The Retirement Planning/ Investment/ Savings Thread (1 Viewer)

[Burke]

Probably the latter. Either way, it's kind of a dumb question. I can likely just find out when I do it.

A better question is this: could someone point me to a book/blog/something that could provide me more info on asset allocation

 

[warma]

Thanks guys. Yeah - for sure Vanguard ETF. So if I were to move my accounts, is it pretty easy to set up asset allocation?

Just for example let's say I want my portfolio to look like this:
-30% US stocks, 30% international stocks, 40% US Bonds

Are there cookie-cutter plans that have that ratio or would I just allocate x% of the account to a different ETF?

I haven’t seen that allocation, maybe look at a lifetime fund? They might have an allocation like that.

Back when I was in the military, I set up my TSP with something similar on the advice of my financial advisor. Sadly, the international portion hasn’t been doing as well. Who knows about the future.

Edit: If you aren’t looking for a specific mix, then a lifetime fund (see above and below) might be something to look at if you want one-stop investing.

 

[Burke]

It's just an example...ill edit my post to include that

 

[ekricket]

You could start an account at Vanguard quite easily, or Fidelity or others I’m sure. I happen to use Vanguard and I have rolled another IRA and an old 401k in there over the years. I would highly recommend Vanguard and have been a boring index fund guy most of my investing life. I’m 53 and I think it has served us pretty well. I won’t come out on top of the investing heap, but we sure ain’t at the bottom either.

We used Vanguard our whole working career. They have some “target retirement dates” funds. So if you are going to retire I 2030 you buy into the 2030 fund and they manage your mix appropriately as the years roll on. I staggered mine through some of this, buying into three different ones to get a different mix before consolidating into “stable value” when i retired. We live off of mine so we “stabilized” part of my investment to live off of but the rest of mine and Liz’s is still scattered around earning.

Probably the latter. Either way, it's kind of a dumb question. I can likely just find out when I do it.

A better question is this: could someone point me to a book/blog/something that could provide me more info on asset allocation

 

[Kidsthesedays]

What are ways to contribute to a roth IRA if you don't have a taxable income?

 

[Chile85]

@mike32 I use Vanguard and also fully support moving your retirement accounts there. You always want to control fees paid and NW Mutual is surely making money off of their high fee investment options. Vanguards ETFs have extremely low fees and I would highly suggest using their ETFs to suit your strategy. As far as asset allocations, you should be able to find a strategy fairly easy based on your age and risk tolerance. You'll be in once per year or more to drop your funds into the account, and that's a good time to check your ratios and rebalance your investments as necessary. Their platform is easy to use and you won't have any issues opening an account and getting things transferred!

 

[Chile85]

What are ways to contribute to a roth IRA if you don't have a taxable income?

I believe that you can only contribute if you have earned income. There may be ways to get creative about showing earned income, but that's worth discussing with an advisor or accountant.

 

[Chile85]

Vanguard ETF s that I utilize in my portfolios:
VOO - Vanguard S&P 500 ETF
VT - Vanguard Total World Stock ETF
VTV - Vanguard Value ETF
VCLT - Vanguard Long-Term Corporate Bond ETF
EDV - Vanguard Extended Duration Treasury Index ETF

 

[gopherblue]

Thanks guys. Yeah - for sure Vanguard ETF. So if I were to move my accounts, is it pretty easy to set up asset allocation?

Just for example let's say I want my portfolio to look like this:
-30% US stocks, 30% international stocks, 40% US Bonds (this is purely an example)

Are there cookie-cutter plans that have that ratio or would I just allocate x% of the account to a different ETF?

Yes, there are. There are also “target” retirement date funds that do the same. But tbh, I don’t bother with all that. Just roughly allocate it according to your preferences and check it every so often. Depending on your age, I’d be more aggressive in equities vs bonds.

 

[ReallyGoodUsername]

Yes, there are. There are also “target” retirement date funds that do the same. But tbh, I don’t bother with all that. Just roughly allocate it according to your preferences and check it every so often. Depending on your age, I’d be more aggressive in equities vs bonds.

