NT: Official Personal Finances Thread

[sneaksoy]

jthagreat Ohhh didn't know you can convert a roth into a traditional IRA. I will try to max out the roth then put any extra in my 401K. My company has an option of contributing pre-tax,after-tax, and roth. So far I've been contributing roth money.

Roth = after-tax. Just to clarify, it's the same thing.

 

[capital sb]

Roth = after-tax. Just to clarify, it's the same thing.

I'm pretty sure it's not. I literally have 3 selections for contributing money, i can put a percentage for each one.

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[venom lyrix]

rates are extremely low but you still have to be a qualified buyer

Why do you think rates are so low? Because banks credit restrictions are so tight.

Have you talked to anybody that's bought a house tenderly versus pre 07?

They're asking for waaaaaay more **** than they used to.


Gone are the days of a 22 year old walking into a bank with less than 10% down and walking away with a house.

Ask the homey sneaksoy if he would've been able to cop that crib without the massive down payment



Like someone stated earlier though... it's now than one way to skin a cat...

I like this thread... lots of good talk in here.

This is unfortunately very true. I just bought my apartment last July and I put down about 22% - it's ridiculous and for young people really difficult and unfair. How can people under 25 be expected to have 20-30k to put down on a apartment/house fresh out of college basically. You need parents help. It's not ideal, but that's the world we live in right now

 

[hennessy]

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I've contributed $13k total in this IRA since 2010. I was still an intern up until 2012. Value is at $22k right now with employee matching and some growth. I had a 10.8% growth last year. Hope to see this continue to increase exponentially.

I haven't been putting in as much as I can afford to buy I need to change that asap. I've been told a good thing to do is add 1% (like 7% up to 8%) to your contribution ever year, or a few % every time you get a raise. That way you don't even really the difference coming from your paycheck.

Just a personal example to show you need to be doing this AT LEAST with your employer or on your own. I'm about to set up my Roth this weekend now. Loving this thread.

 

[Chopper]

In addition to the $200 I put in company 401k, I'm about to get a Roth on my own and just dump like $500/mo into it. Especially if this is true what you guys are saying about no penalty withdrawls for down payments on houses, cars, college.

I believe it's no penalty withdrawal on your first house, up to $10k (and that $10k must be personal contribution, not market gains). I love the fact you can pick individual stocks in a Roth and there's no tax on the gains. It's probably been said but many folks suggest contributing to your 401k until you get the full company match, then contributing to your Roth (and hopefully maxing it out), and then going back to your 401k to try and max it out. 

I plan on being in a higher tax bracket during retirement that I'm in now so that's additional appeal to a Roth.

I hesitate to post this because there are SO MANY variables, and everybody's situation is unique... 

I've heard this before but I heard 1x at 30. This seems very light. If you're making $100k at 67, I doubt $800k (especially after they tax it when you take it out) is getting you through retirement. I think the 'rule of thumb' idea though, I'd just suggest people be more aggressive. 

 

[af1 1982]

Love this thread man.....

 

[hankmoody]

I've heard this before but I heard 1x at 30. This seems very light. If you're making $100k at 67, I doubt $800k (especially after they tax it when you take it out) is getting you through retirement. I think the 'rule of thumb' idea though, I'd just suggest people be more aggressive. 

I was going to mention the 4% rule and googled that term to find a clear definition and just stumbled upon this article.
http://www.nytimes.com/2015/05/09/y...h-for-the-4-percent-retirement-rule.html?_r=0

This one's worth a read too.
http://www.vox.com/2015/5/1/8518455/extreme-early-retirement

How do you know when you're ready to retire? Many of the retirees I spoke to rely on the "4 percent rule," a common rule of thumb that retirees can safely withdraw 4 percent of their savings each year without exhausting their principal.

The chart I posted earlier in this thread is derived from this rule.

