Peter Foley wrote:While there are a lot of investing books, I would suggest starting with one which is very readable for beginners: The Bogleheads Guide to Investing.
Pondo33 wrote:Perhaps I can answer some of my own questions through further study.
However, here is one big question I have: What is a non-taxable vs. taxable account? .....
Pondo33 wrote:If my annual limit is $5500 in an IRA, and I want to do allocate (for example) 10% - Bond Index, 30% - International Stock Index and 60% - Stock Index, but vanguard's minimum investment is $1000 or $3000, do I just try to achieve approximately the balance to the extent I can do so with the purchase minimums of buying through vanguard and the annual limits placed on the IRA?
My wife has $173,000 in a 401k. I have been told I should move that to an IRA. What happens when I do that? If I transfer the money from the John Hancock 401k and put it in an IRA, what happens to the money? What is it doing?
Pondo33 wrote:2) My wife has $173,000 in a 401k. I have been told I should move that to an IRA. What happens when I do that? If I transfer the money from the John Hancock 401k and put it in an IRA, what happens to the money? What is it doing?
retiredjg wrote:1) Leave it where it is. This is a good option if there are good low cost choices in the old 401k.
roymeo wrote:retiredjg wrote:1) Leave it where it is. This is a good option if there are good low cost choices in the old 401k.
He did say the 401k was with John Hancock, #1 is not a very good option, IMHO.
Pondo33 wrote:It is also apparent that I should move the 401k over to an IRA. I am thinking a traditional IRA for two reasons: first, I expect that at retirement I will be making less money and therefore taxed less than I am right now. Secondly, on a typical year we bring in too much to contribute to a Roth IRA- right now my wife is not working, but as soon as she goes back, we will be over the limit.
So, I have to decide what to do with the 401k. I assume that once it is rolled over I have to invest it in something. It seems to me that I should invest heavily in bonds or bond funds since the dividend yield is taxed as income. I am thinking then that it would be better then to have this in a tax deferred account.
I understand that stocks get their return from appreciation in price- and will not be taxed until sold. If I hold my stocks or stock funds for a long time, or until my tax rate is lower, I am better off.
And then I was thinking I should hold stocks (preferably tax managed index funds) and international stocks in a non taxable account. Is that accurate thinking?
Pondo33 wrote:1). First, I really like the Vanguard LifeStrategy Moderate Growth Fund. It is simple and matches my desired allocation. I've also learned that I should get my wife's money away from John Hancock. I intend to move it into a vanguard account. However, once there, should I invest it ALL in VSMGX? VSMGX is $22.14 right now- we will roll over $171,000. Do I just buy $7723 shares?
2). Secondly, my company is looking at setting up a 401K through PAI.
3) How much should I leave in my emergency fund? I am at around $55,000 cash right now.
4). Excluding the 401k money, it seems to me I should max out my 401k and IRA. Should I just use those to continue buying VSMGX? Should I consider any other tax efficient funds in addition/instead such as VTMFX? Should I consider anything else in addition/instead?
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