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User (thunderfist): "I know that most people put off saving for retirement and I don't want to do that. I want to build a big 'ol dinosaur egg and get the most out of my life. I've got about 30 years to prepare for early retirement.\n\nAbout 60% of my income becomes discretionary spending. 40% usually goes into savings, the rest on whatever. I want to make my savings work for me. Where should I start?\n\nNote: I already have a small brokerage account with a very very modest portfolio. No IRA/401k/etc yet.\n\nEDIT: a few details - twenty-something, 2x avg salary, corp. exec path"
Self: "roth ira, roth ira, roth ira"
ccipriano (ccipriano): "yes, yes, yes"
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User (thunderfist): "I know that most people put off saving for retirement and I don't want to do that. I want to build a big 'ol dinosaur egg and get the most out of my life. I've got about 30 years to prepare for early retirement.\n\nAbout 60% of my income becomes discretionary spending. 40% usually goes into savings, the rest on whatever. I want to make my savings work for me. Where should I start?\n\nNote: I already have a small brokerage account with a very very modest portfolio. No IRA/401k/etc yet.\n\nEDIT: a few details - twenty-something, 2x avg salary, corp. exec path"
Self: "Like everyone is saying.... ROTH IRA!\n\nAt the same time though, save up an emergency fund. Depending on your situation (single/stable job), you might want to save up to a year's worth of expenses for that fund.\n\nBeyond that, max out your IRA and available 401K. The latter will have the added benefit of lowering your tax burden.\n\nInvest aggressively at your age. Do it with low-fee index funds."
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User (thunderfist): "I know that most people put off saving for retirement and I don't want to do that. I want to build a big 'ol dinosaur egg and get the most out of my life. I've got about 30 years to prepare for early retirement.\n\nAbout 60% of my income becomes discretionary spending. 40% usually goes into savings, the rest on whatever. I want to make my savings work for me. Where should I start?\n\nNote: I already have a small brokerage account with a very very modest portfolio. No IRA/401k/etc yet.\n\nEDIT: a few details - twenty-something, 2x avg salary, corp. exec path"
Self: "There is a series i've just started about a fictional character similar to yourself and his quest to build a sweet portfolio entitled "Lloyd Pancakes and his disapproving bunnies: How to build a portfolio and dominate life".
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\nContains tips on asset allocation, tax minimization, global diversification, thinking about your timeline for various expenditures over the course of life (including retirement obviously). Part 2 was posted today so check it out!
\n
\nHttp://www.Guynance.com is the site."
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User (therewontberiots): "i got into debt with med bills that ate all my savings and past earnings. in a large amount of debt and ive already lost so much money. i finally have a job and some hope of earning and saving money and i don't want to throw it away. is there someone i should i consult? has anyone negotiated their debt before? should i just continue to not pay? i want to restore my credit. =/"
Self: "It's tough to say without knowing your income or debt amount or if you are behind or if you have a payment plan already negotiated with them.\n\nIf you are behind to a hospital or doctor you need to sit down, in person, with someone at the place and tell them Thank You for taking care of me, I appreciate it and I want to pay you but.... This is what I make and I don't want to file bankruptcy. Then ask them to see what they can do about reducing the balanced owed. You'd be surprised how generous they can be. Just don't go in there acting like they ripped you off or that they owe you.\n\nGood luck."
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User (therewontberiots): "i got into debt with med bills that ate all my savings and past earnings. in a large amount of debt and ive already lost so much money. i finally have a job and some hope of earning and saving money and i don't want to throw it away. is there someone i should i consult? has anyone negotiated their debt before? should i just continue to not pay? i want to restore my credit. =/"
Self: "I made a video about different options for debt consolidation and forgiveness a little while ago. It's done from a humerous perspective, but should give you some information on options to get the principal knocked down to a more manageable level.
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\nhttp://guynance.com/2010/11/07/so-the-credit-companies-think-you-are-a-worse-risk-than-mike-tyson-eh/
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\nHope this helps, best of luck!"
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User (chops228): "Hey Reddit, I will be moving to Australia in a couple of weeks. I am trying to find the best way send money to my Australian account. I will be transferring between $15,000 and $20,000, and so I don't want to get burned by my bank giving me a bad exchange rate (the exchange rate for American to Australian dollars is 1.00:0.99 currently), and so I would like to find some way to exchange with that rate. I have done some research online, but do be honest I feel like I'm in over my head. So, any practical advice? Thanks.\n\nEDIT: Thanks for the advice guys! This is why I love reddit. I can ask reddit questions which are too obscure for google."
Self: "Take a look if you can take cash. Though I think 10k is max undeclared.\n\nOther options\n-Traveler checks\n-Direct transfer\n\n"
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User (chops228): "Hey Reddit, I will be moving to Australia in a couple of weeks. I am trying to find the best way send money to my Australian account. I will be transferring between $15,000 and $20,000, and so I don't want to get burned by my bank giving me a bad exchange rate (the exchange rate for American to Australian dollars is 1.00:0.99 currently), and so I would like to find some way to exchange with that rate. I have done some research online, but do be honest I feel like I'm in over my head. So, any practical advice? Thanks.\n\nEDIT: Thanks for the advice guys! This is why I love reddit. I can ask reddit questions which are too obscure for google."
Self: "Take a look if you can take cash. Though I think 10k is max undeclared.\n\nOther options\n-Traveler checks\n-Direct transfer\n\n"
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User (chops228): "Hey Reddit, I will be moving to Australia in a couple of weeks. I am trying to find the best way send money to my Australian account. I will be transferring between $15,000 and $20,000, and so I don't want to get burned by my bank giving me a bad exchange rate (the exchange rate for American to Australian dollars is 1.00:0.99 currently), and so I would like to find some way to exchange with that rate. I have done some research online, but do be honest I feel like I'm in over my head. So, any practical advice? Thanks.\n\nEDIT: Thanks for the advice guys! This is why I love reddit. I can ask reddit questions which are too obscure for google."
Self: "Once you have an Australian account your bank can transfer the money over for less than $50 I'm pretty sure. You won't lose out to exchange rate ripoffs with Australian banks, they are pretty good at that kinda stuff. You American bank might have some fees though, just check with them."
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User (chops228): "Hey Reddit, I will be moving to Australia in a couple of weeks. I am trying to find the best way send money to my Australian account. I will be transferring between $15,000 and $20,000, and so I don't want to get burned by my bank giving me a bad exchange rate (the exchange rate for American to Australian dollars is 1.00:0.99 currently), and so I would like to find some way to exchange with that rate. I have done some research online, but do be honest I feel like I'm in over my head. So, any practical advice? Thanks.\n\nEDIT: Thanks for the advice guys! This is why I love reddit. I can ask reddit questions which are too obscure for google."
Self: "Oanda's Money Transfer service.. they are a forex broker who has a devision that does international exchanges. \n\nWith them, you pretty much just pay spot price (their own bid/ask spread which is the same they offer spot traders in their forex trading branch) plus a flat fee of $25 that includes your wire out costs. \n\nhttp://fxglobaltransfer.oanda.com/\n\nCheck it out. I found them to be the cheapest option... \n\nBeats paying the bank spot+~2% markup hands down. "
User (chops228): "Thanks! This looks great! I will definitely look into it.\n\nEDIT: So I have been transferring with fx, and it works great! I saved a considerable amount by getting a better exchange rate with them. "
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User (chops228): "Hey Reddit, I will be moving to Australia in a couple of weeks. I am trying to find the best way send money to my Australian account. I will be transferring between $15,000 and $20,000, and so I don't want to get burned by my bank giving me a bad exchange rate (the exchange rate for American to Australian dollars is 1.00:0.99 currently), and so I would like to find some way to exchange with that rate. I have done some research online, but do be honest I feel like I'm in over my head. So, any practical advice? Thanks.\n\nEDIT: Thanks for the advice guys! This is why I love reddit. I can ask reddit questions which are too obscure for google."
Self: "If you have over $10,000 in an offshore account at any time, you will have to file an FBAR with the IRS. Confusing as hell.\n\nhttp://www.irs.gov/businesses/small/article/0,,id=148849,00.html"
User (chops228): "Wow. I did not know this. I will look into it, thank you. "
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "I wouldn't believe him, sounds like he's trying to make some easy money. Listen to your friend."
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Go online, open a Schwab, Vanguard or some other online brokerage that will custody IRA accounts. Invest in very low cost indexed funds like SWTSX, SWISX or SWPPX, they will be far cheaper and will generally outperform most mutual funds after management fees, 12b-1 fees and commissions (A shares have front end loads which are commissions). The dirty secret about mutual funds that that after all the fees and commissions they generally can't outperform the S&P. If you take all of the mutual funds in existence today only about 14% will out pace the market, however if you take all of the mutual funds that have EVER existed only about 0.6% have outperformed the S&P, if you feel good about those odds absolutely go for the A shares :)"
Self: "Here is some mutual fund reading material for you. Stick with indexing. http://www.nytimes.com/2008/07/13/business/13stra.html"
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Unfortunately, it is normal, but it is certainly not worth it. [Costs are the best predictor of future fund performance](http://moneywatch.bnet.com/investing/blog/fund-watch/the-best-predictor-of-future-fund-performance/470/).\n\nI'd recommend you visit www.bogleheads.org for more information. You also might want to look into a [Target date Retirement fund](https://personal.vanguard.com/us/funds/vanguard/TargetRetirementList). They are low cost, broadly diversified, and also scale back the risk over time automatically."
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Listen to your friend. Put your cash in a broadly diversified index fund or target retirement fund (I'm only familiar with those from Vanguard) that is low cost. The Vanguard target retirement fund for 2050 starts off split 70/30 in US/internation total stock market index funds which means you will always perform at least as well as the market (minus costs). You will pay a lot in commissions and taxes on an actively managed fund and gain little improvement in returns or possible underperformance. \n\nAlso remember: Past performance is not an indicator of future performance.\n\nIndex funds are perfect for the lazy investor. You put your money in and let it sit there knowing that you will at least do as well as the market (assuming you are choosing a broadly invested fund)."
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "The load/no load question is separate from the passive/active question.