 

[HankHill]

I think I may end up changing my investment strategy. As far as retirement accounts, I've been putting 10% of salary into 401k (company matches up to 4% of salary) and then only about $200 a month into my Roth. I'll probably drop to 4% contribution of 401K and use the rest to max out my ROth is that. Probably wont be with the company long enough to be fully vested anyway.

 

[djyoung08]

Fantastic thread!

I want to save more but im a noooooob

I turned 25 this year and will be getting a 401k from the company i work at (hopefully in july). They will not match anything... oh well.. no biggie..

But I want to live on less and be more mature with my spending.

I see that saving through investing is the obvious route. Where do I go?

Where does one go to set up these personal ROTH / IRA accts?

 

[yeah]

I see that saving through investing is the obvious route. Where do I go?

Where does one go to set up these personal ROTH / IRA accts?

You can set up an IRA (ROTH or traditional) at just about any bank or well known financial institution. The best option for you may not be the best option for others, so it really depends on your situation.

I haven't seen it mentioned often in this thread, but Financial Advisors can help you tremendously, especially when you're first starting out. Try finding a non-commission based advisor that is willing to work with you and explain the concept of having a diversified portfolio, mutual funds and the different share classes associated with each of them, etc.

Ny advisor is through Northwestern Mutual, friend and former teammate from college. I'd be years from where I am without his help.

Any sole proprietors in here (1099)?

Basically, I got about 200K in student loans but make a good amount. Loans are at about 5-5.5% and I have a good chunk saved up. Better to pay off the loans then start investing? Ideally would like to do both but at this time not too sure.

SEP IRA to plan for retirement and the tax break?
Also, if I do plan on investing, whats the best way to go for a solid return with average risk? Vanguard?

Depends on your loans. You may actually incur extra charges if you try to pay off your loans too quickly (messed up, right?) So it may make more sense for you to continue paying down your loans and investing whatever extra you have. Check with your loan servicer about that to be safe.

 

[sole searchin]

Any sole proprietors in here (1099)?

Basically, I got about 200K in student loans but make a good amount. Loans are at about 5-5.5% and I have a good chunk saved up. Better to pay off the loans then start investing? Ideally would like to do both but at this time not too sure.

SEP IRA to plan for retirement and the tax break?
Also, if I do plan on investing, whats the best way to go for a solid return with average risk? Vanguard?

 

[sole searchin]

You can set up an IRA (ROTH or traditional) at just about any bank or well known financial institution. The best option for you may not be the best option for others, so it really depends on your situation.

I haven't seen it mentioned often in this thread, but Financial Advisors can help you tremendously, especially when you're first starting out. Try finding a non-commission based advisor that is willing to work with you and explain the concept of having a diversified portfolio, mutual funds and the different share classes associated with each of them, etc.

Ny advisor is through Northwestern Mutual, friend and former teammate from college. I'd be years from where I am without his help.
Depends on your loans. You may actually incur extra charges if you try to pay off your loans too quickly (messed up, right?) So it may make more sense for you to continue paying down your loans and investing whatever extra you have. Check with your loan servicer about that to be safe.

Yeah, appreciate the info. No extra fees to pay it off early but at this time, I don't mind paying that 5% since the rate is a bit low.

Also, any of yall ever go into Lending Club? Trying to decide whether to just open up an investing account or a retirement SEP IRA with them.

 

[moderndarwin]

Great info. Took a while to read all that. So, the basic tenets everyone says are:

1.Contribute to your 401k. At minimum, put in how much will get matched. Matched means free money your employer is giving to motivate you to save for retirement. Max you can put in per year is about 18k.

2. Get a Roth IRA (not through work necessarily). Put in the allowed 5,500 contribution each year. This is already taxed so it benefits you since you will not have to pay tax on it in the future at at a higher tax bracket. Also, can pull money out early for special circumstances like buying a house.

3. Anything else you can save look into other investment options that work to your nature (e.g., stocks, real estate, etc). Pick one area and learn it well before spreading yourself too thin.

