Finance anyone?

[iwire]

i buy solid gold and buried in my backyard. Also I m invested heavily in ammos and ar-15

But seriously, I found it 529 college fund or stock that has dividends is the best. I am been real lucky in stock..have a healthy ROI

 

[Ivory]

Careful when choosing a financial adviser. They make their money pushing products that are not always the best choice. Many advisers charge upto ~3%. They use the S&P500 performance as a gauge to determine if they gave sound advisement or not. If they beat the performance of the S&P500 they say they did well. My advise for the long run is to do it your self. Invest in a mutual fund like the S&P500 index and save the 3% commission per year. Since the S&P500 is well diversified and used as a bench mark for performance, I think it is a no brainer just dump all your investment money into this index.

 

[knight1fox3]

KF, I wasn't trying to pick on you, just want to make sure people go into this with eyes wide open, the main point being financial advisers have very little legal obligation to you, so it's always a good idea to do your own homework. Which it sounds like you have done.

I will argue with your response a little bit though. "More qualified" is pretty subjective because it doesn't take all that much education to be a financial planner--obviously some planners have a lot of education and decades of experience, but some do not. I'd also argue in some cases against the idea the it's not worth your time. The answer to this really depends on how your adviser is paid. A lot of advisers (not all--and I'm not saying this is true in your case) are paid as a percentage of assets, such as 1% per year. 1% doesn't sound like much, but if you're starting with $100k, over 30 years that 1% could cost you $200k (the difference between 7% and 8% return). In that case spending a couple hours a month keeping tabs on your investments works out to $275/hour (fatty money!).

As for Money magazine, I agree it isn't the greatest publication out there. SmartMoney was a lot better, but it got sh!tcanned when Rupert Murdoch bought out the Wall Street Journal. However, again, the point of the article I mentioned was more about being cognizant of the risks than saying it's never a good idea to roll over a 401k. Heck, I wish I could roll my 401k into an IRA because IRAs offer a lot more investing options. And as you said, having multiple 401ks lying around can be a PITA. But the article was warning about advisers pushing people into rolling into an IRA with advising services that cost as much as 1.2% per year.

So what I was trying to say boils down to be wary and do your homework. In the end, everyone should do what they are happy with as long as they aren't getting gouged by their advisers. It sounds like you put a lot of work into finding an adviser you trust and the relationship works for you I think that's great! Other people like to take an active role in this stuff and I think that's great too--personally I'm passionate about investing (can you tell?) and I'm always pushing people around me to learn more. Kind of like doing taxes, I used to be intimidated by investing but in the end it doesn't have to be very difficult and can be rewarding--if that's where your interests lie.

It was difficult to determine if the comments were general or specifically directed. Understandable now. I do appreciate the insight and suggestions you have to offer on this topic. But obviously this was something that both LadyFox and I spent quite a bit of time researching. And most of what I read on my own basically referenced what you indicated that it's hard to find an adviser who doesn't work for themselves. I also agree that perhaps they aren't necessarily more qualified, but they do spend a good deal more with certain things than I would have time for. But it certainly sounds like this is something you know very well. Perhaps I should send you our portfolio to see how we measure up. What's your going rate these days?

Retirement/investing is worth my time, unfortunately I'm plain out of it. It also doesn't help that finance doesn't necessarily interest me as much as say technology (or engineering for that matter). So my "spare" time is spent researching components and configurations so I can provide the best parts and options for my clients. Perhaps I'll have more spare time for another "hobby" once grad school is done with.

 

[Krakosky]

At my new job, I can select to have my retirement contribution either before tax, into a Roth 401k, after tax or a combination of these three. At my last 2 jobs I was having it taken out before taxes.

Thoughts?

The company will match 50% up to 8%. Previously I was putting in 10%. Is it worth it to put in greater than the 8% even tho it won't be matched?

 

[mudpuppy]

Retirement/investing is worth my time, unfortunately I'm plain out of it. It also doesn't help that finance doesn't necessarily interest me as much as say technology (or engineering for that matter). So my "spare" time is spent researching components and configurations so I can provide the best parts and options for my clients. Perhaps I'll have more spare time for another "hobby" once grad school is done with.

Dude, not to mention a kid and a business, oh and a day job lol.

Perhaps I should send you our portfolio to see how we measure up. What's your going rate these days?

LOL, I don't charge. But on the other hand figuring out what investments are suitable for someone else takes some time to get to know them as far as their goals and risk tolerance. Without that, any advice I'd have would be biased toward my own tendencies.