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\nSome funds charge you a sales charge or "load" when you buy or sell shares of the fund. People who have studied the industry say you don't get any better performance to justify the sales charge. You can restrict your shopping universe to no-load funds and do just as well.
\n
\nA fund with a load will typically be actively managed because they want to claim that the load is justified, but there are also many actively-managed no-load funds. Whether there is a load or not, an actively-managed fund will generally have higher expenses than a passively-managed fund, because you have to pay for the management. A passively-managed fund typically tries to match the performance of some market index. Some actively-managed funds beat the index; many don't, and you can't necessarily tell which ones will do it. So paying more in expenses for active management may get you better performance, but it may not."
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: ">My friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns.\n\n\n\n\nI was just about to tell you to look into Vanguard after reading about the front end load you would be paying for. The best thing you can do is to grab a book on investing for retirement at the library, determine your own personal risk comfort level, and learn about re-balancing your portfolio (if you elect for more than one fund holding), and adjusting the asset allocation over time yourself. This will save you the 5.xx% upfront, and give you more of your returns annually, if you elect to invest in passively managed funds. \n\n\n\nRead up on passively managed funds. You'll find its a better bet, and you'll save money if you make the annual adjustments the the IRA. ANd you should only make annual adjustments under normal circumstances. \n\n\n>In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\n\nThe average ten year return on the S&P 500 index is about the same as this. Buying Vanguard's S&P 500 Index Fund is the best bet. \n\n\n\nHow old are you? \n\n\n\nI currently have a Roth IRA with Vanguard, and my only holding is the S&P 500 index fund. I don't believe in playing around with retirement money. The loads and fund expense fees add up over a 30+ year period, and I tend to be untrusting of investment managers. \n\n\n\n>According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself?\n\n\nIts so easy, in fact, you can do it online and save a huge amount of money in the long run, and earn similar returns to "actively managed portfolios" "
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Go online, open a Schwab, Vanguard or some other online brokerage that will custody IRA accounts. Invest in very low cost indexed funds like SWTSX, SWISX or SWPPX, they will be far cheaper and will generally outperform most mutual funds after management fees, 12b-1 fees and commissions (A shares have front end loads which are commissions). The dirty secret about mutual funds that that after all the fees and commissions they generally can't outperform the S&P. If you take all of the mutual funds in existence today only about 14% will out pace the market, however if you take all of the mutual funds that have EVER existed only about 0.6% have outperformed the S&P, if you feel good about those odds absolutely go for the A shares :)"
SwagOnInfinity (SwagOnInfinity): "Could not agree more"
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Run away from him. Quickly!\n\nIn this day and age, you should never pay a load on a mutual fund. Most actively managed mutual funds rarely beat the overall market average over a long period of time. A 5.75% load fee is normal for a front loaded mutual fund, but there is absolutely zero reason you should be purchasing one. If you want a professional to help you with your portfolio then you should see a fee-only investment adviser. \n\nYour friend that suggested Vanguard is really trying to help you out. Vanguard does provide mainly index funds, which have very low costs and simply track the market return. Given that many actively managed funds fail to beat the market over a long period of time, you are probably better off in them. No matter what the investment advisor at the bank says, just remember that past performance is no guarantee of future results. Many people get burned chasing returns.\n\nI would strongly suggest visiting bogleheads.org, which is a Vanguard focused messageboard, and posting what you posted here, as there are many knowledgeable people that will help you (free of course)."
daily_bagel (daily_bagel): "In general, the financial advisors working at banks set things up on commission. Not desireable for two reasons: the money comes out of the investor's pocket, and it can distort the advice he gives.\n\nBanking and investing should be two separate operations, and people should use two different firms for them."
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "Agree with everything said already.
\n
\nI would look at a Vanguard fund. If you have 3000 dollars you can get into one of their retirement funds. Target date fund which adjusts its holdings into fixed income/cash as you get closer to retirement.
\n
\nThat guy telling you he'd scall back risk blah blah blah, ignore that. No one can time the market. They aren't going to pull your money out of something, risk that they are wrong, it shoots up and you miss out on all that action. They are going to have it highly diversified in index/bond funds, just like a no-load, .19% annual fee with a Vanguard fund will get you.
\n
\nWith no-load, you are getting the maximum percent of your money into the market. That compounds over time. As does the lower maintainence fee.
\n
\nVanguard IRA also free if you sign up for electronic statements I believe. Highly recommend checking it out. If you can't do the 3000 min investment, you can buy Vanguard ETF's (and other ETF's/index funds) in your IRA as well. "
ajaxdrivingschool (ajaxdrivingschool): ">Vanguard IRA also free if you sign up for electronic statements I believe.\n\n\nIf you have more than $10,000 in your account, you aren't charged the $20 annual fee for not receiving communications electronically. \n\n\n>That guy telling you he'd scall back risk blah blah blah, ignore that. No one can time the market. They aren't going to pull your money out of something, risk that they are wrong, it shoots up and you miss out on all that action.\n\n\nNot only that, but its not worth the risk in a retirement account. The money is going to sit there for 30+ years, enough time to ride out any lows. "
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "In short, run away from this advisor and check out vanguard's index funds.\n\nThe point of investing is maximize growth while minimizing risk. To judge if a mutual fund is doing well, we need to compare it's growth to some overall market index with a comparable level of risk. If the mutual fund invests only in large stable companies, then a comparison with the Dow might be appropriate. Similarly there are market indexes that measure small and middle sized companies. \n\nThe dirty secret is that most mutual funds fail to beat the market index that they compare themselves to. So you can give your money to some bloke who takes 5% off the top and probably won't get as good a return as if you just bought a fund the tracks whatever index you want.\n\nFor your first investment, I'd head over to Vanguard, set up an account, and put your money into their [S&P](https://personal.vanguard.com/us/funds/snapshot?FundId=0040&FundIntExt=INT) index fund. \n\nEdit: 8-9% growth per year over the last 10 years? That is *extremely* good performance. That is unusual enough that I'd look into what investment strategies the fund manager is pursuing. They might be taking huge amounts of risk. "
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User (OMGBikes): "I want to open a roth IRA and maybe a non qualified account. I am planning on maxing the roth for this year and last year. I spoke with a financial advisor at my bank and he created a portfolio for me. Since I am young, he suggested I go with A shares with a front end cost and lower annual expense. \n\nHe said the front end cost for investments under $50,000 was 5.75% of the principal, plus an average of .75% annual expense ratio. The front end cost is lower if you invest more than 50k.\n\nI have no problem with the portfolio he showed me. In fact, I think it had good overall performance, and the average ten year return on it was ~8-9%\n\nMy friend suggested I look at Vanguard because it doesn't have a front end cost, and the annual expense is lower. I asked the financial advisor about it and he said this difference was because of active vs passive fund management. My understanding is that he is supposed to keep an eye on my portfolio for me and scale back the risk over time, which is why there is a higher cost. He also said he can see better returns. \n\nIs what he's saying true? Is such a high front end cost normal? Is it worth this cost? It would be nice to have a professional keep an eye on things for me, since I don't know anything. But I would imagine the "activeness" he mentioned would just be looking at performance every 6 months to a year and he would readjust some allocations for me. According to him, Vanguard is passive, but wouldn't it be just as easy to monitor the portfolio's performance every once and a while and decide on allocations myself? \n\nI don't know who I should go with. At the very least I'd like to open a roth first and then get into non qualified stuff later. Can someone shed some light?"
Self: "TD Ameritrade has 100 commission free ETFs the only thing you have to do is hold it 30 days. This way you can invest before having to accumulate a certain amount."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "I opened mine with Scottrade. Couldn't be happier. Manage it all online.\n\nThey may or may not offer investment advice or what have you, but I wanted something simple I could manage myself that didn't cost much. Trades are $7ea, it was free to open and didn't require a recurring deposit."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "I like T. Rowe price you don't need a minimum investment of $500-$1000. As long as you agree to something like $50 or $100 automatically deducted from your checking/savings each month they will open an account. "
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "I like both Vanguard and Fidelity. Both have low-fee options on their funds and such. Fidelity also has store fronts you can visit to speak to someone face-to-face while either option has people you can talk to.\n\nWith Vanguard, most funds have a minimum investment of around $3k. Their Star fund is $1k for those with an IRA I believe. I think you can avoid the minimums if you set up a monthly automatic contribution.\n\nThere are many other options as well."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "On my mobile, but check out vanguard. They have low fees and you can talk to someone over the phone. Super easy, but there are a ton of diys online if you do a google search."
User (inourspace): "thank you for the tip, I will take a look at Vanguard."
Self: "If you want to talk to someone in person - check out [Edward Jones](http://www.edwardjones.com/en_US/index.html). I've talked with them before and they're pretty good. the best advice I can give you is to use [Vanguard](http://www.vanguard.com) and invest in something safe (like an index fund) with a low [expense ratio](http://en.wikipedia.org/wiki/Expense_Ratio). Read up about the [differences between a roth and a traditional ira](https://personal.vanguard.com/us/whatweoffer/ira/whichira) and figure out whats the best options for you. Also read up about 401ks because those impact traditional IRAs.\n\nHope that helps!\n\nHere are some guides to setup one:\n\n* [Fool.com](http://www.fool.com/60second/ira.htm)\n* [genywealth.com](http://www.genywealth.com/how-do-i-start-a-roth-ira)\n* [financegourmet.com](http://financegourmet.com/roth-ira.htm)\n* [wisegeek.com](http://www.wisegeek.com/what-is-a-self-directed-roth-ira.htm)"
JackRubysGun (JackRubysGun): "Yeah, don't go to EJ. All they are going to do is jam you in to a bunch of American funds which is something you can do by yourself for less cost. I don't think I have ever seen an EJ client statement that didn't have at least 75% of the money in some flavor of American funds. "
Self: "My first experience setting up a roth - i wanted to talk to someone too - i spoke to EJ first since they were closer, but went with my Credit Union. They do the same thing - the best thing to do it do the research yourself and pick the funds yourself."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "On my mobile, but check out vanguard. They have low fees and you can talk to someone over the phone. Super easy, but there are a ton of diys online if you do a google search."
