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Yep - Matsuki nailed it. Moving this and getting into ETFs/funds with .1% fees instead of 1% fees is a really good thing.
. That and their reps suck.
Fidelity says they're lower, but really at that point the gains are tiny. Expense ratios in my 401k are at least .5% higher than that.
Christ you're right. I have an old 401k with fidelity and I pay .045% for one of my index funds; .07% for the other.
Higher risk.
401k and related contributions reduce your AGI. I am in a similar situation where my bonus can move me beyond AGI limits for a Roth. So I just heavily contribute to my 401k until bonuses are paid mid-year, then decide if I can make a Roth contribution or do the backdoor.
If you're comparing a traditional and a Roth IRA, your current tax bracket along with your projected retirement tax bracket are more important than your income. However, the income needs to be watched in regards to what you able to do. Some people can only do certain contributions based on the income limits.
Thanks. I expect my tax bracket to be lower in retirement and I make over the amount allowable to contribute to a Roth. So does it make sense to contribute to a traditional? Its my understanding at a certain income level you lose the tax benefits for the traditional IRA as well. Is that correct?
If you contribute to a 401k, I don't believe you can contribute to a deductible traditional. You can contribute to a non-deductible traditional. So you're best option is to contribute to the non-deductible traditional and then back door it into the roth.
When I was close I'd just wait until the following year to see how all my taxes shook out. YOu can contribute for 2017 until april of 2018, just hang tight
It depends on your income. If married and you file jointly if you are under $100k you can contribute to your 401k and also make a deductible IRA contribution. If single, income must be under $62k.
If you are over the limits, do a backdoor Roth. Your earnings would not be taxable and you don't have to do required minimum distributions.
Not a dumb question at all. If you're on the very low end of the income scale and don't see that you'll be at a higher rate in retirement, then maybe (even then a tax sheltered account avoid cap gains taxes if your income grows to the point you get assessed those). This higher in income you are the more effective tax sheltered accounts are. In fact, you're significantly better off investing in a 401k and then paying the 10% penalty to take it out then just leaving it in taxable. If you include the possibility of FIRE and at that point shifting monies from an rollover IRA to a Roth IRA at very low tax rates it makes huge sense to pack the 401k/IRA full now.
I'm 36 and am 100% in an S&P index. With 20-25+ years until retirement, I see no reason to be in bonds.
Oh #### yeah. At your age - no bonds (or very low %).
You've done just fine with this allocation. There is a very good reason not to be all stocks - it's nowhere near optimal. Read this article. In particular look at the scatter charts nearer the bottom and the spread of possibilities of returns for 100% equity portfolios. Then have a look at specific portfolios - Total Stock Market and Merriman Ultimate, for example. Then ask yourself - do you feel comfortable to have a run of 13 years of below zero returns? That's been documented with TSM. Merriman - 5 years. And you're only giving up .4% average return per year to get that. Diversification is your most powerful tool; there is no reason for anyone to have a 100% equity portfolio..Long Ball Larry said:
so from that first article, it says:
Don't let Sand scare you off. He tell you something about the Japan stock market. 100% for me as well until I'm 10 years out.
I keep a good size cash reserve in a CD in case of emergency then go mostly stocks as I'm a long ways out from retirement as well. Although sending a check to Binky the Doormat is also can't miss.
I was kidding.
agree, sounds like a bad idea. I was serious, though I would never say that allocation was wrong, I would say that it is more about an individual's level of risk tolerance and where they in relation to when they need the money and what their goals are. One of the first things an advisor is going to do is have to take a risk tolerance test (hopefully an in-depth one) as a part of your initial assessment.
Bogleheads board is great info, must read for anyone that hasn't checked it out yet.
I have focused on saving and investing since my early 30s - and have made plenty of mistakes. I have had several planners/advisors over the years and read lots of books - later on, I got hooked into the boglehead site and have read a lot there (including the books). I would also suggest looking into Firecalc - a retirement planning tool that is free and allows for a number of detailed scenarios - it then runs Monte Carlo simulations based on what you have set up.
BTW - I am retired, 58, and at a 52% equities / 41% bonds / 7% cash split across what we currently have. If I was still working I would have a little higher in equities and lower amount in cash.
Below is a paste from the Bogelhead boards that describes the historical return difference between a 100% equities & an 80%-20% equities/bonds portfolio.
Right, someone might feel this way if volatility were measured on an annual basis, I'm arguing that if it were measured on a 10 year basis, the volatility increase of 80% vs 100% would be negligibly small. In the mean time, you are significantly sacrificing return by going from 100% equities to 80% equities. https://personal.vanguard.com/us/insigh ... llocations 100% Stocks has an historical return of 9.9% 80/20 Stocks/Bonds has an historical return of 9.4% If you are 20 years old and plan on retiring at 65, a $10,000 investment in a Roth IRA (so neglect taxes) at 9.9% grows to $699,000. That same investment at 9.4% grows to $569,000. A $130,000 difference on only a $10,000 investment.
Have you ever worked with the Firecalc model? Bookmark that #####.
Under summary -> Statements, put in a date range and it will tell you how you did. 14.4% last year. Not too shabby. One last time, thanks obama.
This looks to be very generous. I'd be sure to double check with other calculators (firecalc being one).
I second this - started reading it about a year ago and it has changed the way I invest.
I skim the general forum a few days a week......always great info on a wide spectrum of things. While I'm not quite as frugal as some on there it's a great guide.
Same as you, try to skim it 4-5 times per week. There are some real thrifty people there. And rich people.I skim the general forum a few days a week......always great info on a wide spectrum of things. While I'm not quite as frugal as some on there it's a great guide.
Anyone that hasnt give it a shot bogleheads.org
Not debating it since I'm an idiot about this stuff, but what do you mean by generous? I assumed the breakdown you get was all based on the math you put in. Is that not right?
I think it calculates too high of balances than it should. In other words, it's non-conservative. I'd run your same case on firecalc and see what you get.
An example of non-conservative vs conservative is using the historical rate of return from the stock market vs using a percent or even two less than that just to be on the safe side. That will make a huge difference on projections.
Yep, it's amazing what 2% annually will do. But that's an advantage of being able to adjust it yourself. It's also my biggest gripe about Dave Ramsey (he uses 12% in his calculations)