At my new job, I can select to have my retirement contribution either before tax, into a Roth 401k, after tax or a combination of these three. At my last 2 jobs I was having it taken out before taxes.

Thoughts?

The company will match 50% up to 8%. Previously I was putting in 10%. Is it worth it to put in greater than the 8% even tho it won't be matched?

I wouldn't recommend after tax contributions to your 401k. This could be an option if you've already maxed out your regular or Roth contributions, but it may be better to open a brokerage account because you have many more options that way. In both these cases you're not getting any tax advantages and your tax filing gets a lot more complicated.

As for traditional versus Roth 401k contributions, that's a more difficult decision. With traditional accounts you get a tax deduction for your contributions, but you have to pay tax when you withdraw the money when you retire. With a Roth, you don't get the tax deduction now, but you never pay tax on that money again. So it partially depends on your tax situation now versus what you think it will be after you retire. So if you're in a high tax bracket now but will not be when you retire, then the traditional is better, or if you plan to spend lots of money in retirement the Roth may be better. The Roth has an advantage if you plan to max out your contributions because it effectively lets you save more than the traditional and for this reason I put all my contributions in the Roth. Another advantage of the Roth is you can withdraw your contributions with no taxes or penalty after the account has been open 5 years, which can be handy as an ultimate emergency backup plan.

In the end, it might be a good idea to split your contributions between the Roth and traditional, as that will give you the greatest flexibility to control your taxes when you're retired. Just make sure you're not bumping yourself into a higher tax bracket.

As for your last question, I agree with RG that you should always put away enough to get your company match. Otherwise you're throwing away free money. But beyond that it's never a bad idea to save more!* Personally, after hitting the company match I like to put money into a Roth IRA because it gives you the ability to invest in anything you want instead of the few options available in the 401k--stocks, bonds, mutual funds, commodities, real estate, pretty much anything you can own, you can invest in an IRA. However, if you don't have the investing bug like I do and you don't want to spend the time to figure out where to invest an IRA then contributing more to the 401k is certainly a good idea.

*I will add, though, there are times when it doesn't make sense to invest more in retirement. Mainly if you have high-rate debt such as credit cards. It's better to pay that off before saving more. Or if you don't have enough emergency cash saved to get by if you lose your job.

 

[ALBin517]

I have only been putting 4.5% into my 401 but my employer (gubment) matches with 9.5% so it's a no-lose. Most of that cash goes into a Milestone 2035 fund which is on pace to earn about 20% this year.

I feel like I should improve my Long Term Disability though. Our union contract includes LTD but the amount has not increased in decades so it has to be insufficient. The main problem with LTD seems to be that most insurance agents don't sell it.

 

[Supe]

X2 on Mudpuppy's comments. My only concern with the Roths are talks of whether the gubment will change the taxation rules and eventually hit you again upon withdrawal, but that is just hearsay.

 

[snickerd3]

we do it ourselfs. We have looked into advisors but locally our options are basically our old neighbor. Granted he has done very well for himself but the fees ameriprise charges are sort outragous in our opinion....and then there is the separation of business and friends.

 

[kevo_55]

We use Vanguard for our non-work financial stuff.

I am not too savvy financial-wise but Mrs Kevo is. I will admit, we do get some good returns with the funds we use at Vanguard.

 

[YMZ PE]

X2 on Mudpuppy's comments. My only concern with the Roths are talks of whether the gubment will change the taxation rules and eventually hit you again upon withdrawal, but that is just hearsay.

This sounds just a little paranoid.

 

[knight1fox3]

As for your last question, I agree with RG that you should always put away enough to get your company match. Otherwise you're throwing away free money. But beyond that it's never a bad idea to save more!* Personally, after hitting the company match I like to put money into a Roth IRA because it gives you the ability to invest in anything you want instead of the few options available in the 401k--stocks, bonds, mutual funds, commodities, real estate, pretty much anything you can own, you can invest in an IRA. However, if you don't have the investing bug like I do and you don't want to spend the time to figure out where to invest an IRA then contributing more to the 401k is certainly a good idea.

I believe the goal for your 401k is to maximize your annual contribution of $17500, correct? After that you look to other investment options, yes?

 

[Road Guy]

^- thats our goal, take advantage of the pre tax and then do other investments..

 

[ktulu]

+1 for Vanguard.

 

[mudpuppy]

As for your last question, I agree with RG that you should always put away enough to get your company match. Otherwise you're throwing away free money. But beyond that it's never a bad idea to save more!* Personally, after hitting the company match I like to put money into a Roth IRA because it gives you the ability to invest in anything you want instead of the few options available in the 401k--stocks, bonds, mutual funds, commodities, real estate, pretty much anything you can own, you can invest in an IRA. However, if you don't have the investing bug like I do and you don't want to spend the time to figure out where to invest an IRA then contributing more to the 401k is certainly a good idea.