User (inourspace): "thank you for the tip, I will take a look at Vanguard."
eco_was_taken (eco_was_taken): "I just opened one with Vanguard. It's pretty simple. You can just go to the website and open it up. My initial contribution was a little confusing. They worded it funny (something like "2010 contribution") so I entered the max because that's what I wanted to put in by the end of the year and that's exactly what the withdrew from my account right after it was open. They send you some paperwork to return. I think they asked for a photocopy of my driver's license and some other information.\n\nAll in all much easier than I expected."
freefrombroke (freefrombroke): "The wording was probably due to the fact that you have until the tax filing deadline to still contribute for 2010. So it probably gave you the choice to either contribute for last year or towards 2011."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "On my mobile, but check out vanguard. They have low fees and you can talk to someone over the phone. Super easy, but there are a ton of diys online if you do a google search."
User (inourspace): "thank you for the tip, I will take a look at Vanguard."
eco_was_taken (eco_was_taken): "I just opened one with Vanguard. It's pretty simple. You can just go to the website and open it up. My initial contribution was a little confusing. They worded it funny (something like "2010 contribution") so I entered the max because that's what I wanted to put in by the end of the year and that's exactly what the withdrew from my account right after it was open. They send you some paperwork to return. I think they asked for a photocopy of my driver's license and some other information.\n\nAll in all much easier than I expected."
strife25 (strife25): "I did the same last year around this time - opening an account online was as simple as filling out an online form and providing a bank account number."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "On my mobile, but check out vanguard. They have low fees and you can talk to someone over the phone. Super easy, but there are a ton of diys online if you do a google search."
User (inourspace): "thank you for the tip, I will take a look at Vanguard."
eco_was_taken (eco_was_taken): "I just opened one with Vanguard. It's pretty simple. You can just go to the website and open it up. My initial contribution was a little confusing. They worded it funny (something like "2010 contribution") so I entered the max because that's what I wanted to put in by the end of the year and that's exactly what the withdrew from my account right after it was open. They send you some paperwork to return. I think they asked for a photocopy of my driver's license and some other information.\n\nAll in all much easier than I expected."
strife25 (strife25): "I did the same last year around this time - opening an account online was as simple as filling out an online form and providing a bank account number."
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User (inourspace): "So I just found out thanks to another Redditor that I can start a Roth IRA for 2010 if I do it by April 15th. \n\nAny suggestions on where to go or what to look for?\n\nI would prefer to go somewhere to talk to someone in person before I commit to it, but I am wary of spending heavily on various fees/charges.\n\nAny help would be greatly appreciated :)"
Self: "On my mobile, but check out vanguard. They have low fees and you can talk to someone over the phone. Super easy, but there are a ton of diys online if you do a google search."
User (inourspace): "thank you for the tip, I will take a look at Vanguard."
Self: "If you want to talk to someone in person - check out [Edward Jones](http://www.edwardjones.com/en_US/index.html). I've talked with them before and they're pretty good. the best advice I can give you is to use [Vanguard](http://www.vanguard.com) and invest in something safe (like an index fund) with a low [expense ratio](http://en.wikipedia.org/wiki/Expense_Ratio). Read up about the [differences between a roth and a traditional ira](https://personal.vanguard.com/us/whatweoffer/ira/whichira) and figure out whats the best options for you. Also read up about 401ks because those impact traditional IRAs.\n\nHope that helps!\n\nHere are some guides to setup one:\n\n* [Fool.com](http://www.fool.com/60second/ira.htm)\n* [genywealth.com](http://www.genywealth.com/how-do-i-start-a-roth-ira)\n* [financegourmet.com](http://financegourmet.com/roth-ira.htm)\n* [wisegeek.com](http://www.wisegeek.com/what-is-a-self-directed-roth-ira.htm)"
JackRubysGun (JackRubysGun): "Yeah, don't go to EJ. All they are going to do is jam you in to a bunch of American funds which is something you can do by yourself for less cost. I don't think I have ever seen an EJ client statement that didn't have at least 75% of the money in some flavor of American funds. "
freefrombroke (freefrombroke): "I found a similar experience when I talked with someone at BofA years ago. They suggested a bunch of funds they ran full of loads.\n\nAt least when Vanguard and Fidelity offer their funds, they are low cost."
my_thoughts_exactly (my_thoughts_exactly): "Great fund family suggestions, but just one note... not all Fidelity funds are low cost. Fidelity does offer great index funds (the Spartan family), but they also offer actively managed funds with high costs. If low cost is your goal, just please do not assume that all Fidelity funds fit the profile."
freefrombroke (freefrombroke): "Good point. You still have to do your homework when looking at the funds. I should have said that Fidelity has more low-cost options that are offered."
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User (vints1): "I keep hearing about this and my investment company keeps showing ads for it. I tried to read up on it but I'm just not really clear on why these guys are different. Compared to, say, a standard Total US Stock Index mutual fund, what is different about an ETF in the same sector? What are the risks and rewards associated with an ETF that a mutual fund could not capture?"
Self: "The [wikipedia article on ETFs](http://en.wikipedia.org/wiki/Exchange-traded_fund) is pretty good, and has a section on the benefits of ETFs over an equivalent mutual fund.\n\n"
User (vints1): "Thank you! I don't know why I didn't think to look at wikipedia. I guess I just assumed that the various investment sites online would have better info, but that was by far the best explanation I've seen so far."
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User (vints1): "I keep hearing about this and my investment company keeps showing ads for it. I tried to read up on it but I'm just not really clear on why these guys are different. Compared to, say, a standard Total US Stock Index mutual fund, what is different about an ETF in the same sector? What are the risks and rewards associated with an ETF that a mutual fund could not capture?"
Self: "ETFs are good but be very very very careful with commodity ETFs or ETFs that leverage long or short (unless you will hold them for less than a day). A 2x S&P 500 ETF ******WILL NOT******* give you double the return over a long period of time. "
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User (vints1): "I keep hearing about this and my investment company keeps showing ads for it. I tried to read up on it but I'm just not really clear on why these guys are different. Compared to, say, a standard Total US Stock Index mutual fund, what is different about an ETF in the same sector? What are the risks and rewards associated with an ETF that a mutual fund could not capture?"
Self: "Here is a post from a finance blog that breaks down ETFs vs. Mutual Funds and their benefits. Written from a humerous perspective but definitely will give you some insight into ETFs.
\n
\nhttp://guynance.com/2010/11/06/reader-question-yea-i-got-readers-my-knowledge-of-mutual-funds-would-lose-a-game-of-chicken-to-an-actual-chicken-help-pwwwrease-2/"
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User (timredditwis): "/r/AskReddit suggested I post here:\n\nMy brother is 39, I'm 22. As long as I can remember, he's always lived paycheque to paycheque. He is always short on cash and borrowing money to barely get by. He recently took out a home equity loan on his house to get 'caught up' and now, about 2 months later, he's going for another one. I worry he's going to lose his house because I know he can't pay for these loans each month.\n\nHe makes about $30,000 per year at his job. I make about the same and have more bills than he does, yet I do fine and manage to save quite a bit every paycheque. I suppose I'm just better at personal finance and am a more disciplined spender. How can I help him be the same way?\n\nEDIT: He *does* recognise that he's bad with money. He always has excuses but he would be open to suggestions. The trouble would be getting him to follow through on them."
Self: "There's really not much you can do except educate him. You can try and get him fired up about fixing his situation but in the end, only he can help himself.\n\nIf he likes reading, maybe you can send him a basic personal finance book like "Total Money Makeover" or something.\n\nOr more practically, you can sit down with him with a beer and talk the whole thing out of him."
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User (timredditwis): "/r/AskReddit suggested I post here:\n\nMy brother is 39, I'm 22. As long as I can remember, he's always lived paycheque to paycheque. He is always short on cash and borrowing money to barely get by. He recently took out a home equity loan on his house to get 'caught up' and now, about 2 months later, he's going for another one. I worry he's going to lose his house because I know he can't pay for these loans each month.\n\nHe makes about $30,000 per year at his job. I make about the same and have more bills than he does, yet I do fine and manage to save quite a bit every paycheque. I suppose I'm just better at personal finance and am a more disciplined spender. How can I help him be the same way?\n\nEDIT: He *does* recognise that he's bad with money. He always has excuses but he would be open to suggestions. The trouble would be getting him to follow through on them."
Self: "Would you be willing to sit down with your brother and help him do a budget? \n\nMany times people don't realize how quickly "regular, nonmonthly" expenses can add up. Things like auto insurance, property taxes, income taxes, gym fees, school fees, auto maintenance. Once you start seeing that $1500 per year ($125 per month) is committed to things like this, it changes your perception of your disposable income.\n\nAnother thing might be to figure out the monthly amount of truly disposable income -- money that can be spent on coffee, dining out, movies, etc, -- and translate that to weekly/daily amounts. Knowing that the limit is $20 per week for lunches at work might be really helpful.\n\nUltimately, you can help set a framework for understanding all this, but your brother will need to create the budget and follow through on it. If you create the most perfect, detailed, reasonable budget in the world and hand it to your brother, it won't fix the problem in itself. He's got to want to improve things and has got to exercise some discipline to do it.\n\nGood luck."
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User (timredditwis): "/r/AskReddit suggested I post here:\n\nMy brother is 39, I'm 22. As long as I can remember, he's always lived paycheque to paycheque. He is always short on cash and borrowing money to barely get by. He recently took out a home equity loan on his house to get 'caught up' and now, about 2 months later, he's going for another one. I worry he's going to lose his house because I know he can't pay for these loans each month.\n\nHe makes about $30,000 per year at his job. I make about the same and have more bills than he does, yet I do fine and manage to save quite a bit every paycheque. I suppose I'm just better at personal finance and am a more disciplined spender. How can I help him be the same way?\n\nEDIT: He *does* recognise that he's bad with money. He always has excuses but he would be open to suggestions. The trouble would be getting him to follow through on them."
Self: "Get him into Financial Peace University. It changed my life. It's more of an education and support system for "Total Money Makeover", rather than just a book. Both are from Dave Ramsey.
