong approach here but very open to suggestions.

Any thoughts on ignoring International Index Funds altogether in Retirement accounts? Returns don't look great. 

I'm really considering going 60 FZROX Fidelity Total Market Fund / 20 FSSNX Fidelity Small Cap / 20 FSMDX Fidelity Mid Cap for my Roth IRA as well. (For better or worse, it would pretty much mirror my Deferred Comp plan)

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1 hour ago, D'OHtis said:

Any thoughts on ignoring International Index Funds altogether in Retirement accounts? Returns don't look great. 

It’s ok to skip them if you want but 10% to 20% would be my suggestion.  Past performance is not an indicator of future performance and buying assets when they are down is what you want to do.  

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On 3/1/2021 at 5:35 PM, D'OHtis said:

So got them to send the mailer to me (I trash most mail so probably just overlooked it). End result is better than what I originally thought but not as good as the email I got today that stated "anything over 3% is 50% matched".

It's 100% match to 3% and 50% match up to 5%. So I'll just do the 5%. The fund options are very lackluster but I'll take some free money. I will talk to the plan administrator about the offerings. Thanks for the suggestion and all for assistance.

I got to say it’s awesome that you’re focusing on investing at such a young age.  It’s going to pay huge dividends for you going forward.  May I also suggest googling “Bogleheads forum” and checking out the investing forum.  Tons of great advice in there and they can answer just about any question you have on investing.

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On 3/1/2021 at 2:18 PM, SFBayDuck said:

Rental guys, I'm trying to build out an excel cash flow/ROI calculator.  Found a few online and they had the following categories with pre-filled percentages.  Anything missing?  And do these percentages seem about right?

Vacancy Rate:  8%  Good, maybe conservative right now

Repairs & Maint:  13%  Good longer term.

Property Mgmt:  10%  I charge 1/2 a month and then 10% with discount to 8% for multiple doors or $$$$ properties.

Property Taxes:  I can find

Property Insurance:  I can find an estimate

Rent Insurance:  $250-$400/year.  All insurance is a losing proposition.  I would look to cut this.

@Shula-holic, @BassNBrew, @CR69, I know we have several around here with rentals.

Sorry for the slow reply....see above.

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On 3/1/2021 at 10:59 AM, D'OHtis said:

HSA thru employer #1 via Optum Bank: Will Max out. 100% VITSX Vanguard Total Stock Market Index Fund in all likelihood. Anyone had experience with Optum Bank investing? (Is new with employer). Investment options: https://imgur.com/nLRrvnh

We use Optum at work.  It's okay.  Website can be kinda clunky / counter-intuitive at times, but overall gets the job done.  Better than some other options I've seen but I'm sure it's worse than others as well.  I don't think there's much in the way of fees once you have a certain amount in the plan.  There's a minimum cash balance you need to hit before you can invest though, might be like $5,000?

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On 3/1/2021 at 4:35 PM, D'OHtis said:

So got them to send the mailer to me (I trash most mail so probably just overlooked it). End result is better than what I originally thought but not as good as the email I got today that stated "anything over 3% is 50% matched".

It's 100% match to 3% and 50% match up to 5%. So I'll just do the 5%. The fund options are very lackluster but I'll take some free money. I will talk to the plan administrator about the offerings. Thanks for the suggestion and all for assistance.

I was going to say dump 19k in every year (that would have been a 65% return on your money).  5% is a good start, but generally won't accumulate to a desired sized nest egg.  Keep pumping one way or another to 10-15%.  

If you have an HSA I'd max that out as the next step.  Use it as a retirement vehicle.  It's structurally superior to everything else.  Then a traditional IRA if you qualify.   Also, don't be afraid to put in more to the 401k unless the fees are punitive.  The compounding advantage to shielding the money from taxation is pretty huge.

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ok, I'm looking at some index funds that are mixed between stocks and bonds for good diversification.  The reason to do that is for protection in a downswing, right?  If the market tanks, you want to be in bonds and a good mix limits the downside (while also limiting the upside) - at least, that's my understanding of it all.

Well, we had a pretty bad downswing last year - roughly a year ago.  it seems to me that the S&P500 outperformed these funds even then.  I mean, maybe the bond funds did a tiny bit better, but really missed the boat climbing back out.

Am I better off just putting everything into a simple S&P 500 type index fund that has much better performance overall?  It seems to me that diversifying with bonds really limits the upside much more than the downside.

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15 minutes ago, moleculo said:

ok, I'm looking at some index funds that are mixed between stocks and bonds for good diversification.  The reason to do that is for protection in a downswing, right?  If the market tanks, you want to be in bonds and a good mix limits the downside (while also limiting the upside) - at least, that's my understanding of it all.

Well, we had a pretty bad downswing last year - roughly a year ago.  it seems to me that the S&P500 outperformed these funds even then.  I mean, maybe the bond funds did a tiny bit better, but really missed the boat climbing back out.