4. Enjoy life with the rest of your non set aside money.

 

[ddh1122]

Went to the bank and the advisor told me I was too young to invest in an IRA and I shouldn't worry about it + it might not be beneficial for me with my salary just yet. He suggested I do my company's 401K (which I'm about to enroll in) and he gave me 2 portfolios to look at. One is Health Care and the other is Biotechnology. He said I can do this thing where I deposit a minimum of $100 a month and it'll go into these funds/stocks and that might be a good option for me. 

I'm going back next week but I just wanted to know what questions I may want to ask and if I do invest in one of these portfolio stock/fund things, should I go in the industry he suggested or is there another one worth looking at?

 

[jthagreat]

Went to the bank and the advisor told me I was too young to invest in an IRA and I shouldn't worry about it + it might not be beneficial for me with my salary just yet. He suggested I do my company's 401K (which I'm about to enroll in) and he gave me 2 portfolios to look at. One is Health Care and the other is Biotechnology. He said I can do this thing where I deposit a minimum of $100 a month and it'll go into these funds/stocks and that might be a good option for me. 

I'm going back next week but I just wanted to know what questions I may want to ask and if I do invest in one of these portfolio stock/fund things, should I go in the industry he suggested or is there another one worth looking at?

How old are you?
Either way, smack dude. The younger you are, the better...the whole point is to start investing as ealy as possible to take advantage of compounding interest.

Not sure what you mean by 2 portfolios to look at...if he, or the company manages the portfolio, odds are, he is getting money on the MANY fees charged for managing the portfolio. I would suggest questioning him more just based off the bad advice he gave you on getting an IRA (get a Roth IRA)

I would be skeptical if i was you. never heard someone advise against investing.

 

[Coromanti]

My budget project actually starts this Thursday (because I get paid this Thursday).

I am doing the weekly saving challenge + $25 every pay day at present. However I'd like to increase my savings to 20% after the challenge+ $25

 

[ddh1122]

How old are you?
Either way, smack dude. The younger you are, the better...the whole point is to start investing as ealy as possible to take advantage of compounding interest.

Not sure what you mean by 2 portfolios to look at...if he, or the company manages the portfolio, odds are, he is getting money on the MANY fees charged for managing the portfolio. I would suggest questioning him more just based off the bad advice he gave you on getting an IRA (get a Roth IRA)

I would be skeptical if i was you. never heard someone advise against investing.

Exactly what I was thinking. And he told me that within the first 30 seconds and I'm just sitting there like "uhh this may be a waste of time". He then contradicted himself at the end talking about one of his friends who did investing and had an IRA account and opened it at like 21 or 22 and had 1 mill by the age of 30 just from his little investing ventures. I'm 21 btw. 

And this is what he printed out for me to look at: https://fundresearch.fidelity.com/mutual-funds/summary/316390301 and https://fundresearch.fidelity.com/mutual-funds/summary/316390772?type=sq-SrchResults

 

[capital sb]

Yeah its best to start investing as early as possible, does your employer match?

It seems like what people are saying whats best to do is contribute up to the match in the 401k, then the remainder into a roth (trying to max out the roth).

 

[ddh1122]

 
Yeah its best to start investing as early as possible, does your employer match?

It seems like what people are saying whats best to do is contribute up to the match in the 401k, then the remainder into a roth (trying to max out the roth).

Yeah I found out they match 50% up to 6%. I wanted to do that + open a Roth IRA + invest in some type of stocks with some money I have from selling some of my shoes (not much)

 

[antidope]

Where does one go to set up these personal ROTH / IRA accts?

You can go do that at your bank/credit union or any financial services company (eTrade, Scotttrade, etc), or you can go to a broker/financial advisor to have them set one up for you. Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

You may to have to pay whats known as a ira maintenance fee to even have an account open ( I know my credit union doesnt charge a fee for this, I dont think Fidelity does either), then if you're going to trade the account you'll be paying ticket charges on the trades you place, and if you go through a financial advisor you'll be paying him a commission or advisory fees.