\n
\n"
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User (timredditwis): "/r/AskReddit suggested I post here:\n\nMy brother is 39, I'm 22. As long as I can remember, he's always lived paycheque to paycheque. He is always short on cash and borrowing money to barely get by. He recently took out a home equity loan on his house to get 'caught up' and now, about 2 months later, he's going for another one. I worry he's going to lose his house because I know he can't pay for these loans each month.\n\nHe makes about $30,000 per year at his job. I make about the same and have more bills than he does, yet I do fine and manage to save quite a bit every paycheque. I suppose I'm just better at personal finance and am a more disciplined spender. How can I help him be the same way?\n\nEDIT: He *does* recognise that he's bad with money. He always has excuses but he would be open to suggestions. The trouble would be getting him to follow through on them."
Self: "Here is a site based around personal finance but written from a humor perspective. It's good for getting people who wouldn't usually care about this stuff to learn. There is a series just started called "The adventures of Lloyd Pancakes and his disapproving bunnies: how to build a portfolio and dominate life" that might help him. Also a video on debt reduction/consolidation that could help him catch up. Links below:
\n
\nhttp://guynance.com/2010/11/07/so-the-credit-companies-think-you-are-a-worse-risk-than-mike-tyson-eh/
\n
\nhttp://guynance.com/2011/01/29/lloyd-pancakes-and-his-disapproving-baby-animals-how-to-build-a-portfolio-and-dominate-life-part-2/
\n
\nGood luck man!"
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User (timredditwis): "/r/AskReddit suggested I post here:\n\nMy brother is 39, I'm 22. As long as I can remember, he's always lived paycheque to paycheque. He is always short on cash and borrowing money to barely get by. He recently took out a home equity loan on his house to get 'caught up' and now, about 2 months later, he's going for another one. I worry he's going to lose his house because I know he can't pay for these loans each month.\n\nHe makes about $30,000 per year at his job. I make about the same and have more bills than he does, yet I do fine and manage to save quite a bit every paycheque. I suppose I'm just better at personal finance and am a more disciplined spender. How can I help him be the same way?\n\nEDIT: He *does* recognise that he's bad with money. He always has excuses but he would be open to suggestions. The trouble would be getting him to follow through on them."
Self: "You cannot change your brother. The sooner you realize that and accept it the better."
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User (mcos): "Hey Everyone,\n\nI'm a software engineer currently working in the US on a H1B visa. I currently contribute 5% of my gross income to a 401k, which is matched by my company. I'm fully vested. My question is as follows: if I end up leaving the US to return to my home country before getting a green card or citizenship, or I leave before the age I can withdraw from the 401k without penalty, can I just leave the 401k in the US and draw down from it when I retire in my home country? Or, should I withdraw everything and pay a penalty and take my investments with me when I leave the US? \n\nThanks...\n\nTL; DR. I'm a foreigner with a 401k, should I liquidate it if I turn out not to be resident in the US in the future?"
Self: "Keep it here until retirement and pay no penalty or take it out and pay penalties and taxes now... and or look into the 72t option..."
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User (mcos): "Hey Everyone,\n\nI'm a software engineer currently working in the US on a H1B visa. I currently contribute 5% of my gross income to a 401k, which is matched by my company. I'm fully vested. My question is as follows: if I end up leaving the US to return to my home country before getting a green card or citizenship, or I leave before the age I can withdraw from the 401k without penalty, can I just leave the 401k in the US and draw down from it when I retire in my home country? Or, should I withdraw everything and pay a penalty and take my investments with me when I leave the US? \n\nThanks...\n\nTL; DR. I'm a foreigner with a 401k, should I liquidate it if I turn out not to be resident in the US in the future?"
Self: "The problem you might have is you could end up getting taxed twice when you take the money out on retirement. 401k investments aren't tax free, they're tax _deferred_. The benefit of a 401k is you can invest pre-tax income, get more compound interest on it so it grows faster, then pay tax on that income when you take it out on retirement. As it's likely your income will be lower when you retire than when you were working, you'll be paying a lower rate of tax, than you would have on the money when you put it in.\n\nThe risk is that you might get taxed twice – once by the US on your income from 401k withdrawals, and then again by your home country. You should check what kind of double taxation treaty your home country has with the US. Also it's possible the future appreciation on the 401k will become taxable by your home country once you resume residency there, even if you leave it in the 401k in the states (for example, if you have a UK ISA, which is a tax-free savings vehicle similar to a US 401k, the US govt taxes you on the interest you earn on it). \n\nThat said, it's highly unlikely even if you do get double taxed that the downsides will outweigh the fact you are getting matched 1:1 by your employer."
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "Pay off your debt.\n\nThis would allow you to drop unwanted insurance coverage - and free up a good chunk of cash in the way of the car's monthly payment."
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "Pay yourself first. "
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "Is this portfolio going to perform better than 5.94%? Unlikely.\n\nAlso what kind of risk is involved in the portfolio? Are you willing to risk loosing your investment? If you do loose it all you now have no assets and still have to pay the loan.\n\nScenarios:\n\nA) You pay off loan. Take money you were using to make loan payments each month and put it into a money market account. (Check with your bank). Result: Debt free and starting to save again while generating interest at money market rates (i.e. better than savings, with more flexibility than a CD)\n\nB) You invest in the portfolio. You keep making loan payments. The return on the portfolio is less than the loan payments, but you don't loose your investment. Result: You've "lost" money in the long run because the loan payments are not balanced by the profit of the portfolio.\n\nC) You invest in the portfolio. You keep making loan payments. The portfolio pays more than the loan payments. Result: You have "made" money because the difference between the loan payments and the portfolio are positive. (Best reasonable outcome)\n\nD) You invest in the portfolio. You keep making loan payments. The portfolio goes bottom up and you loose your entire investment. Result: Your investment is gone and you are still making loan payments. (Worst outcome)\n\nE) You find a CD offering an interest rate higher than you loan interest. (not going to happen, unless it's for like 15 years and your investment is over $10k, still unlikely) You arbitrage the difference between the CD and loan paying off the loan with the CD interest. Result: You are the winner. You've paid off your loan and made a bit of cash in the mean while. This may have been possible three years ago, but interest rates for CD's right now are shit because the Fed is giving bank's loans for 0% or practically nothing, thus the bank not needing to borrow money from you in the form of a CD.\n\nI would do Scenario A. No risk, safest investment. Scenario E is not likely to happen. Scenario B is much more likely than Scenario C or D.\n\nSo the question is how much risk are you willing to take? If the portfolio can't return enough to make the loan payments you have screwed yourself."
molbio (molbio): "A. Definitely A."
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "Is this portfolio going to perform better than 5.94%? Unlikely.\n\nAlso what kind of risk is involved in the portfolio? Are you willing to risk loosing your investment? If you do loose it all you now have no assets and still have to pay the loan.\n\nScenarios:\n\nA) You pay off loan. Take money you were using to make loan payments each month and put it into a money market account. (Check with your bank). Result: Debt free and starting to save again while generating interest at money market rates (i.e. better than savings, with more flexibility than a CD)\n\nB) You invest in the portfolio. You keep making loan payments. The return on the portfolio is less than the loan payments, but you don't loose your investment. Result: You've "lost" money in the long run because the loan payments are not balanced by the profit of the portfolio.\n\nC) You invest in the portfolio. You keep making loan payments. The portfolio pays more than the loan payments. Result: You have "made" money because the difference between the loan payments and the portfolio are positive. (Best reasonable outcome)\n\nD) You invest in the portfolio. You keep making loan payments. The portfolio goes bottom up and you loose your entire investment. Result: Your investment is gone and you are still making loan payments. (Worst outcome)\n\nE) You find a CD offering an interest rate higher than you loan interest. (not going to happen, unless it's for like 15 years and your investment is over $10k, still unlikely) You arbitrage the difference between the CD and loan paying off the loan with the CD interest. Result: You are the winner. You've paid off your loan and made a bit of cash in the mean while. This may have been possible three years ago, but interest rates for CD's right now are shit because the Fed is giving bank's loans for 0% or practically nothing, thus the bank not needing to borrow money from you in the form of a CD.\n\nI would do Scenario A. No risk, safest investment. Scenario E is not likely to happen. Scenario B is much more likely than Scenario C or D.\n\nSo the question is how much risk are you willing to take? If the portfolio can't return enough to make the loan payments you have screwed yourself."
User (bolapara): "A. is exactly what I was advocating. It's a rare 'guaranteed' investment as I am guaranteed not to pay that interest."
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "I would agree with advicevice but one question. Do you have an emergency fund? Also, what other debt do you have? And why would you need to invest at this very moment? I challenge you to think of it this way. If you pay off the car now, you know the outcome and can quantify how much you will save. Under any other outcome, you won't know with any certainty what the outcome will be. In this environment it is better to have less obligations in case anything were to happen. I for one would pay off the car and relish at the thought of having one less major obligation. "
User (bolapara): "Yes, paying off the loan would take about 35% of the total balance.\n\nOnly other debt is mortgage.\n\nAgree with you on the guarantee you get when paying off the loan, that is exactly my motivation for the idea."
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User (bolapara): "I'm seeking other opinions at the behest of my S.O....\n\nI have a balance of cash that would allow me to invest in a managed portfolio. Alternatively, I could take a portion of that cash and pay off the balance of an auto loan (at 5.94%). If I pay off the loan I won't have enough to make the minimum investment for that portfolio and will have to wait until I build it back up.\n\nAny opinions on the matter?\n\nEDIT - You confirmed what I was advocating. Thanks all!"
Self: "Excerpt from a post on guynance.com on a similar topic just with a student loan instead of auto loan:
\n
\nTo pay down the remainder of his student loan, or start slangin money into his portfolio right away. This is always a concern of people fresh out of university/college starting into real life or any time you have debts not secured by assets (ie. Mortgage) and the answer is this: it depends. It depends on whether you are in control of your payment schedule (ie. Can delay making payments for a long time) and also whether you can out earn your interest rate on your loan in the market. Consider the following situation:
\n
\n•Lloyd has 10K of student debt left and has decided that he can put $750 per paycheque into his savings
\n•His interest rate is 4.5% annually so if he leaves his balance at 10K he will owe $450 in interest over the year
\n•To make it simple let’s just look at his first $750.
