Investing for Retirement

[Michael]

I just took a dive into the stock market because im a gambling man--nothing too serious, just dabbling to perhaps start to build a portfolio outside my 401K.

Do you guys have some good resources you use? Anyone's word you take as gospel etc? Good daily reading that you find to be pretty consistent?

This may not even be the appropriate thread.

What are your goals with this money? Will you need it in the near future for something like a home down payment?

If your goal is retirement, just include the money as a part of a 3 fund portfolio. Ideally you'll prioritize low cost equity indexes (total market US & total international) in the taxable account because it's likely more tax efficient.

FWIW, recently my wife and I have decided we'd like to buy a weekend home in the next 2-5 years for business and recreation purposes. For a second home you have to have a fairly large down payment, so I've stopped buying equity indexes in my taxable account and now add money to a conservative money market fund. The funds in that money market are added to the bonds percentage in my 3 fund portfolio and I continue to buy equity indexes in my 401k. It's not optimal from a tax/performance perspective, but that's okay, we have to live our lives. If we end up purchasing a 2nd house and use the money market cash, I'll re-balance our entire portfolio by buying total bond indexes elsewhere (401k, ROTH IRA, etc).

I know I'm a broken record about the 3 fund portfolio, but the performance is excellent and it's flexible enough cover life events like upcoming big purchases. In my opinion, if you just stick with a 3 fund portfolio you'll be way ahead of the curve.

[Smith Corks One]

Here's a question that will show my level of ignorance on investing.

When you retire, and reach the appropriate age to start taking distributions from a 401k or IRA, does the money remaining in the account after each distribution continue to be invested in the same way it was before retirement? So, theoretically, if your distribution was a small enough percentage of your balance, your balance could stay the same or even continue to grow?

[go birds]

I just took a dive into the stock market because im a gambling man--nothing too serious, just dabbling to perhaps start to build a portfolio outside my 401K.

Do you guys have some good resources you use? Anyone's word you take as gospel etc? Good daily reading that you find to be pretty consistent?

This may not even be the appropriate thread.

What are your goals with this money? Will you need it in the near future for something like a home down payment?

If your goal is retirement, just include the money as a part of a 3 fund portfolio. Ideally you'll prioritize low cost equity indexes (total market US & total international) in the taxable account because it's likely more tax efficient.

FWIW, recently my wife and I have decided we'd like to buy a weekend home in the next 2-5 years for business and recreation purposes. For a second home you have to have a fairly large down payment, so I've stopped buying equity indexes in my taxable account and now add money to a conservative money market fund. The funds in that money market are added to the bonds percentage in my 3 fund portfolio and I continue to buy equity indexes in my 401k. It's not optimal from a tax/performance perspective, but that's okay, we have to live our lives. If we end up purchasing a 2nd house and use the money market cash, I'll re-balance our entire portfolio by buying total bond indexes elsewhere (401k, ROTH IRA, etc).

I know I'm a broken record about the 3 fund portfolio, but the performance is excellent and it's flexible enough cover life events like upcoming big purchases. In my opinion, if you just stick with a 3 fund portfolio you'll be way ahead of the curve.

No goal in mind really--mainly just something to do lol.

But as i begin to build my portfolio, perhaps just a rainy day fund, or depending on performance, yes a down payment on a house (or perhaps even just paying off a mortgage).

I took a brief glance at the 3 fund portfolio and have been meaning to take a deeper dive, just havent had the opportunity to sit down and soak it in, but i like what i saw.

[Michael]

Here's a question that will show my level of ignorance on investing.

When you retire, and reach the appropriate age to start taking distributions from a 401k or IRA, does the money remaining in the account after each distribution continue to be invested in the same way it was before retirement? So, theoretically, if your distribution was a small enough percentage of your balance, your balance could stay the same or even continue to grow?

