Official Investing Thread

Discussion in 'The Mainboard' started by Joe Louis, Jul 12, 2010.

  1. Jimmy the Saint

    Jimmy the Saint The future is a benevolent black hole
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    What kind of bonds are you in for that? I have a taxable account I started to throw money into on a regular basis since I have no debt and an emergency fund set aside. Haven't ventured into bonds with it, most of the account is in various ETFs. However, I ultimately have a similar goal for it to be growth and income, most likely to use towards a down payment years down the road.
     
    Rabid likes this.
  2. tmbrules

    tmbrules Make America Great Again!
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    Yep.

    The piece of mind of not worrying about your money while you are overseas would be worth it to me to not have it invested. Checking account, savings account, money market .... whatever .... it wont make too much of a difference.
     
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  3. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    BamaNug

    I agree with tmbrules and Swim Cantore. Open up a high interest savings account and park your money there. I use Ally's savings with 1% APY.

    One question, were your contributions to your 401k post tax? If so, you'll probably want to split up your 401k and roll it over to a traditional and a Roth IRA account. This is what I did when I left my last employer. If you don't split it up and put it all in a Roth, you will have to pay income taxes on your employer's non-taxed contributions.

    Once the money is a in a Roth IRA, you might be able to withdraw your contributions tax/penalty free if you need to but it would be wise to leave it there.
     
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  4. Nug

    Nug MexicanNug
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    This is my primary concern.

    Thanks brahs
     
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  5. Bo Pelinis

    Donor TMB OG
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    http://content.schwab.com/web/retai...matchtype=e&network=g&devicemodel=&placement=

    A brokerage account or a savings won't really matter. You can easily link your savings/checking to your brokerage and move the money over digitally. I don't think it will make much difference no matter what you do in that short time frame.
     
    High Cotton likes this.
  6. pockets

    pockets Lesser-Known Member
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    every person's situation is different and I wouldn't give advice to a single person without a lot of information, but just about everyone needs debt.
     
    tmbrules likes this.
  7. Rabid

    Rabid Fan of: DQ Treats
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    Muni bond fund. That decision should be based on your marginal tax rate though. Otherwise some combination of short-term and intermediate-term (or core) bond funds would be appropriate depending on the timeframe of when you think you may use it.
     
  8. je ne suis pas ici

    je ne suis pas ici Well-Known Member
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    fair enough, but the typical TMB'r of late 20s early 30s generally professional background and what not means we can be a bit more aggressive than the dude pulling 36k down at the plant
     
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  9. Dukes

    Dukes flying ain't nothing just fallin' with style
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    Are you guys maxing out your 401k and Roth IRA before contributing into a taxable account or not maxing but using the taxable accounts to grow money for future purchases/etc..?
     
  10. pockets

    pockets Lesser-Known Member
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    No doubt. His allocation model should be tilted higher towards equities, but you don't want a standard deviation in the high twenties.

    Just a few years ago the 10Y had an annualized return of 17% whereas emerging markets were -18%. Point being, nobody knows what will happen five years from now. You need some diversification. Then, let it ride and rebalance when needed.
     
  11. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    the moderate/agressive expense ratio is 1.1% fee.
    the black rock s&p 500 fee is 0.36%
    appears most vanguard index funds are in the 0.15% expense percentage.

    getting raped. they don't offer vanguard but my rep says shes about to have it available. best bet for now is black rock i suppose
     
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  12. Gallant Knight

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    i'm not putting a single dollar into any retirement accounts because you can't use them as collateral.

    but i think the most prevalent advice is to max out the roth up to what your employer matches, then max out a roth, and then party because you've saved quite a bit of ched.
     
  13. tmbrules

    tmbrules Make America Great Again!
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    I almost soley invest in IRA and other tax advantaged accounts (529 plans). If I have left over money I usually pay down my mortgage. Its been a long time since 2008, but I learned a lot during that time and it is nice during down turns to have the security of some of your money. I think a lot of that gets lost in the last 7-8 years since the market has been ripping higher. It wont last forever, just make sure you aren't over extended and have some powder dry for the downturn.

    A lot of these decisions are based on personal situations (my job for me) and are a matter of personal preference.
     
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  14. High Cotton

    High Cotton Where does this fall in our Christian walk?
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    https://www.schwab.com/public/schwab/nn/m/lowercosts.html

    And even looks like they're lowering costs as of 3/1.
     
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  15. leroi

    leroi -
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    your approach to all this just totally baffles me

    I have like, maybe 10 choices by my employer. I pick 4 of them and the highest expense ratio I pay is 0.09%. Your S&P 500 expense ratios are 10 times greater than mine.

    What kind of clusterfuck are you involved with, where you have a "Rep" and this person gives you 20 options that are all overpriced? Did you actually choose this type of setup, or are your choices limited by your employer? And who is this "rep" giving you advice?
     
