Since we are on the topic of investing and diversifying, does anyone work for a investment brokerage company? I just got a job at one of the national firms and I have to move ALL of my securities accounts over there (anti insider trading laws). I have never been comfy about having all of my eggs in one basket. Just curious as to how someone else splits out their investments when they are forced to do this....
I'm taking a finance class. I hate this ****. I'm poor. I have a ton of student loan debt. Don't ask me about my future. Any papers about asset allocation and all that other crap is useless to me. End rant.
Uh no. I was asking that question facetiously. You cannot max out both a Roth IRA and a Traditional deductible IRA in the same year. The maximum you can invest between the 2 is $4,000 - not $4,000 each (not counting the catch up provision). You need to read the fine print a little more carefully. Im still amazed by the lack of knowledge by the general investing public.
You are correct. That's the problem with sites like the Motley Fool, Suze Orman, or Yahoo personal finance.
Having all of your securities at one firm does not equal to having all of your eggs in one basket. Having all of your money in 1 stock = eggs in one basket. Having multiple stocks/bonds/whatever at 1 firm is no different than having it at 15 different firms (unless your account is over the SIPC limit). Mutual Funds could solve your problems. Legal disclaimer: The above statement(s) does not constitute financial planning advice.
Vanguard's portfolio analyzer tells me my mutual funds are 95% invested in stocks. I'm 32 and single, and my only debt is student loans, so I can afford to take more risk. If your company has a 401(k) plan that matches, and you aren't contributing to it, you are losing out on free money. My company matches up to 6%, so I take full advantage of that.
That's conventional wisdom and it works for you because your debt is probably at a low interest rate (and may also be deductible). However, what happens if you have non-deductible consumer debt with an APR of 25%? Which is better - the match or paying off the credit card debt? Legal disclaimer: The above statement(s) does not constitute financial planning advice.
#1 Diversify and rebalance is the 1st rule I approach it this way..... US equities (mine is about 45%): Start with index funds, like 500 or total US market ones. Because large caps are so well known, the fee savings is great and they will almost surely outperform more manged large cap ones. You might also supplement with managed mid and small cap funds where the fees are worth it for a fund doing good research on less well known companies. International equities have been underused IMO. I have had about 35%. You also might start with an index (weighted mostly with big Europe and Japan companies) but also have some more managed funds in emerging markets. This has been a rockin part of my portfolio for a few years, but it is always possible buying now is buying high. Though the performance earning data still suggests established Pacific Rim markets, established Europe markets Emerging Markets (covers other less developed countries/less established markets) are cheaper than comparable US equities---so I will rebalance but not re-weight. Other diversification, 20%. Convertables, real estate funds, funds with heavy dose of prefered stock, blended bond funds, international/global bond funds, inflation protected bond funds, funds liked to commodities this is my plan anyway, I am aggresive (figure I have 30+ years) but also very diverse, but I am not a financial advisor.
i always get a good laugh at work when the news guy calls out an upgrade or downgrade by dodge & cox. dodgin cocks. he he. he he.
Well I'll be damned, you learn something new everyday. I never had to worry about it because I don't qualify for a Roth. Sorry to offend you oh enlightened one.
Don't get too comfortable with those double-digit returns, 2000-2001 pretty much rendered that moot (NASDAQ lost 2/3 of it's value). I'm thinking anyone who invested between the late '60s and very early '80s would say the same thing as well. Probably depends on the stock or sector. Our basic plan had 5 or 6 different funds basically representing different asset classes; I would have liked more choices but then I would have had to talk to a Financial Planner (whom I don't respect or trust much, just based on my experience being recruited by them in college). I went ahead and dumped it all International Stock: highest average return but also most volatile, same age as you are so I'll probably keep it in that asset class for a while, then transition to small-cap, then mid, then blue chips.
Until this year I was a consultant not covered by a retirement plan so I could contribute to a traditional IRA. I had an adjusted income over $110k so I could not contribute to a Roth.
Sherv, I'm a few years younger than you and I've always been close to 100% stock..Like others have said you are young enough to take on the risk, like a few others I'd go mostly international if I were you, I'm currently at 60% international with the other 40 pulling large and mid cap.. I don't know why people say never look at your 401K, I like to get daily updates from Morning Star on how everything I have is performing, but that's just me I guess.. I do have a question though, my company doesn't match on our 401K but they give us 3% of our salary every pay period into our 401K even if we are investing or not into it... Almost everyone I talk to has a matching system at their jobs, is this practice really rare?
How often should you rebalance? And when you say 'rebalance', are you talking about changing your current allocations, or just getting your assets in line with your current allocations? I haven't rebalanced since opening up my plan 4 years ago. My balance % is within a few percentage points of my current allocations. Is this good or bad? Or meaningless?
You probably have a safe harbor plan. 401k plans are qualified plans which have discrimination rules. You can't have only the highly paid people contributing unless you have an exception like safe harbor. More common among smaller companies
RIET, what do you do for a living? Also, do you (or anyone else) have any suggestions for books, magazines, websites, etc. Pretty much all I do is read about investing and saving. I started out with easy to read books like Personal Finance, Investing, and Economics for Dummies and I'm reading a small book now about annuities. I have subscriptions to Money, SmartMoney, and Kiplinger and I read them cover to cover. While, obviously, not all it is has been retained and I'm still really green, I'm wanting to learn as much as I can. It is a ton to comprehend and try to remember but hey, at least I'm trying.