\nIf he puts it towards his student loan, instead of paying 4.5% interest on 10K ($450) he’s paying interest on $9,250 so his interest would be (9250 * 0.045 = $416.25) and at year end he owes (9250 + 416.25 = $9,666.25) total.
\n
\nIf instead he puts it into his portfolio and at the end his portfolio earns him 6% (750 * 1.06 = $795) then he puts this $795 towards the loan instead he now owes ($10,000 + (10,000 * 0.045)- $795) = $9,655 total. So despite the fact that he paid interest on a larger amount of debt (ISBA: the non interest part of your debt is called “Principal”), he out earned his interest in the market so in the end he came out further ahead.
\n
\n•So if you have super low interest rates on your debt and are confident in being able to out earn your interest rates then go ahead and put your money into your portfolio. From a practical standpoint though, this can be risky and it’s not like the bank will say “my word sir! It appears your portfolio happened to have underperformed due to some Space Alien Hijinx! We at Faceless Bank Co. completely understand please make your interest payment at your earliest leisure!” Nope, if you underperform your interest rate you have to cover the difference immediately and you are that much farther away from money sex lube time.
\n•All said, in huge loans with millions of dollars in interest payments on this line, this MIGHT be worth it in certain situations, however with the average student debt the savings is so minimal compared to the hassle that it’s not worth it. So unless you are saving for something specific and need a lump sum of cash for something, stuff most of your money into paying off whatever debts you have lurking. A small amount can absolutely still be put into long term savings though.
\n"
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Pay off the credit card, the feeling of having no more credit card debt will be more than worth it. I was in a similiar situation a few years ago, payed of my cc debt completely and it felt good. If you are worried about emergencies, you will still have that clean credit card to use in that case."
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Do you have extra money for emergencies? What would happen if you paid off all your debt but something happened and you couldn't work? Would you have to go back into debt? Would paying off your debt allow you to start saving an emergency fund? And would you be diligent enough to do so?"
User (stanleyftw): "Great questions to think about.\n\nMy emergency fund is definitely lacking and I'd like to think I would add to it more once my credit card debt is clear.\n\nThanks for the questions to ponder."
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Do you have extra money for emergencies? What would happen if you paid off all your debt but something happened and you couldn't work? Would you have to go back into debt? Would paying off your debt allow you to start saving an emergency fund? And would you be diligent enough to do so?"
dawiz25 (dawiz25): "I would check out [Dave Ramsey's baby steps](http://www.daveramsey.com/new/baby-steps/).
\n
\nThis gives you a good guide to getting control of your finances. "
User (stanleyftw): "I was just browsing his page the other day. Thanks!"
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "pay off the card. if you carry a balance your paying interest and losing money. if you pay off the balance you won't have that monthly payment anymore so you can spend or save that money.\n\nthe only way it would make sense to not pay off the balance is if you had a savings account that paid higher interest than your credit card. and seeing that credit card interest can be 12%, 16%, 20% or more i seriously doubt that you have a savings account that's going to paying more than that."
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Pay it off and cancel it. Start saving the monthly payment in your savings account, build it up to the same amount as your credit limit, then use yourself as a credit card. Long term, it's much cheaper."
User (stanleyftw): "Is cancelling really a good idea? I only have one credit card and I kind of like knowing that I have "money" if needed even if it's at the cost of paying interest.\n\nDo you have any credit cards still?"
Self: "Nope. I paid them off, then built up a fund equal to the Credit Limit and put that in the bank. If an emergency comes up, I pay cash for it from the fund. Then I start working on putting the money back in as if I was making a payment.
\n
\nI know it seems weird at first, but if you think about it, I'm doing exactly what you are doing without the high interest and heavy fee's. And if for some reason I need to skip a payment, I don't have someone beating down my door."
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Pay it off and cancel it. Start saving the monthly payment in your savings account, build it up to the same amount as your credit limit, then use yourself as a credit card. Long term, it's much cheaper."
User (stanleyftw): "Is cancelling really a good idea? I only have one credit card and I kind of like knowing that I have "money" if needed even if it's at the cost of paying interest.\n\nDo you have any credit cards still?"
zak_on_reddit (zak_on_reddit): "keep the card once you pay it off. you'll still need it to rent a car, buy airplane tickets, purchase stuff online, etc. even better, once you pay it off, try and find a better card, one with a good rewards program.\n\nbut 1st & foremost get rid of the mentality that it's "money". it's not money, it's an IOU. and probably with a significant interest rate. you should get into the habit of never carrying a balance. just because you can afford to pay $25, $80 or $125 a month does not mean that you should. those monthly payments include a lot of interest which means you are losing additional money.\n\nif you can't afford to pay of the card every month you are living beyond your means and throwing away money to the credit card company.\n\nand instead of thinking that the credit card is "money" for an emergency start saving a little bit of money each week until you can accumulate 3 to 6 months of salary. that is your emergency "money". you don't have to pay interest on it to use it and you don't get a bill every month. you can also save that money in a high interest account so it's actually making a little bit of month for you instead of you paying interest to a credit card."
User (stanleyftw): "Good point. Thanks for the advice!"
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User (stanleyftw): "I am getting a decent tax return this year, and with it I can completely pay off my credit card and have a small amount of left over cash for what have you. The other thing I was thinking was pay off 1/2 or 2/3 of the credit card and keeping a larger amount of cash for what have you.\n\nI consistently make more than the minimum payment if that's worth anything.\n\nTl;DR: Use tax return to pay off credit card all the way or part of the way?"
Self: "Pay it off and cancel it. Start saving the monthly payment in your savings account, build it up to the same amount as your credit limit, then use yourself as a credit card. Long term, it's much cheaper."
User (stanleyftw): "Is cancelling really a good idea? I only have one credit card and I kind of like knowing that I have "money" if needed even if it's at the cost of paying interest.\n\nDo you have any credit cards still?"
jdelphiki (jdelphiki): "I agree on paying off the card, but disagree on canceling it. If you're responsible about using credit cards and only spend as much as you have (meaning never carrying a balance), then you can use reward cards and end up earning a few dollars back from what you spend."
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User (macosusci): "i met with a financial adviser today to set up my 403 b plan. I felt really confident at first but after talking with a friend I realized that I didn't ask any of the right questions. I guess the company I went with does something called front loading? Can someone explain this to me in layman's terms? I'm planning on calling the guy back tomorrow. What questions should I ask and what should I look out for? Any advice would be appreciated!!!"
Self: "[Front loading](http://www.investopedia.com/terms/f/front-endload.asp) - A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and, as a result, it lowers the size of the investment.\n\nWhat firm are you investing with? Are you investing in mutual funds? They should give you a list of options your program has and you can look those up (how much they cost, etc)."
User (macosusci): "AXA"
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User (macosusci): "i met with a financial adviser today to set up my 403 b plan. I felt really confident at first but after talking with a friend I realized that I didn't ask any of the right questions. I guess the company I went with does something called front loading? Can someone explain this to me in layman's terms? I'm planning on calling the guy back tomorrow. What questions should I ask and what should I look out for? Any advice would be appreciated!!!"
Self: "This doesn't sound right. Individual 403bs are pretty rare, are you a pastor or something? If you are doing this as an individual you probably need to consider how much you will be contributing, if you won't be exceeding IRA contribution (5k/yr) guidelines you will be much better starting a ROTH IRA through an online brokerage and investing in indexing funds. "
Self: "Might have misread that if this is a financial advisor you met at work (school, hospital etc) you probably don't have much of a choice as to what you are investing in. Unless your job is matching your funds up to some point you might want to consider maxing out a ROTH IRA first then contributing to a 403b. "
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User (macosusci): "i met with a financial adviser today to set up my 403 b plan. I felt really confident at first but after talking with a friend I realized that I didn't ask any of the right questions. I guess the company I went with does something called front loading? Can someone explain this to me in layman's terms? I'm planning on calling the guy back tomorrow. What questions should I ask and what should I look out for? Any advice would be appreciated!!!"
User (macosusci): "Do I want a mutual fund or a variable annuity? What fees are ok? What fees should I avoid!?!"
JackRubysGun (JackRubysGun): "As variable annuities go AXA products are not bad, with that being said. A variable annuity inside a tax deferred vehicle (403b) is redundant. You don't need the variable chassis. And if it is a variable annuity you employer isn't contributing, tell em to pound sand and do the investing yourself. See above."
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User (macosusci): "i met with a financial adviser today to set up my 403 b plan. I felt really confident at first but after talking with a friend I realized that I didn't ask any of the right questions. I guess the company I went with does something called front loading? Can someone explain this to me in layman's terms? I'm planning on calling the guy back tomorrow. What questions should I ask and what should I look out for? Any advice would be appreciated!!!"
Self: "[Front loading](http://www.investopedia.com/terms/f/front-endload.asp) - A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and, as a result, it lowers the size of the investment.\n\nWhat firm are you investing with? Are you investing in mutual funds? They should give you a list of options your program has and you can look those up (how much they cost, etc)."
User (macosusci): "I believe it is a variable annuity. "
Self: "Read up on annuities. I don't know that much about them, but I had one, converted that with vanguard after I left my last company."
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User (macosusci): "i met with a financial adviser today to set up my 403 b plan. I felt really confident at first but after talking with a friend I realized that I didn't ask any of the right questions. I guess the company I went with does something called front loading? Can someone explain this to me in layman's terms? I'm planning on calling the guy back tomorrow. What questions should I ask and what should I look out for? Any advice would be appreciated!!!"
Self: "Many schools and other organizations have multiple 403b providers. If so, take a look at one of the mutual fund providers rather than the annuity providers. You'll avoid the insurance charges of the annuity.\n\nGood luck."