    #7515 leroi, Feb 14, 2017
    Last edited: Feb 14, 2017
  16. Nug

    Nug MexicanNug
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    Couple follow-up questions:

    -Is there any appreciable difference as to when I transfer my current 401k? My next job will also have a 401k, and it seems that the best situation for me personally to just transfer this $25K to my new firm's 401K plan rather than open up a separate IRA (see below). Could I simply let my current 401K stay where it is the 3-4 months I'm gone, and then once I secure employment transfer it all to my new employer's 401k? Would there be any penalty involved?

    -I say the above because I will likely use a portion of my house proceeds to open an IRA (after a down payment on a house). Based on my research and the above responses re: windfall money:
    • put in Money Market/Schwab brokerage account while I'm overseas
    • have easy and immediate access to it once I relocate to Seattle
    • after a down payment is made, take the rest and open an IRA/put the rest somewhere (I'll likely get a guy once I get out there, need to research and learn more, honestly)
    • while still able to roll over the $$ from my previous 401k
     
  17. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Regarding penalties/differences, I wouldn't think so. You'd still be exposed to the market so if it takes a dip/rise your investment accounts would likely dip/rise in a similar manner regardless of who holds your 401k. If you could somehow time the market (you won't) before it drops and shift your portfolio to be less volatile, that would be a benefit.

    Why not just make the IRA accounts now? The rollover funds do not count against your yearly contribution limit. And you could invest in something like a Vanguard ETF and probably get lower fees than leaving your money in the 401k.

    The stuff you're talking about is more like Advanced Personal Finance rather than proper Investing, IMO. You should be able to pick up most of the basics after a week of casual research.
     
    #7517 Name P. Redacted, Feb 14, 2017
    Last edited: Feb 14, 2017
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  18. Bo Pelinis

    Donor TMB OG
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    I moved my previous 401k into a rollover only to have more control over the funds and pick funds that have a lower expense ratio. Do you know what you're invested in currently? As in, are you in a mutual fund or actively managed fund because those usually have higher fees.
     
  19. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    we have a merrill lynch lady that comes by the office like once a year. she sits down with every employee here and basically just tells you to do moderate or etc depending on your age. everyone just does what she tells them to do. and they manage our 401k and they have limited options in terms of different index funds etc you can put your money in. i dont think that is all that rare. i'm the only one that is actually questioning things and looking into it.
     
    tmbrules likes this.
  20. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    0.09% is actually pretty damn low even as far as I can tell. i don't think that's representative of average expense ratios.

    "The current average expense ratio for actively managed mutual funds is between 0.5% and 1.0% and typically goes no higher than 2.5%, although some fund ratios have gone as high as nearly 20%. For passive index funds, the typical ratio is closer to 0.25%. Expenses can vary significantly between different types of funds."
     
  21. Bo Pelinis

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    Average doesn't really matter that much. There are some that are quite high but you can find great funds with super low expense ratios. For example, I have invested quite a bit in SCHB in one account. It's provided a very solid return with a .03% expense ratio and the last dividend payment was .3513/share. It also has no trade fee.

    I also have some from iShares with a .03% ratio, as well.

    Anything over 1% is highway robbery to me but your options may be limited by your employer so idk.
     
  22. Arkadin

    Arkadin inefficiently efficent and unclearly clear
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    Actively managed funds have higher fees to pay all the people who put their hands on it. Not all funds are actively managed. Yours is, your fees are high, and your set up sucks
     
  23. Gallant Knight

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    only thing positive about his setup is that his employer is matching contributions.
     
  24. leroi

    leroi -
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    ok, so these high-fee funds are partly because you are limited...

    ...but also partly because you're choosing to invest in actively managed funds.

    why, may i ask, are you investing in actively managed funds?
     
  25. tmbrules

    tmbrules Make America Great Again!
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    Actively managed funds tend to outperform index funds in down markets. Its hard to see this the past 7-8 years.
     
  26. Bo Pelinis

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    But nothing outperforms the market during the course of a working life, if we're talking retirement funds.
     
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  27. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    i'm about to get out of the high fee funds damn it, that is the point of a bunch of my last posts. i'm trying to get into low fee index and large cap funds. i have limited options because of the company my firm employs to manage our 401k. i need to continue using the employers plan though because they match at 5%
     
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  28. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    i'm probably going to do rabids aggressive approach he laid out above. i just have to find a low expense ratio bond fund , and figure out what i'm going to do for 10% alternative. I started to look into the options that would allow it but got busy at work.
    to summarize he said:
    10% bond
    35% large cap
    25% small/mid cap
    20% international
    10% alternative
     
  29. leroi

    leroi -
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    a. citation needed

    b. so what? "outperform in down markets" is not an indication they offer greater risk-adjusted returns over time.
     
  30. tmbrules

    tmbrules Make America Great Again!
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    I don't subscribe to that at all.
     
  31. Rabid

    Rabid Fan of: DQ Treats
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    If your balance is more than $5k, you can leave the 401k at the former employer indefinitely and there shouldn't any penalty or incremental fees for doing so. It would be up to you when you roll it to a new employers 401k or IRA.

    I was in your shoes about 10 years ago. I chose to roll my balance in to an IRA so that I could have more control over the fund choices. That is a good option. However, my one word of caution is that because I did that I am limited on my ability of doing a backdoor Roth IRA (because I would have to pay taxes on the full amount of the IRA being rolled over).

