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      12-04-2019, 12:42 PM   #89
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Originally Posted by bimmer456 View Post
I don't like having to pay anyone to manage anything. I just own stock and manage it myself. Costs me nothing and I even get dividends to reinvest or cash out.
Investing yourself is great if you can do it properly, most people cannot, which is the appeal of index funds.

Index fund expense ratios are extremely low nowadays. For example Fidelity's S&P 500 index fund FXAIX is 0.015% ER, which equates to $0.15/$1000. They even offer a zero cost index fund FZROX. These funds also offer dividends in which you can reinvest or cash out.
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      12-04-2019, 02:39 PM   #90
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I feel like such a slacker reading the responses in this thread.
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      12-04-2019, 04:05 PM   #91
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Originally Posted by damageprone View Post
Index fund is a type of mutual fund, but not vice versa.

A mutual fund is an investment program funded by shareholders that trades in diversified holdings and is professionally managed actively or passively.

Index funds usually are mutual funds that follow a specific index, AKA S&P 500, total stock market, International total stock market, etc. Index funds tend to be cheaper to hold as there is nobody actively managing them.
Thanks for the clarification!
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      12-05-2019, 12:18 PM   #92
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Quote:
Originally Posted by damageprone View Post
Investing yourself is great if you can do it properly, most people cannot, which is the appeal of index funds.

Index fund expense ratios are extremely low nowadays. For example Fidelity's S&P 500 index fund FXAIX is 0.015% ER, which equates to $0.15/$1000. They even offer a zero cost index fund FZROX. These funds also offer dividends in which you can reinvest or cash out.
These are the ones that my company typically sticks with in their 401K programs as we have so many people that don't participate. You can explain expense ratios all you want...all they see is that it's money they don't see in their check.
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      12-05-2019, 02:27 PM   #93
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These are the ones that my company typically sticks with in their 401K programs as we have so many people that don't participate. You can explain expense ratios all you want...all they see is that it's money they don't see in their check.
Everyone should contribute at least to the company match. That is free money. 42% of my current 401k balance is from the company match (and the growth on that match).
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      12-05-2019, 02:36 PM   #94
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Everyone should contribute at least to the company match. That is free money. 42% of my current 401k balance is from the company match (and the growth on that match).
I'd recommend maxing out at $19000 if you can, unless your company has poor and costly fund options. Especially if it will drop you to a lower tax bracket.

Last edited by grocerylist; 12-05-2019 at 02:47 PM..
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      12-05-2019, 03:05 PM   #95
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Quote:
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Everyone should contribute at least to the company match. That is free money. 42% of my current 401k balance is from the company match (and the growth on that match).
I'd recommend maxing out at $19000 if you can, unless your company has poor and costly fund options. Especially if it will drop you to a lower tax bracket.
I would also max out IRA and Roth IRA as you can trade individual stocks with those. Max out Roth IRA, traditional IRA and Roth 401k. If leaving a company roll over all 401ks to equivalent IRA (Roth 401k to Roth IRA and traditional 401k to traditional IRA). If putting money in Roth 401k it will not lower taxable income but that is for the better because you don't pay taxes later when it is worth a lot more and thus a lot more taxes.
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      12-05-2019, 04:50 PM   #96
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I'd recommend maxing out at $19000 if you can, unless your company has poor and costly fund options. Especially if it will drop you to a lower tax bracket.
I max everything: pre-tax 401k, catch up 401k, after tax 401k (which I rollover to a Roth every year), and 2 traditional IRA's + catchup that I then roll to a Roth every year.
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      12-05-2019, 05:44 PM   #97
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Originally Posted by bimmer456 View Post
I would also max out IRA and Roth IRA as you can trade individual stocks with those. Max out Roth IRA, traditional IRA and Roth 401k. If leaving a company roll over all 401ks to equivalent IRA (Roth 401k to Roth IRA and traditional 401k to traditional IRA). If putting money in Roth 401k it will not lower taxable income but that is for the better because you don't pay taxes later when it is worth a lot more and thus a lot more taxes.
Unless the rules change.
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      12-05-2019, 05:52 PM   #98
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Quote:
Originally Posted by grocerylist View Post
I'd recommend maxing out at $19000 if you can, unless your company has poor and costly fund options. Especially if it will drop you to a lower tax bracket.
I max everything: pre-tax 401k, catch up 401k, after tax 401k (which I rollover to a Roth every year), and 2 traditional IRA's + catchup that I then roll to a Roth every year.
I don't think my company allows roll over of 401k unless I leave. Maybe they will allow it after I'm fully vested but I don't know. They give me 5 percent automatically no matching just free. But that goes into another supplemental retirement account that takes a few years to be fully vested and doesn't have a Roth option.
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      12-06-2019, 04:18 AM   #99
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      12-06-2019, 07:56 AM   #100
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Quote:
Originally Posted by bimmer456 View Post
I don't think my company allows roll over of 401k unless I leave. Maybe they will allow it after I'm fully vested but I don't know. They give me 5 percent automatically no matching just free. But that goes into another supplemental retirement account that takes a few years to be fully vested and doesn't have a Roth option.
The inservice rollover is just the after-tax contributions. It's called a mega back door Roth. It's not allowed by all plans.
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      12-06-2019, 09:57 AM   #101
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Quote:
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Quote:
Originally Posted by bimmer456 View Post
I don't think my company allows roll over of 401k unless I leave. Maybe they will allow it after I'm fully vested but I don't know. They give me 5 percent automatically no matching just free. But that goes into another supplemental retirement account that takes a few years to be fully vested and doesn't have a Roth option.
The inservice rollover is just the after-tax contributions. It's called a mega back door Roth. It's not allowed by all plans.
I would max that out and rollover if I could, since the max is much higher than an IRA, so maybe max the IRA and that, then roll it over as soon as I can and manage it myself.
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      12-06-2019, 11:17 AM   #102
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Damn, sounds easy from your perspective, I just don't know the first thing about it, and that's the type of guy that loses his money and funds guys like you that know what to do.