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User (PootyT): "I've done a little bit of research already, and it seems like handling this will be kind of tricky. A relative passed and left a ~$40,000 IRA to be split evenly among 5 individuals, none of whom were his spouse (this matters because the laws are different). The representative from the bank told me that I'd be getting a check for about $400 soon, then I could opt to disburse my share, or keep it in the IRA and get yearly payments that increase over time based on life expectancy (I'm 26 right now). Trying to be responsible, my first thought was, "of course I'll keep it in the IRA and it will make more money and I get a little extra $$ each year!" But the more I read about it, the less attractive that sounds. I have some questions that finance websites aren't really answering:\n\n\n* is there a tax incentive for keeping it in the IRA? I know I will have to pay taxes if I disburse.\n\n\n* If I keep the $$ where it is, I won't be allowed to contribute to it. Does it make more sense to disburse then put in my own IRA that I can contribute to?\n\n\n* Is there a super-awesome way of handling this that will maximize my return and minimize taxes?\n\n\n* Is there something really important that I'm not even thinking about?\n\n\nTHANKS!!"
Self: "I'm not entirely sure I understand what the $400 check is for, unless the asset is a defined benefit plan or something, so I'd talk to a financial adviser. More on that in #4. Everything below relates to IRAs, if it is really a 401k or pension or some kind of annuity, disregard everything following this.\n\n1. You can take a tax deduction for money you contribute to a regular IRA. So if your income is $40,000 and you contribute $4,000 to the IRA, your taxable income for the year will be $36,000 (ignoring everything else). You'll pay taxes when you take the money out, and since you're young, you'll also get hit with a penalty for early withdrawal (usually 10% on top of your marginal tax rate). Early means before age 59.5, or any time you retire between age 55 adn 59.5. \nA ROTH IRA is the opposite. You don't get a deduction for money you contribute, but you're not taxed on money you withdraw. Both traditional and ROTHs are good deal, though a ROTH is typically thought of as a better deal, and they're both better than an unmatched 401k. ROTHs also have an early disbursement penalty. This is all assuming you don't make so much money that a deductible IRA is off the table, and you're left with a nondeductible IRA. \n\n2. I'm not sure about inheritances, but generally if you pull out the money this young, and it is a normal IRA, you'll get hit with a penalty and taxes on the whole thing (assuming the IRA was transferred to you with the same basis, which depends on your how your relative passed the IRA to you). When you re-invest that money, it'll get taxed again when you take it out. \nUnless $8,000 (40k / 5 ways) isn't a lot of money to you, and the hassle of maintaining it exceeds the tax burden, don't take it out. You should be able to move the money to a different investment while maintaining IRA status, as long as the money never hits your account. EDIT2: This may not be accurate for inherited assets, see [this post](http://www.reddit.com/r/personalfinance/comments/faz04/i_was_left_a_nonspousal_beneficiary_ira_halp/c1elt1e). \n\n3. IRA is a retirement fund. Let it grow until you retire. Always max your own ROTH IRA first, then contribute to a normal IRA (assuming your employer doesn't match your 401k contributions - if they do, do that first up to whatever matching limit your employer set). \n\n4. You're thinking about the right things, so hopefully not, but I'm not a financial adviser, accountant, or tax lawyer. If you have a savings account with a large or mid-size bank, ask them if they have a financial planner you can speak with. I know several of the big ones offer this service for free. \nIf that's not an option, it is probably worth a few hundred bucks to talk to a financial adviser anyway, call around and get a good price. Make sure to ask if the adviser is compensated by any of the investments they recommend, it sounds impolite, but you don't want to get steered to a lousy fund so they get a kickback. \n\nEDIT: For ROTH tax exemptions, see [IRC §408(e)(1)](http://www.law.cornell.edu/uscode/26/usc_sec_26_00000408----000-.html) & [IRC §219](http://www.law.cornell.edu/uscode/26/usc_sec_26_00000219----000-.html), for penalties on early disbursements [see IRC §72(t)](http://www.law.cornell.edu/uscode/26/usc_sec_26_00000072----000-.html), and for ROTHs [see IRC §408A(c)](http://www.law.cornell.edu/uscode/26/usc_sec_26_00000072----000-.html). For more explanation & details, see also the [treasury regs](http://www.access.gpo.gov/cgi-bin/cfrassemble.cgi?title=201026), all named "1." and then the statute cite (e.g. IRC §408(e) becomes [1.408](http://www.access.gpo.gov/nara/cfr/waisidx_10/26cfr1e_10.html)). Above all, talk to an expert. No one who is anonymous over the internet counts as an expert, certainly not me. "
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User (PootyT): "I've done a little bit of research already, and it seems like handling this will be kind of tricky. A relative passed and left a ~$40,000 IRA to be split evenly among 5 individuals, none of whom were his spouse (this matters because the laws are different). The representative from the bank told me that I'd be getting a check for about $400 soon, then I could opt to disburse my share, or keep it in the IRA and get yearly payments that increase over time based on life expectancy (I'm 26 right now). Trying to be responsible, my first thought was, "of course I'll keep it in the IRA and it will make more money and I get a little extra $$ each year!" But the more I read about it, the less attractive that sounds. I have some questions that finance websites aren't really answering:\n\n\n* is there a tax incentive for keeping it in the IRA? I know I will have to pay taxes if I disburse.\n\n\n* If I keep the $$ where it is, I won't be allowed to contribute to it. Does it make more sense to disburse then put in my own IRA that I can contribute to?\n\n\n* Is there a super-awesome way of handling this that will maximize my return and minimize taxes?\n\n\n* Is there something really important that I'm not even thinking about?\n\n\nTHANKS!!"
Self: ">The default rule for withdrawal from these plans by non-spouse beneficiaries is to begin minimum required distributions by Dec. 31, 2011, the year after the account owner's death. The alternative is to withdraw the balance of the account's assets within five years of the date of death.\n\n>For each option, income tax (but no penalty) will be due on the amount withdrawn from the IRA and 401(k) accounts.\n\nTo help answer your questions:\n\n* The only tax incentive to keeping it in the IRA is that you will not be subject to ordinary income taxes on the Required Minimum Distributions until withdrawal, while the rest of the money in the IRA will grow tax deferred. The lump sum payout of $8,000 (40k divided by 5) will be taxed as ordinary income.\n\n* It appears that taking the lump sum distribution and taking the tax hit now (assuming you'll be in a higher tax bracket in 5 years since you are currently 26 years of age) would be your best option (I come to this conclusion because you say you want to be responsible with the money and it doesn't sound like the RMD will impact your current situation.) I'd recommend putting the proceeds in a Roth IRA, which you can contribute to in future years.\n\n* Unfortunately no. You only have the two choices that are outlined above.\n\nHope this helps!\n"
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Just in case this isn't obvious: being sensible with money doesn't mean investing in stocks.\n\nSome other basic things if you don't have them down are: learn to budget, save up an emergency fund, and try and plan some basic financial goals for the next few years."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "nallyo2 is correct - invest in what you know. I'm a software engineer and my stock investments are all in what I believe are emerging technologies that I feel will blow up into general use. That's just my 'playing around' investment money, however. My primary retirement portfolio is my 401K which is all in moderately aggressive mutual funds - I'm willing to be a little risky due to my low age.\n\nSince you're 18 and probably don't have a ton of experience in financials or a given field, I would recommend starting by investing in index funds for several reasons. Firstly, they're quite low risk due to the risk being spread out among so many companies. Secondly, they're unmanaged which means you won't be paying for much in the way of fees. There is plenty of evidence out there that funds with lower fees generally outperform highly managed funds with higher fees."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "- Use your intuition. The minute you hear or read something interesting on a company that you're familiar with buy some of their stocks. If you read it in the paper that a company is doing well or that their stock went up you're probably too late. Keep your ear open to other news and companies.\n\n- Don't invest what you can't afford to lose.\n\n- I only buy stocks every quarter because I don't keep up on the research regularly. There is no set time that someone should make a purchase. You do it when you feel like it. Obviously its best to buy a stock when it's on the lower end or "on sale". Sometimes I'll save up for the first quarter of he year and start doing research around April or May. \n\nIt's just a game. Have fun. ;)"
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "I started when i was 20 years old and I am almost 24 now, with the help of my father I have learned a lot, best way is to just get into it and try it ... with money your willing to lose. Personally I like Uranium, gold and silver... you can choose from many sectors, lululemon might be a good to watch. Always watch learn and be patient."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "if you want to be "sensible" with your money at 18...open a roth IRA at vanguard or fidelity. Just about every human being alive WISHES they had started a roth at 18...."
ParetoOptimusPrime (ParetoOptimusPrime): "I started a Roth IRA at Vanguard around 20 y/o; It was one of the best decisions that I've ever made. I never planned to beat the market, just go with the flow, my results are pretty much the same as the overall markets, Djia and the S&P 500. Although I got it after the crash and it has been steadily increasing, so results may vary. "
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Armchair Millionaire book from the library."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Open a sharebuilder account. Buy simple ETFs with low cost like Vanguard. Don't try to beat the market. Let your money grow by dividends, dollar cost averaging, and compounding. "
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Invest in commission free ETFs. It increases exposure, limits risk and eliminates brokerage fees that eat away at returns.\n\nSeriously."
araq1579 (araq1579): "how does one do this?"
Self: "Find a brokerage that has ETFs that you can trade commission free. I have an account with schwab. I opened the brokerage account and they waived the minimum initial deposit because I also opened a free checking account with them.\n\nThere are other firms that allow you to trade a number of ETFs commission free"
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "There is a series i've just started about a fictional character similar to yourself and his quest to build a sweet portfolio entitled "Lloyd Pancakes and his disapproving bunnies: How to build a portfolio and dominate life".
\n
\nContains tips on asset allocation, tax minimization, global diversification, thinking about your timeline for various expenditures over the course of life (including retirement obviously). Part 2 was posted today so check it out!
\n
\nHttp://www.Guynance.com is the site.