Yes, the money can be invested the same way (or not), however 401k's, IRA's and ROTH IRAs are a little bit different distribution wise. By age 70.5 IRAs require a minimum withdrawal rate as you age. Same with 401k's. Here's a calculator that shows the distribution requirements.

Roth IRAs do not require a minimum distribution every year. There are other IRA variations that I can't speak to.

From a theoretical perspective, as you grow older and your timeline shrinks generally your portfolio holding should become more conservative.

I took a brief glance at the 3 fund portfolio and have been meaning to take a deeper dive, just havent had the opportunity to sit down and soak it in, but i like what i saw.

Excellent! Let us know if you have any questions.

[IMADreamer]

Can anyone here elaborate on SEPP and put it in layman's terms?

[Michael]

No fee index funds:

Fidelity Investments just beat all of the low-fee index fund competition to a move long expected: It will be the first fund company to offer core index funds without any management fee.

On Wednesday, Fidelity announced the Fidelity Zero Total Market Index Fund and the Fidelity Zero International Index Fund will be available to investors on Friday. "Investors will pay a 0.00 percent fee, regardless of how much they invest in either fund, while gaining exposure to nearly the entire global stock market," Fidelity said in a release.

Link


Amazing.

[Swirls]

No fee index funds:

Fidelity Investments just beat all of the low-fee index fund competition to a move long expected: It will be the first fund company to offer core index funds without any management fee.

On Wednesday, Fidelity announced the Fidelity Zero Total Market Index Fund and the Fidelity Zero International Index Fund will be available to investors on Friday. "Investors will pay a 0.00 percent fee, regardless of how much they invest in either fund, while gaining exposure to nearly the entire global stock market," Fidelity said in a release.

Link


Amazing.

So no trading fees or expense ratios at all? Holy hell.

There's actually a really solid Fidelity credit card I'm considering picking up. 2% cash back on everything, no annual fee, but the caveat is that the cash back is actually deposited into a Fidelity investment account. So it's a neat way to ensure you're putting money towards retirement. I wonder if this no fee index fund would be part of that family allowed by the credit card?

[IMADreamer]

No fee index funds:

Fidelity Investments just beat all of the low-fee index fund competition to a move long expected: It will be the first fund company to offer core index funds without any management fee.

On Wednesday, Fidelity announced the Fidelity Zero Total Market Index Fund and the Fidelity Zero International Index Fund will be available to investors on Friday. "Investors will pay a 0.00 percent fee, regardless of how much they invest in either fund, while gaining exposure to nearly the entire global stock market," Fidelity said in a release.

Link


Amazing.

So no trading fees or expense ratios at all? Holy hell.

There's actually a really solid Fidelity credit card I'm considering picking up. 2% cash back on everything, no annual fee, but the caveat is that the cash back is actually deposited into a Fidelity investment account. So it's a neat way to ensure you're putting money towards retirement. I wonder if this no fee index fund would be part of that family allowed by the credit card?

I think I'm going to look into that. Might only end up being a few hundred bucks a year but it's a nice passive way to invest.

[Michael]

This news seals it for me regarding Vanguard. They're generally excellent and it's where I currently buy taxable funds because I setup the account like 7 years ago. However, by today's standards Vanguard starting to lag the competition in certain respects. For example, Vanguard's website and support is generally considered inferior to other low cost options like Fidelity and Charles Schwab. I think if I were creating a new account today I would rather do business with a different firm.

I have a Fidelity account via my 401k. I think I'm going to start making my taxable contributions over there.

[Swirls]

I think I'm going to look into that. Might only end up being a few hundred bucks a year but it's a nice passive way to invest.

Here you go... https://www.fidelityrewards.com/credit/ ... ng=en&exp=

Also, here are the eligible funds per their terms and conditions:

Eligible accounts include most nonretirement registrations as well as Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Fidelity Charitable® Giving Account®, Fidelity HSA®, and Fidelity-managed 529 College Savings Plan accounts.