I believe the goal for your 401k is to maximize your annual contribution of $17500, correct? After that you look to other investment options, yes?

Yes and no. Maximizing your 401k contributions isn't a bad idea, but a Roth IRA gives you the same benefits as a Roth 401k with the added benefit of being able to invest in anything you want instead of the handful of options your employer chooses for you in the 401k. So if you're a do-it-yourselfer the IRA option gives you a lot more flexibility without giving up anything (unless you're a couple with a taxable income over $181k/year, then you can't contribute to a Roth IRA).

So for those who want to do the work to open an IRA I recommend:

Put enough in your 401k to get the company match

Then maximize your Roth IRA ($5500/year per person)

Then maximize your 401k contribution ($17500)

Then look into taxable accounts

If you don't want to bother with selecting funds, though, there's nothing wrong with maximizing your 401k first before going into the IRA--you don't lose anything either way, it's just the IRA is more flexible.

 

[knight1fox3]

Ok thanks. For now (as mentioned above...LOL) we're going for the max 401k contribution. I believe I'm currently at 12% and LF is 8 or 10%.

 

[Road Guy]

I have always had really good options in the 401K's that I have had, basically the same depth of choices provided by my vanguard IRA's. Not sure if they were just tied to bigger companies, but we noticed most of them offer (not the exact funds) but very similar to what they offer in their IRA's

 

[mudpuppy]

Some 401ks are better than others. If you're happy with your 401k then that's great. But IRAs still offer more options--if you open an IRA with a brokerage (say E-trade or Scottrade) you can buy individual stocks or individual bonds. You can buy gold bars or pork bellies or even buy a house in an IRA as an investment. Not saying that's a great idea, but it's possible. Of course, not all IRAs offer these options, but the tax law allows IRAs to offer these options.

 

[snickerd3]

^ my inlaws are looking to buy farmland with their IRAs, but they haven't quite grasped the fact that the GOOD farmland isn't going to be on the market long enough for them to plan a visit to it before they pull the trigger.

 

[Road Guy]

they were giving away free land in Kansas last time I drove through there...sign said it had water and util. access..

 

[MetsFan]

I'm glad this thread has sparked some good discussions. I hope it becomes an outlet where we can share our ideas all the way into retirement

I'm a big fan of Bogle--that guy is a legend. It's hard to go wrong with his ideas about indexing and keeping costs low.

If you're interested in selecting individual stocks, I'd recommend reading Stocks for the Long Run by Ben Graham--it's pretty much the Bible of value investing. Also this may sound like a funny recommendation, but "Starting and Running a Profitable Investment Club" has some really good information about how to analyze stock fundamentals using publicly available data (it also has several chapters on how to set up an investment club which you could ignore). If you can get access to it, the Value Line Investment survey has all the data you need to do fundamental analysis, and they also provide their own analysis and ratings. Subscriptions to Value Line are expensive, but most libraries carry it (and some offer access online).

I only keep about 10% of my money (fun money) in individual stocks. My biggest winners have been GOOG and UA (Under Armour) which have doubled to tripled. My worst pick was YRCW (Yellow, Roadway, Conway trucking company) which went bankrupt, and GE, which I bought soon before the financial crash and goes to show that no matter how safe a stock looks it can still drop in half.

In the near term I plan to take a look at HD (like RG) and Lowe's and I'm thinking of buying more Qualcomm. I'm also thinking about selling MCD. Remember that deciding when to sell is just as important (or more) than when to buy.

Thanks for the recommendations. Some others I have on the list are A Random Walk Down Wall Street, The Richest Man in Babylon, and The Millionaire Next Door. I'm waiting for them to be returned to the library since I won't get rich slowly by spending money on something I'm probably only going to read once.

I've only just started investing in stocks and so only have about 5% into it. I figure that's enough for now until I learn the ins and outs of trading.

So for those who want to do the work to open an IRA I recommend:

Put enough in your 401k to get the company match

Then maximize your Roth IRA ($5500/year per person)

Then maximize your 401k contribution ($17500)

Then look into taxable accounts

If you don't want to bother with selecting funds, though, there's nothing wrong with maximizing your 401k first before going into the IRA--you don't lose anything either way, it's just the IRA is more flexible.

Is there a way to contribute to a 401K that's not by your company? Ideally, I would contribute to the match, then maximize my Roth IRA, then contribute up to the $17,500 using Vanguard.