This. If you don’t feel comfortable about doing it yourself or think you may get lazy about it then one of the target funds works just fine. But it’s also something most people can spend a few hours a year to update/tweak and save yourself a literal boat load of money over your lifetime.

 

[Poker Zombie]

Like Elliot points out, there is a "standard" for asset allocation. It used to be 100 - your age = % to keep as cash or bonds.

A more important factor is risk tolerance. Stocks will fluctuate more than bonds, and cash will consistently lose a little ground to inflation. So the real question is how much do you have and will you need? The more that you have that you aren't going to tap into soon (say... the next 5 years), the more you can risk.

Asset allocation is like a poker tournament. When you have a bigger stack, you can loosen up the range and take some big swings (stocks). You may lose more with that suited one-off, but it can also reap the biggest profits. If your stack is short, you have to play premium only (bonds). They aren't going to pay as much, but they will keep you going. Finally, if you have very little just before the bubble, you can just lock down (cash). You won't be rich, and the blinds (inflation) will keep chipping away at your stack, but you can predict the timing.

For each individual, the stack sizes and ranges vary, based on tolerance.

 

[Highli99]

We used Vanguard our whole working career. They have some “target retirement dates” funds. So if you are going to retire I 2030 you buy into the 2030 fund and they manage your mix appropriately as the years roll on

This

 

[gopherblue]

Like Elliot points out, there is a "standard" for asset allocation. It used to be 100 - your age = % to keep as cash or bonds.

A more important factor is risk tolerance. Stocks will fluctuate more than bonds, and cash will consistently lose a little ground to inflation. So the real question is how much do you have and will you need? The more that you have that you aren't going to tap into soon (say... the next 5 years), the more you can risk.

Asset allocation is like a poker tournament. When you have a bigger stack, you can loosen up the range and take some big swings (stocks). You may lose more with that suited one-off, but it can also reap the biggest profits. If your stack is short, you have to play premium only (bonds). They aren't going to pay as much, but they will keep you going. Finally, if you have very little just before the bubble, you can just lock down (cash). You won't be rich, and the blinds (inflation) will keep chipping away at your stack, but you can predict the timing.

For each individual, the stack sizes and ranges vary, based on tolerance.

This is probably the most cogent and on-point analysis of the issues related to personal finance/retirement planning.

(And despite misspelling my name. )

 

[warma]

Like Elliot points out, there is a "standard" for asset allocation. It used to be 100 - your age = % to keep as cash or bonds.

I think the formula is opposite that. The older you are, the more certainty (cash/bonds) you want.

The more that you have that you aren't going to tap into soon (say... the next 5 years), the more you can risk.

Absolutely. If you have a need for cash in the next 5 years (e.g., house down payment, annual retirement income), the stock market (especially now) is not the best place to park it. Wild swings could see the money you need vaporize right before you need it.

 

[Darson]

I would use a rule of thumb for bonds/equities of 100% equities when you're 25 and 50:50 when you're retired. Although according to that calculation I should be 25% bonds at my age and I'm more like 10%. A lot depends on when you plan or retiring (or really how long you plan on living after retiring).

There's a forum on bogleheads.org where you can ask for specific advice relevant to your situation. The site seems to be down at the moment but when it's back up, there are some great threads on 3-fund portfolios etc.

 

[DrStrange]

Bonds are no longer the "safe" investments that we reminisce about. Even if the standard advice is we should have more bonds in our portfolio as we age.

The joint life expectancy of a couple at age sixty is well into their eighties. For the right demographics, this might be close to ninety. Twenty to thirty years is a very long time.. The risk of "living too long" should be one of the primary concerns. I suspect many people would be better served by heavier weighting in equities - perhaps even 100% equity.

Low risk bonds are almost sure losers after accounting for inflation. In some cases, this loss it is worthwhile due to a person's risk intolerance. But most people should not be involved with bonds or cash without a specific, short term need for cash.

DrStrange

 

[T_Chan]

I've been listening to a lot of Dave Ramsey on youtube as well as listened to his audio book, Total Money Makeover. He provides some great insight. I don't agree with all of his teachings, but most are spot on IMHO.