\n"
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "The first thing is to read. The actual act of investing in the stock market is effortless these days, so everyone does it, but it really should be seen as an act of utmost arrogance. When you buy a stock, you're betting that you know more than the market--the Goldman Sachs, the PIMCOs, the hedge funds. The market is vicious and efficient and eats most investors alive. Unless you're very smart, disciplined and able to put in full-time effort, stay away from picking stocks.\n\nSo read. I recommend The Investor's Manifesto by William Bernstein.\n\nThere is one safe way to invest in the market suitable for the vast majority of investors: investing in low-cost index funds. An index fund simply tracks the market by buying a broad basket of securities. In any given year, the majority of professionally managed funds fail to beat the market. According to David Swensen, over multidecade periods, the chances of an active investor beating index funds drops to 1%.\n\nVanguard, hands down, has the best index funds available. They charge the lowest fees. I keep almost all my assets with them, and I suggest you do, too.\n\ntl;dr: Read The Investor's Manifesto by William Bernstein. Don't buy individual stocks; buy low-cost index funds. Go with Vanguard."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "I'm in my mid-50s. I can tell you what I learned about picking individual stocks:
\n
\nI can't do it. That is, I can't pick winners.
\n
\nI've done much better with broad-based indexed mutal funds.
\n
\nI believe you can open a account at T.Rowe Price with a small initial deposit if you commit to an automatic monthly deposit. Start a Roth IRA and add to it monthly. "
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Roth IRA, invest in a 2040 or later target date retirement fund."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "IRA or mutual funds. Picking a few stocks doesn't diversify enough risk away from yourself. Getting into a mutual fund or something of the like allows you to move with the market. Sure you probably won't "beat the market" but it's much more sensible that stock-picking.\n\nIf you do go the mutual fund route, go for a growth fund since you're so young. You're able to suffer the swings in it right now and in the long run they're just safer than individual stocks."
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User (robertdenavi): "I recently turned 18 and I want to be sensible with my money. So I've decided to invest in the stock market, do you have any suggestions?"
Self: "Most people seem to be suggesting stocks and IRA accounts. At 18, I'd recommend ensuring that you have liquidity and flexibility in your accounts. Once you put money into the IRA then the cash is locked (with a few exceptions).\n\nDo you have a substantial emergency/liquidity fund already and this is just some extra spending cash you're trying to grow? Do you have any debt like student loans, or will you be paying substantial amounts for college soon? What about buying a house or just paying rent? \n\nFor many people that try to play the stock market they would wind up making a better return on their money by simply paying off all their debts or putting their cash in a high yield savings account for upcoming large purchases."
ajaxdrivingschool (ajaxdrivingschool): "If he puts it into a Roth, he can withdraw the contributions at any time. Not to mention, I am willing to bet his taxes will never be lower than they are now, if he keeps the money for retirement. "
Self: "While you *can* pull money out at any time, you'll pay a 10% penalty unless it's a qualifying withdrawal. That would probably wipe almost any savings he's made in the fund unless he's held them with some decent investments after several years. "
ajaxdrivingschool (ajaxdrivingschool): "No, there is no Roth IRA penalty for contributions. If you withdraw earnings, or make a withdraw from a regular IRA, you will owe the 10% penalty in addition to taxes. "
Self: "What? Any non-qualified withdrawal from an IRA is subject to the 10% penalty. It doesn't matter if it's roth or traditional. See [here](http://www.irs.gov/publications/p590/ch02.html#en_US_2010_publink1000231061), [here](http://www.fool.com/money/allaboutiras/allaboutiras07.htm), or [here](http://www.obliviousinvestor.com/roth-ira-withdrawal-rules/)."
ajaxdrivingschool (ajaxdrivingschool): "From one of your links:\n\n\n>The most important thing to know is this: Contributions (that is, the money that you put into your Roth) can come out at any time, free of taxes and penalties."
Self: "Oh, I realize what I was missing now. But an IRA still doesn't provide a real avenue for growth of your contributions if you need to withdraw them anytime soon. I was just trying to point out that unless he's trying to save for retirement then an IRA might not be the best savings vehicle. "
sol1 (sol1): "It depends entirely on what he wants to save that money for. If he's thinking really long term, starting an IRA at 18 with a decent amount of seed cash is going to put him so far ahead of the retirement game that he'll be able to use money down the road with a lot more flexibility. "
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User (strife25): "Hi All,\n\nI'm a student and have had my sister, who is an accountant and CFO for a small business, handle my yearly taxes. \n\nThis has worked out completely fine for me (she got me about $4,000 in a refund last year), the only qualm I have is that I enjoy being self-sufficient and understand my finances better than she does. \n\nConsidering this, would it be better for her to continue to file my taxes, or should I start to learn how to take care of this for myself? If it's the latter, what tools are there to help me fill out the forms?\n\nThanks in advance!!!\n\n**EDIT** Got in touch with my sister and she recommended I use TaxAct. Thanks a ton for the input everyone!\n"
Self: "I would start taking on the taxes yourself. Learn as much as you can from your sister and always get her help. She is a truly invaluable resource in this instance.\n\nStart doing them alongside her. Right now your taxes are probably very simple, but, it is a great time to start learning so that you have more knowledge and understanding when it gets more complicated."
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User (strife25): "Hi All,\n\nI'm a student and have had my sister, who is an accountant and CFO for a small business, handle my yearly taxes. \n\nThis has worked out completely fine for me (she got me about $4,000 in a refund last year), the only qualm I have is that I enjoy being self-sufficient and understand my finances better than she does. \n\nConsidering this, would it be better for her to continue to file my taxes, or should I start to learn how to take care of this for myself? If it's the latter, what tools are there to help me fill out the forms?\n\nThanks in advance!!!\n\n**EDIT** Got in touch with my sister and she recommended I use TaxAct. Thanks a ton for the input everyone!\n"
Self: "my main question would be who is accountable if she screws up?"
SmokeyDawg2814 (SmokeyDawg2814): "This is a pretty good question and another reason to start doing them yourself with her help."
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User (strife25): "Hi All,\n\nI'm a student and have had my sister, who is an accountant and CFO for a small business, handle my yearly taxes. \n\nThis has worked out completely fine for me (she got me about $4,000 in a refund last year), the only qualm I have is that I enjoy being self-sufficient and understand my finances better than she does. \n\nConsidering this, would it be better for her to continue to file my taxes, or should I start to learn how to take care of this for myself? If it's the latter, what tools are there to help me fill out the forms?\n\nThanks in advance!!!\n\n**EDIT** Got in touch with my sister and she recommended I use TaxAct. Thanks a ton for the input everyone!\n"
Self: "If you're intelligent enough to be on reddit and asking this question here, taxes will be a breeze for you. Surprisingly, the 1040 instructions are generally excellent. Shouldn't take you more than an hour."
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User (strife25): "Hi All,\n\nI'm a student and have had my sister, who is an accountant and CFO for a small business, handle my yearly taxes. \n\nThis has worked out completely fine for me (she got me about $4,000 in a refund last year), the only qualm I have is that I enjoy being self-sufficient and understand my finances better than she does. \n\nConsidering this, would it be better for her to continue to file my taxes, or should I start to learn how to take care of this for myself? If it's the latter, what tools are there to help me fill out the forms?\n\nThanks in advance!!!\n\n**EDIT** Got in touch with my sister and she recommended I use TaxAct. Thanks a ton for the input everyone!\n"
Self: "my main question would be who is accountable if she screws up?"
freefrombroke (freefrombroke): "If she prepares the taxes then she should be signing the return as the preparer. Though she may not since she's doing it more as a favor than a profession. If it's signed then she takes on some accountability."
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User (strife25): "Hi All,\n\nI'm a student and have had my sister, who is an accountant and CFO for a small business, handle my yearly taxes. \n\nThis has worked out completely fine for me (she got me about $4,000 in a refund last year), the only qualm I have is that I enjoy being self-sufficient and understand my finances better than she does. \n\nConsidering this, would it be better for her to continue to file my taxes, or should I start to learn how to take care of this for myself? If it's the latter, what tools are there to help me fill out the forms?\n\nThanks in advance!!!\n\n**EDIT** Got in touch with my sister and she recommended I use TaxAct. Thanks a ton for the input everyone!\n"
Self: "Any chance you could just get her to run through this year's with you there?"
freefrombroke (freefrombroke): "I like this answer. If you can do the taxes yourself and then run them through your sister to see if you did everything correctly or see if you missed anything, this would help you understand your taxes better (or at least it could)."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "Provided you have a positive outlook on the future of the global economy and patience, I would suggest the following system.\n\nThis is not my own idea, btw.(non english btw, so I hope I can work it out with the meaning of different words)\n\nThe system is based on 2 basic principles.\n\n1. It's not the current price your stock has, but the average price you paid for that stock over a longer period that determines it's value.\n\n2. Whatever happens, regardless of financial bubbles, the whole of the economy tends to have a positive growth when seen over a period of 5-15 years.\n\nSo what you do is you invest in "shares" of a few companies that have a large portfolio of different shares of all companies on the index.\n\nThese "shares" tend to go up and down in small amounts and follow the general economic development in the long run.\n\nSo let's say you invest half of your money in these "shares", you now have a start value for you shares.\n\nWhen the shares go up, you've made virtual money, hurray.\n\nHowever when the shares go down, you can start lowering the average price at which you bought the whole package, by slowly buying additional shares.\n\nAnd in this fashion, lower the average loss per share.\n\nNow in the long run, chances are that your shares will return to the point you started, however now you have more shares which you paid less for when you started.\n\nEasy money?\n\nNo, this wil only work if you invest over a long period and the amount of shares you trade and the gains you make outweigh the transaction costs and you have enough financial buffer in case you happen to get in at the current 10 year high, before everything gets cut in half and you need the money for something else.\n\nedit: Gold on the short/mid term period is also interesting, provided that the dollars that you will sell the gold for will have decent value by the time you do....."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "vanguard index fund."
SwagOnInfinity (SwagOnInfinity): "Somebody knows what he or she is talking about"
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "vanguard index fund."
unforgyvn (unforgyvn): "Which index? Just curious, I'm in a similar money situation and have been eyeballing the S&P 500 and their emerging markets index. "
Self: "i like [VFINX](http://www.google.com/finance?q=MUTF:VFINX)"
jameson71 (jameson71): "[VTWSX](https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT) is a pretty good choice too."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "For me it would be paying off debt. Starting with the highest interest rate and stopping when I hit the loan that is equal to CPI. If any is left over I would invest it...somehow."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "Do you have an emergency fund outside of this money? If not, then I suggest a Money Market account. Most require $10K minimum. It pays the highest interest for a savings account and still allows you quick access to your money. If you have an emergency fund outside this money, then Vanguard is the way to go."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "Pay off my student loans, therefore saving myself interest and the ability to make more money :)"
JuicyBoots (JuicyBoots): "Same for me. Not exciting at all, but it certainly would be the smart thing to do."