Am I better off just putting everything into a simple S&P 500 type index fund that has much better performance overall?  It seems to me that diversifying with bonds really limits the upside much more than the downside.

 

Bonds don't "outperform" much anymore. Rates are too low. The advice used to be something like "retire at 65 with a 60/40 stock/bond mix". Now it's closer to 85/15 mix. Interest rates aren't anywhere close to the levels they were when that advice was written. Used to be, what, 4-6%? Now you're lucky to see like 1.25%?

It depends how far out from retirement you are. I keep a little in bonds, like 5-10%. But the thing is, it's not bonds as an investment, it's bonds (and maybe half in TIPS) to get a better return than cash while waiting for the downswings. 

And then rebalance.

For example, when the market took the huge hit, your portfolio may have gone from 90/10 split to 70/30, all because of the massive haircut on stocks when things took a dive. That's when you'd sell the extra 20% in bonds and re-buy stocks when they were lower. Then this recovery would hit you hard and while stocks went back up 30%, your portfolio would actually go up like 50% because you had cost averaged so much lower after the rebalance.

Then now that the recovery is in place... you'd sell some of the highs and get back to a 90/10 split again by banking profits and saving cash for the next dip.

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21 minutes ago, HaFo SaFo said:

 

Bonds don't "outperform" much anymore. Rates are too low. The advice used to be something like "retire at 65 with a 60/40 stock/bond mix". Now it's closer to 85/15 mix. Interest rates aren't anywhere close to the levels they were when that advice was written. Used to be, what, 4-6%? Now you're lucky to see like 1.25%?

It depends how far out from retirement you are. I keep a little in bonds, like 5-10%. But the thing is, it's not bonds as an investment, it's bonds (and maybe half in TIPS) to get a better return than cash while waiting for the downswings. 

And then rebalance.

For example, when the market took the huge hit, your portfolio may have gone from 90/10 split to 70/30, all because of the massive haircut on stocks when things took a dive. That's when you'd sell the extra 20% in bonds and re-buy stocks when they were lower. Then this recovery would hit you hard and while stocks went back up 30%, your portfolio would actually go up like 50% because you had cost averaged so much lower after the rebalance.

Then now that the recovery is in place... you'd sell some of the highs and get back to a 90/10 split again by banking profits and saving cash for the next dip.

gotcha, but I'm really talking about a fund like FFNOX: fidelity four-in-one index fund.  It is 60% S&P 500 index fund, 25% international index fund, and 15% investment grade bond funds.  

Seems like this limits ability to take advantage of rebalancing, right?  I'm probably better off in something like 50% FXAIX (S&P 500 index fund) and then 50% in bonds or cash equivalent. (50/50 mix because IMO we are due a correction and I want to play it safe with this account - I'm looking at a 10 year horizon.

My goal, BTW, is enhanced savings.  I recently refinanced my house to a much lower rate and I want to invest the difference - intent is to be able to pay off the house faster.  If I can make at least 3% a year, I come out ahead.  I think I will be able to pay off my mortgage in 10 years if things go well.

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28 minutes ago, HaFo SaFo said:

 

Bonds don't "outperform" much anymore. Rates are too low. The advice used to be something like "retire at 65 with a 60/40 stock/bond mix". Now it's closer to 85/15 mix. Interest rates aren't anywhere close to the levels they were when that advice was written. Used to be, what, 4-6%? Now you're lucky to see like 1.25%?

It depends how far out from retirement you are. I keep a little in bonds, like 5-10%. But the thing is, it's not bonds as an investment, it's bonds (and maybe half in TIPS) to get a better return than cash while waiting for the downswings. 

And then rebalance.

For example, when the market took the huge hit, your portfolio may have gone from 90/10 split to 70/30, all because of the massive haircut on stocks when things took a dive. That's when you'd sell the extra 20% in bonds and re-buy stocks when they were lower. Then this recovery would hit you hard and while stocks went back up 30%, your portfolio would actually go up like 50% because you had cost averaged so much lower after the rebalance.

Then now that the recovery is in place... you'd sell some of the highs and get back to a 90/10 split again by banking profits and saving cash for the next dip.

I know nothing about bonds.  That being said, for something like this, is the performance of that not what it appears to be?

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9 minutes ago, moleculo said:

Seems like this limits ability to take advantage of rebalancing, right?

The all in one portfolio will rebalance itself so it’s doing the same thing but I prefer the second approach of splitting the money into separate funds for more control of when the rebalancing takes place.  HaFo mentioned TIPS for some of the bonds, I’d recommend them as well for what you are trying to accomplish.  The fund Nutter Butter linked above is a good bond fund for the rest (or something similar). 