I've been tossing around the idea of investing in dividend ETF's and use the dividend payment to reinvest to buy more, just haven't committed to it yet. For long term investments, any feedback on index funds vs ETF's?

 

[Darson]

Dave Ramsey's advice is designed to make him money, not necessarily you. Same can be said for anyone who isn't a fiduciary.

 

[moose]

I've been listening to a lot of Dave Ramsey on youtube as well as listened to his audio book, Total Money Makeover. He provides some great insight. I don't agree with all of his teachings, but most are spot on IMHO.

I've been tossing around the idea of investing in dividend ETF's and use the dividend payment to reinvest to buy more, just haven't committed to it yet. For long term investments, any feedback on index funds vs ETF's?

Unless your investments are very low <10k or if you wish to make systematic purchases eg $100/month you should be entirely in stocks/etfs. Mutual funds will kill you on fees (MER). The drawback to ETFs is the purchase/sell commissions. Look into scotia, which has a short list of comission free ETF's, National bank also has commission free ETFs and wealthsimple is commission free on stocks/etfs.

Personally I like scotia itrade because you can select online which stocks you wish to drip and can easily make changes online. BMO does it, but they have a limited list of which stocks/etfs you can drip and you have to call when you need to make changes, which can be hours on the phone on hold. TD drips everything but again you have to call to make changes. No experience with National or wealthsimple, though I think I will be opening my son's TFSA account there.

 

[BNM]

Dave Ramsey's advice is designed to make him money, not necessarily you. Same can be said for anyone who isn't a fiduciary.

^^^This^^^. A few years ago I tried his Podcast and lasted about 5 days. Some gems, but no diamonds and mostly just rough.

For investing I listen to the following podcasts: InvestTalk and The Investors Podcast. The first is a call-in show where they have a couple topics of the day to discuss but it’s largely them answering caller questions on lots of investing topics. I don’t always agree with them but it’s straightforward and informative. The later is a deeper dive on various finance topics often with a guest. It’s a higher level of discussion and I get lost sometimes but I learn a lot.

 

[warma]

A old buddy of mine runs The Daily Dirtnap (@dailydirtnap on Twitter), has a paid newsletter as well. He runs a talk show- I don’t know the schedule- Thursdays? Give him a call- he’s always looking to chat. Info’s on his Twitter feed.

He’s not for everyone, and his approach is more social psychology-based.

 

[IaHawk]

This. If you don’t feel comfortable about doing it yourself or think you may get lazy about it then one of the target funds works just fine. But it’s also something most people can spend a few hours a year to update/tweak and save yourself a literal boat load of money over your lifetime.

@ReallyGoodUsername

I've always been a target fund person (40 years old with a 2045 target date fund). I actually have a high interest in investing but have always trusted the professionals to handle it.

I'm not making any drastic changes but I'm all ears on how I could maximize my investments if I'm losing money by leaving them in target funds.

 

[IaHawk]

^^^This^^^. A few years ago I tried his Podcast and lasted about 5 days. Some gems, but no diamonds and mostly just rough.

For investing I listen to the following podcasts: InvestTalk and The Investors Podcast. The first is a call-in show where they have a couple topics of the day to discuss but it’s largely them answering caller questions on lots of investing topics. I don’t always agree with them but it’s straightforward and informative. The later is a deeper dive on various finance topics often with a guest. It’s a higher level of discussion and I get lost sometimes but I learn a lot.

I listened to Dave Ramsey for a few months. He always seemed to suggest he could get much higher returns then what other experts projected. Was there any truth to what he was recommending or was that just for the listeners? I never fact checked any of it but found it interesting when others said to use 7-8% return for projections and he would always use 12-15%, or something like that.

 

[Poker Zombie]

Dave Ramsey is crap with corn in it.

Mostly crap, but a few nuggets in there. However, you already know those nuggets (stay out of debt), so there is no need to eat up the corn he's serving.

 

[Burke]

Specifically, why/how is he full of crap? Have never listened to him

 

[Poker Zombie]

Mostly personal stuff.