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User (isitlunchtimeyet): "[Here](http://www.reddit.com/r/AskReddit/comments/fbngl/reddit_if_you_had_10000_to_use_however_you_wanted/) is the old post. Most said CDs, some said pay off debt (but i don't have any), there was even talk of a gold shitting dog. What are your ideas?"
Self: "Silver"
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Well, financing for credit alone might not be worth the extra cost of the financing. Depends on what rate you get.\n\nMy rule of thumb is if I can get a low rate (<5%) i generally finance about half the car and wait 3-6 months to assure its not a lemon. You'll have a lot more recourse with a lemon with a bank owning a large portion of the car than just yourself. Once I'm happy with the car's reliability after a couple long trips, I pay the whole loan off. \n\nSo basically, on a purchase this large, I'm willing to pay a couple 100 dollars to guard against a lemon, but thats it. After that, the loan is gone.\n\nLoans are almost always a bad thing, but car loans are especially terrible as its a large loan on a depreciating asset (usually at higher interest rates as well).\n\n"
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Cash, because it feel fantastic when people ask you how much your monthly payment is and you get to respond with, "What monthly payment? :)""
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "I would pay cash. Don't you have credit cards? If you don't start with a secured credit card.\n\nAnd don't buy a brand spankin' new car either. That's foolish."
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Loans are always bad, always, because you end up paying more for it than what it's worth. And since cars are depreciating assets (their value doesn't go up in time, unlike real estate), you end up paying much more for the car when you first bought than when the loan has matured and you want to sell it. \n\nThat being said, some car dealerships (like Toyota during their whole recall last year) will charge a 0% interest rate for the loan. This is great since inflation is higher than 0%, so over the length of the loan, you pay less than the price of the car in real dollars."
tsunam (tsunam): "If the original poster has no real credit rating, then a small loan (say 2k) for the car paid over 2 years will improve would be well worth the loan."
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Pay cash if possible. If you get a loan, even a 0% loan, you're committing your future self to monthly repayments for the next x years. "
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Ask what type of loan you can get. If they offer you an 8% loan, tell them to piss up a rope. If it's 2-3% or less, then go ahead and take it. You can toss the money into an account and make up most of the difference in interest. Looking forward to the house, a loan of this sort will make it significantly easier."
rhbast2 (rhbast2): "Anything less than the inflation rate ~4% means that you should take the loan although sometimes you can negotiate better if you are paying cash."
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "If you decide to go with a loan, definitely avoid trying to get financing from the dealer. Try getting pre-approved for a specific loan range from a credit union instead. The benefit of doing this, is that you can negotiate for a better price on the car because you are simply cutting the dealer a check and saving him/her the cost of going through the financing process - which can translate to a good 5-10% off the car's sale price.\n\nSecondly, "0% financing" is a myth because they make up for some upfront money through the financing process and refuse to negotiate on the sale price because of it. Besides, since you don't have a great credit history yet they might refuse that offer anyway.\n"
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "Cash. No doubt.\n\nA major financial goal is to have enough money to really enjoy life, retirement, travel and buy toys. If you are worried about your credit score you are saying that you will never be able to do those things unless you borrow money.\n\nIf you are responsible enough to save up for a car then you are responsible enough to save up the money to pay for other things as well. You are well on your way to being wealthy by just avoiding a car payment.\n\nRemember, the majority of people borrow money, are in debt, and broke when it comes to net worth. Be weird. Pay for things and pile up the money."
csyuppie (csyuppie): "Dave Ramsey? :)"
Self: "People call me Dave Ramsey Jr."
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User (tunacow): "I'm planning to buy my first car in the next couple of years. I have enough that I could pay for it with cash, but I'm wondering if it might be a good idea to finance at least part of it to beef up my credit history for when I eventually need a home loan.\n\nIs there any reason to get a car loan when you can already afford the car?"
Self: "PAY CASH!!!!\n"
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "If stocks is where you want to be (since you are looking at SP)...I would look closely at their dividend funds...\n\nif your going to be in stocks longer term...dividend paying stocks is where to be..."
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "I just invested in [VFIFX](http://www.google.com/finance?q=VFIFX) for my Roth IRA.\n\nThis is a target date fund with a VERY low expense ratio (0.19%). This should get you a good mix and evolve over time with a completely hands off approach. This will keep you diversified and not overly exposed to stocks."
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "My current mix is as follows:\n\n45% VTSMX (or the admiral equivalent if you can afford it)\n25% VGTSX\n10% VIPSX\n20% VBMFX\n\nThis provides me with 70/30 stock to bond, 33/66 Inflation Protection/Ordinary Bonds, and 35/65 International/Domestic exposure. I may add some REIT (Real Estate) exposure at a later date, though I am not sure, since I want to Keep It Simple.\n\nI'm 31. While the target retirement accounts are ok, I like having a little finer control over the percentages of TIPS/Bonds, International/Domestic and Stock/Bond. I also like having direct control of where money inflows go. This helps me to rebalance my accounts with new money, rather than old money (At least at the beginning. I hope to one day have the 'problem' of having enough money in these accounts that one can't just fix errors in asset allocation by changing where new money is allocated).\n\nAbove all, however, is to keep it simple, and to stick to your plan of maxing out your Roth each year. As some of the other posts mention, investing can be made very *simple* but is not at all *easy* (at least not for all people). The difference being that while it can be simple to put together a financial plan, sticking to that plan can be difficult, especially in bear markets.\n\nAlso, another universal truth is that no one knows where to be in the future. So it's best to buy the whole market, stay the course with your savings plan, and tinker with the ratios above, IMO."
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "You're on the right track. If you're retiring between the years 2045 and 2050, now is a great time to open an IRA with index mutual funds. (passive investments that try to mirror the market and its performance)\n\nThe target retirement funds will provide you with returns from several different asset classes both domestic and international; Placing your money in the S&P 500 index fund wont provide you with the same diversification (The S&P 500 index funds invests in the 500 largest US stocks)\n\nGiven a 35 year span, keeping your expenses low and contributions steady you should have yourself a pretty nice nest egg saved up by the time you retire.\n\nVTSMX will you give you 100% exposure to stocks. If you are comfortable with that risk, that is the route to take. With 35 years left before retirement, having 100% of your retirement assets in the stock market is perfectly acceptable. \n\n"
SwagOnInfinity (SwagOnInfinity): "Excellent advice. It might be a good idea to put some of that money in international stocks, specifically emerging markets. They tend to be more volatile, with greater opportunity for growth, and you'd diversify your portfolio a bit. They tend to have a higher expense ratio, however. I know this is true of Vanguard.\n\nPersonally, I'd recommend putting 80 percent of your money in stocks, and 20 percent in bonds. Of that 80 percent, 70 percent in a domestic index fund and 30 percent in Vanguard's emerging markets fund."
meatloafsurprise (meatloafsurprise): "Isn't 20% in bonds a little high for someone looking to retire in the 2045-2050 range?"
syzygic (syzygic): "The amount in bonds depends entirely on your risk tolerance. If you can handle the risk that comes along with 100% stocks, then I agree. With that long of a time horizon, history has shown that 100% stocks would be ok.\n\nBut here is what often happens: Someone has 100% stocks, and then a bear market hits before they know it, 33% of their investment is gone. They then pull out their money because they 'know' it will get even worse. Then the recovery starts, but no one goes back in because 'surely' it will take a double dip. Then everyone recognizes as a recovery, only half of it has already taken place.\n\nThis describes many investors, and certainly means that they should have not been 100% invested in stocks in the first place.\n\nI don't have a source, but I have read that although the market has returned X% per year over a given time period, actual investors on average have seen much less than X% due to trying to time when to enter/exit various markets. IMO, the best thing to do is to find the asset allocation that you won't lose sleep over (harder than it seems!) and just keep plugging along, investing in what your plan supports. For some this will be 100% stocks, but for others it will be less."
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "I am 25, I have had a Roth IRA at vanguard for the last 5 years or so and highly recommend it. They offer some of the lowest expense ratio funds around. I use the target retirement funds. I set up automatic monthly withdraws to max it out every year and just let it take care of itself. \n\nAlso , if you want to be a little more aggressive invest in the next fund up from your actual planned retirement year. For example, I invest in the 2050 target retirement fund even though I plan to retire earlier than 2050."
strife25 (strife25): "I have the same fund and it worked great - made about $800 in the past year from what I was able to contribute. I would definitely recommend a target retirement fund for anyone who is looking to open a ROTH but don't want to deal with the time required to manage their portfolio."
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User (DinoVixen): "I am considering put the max into a vanguard roth ira for both last year and this year. Any suggestions for which funds to choose and the mix? \n\nI'm leaning towards index funds and at first was just thinking about going with their S&P because it's all a bit overwhelming and I know very little. After looking at the current make-up for the 2045 and 2050 aim retirement funds I'm thinking about putting something into VTSMX or VGTSX. \n\nIs now even a good time to open an ira with index funds? Ahh...thanks."
Self: "Here's a great post I saw talking about what the author would do in 8 different scenarios at vanguard depending on if they could only choose 1, 2 all the way up to 8 funds in their portfolio.\n\nhttp://www.obliviousinvestor.com/8-sample-and-simple-portfolios/\n\nexamples: \n\nOne-Fund Portfolio\n\n * 100% Vanguard Target Retirement Fund of your choice.\n\nTwo-Fund Portfolio\n\n * 70% Vanguard Total World Stock Index (VTWSX, VT)\n * 30% Vanguard Total Bond Market Index (VBMFX, BND)"
d12anoel (d12anoel): "Right now I am 100% into VTIVX (Vanguard Target Retirement 2045), how would I go about to add a diff fund in to my Roth IRA? (Sorry noob question) Or is it because I have the Target Retirement I cant change to a 2 fund? Was thinking of getting more international exposure thats why...any Vanguard recommendations?\n\nTIA for all hopeful replies"
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