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1 minute ago, Lion to myself said:

The all in one portfolio will rebalance itself so it’s doing the same thing but I prefer the second approach of splitting the money into separate funds for more control of when the rebalancing takes place.  HaFo mentioned TIPS for some of the bonds, I’d recommend them as well for what you are trying to accomplish.  The fund Nutter Butter linked above is a good bond fund for the rest (or something similar). 

thanks for the reply but it seems that the all in one fund isn't rebalancing - i mean, it strives to keep the same ratios between bonds and equity funds  - when the market is down it isn't selling bonds to buy equity... seems to me that it really is doing nothing but limiting it's own upside.

I think I know what I want to do.  thanks.

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29 minutes ago, moleculo said:

thanks for the reply but it seems that the all in one fund isn't rebalancing

It is rebalancing.  There would be only two ways to keep that target allocation. One is rebalancing and the other is using the inflows of new money.  It’s doing both.  Not trying to beat a dead horse here just hoping to educate the masses.  

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4 hours ago, Sand said:

I was going to say dump 19k in every year (that would have been a 65% return on your money).  5% is a good start, but generally won't accumulate to a desired sized nest egg.  Keep pumping one way or another to 10-15%.  

If you have an HSA I'd max that out as the next step.  Use it as a retirement vehicle.  It's structurally superior to everything else.  Then a traditional IRA if you qualify.   Also, don't be afraid to put in more to the 401k unless the fees are punitive.  The compounding advantage to shielding the money from taxation is pretty huge.

HSA's are freaking awesome. They are great and all for hedging against medical costs now but they are really superior as a retirement fund. I don't think enough people know this.

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1 hour ago, moleculo said:

gotcha, but I'm really talking about a fund like FFNOX: fidelity four-in-one index fund.  It is 60% S&P 500 index fund, 25% international index fund, and 15% investment grade bond funds.  

Seems like this limits ability to take advantage of rebalancing, right?  I'm probably better off in something like 50% FXAIX (S&P 500 index fund) and then 50% in bonds or cash equivalent. (50/50 mix because IMO we are due a correction and I want to play it safe with this account - I'm looking at a 10 year horizon.

My goal, BTW, is enhanced savings.  I recently refinanced my house to a much lower rate and I want to invest the difference - intent is to be able to pay off the house faster.  If I can make at least 3% a year, I come out ahead.  I think I will be able to pay off my mortgage in 10 years if things go well.

I do it myself. 

59 minutes ago, Lion to myself said:

The all in one portfolio will rebalance itself so it’s doing the same thing but I prefer the second approach of splitting the money into separate funds for more control of when the rebalancing takes place.  HaFo mentioned TIPS for some of the bonds, I’d recommend them as well for what you are trying to accomplish.  The fund Nutter Butter linked above is a good bond fund for the rest (or something similar). 

This is a big advantage of M1 imo, if you're keeping your portfolio simple.

Just go with something like 90% VTI, 10% BND (if you want bonds) and every quarter/annual or so hit the rebalance button. Simple. 

Of course my portfolio is more complex than that but rebalancing is still simple.

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1 minute ago, Chadstroma said:

HSA's are freaking awesome. They are great and all for hedging against medical costs now but they are really superior as a retirement fund. I don't think enough people know this.

Yeah, it grinds my gears that we're not eligible. 

(Not really but it would be nice)

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1 minute ago, -OZ- said:

Yeah, it grinds my gears that we're not eligible. 

(Not really but it would be nice)

Hey! Look at me! I got a really good health care plan!

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2 minutes ago, -OZ- said:

Yeah, it grinds my gears that we're not eligible. 

(Not really but it would be nice)

Yup, same here.  I wish people would stop talking about it in this thread b/c I'm getting jealous.  

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7 minutes ago, Chadstroma said:

Hey! Look at me! I got a really good health care plan!

🤷🏽‍♂️ I got paid less than market value. It's a trade off. (Worth it, but there is a trade off)

6 minutes ago, NutterButter said:

Yup, same here.  I wish people would stop talking about it in this thread b/c I'm getting jealous.  

:)

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7 minutes ago, NutterButter said:

Yup, same here.  I wish people would stop talking about it in this thread b/c I'm getting jealous.  

If I had healthcare plans like you guys I actually would be better off.... my HSA has been drained from trips to the ER and medical stuff. :censored:

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2 minutes ago, Chadstroma said:

If I had healthcare plans like you guys I actually would be better off.... my HSA has been drained from trips to the ER and medical stuff. :censored:

An HSA is available for high deductible plans right?  Not to brag, but I don't even have a deductible.   Maybe I should hurt myself more so I can at least get my monies worth.   All I ever use it for is the occasional PC visit.  We do have a cheaper plan that has a $2.5k single/$5k family.    Do I need to talk to my HR to see if that would qualify?   Knowing my kids, if I switch to that plan they'll start hurting themselves and I'll be in your situation.   