Maybe I'll visit KC, buy you dinner and you can show me the ropes. haha

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Read this simple, though somewhat redundant book: "The Little Book of Common Sense Investing"

It will hammer into your brain why low fee (aka expense ratio) S&P 500 index funds are the best investment choice for a majority of investors and why financial advisers are a total waste for most us. Take it from me, don't trust anyone with investing your money but you. It's a pricey mistake I made and it cost me a lot of money in lost performance.

Go to https://apps.vanguard.com/web/cf/move-money/welcome and open an account. It's incredibly simple.

Transfer money (typically $3000 needed to open an account) from your linked bank account and buy 90% in:

Vanguard S&P 500 ETF (VOO); or
Vanguard 500 Index Fund Investor Shares (VFINX); or
Vanguard 500 Index Fund Admiral Shares (VFIAX)

They have their minor differences, but their overall approach is the same. It's a very low cost mutual fund that has shares in all of the major S&P 500 players. The performance of the funds follow the performance DOW/S&P 500 to nearly tenths of a point.

Then take the remaining 10% and buy various low fee government bond funds.

Vanguard, and I'm sure the others like it, make it very easy to open:

- traditional IRAs
- Roth IRAs
- opening 529 college accounts for children
- transfer 401K accounts from previous employers

I've done all those things and the hardest part of it all was coordinating the transfers with my fired financial adviser and doing the correct paper work to avoid tax implications of all the transfers.

Like you, I knew very little and just let my adviser at Morgan Stanley handle it all for nearly 15 years (MISTAKE!). Then I read "The Little Book of Common Sense Investing" 7 years ago and shortly thereafter took total control.

My wife and I have the following at Vanguard:

- Brokerage account
- His and her Roth IRAs
- Traditional IRA from a previous employer 401K account
- Two 529 college plans for our kids
- Very well funded saving account "war chest" that has funds to cheap stocks during major market downturns

I spend less than 1 hour a month managing my accounts and most of it is simply checking up on performance for the month. I do very little buying and selling. All dividends are reinvested into their respective accounts and/or funneled into the war chest account.

Simple.
You can also get SPY which is another S&P 500 ETF. Hasn't been mentioned here yet so thought I'd throw that out.
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      12-06-2019, 12:33 PM   #103
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Quote:
Originally Posted by corn18 View Post
Everyone should contribute at least to the company match. That is free money. 42% of my current 401k balance is from the company match (and the growth on that match).
Agreed, put in to the match at the least. If you have good investment options in your 401K like low expense ratio/fee S&P 500 index funds, put more money in there.

- Then take other money and open a Roth IRA. Again, buy mostly low expense ratio/fee S&P 500 index funds.

- Then once those accounts are cranking and have 6 figures in them, then open a brokerage account and buy more low expense ratio/fee S&P 500 index funds, quality stocks and funds, and play around.

- Pay off your house.


Do all of this while living within your means and don't be a slave to debt or buy into the YOLO idea because the reality is you're likely living into your 70s or later.
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