• Preaches family, caught cheating on wife
• Mandated "No Masks" at his company. Multiple people fired for violation of rule.
• Says "Stay out of debt". Declared Bankruptcy (though, did later pay off debts owed).
• Always says "cut up credit cards". This is terrible advice. "Pay off the entire bill each month" would be the best advice, but he assumes anyone listening to him is a undisciplined imbecile. To be fair, he is half right.
• Says "Don't go into debt, even for a house". Now it is possible that his 2 mansions (one within eyeshot of my firehall) were paid in cash, but the small one is in excess of 15 million.

Basically, I don't trust him. I would never pay for (or take) financial advice from someone I didn't trust.

 

[T_Chan]

Unless your investments are very low <10k or if you wish to make systematic purchases eg $100/month you should be entirely in stocks/etfs. Mutual funds will kill you on fees (MER). The drawback to ETFs is the purchase/sell commissions. Look into scotia, which has a short list of comission free ETF's, National bank also has commission free ETFs and wealthsimple is commission free on stocks/etfs.

Personally I like scotia itrade because you can select online which stocks you wish to drip and can easily make changes online. BMO does it, but they have a limited list of which stocks/etfs you can drip and you have to call when you need to make changes, which can be hours on the phone on hold. TD drips everything but again you have to call to make changes. No experience with National or wealthsimple, though I think I will be opening my son's TFSA account there.

What about questrade or wealthsimple? They have free ETF purchases with TFSA. I think Questrade charges when you withdraw though but only up to $10 fee.

 

[Chile85]

What about questrade or wealthsimple? They have free ETF purchases with TFSA. I think Questrade charges when you withdraw though but only up to $10 fee.

It looks like Questrade charges a management fee on your money (.25% or .20%). That's a fee to manage the portfolio, they most likely guide you into their ETFs which would have fees built into them also. While the fees can seem minimal, over time that can add up to a lot of money. I'd recommend a self managed ETF stategy through Vanguard. Vanguard has no management fees and they are the absolute lowest ETF fees I've found. Vanguard is a phenomenal company to stand your portfolio behind.

 

[hdgeno]

What about questrade or wealthsimple? They have free ETF purchases with TFSA. I think Questrade charges when you withdraw though but only up to $10 fee.

I've been using WealthSimple Trade for almost a year, and it's works well. It's phone app only (though will eventually be desktop as well I believe) and is quite limited. There are very little fees, though buying USD shares in stocks or ETF's will hurt as they keep 1.5% when you buy and when you sell. If investing only in CAD shares there are no fees. Stock prices are also delayed, so I have the Webull and Yahoo apps for live prices.

There is WealthSimple, and there is WealthSimple Trade, which are two totally different things apparently. I have experience only with the Trade version.

 

[Burke]

Was able to transition with my financial advisor. He recently switched firms and allows a fee-for-service type model. Rolled my IRA over to Vanguard and sold high-expense ratio funds and bought Vanguard ETFs. Simple portfolio for now at least until I read more; All About Asset Allocation by Rick Ferri is on my eventual reading list.

With the lack of poker (for me at least), it has been a good time to read....it's really sad how much I didn't know about the importance of personal finance in college/med school. Pays a ton to know some of these details earlier rather than later. I have learned a lot since reading two books from the "The White Coat Investor" and now have an immediate reading list including the below books. I also recently read William Bernstein's short pamphlet, "If You Can - How Millennials Can Get Rich Slowly" and he offered a slew of book recommendations which are included below as well.

My Immediate Reading List (mostly because I have these in hard copy on my nightstand)
The Little Book of Common Sense Investing - Jack Bogle
A Random Walk Down Wall Street - Burton Malkiel
The Only Investment Guide You'll Ever Need - Andrew Tobias
All About Asset Allocation - Rick Ferri

Bernstein's Reading List:
The Millionaire Next Door - Thomas Stanley and William Danko
Common Sense on Mutual Funds - Jack Bogle
Devil Take the Hindmost - Edward Chancellor
The Great Depression: A Diary - Benjamin Roth
Your Money and Your Brain - Jason Zweig
How a Second Grader Beats Wall Street - Allan Roth
All About Asset Allocation - Rick Ferri

Just wanted to say a quick thanks. This thread could use a bump seeing how important this topic is.