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1 minute ago, NutterButter said:

An HSA is available for high deductible plans right?  Not to brag, but I don't even have a deductible.   Maybe I should hurt myself more so I can at least get my monies worth.   All I ever use it for is the occasional PC visit.  We do have a cheaper plan that has a $2.5k single/$5k family.    Do I need to talk to my HR to see if that would qualify?   Knowing my kids, if I switch to that plan they'll start hurting themselves and I'll be in your situation.   

Yes, you need to have a high deductible plan to qualify. 


We don't have a choice with my wife's employer but at least her company helps fund the HSA. I would take a look at your options more deeply.... the cost savings of the fund and the likelihood of ending up spending. 

I had a bad car accident in 2014 that that completely drained everything then (with a lot of follow up stuff because of a long story that no one cares to hear about). Then I have had things here and there and in the last year or so a couple of trips to the ER for kidney stones sucked a whole lot of the money real fast. 

So.... so far, I would have most likely been ahead with good medical coverage and no HSA. But I can dream that rebuilding it now is not going to get drained again. lol

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while I'm here, I want to vent for a minute.  Just checking my 401(k) and I'm down about $7k from a couple of weeks ago.  Market fluctuation, right? nope.

Last year when business went bad, my company froze 401(k) match and like 1/2 the company got furloughed.  somehow that messed up our 401(k) balance and we failed a compliance test.  I don't really understand how or why, but about $3500 of my contribution was deemed "excessive", even though I put in my allowable $19.5k.  That amount was sent to me via check.  Another $3500 was forfeited - employee match and some gains.

So, basically I am being penalized because my company froze the match.  My allowable contributions for 2020 were actually $16k, not $19.5k.

I mean, it's better than being furloughed, and if this is the worst financial effect I see from COVID I am doing really well.  I don't mean to complain too much but damn...

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58 minutes ago, NutterButter said:

An HSA is available for high deductible plans right?  Not to brag, but I don't even have a deductible.   Maybe I should hurt myself more so I can at least get my monies worth.   All I ever use it for is the occasional PC visit.  We do have a cheaper plan that has a $2.5k single/$5k family.    Do I need to talk to my HR to see if that would qualify?   Knowing my kids, if I switch to that plan they'll start hurting themselves and I'll be in your situation.   

We have a deductible, $3k/annual, which we have hit once. When my daughter was at St Jude's (so we didn't pay it). $25 / month cost, which goes towards the deductible. 

Yeah, I can't complain with a family of 7.

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1 hour ago, moleculo said:

while I'm here, I want to vent for a minute.  Just checking my 401(k) and I'm down about $7k from a couple of weeks ago.  Market fluctuation, right? nope.

Last year when business went bad, my company froze 401(k) match and like 1/2 the company got furloughed.  somehow that messed up our 401(k) balance and we failed a compliance test.  I don't really understand how or why, but about $3500 of my contribution was deemed "excessive", even though I put in my allowable $19.5k.  That amount was sent to me via check.  Another $3500 was forfeited - employee match and some gains.

So, basically I am being penalized because my company froze the match.  My allowable contributions for 2020 were actually $16k, not $19.5k.

I mean, it's better than being furloughed, and if this is the worst financial effect I see from COVID I am doing really well.  I don't mean to complain too much but damn...

Yup, its happened to me before.  I think you're talking about "safe harbor".  Basically you and all your big baller colleagues are contributing far more than all the poor folks in the company and the government don't like that.   Google it for a far better explanation.  

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1 hour ago, NutterButter said:

Yup, its happened to me before.  I think you're talking about "safe harbor".  Basically you and all your big baller colleagues are contributing far more than all the poor folks in the company and the government don't like that.   Google it for a far better explanation.  

We get notices of it potentially happening every year but it has never kicked in for us

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5 hours ago, moleculo said:

ok, I'm looking at some index funds that are mixed between stocks and bonds for good diversification.  The reason to do that is for protection in a downswing, right?  If the market tanks, you want to be in bonds and a good mix limits the downside (while also limiting the upside) - at least, that's my understanding of it all.

Well, we had a pretty bad downswing last year - roughly a year ago.  it seems to me that the S&P500 outperformed these funds even then.  I mean, maybe the bond funds did a tiny bit better, but really missed the boat climbing back out.

Am I better off just putting everything into a simple S&P 500 type index fund that has much better performance overall?  It seems to me that diversifying with bonds really limits the upside much more than the downside.

Forget the bonds.

Also looking at a 10 year horizon you don't need to be conservative.  Even if your balance dips by half this year, you will be ahead in 10 years.  Actually the market dropping helps you because your contributions buy more shares now that will be worth more later.  Maybe 2-3 years out I would look at bonds, but unless interest rates are up I would still want a dividend based stock fund.

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