You could always establish one somewhere and if you dont like the service/find something better you could transfer it/rollover elsewhere (you get an unlimited amount of transfers but only one rollover a year there is a difference)

 

[djyoung08]

Where does one go to set up these personal ROTH / IRA accts?

You can go do that at your bank/credit union or any financial services company (eTrade, Scotttrade, etc), or you can go to a broker/financial advisor to have them set one up for you. Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

You may to have to pay whats known as a ira maintenance fee to even have an account open ( I know my credit union doesnt charge a fee for this, I dont think Fidelity does either), then if you're going to trade the account you'll be paying ticket charges on the trades you place, and if you go through a financial advisor you'll be paying him a commission or advisory fees.

You could always establish one somewhere and if you dont like the service/find something better you could transfer it/rollover elsewhere (you get an unlimited amount of transfers but only one rollover a year there is a difference)

Thanks for the insight. I just need to get off my butt and talk to my local bank(s) and get the ball rolling on an IRA (traditional or ROTH).

 

[based mod]

Where does one go to set up these personal ROTH / IRA accts?

You can go do that at your bank/credit union or any financial services company (eTrade, Scotttrade, etc), or you can go to a broker/financial advisor to have them set one up for you. Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

You may to have to pay whats known as a ira maintenance fee to even have an account open ( I know my credit union doesnt charge a fee for this, I dont think Fidelity does either), then if you're going to trade the account you'll be paying ticket charges on the trades you place, and if you go through a financial advisor you'll be paying him a commission or advisory fees.

You could always establish one somewhere and if you dont like the service/find something better you could transfer it/rollover elsewhere (you get an unlimited amount of transfers but only one rollover a year there is a difference)

Thanks for the insight. I just need to get off my butt and talk to my local bank(s) and get the ball rolling on an IRA (traditional or ROTH).

Or just get off NT. Plenty of online resources.

I personally wouldn't go to your typical bank since I'm not sure how much experience they have handling retirement accounts. Some of those guys' jobs are just to convince you to open an account, just like any other salesman. Check for a Fidelity in your area.

 

[based mod]

Where does one go to set up these personal ROTH / IRA accts?

Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

Should cost $0 to open an account. Expense ratios for mutual funds are a given but are minimal.

 

[djyoung08]

Where does one go to set up these personal ROTH / IRA accts?

You can go do that at your bank/credit union or any financial services company (eTrade, Scotttrade, etc), or you can go to a broker/financial advisor to have them set one up for you. Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

You may to have to pay whats known as a ira maintenance fee to even have an account open ( I know my credit union doesnt charge a fee for this, I dont think Fidelity does either), then if you're going to trade the account you'll be paying ticket charges on the trades you place, and if you go through a financial advisor you'll be paying him a commission or advisory fees.

You could always establish one somewhere and if you dont like the service/find something better you could transfer it/rollover elsewhere (you get an unlimited amount of transfers but only one rollover a year there is a difference)

Thanks for the insight. I just need to get off my butt and talk to my local bank(s) and get the ball rolling on an IRA (traditional or ROTH).

Or just get off NT. Plenty of online resources.

I personally wouldn't go to your typical bank since I'm not sure how much experience they have handling retirement accounts. Some of those guys' jobs are just to convince you to open an account, just like any other salesman. Check for a Fidelity in your area.

Feel free to point me in the right direction per my initial question.

 

[antidope]

 

 

Where does one go to set up these personal ROTH / IRA accts?

Housing an account isnt free though,  there are several potential costs associated with having an IRA account.

Should cost $0 to open an account. Expense ratios for mutual funds are a given but are minimal.

Yeah I know, but maintaining one and using it cost money potentially. I know where I work now theres a 35$ Maintenance fee and ticket charges are 22.50 per equity trade.

It doenst have to cost that much, but I wanted to give him a quick heads up of things to look for.