    Yes, I max out my 401k as well as a HSA. I can't do a Roth and as just mentioned above I can't really do a backdoor Roth either because of having to pay taxes to roll over the full IRA.

    I'm very in favor of maxing out all tax deferred accounts but it isn't a terrible idea for somebody that can't do that to have taxable investments as well. I went through my 20s being asset rich (in tax deferred accounts) but cash poor. Aside from having 3-6 months of expenses as an emergency fund people should consider potential future expenses that a tax deferred account can't (or shouldn't) help you with---wedding, down-payment on a home, car, etc.
     
    #7531 Rabid, Feb 14, 2017
    Last edited: Feb 14, 2017
  32. Bo Pelinis

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    You don't have to subscribe to that but it's true.
     
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  33. Rabid

    Rabid Fan of: DQ Treats
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    Lord Abbett is a quality bond manager. I don't know what the fees on those funds are but bond funds tend to charge lower fees than stock funds and the reality of the bond market is you need a higher degree of active management.
     
  34. tmbrules

    tmbrules Make America Great Again!
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    So you don't think there is anyway that one can beat the market over the long term?
     
  35. Bo Pelinis

    Donor TMB OG
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    http://www.marketwatch.com/story/almost-no-one-can-beat-the-market-2013-10-25

     
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  36. Bo Pelinis

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    Statistically, it is nearly impossible over the course of a working life. Shorter term? Sure. But anything beyond 10 years is just gambling that they'll get it right.
     
    leroi likes this.
  37. Hail Southern

    Hail Southern GATA Eagles!
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    Anyone thinking this is a time to stock up on cash with the market getting so high?
     
  38. tmbrules

    tmbrules Make America Great Again!
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    Do a little looking around and you can see it happening all the time. Might want to check your assumptions in that model.
     
  39. JohnnyChimpo

    JohnnyChimpo This man, Lenny Pepperidge, AKA Lenny the Pep...
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    The point is that on average, low cost index funds trounce higher-cost actively managed fund returns over time

    obviously there are exceptions
     
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  40. tmbrules

    tmbrules Make America Great Again!
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    On average I agree. That is a far different than saying its statistically impossible.
     
  41. Bo Pelinis

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    Did you read that article I posted? .6% beat the market consistently. That is "statistically indistinguishable from zero." For statistical purposes, I am absolutely not wrong and it's foolish to assume otherwise. I thought this was common knowledge.
     
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  42. tmbrules

    tmbrules Make America Great Again!
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    Assumptions made in this article:
    It’s not just that true stock-picking ability is as rare as, say, being a violin virtuoso or throwing a 95-mile-an-hour fastball; it’s that the profits from such talent are eaten up by trading costs or management fees.

    I can trade as much as I want in my retirement account free of cost (while maintaining a relatively minimal amount of money in there.) 2) I don't pay any management fees.

    There are certainly people who can consistently beat the market if you take the assumptions away.
     
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  43. Bo Pelinis

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    You could be as smart as these guys to be sure but it is nearly impossible, even excluding fees.

    https://www.google.com/amp/www.barr...s-who-consistently-beat-the-market-1452318197
     
  44. Bo Pelinis

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    But the point is it is the best strategy for nearly every investor to park their retirement money in super low cost funds that track the market and forget that shit until retirement.
     
  45. tmbrules

    tmbrules Make America Great Again!
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    I don't disagree with you. For the average investor that is still the best strategy.

    However, I think that your statement "But nothing outperforms the market during the course of a working life, if we're talking retirement funds." was an overly broad statement that is not true. Ive read all those articles in depth years ago. There are a lot of assumptions made in them. Take away a lot of the assumptions (which is easy to do) and your results will tell a much different story. That's all im saying.

    http://www.forbes.com/sites/brianportnoy/2014/04/28/buffets-bad-advice/#4863ba4d7194
     
    #7545 tmbrules, Feb 14, 2017
    Last edited: Feb 14, 2017
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  46. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    the lord abbot high yield r2 is 1.34% expense ratio. thinking about putting 10% of my assetts into that as my bond holdings with no other bond holdings. sound good?
     
  47. tmbrules

    tmbrules Make America Great Again!
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    Only if you have no other choices that have lower fees. 1.34% is still a very high fee.
     
  48. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    pisses me off that the lowest fee large cap/index fund is still 0.36%. they are robbing us blind. i wonder if i raise hell if they will offer a 0.05%ish large cap or index fund. i can't afford to just drop out because the 5% matching is clutch.
     
  49. tmbrules

    tmbrules Make America Great Again!
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    Yeah, if it was me I would just drop all the money into the large cap / index fund and then invest in other things with lower fees outside of your work account.

    Edit: .35% isn't THAT bad
     
  50. RJF-GUMP

    RJF-GUMP Daubert Qualified in Cooler Thermodynamics
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    they don't have a single bond fund that is sub 1% expense ratio. the lowest is 1.0% short duration fund that doesn't have exposure to high yield.