I am currently putting 22% of my income into my 401k. That is the lowest I have put in for a while due to bull market. Last year put in around 30%.
Income is around $50k
letsgobobby wrote:Don't forget s/he also has state tax on to of marginal federal rate. Given the income level, unless there is a pension I would not rush to use a Roth IRA even at the 22% bracket, which is 15% federal + 7% state.
That is a good perspective. At the moment I have no pending windfalls that I can see anytime soon. Considering that I still have the following questions that I would love to hear opinions on. From many of the responses it seems that most see my portfolio to basically be on the right track.
1.Should I put anything into a Traditional or Roth for 2012 taxes
2.For 2013 and beyond do I put everything I can into 401k or at what point should I move my contributions to an IRA (Roth, Traditional or both?)
3.Does the fact that I can have much lower costs in an IRA (because it would be with Vanguard) than the funds in my 401k change the strategy of whether I am contributing to 401k or IRA based on my tax bracket?
4. Other than having too much FAST stock in my 401k, are there many thoughts about the rest of my 401k options and which fund I should put all the FAST stock into?
1. If you have the funds to fill for 2012 yes take the space. If you have to sell some of your taxable and you don't have to much in gains I would look at that option to fill the space.
2. Your 401k fund choices are not the best. I would fill the 401k up to the match, then the tIRA then back to the 401k then taxable or maybe even some I-bonds.
3. Always take the free money in the 401k first even if the fund choices are a crap shoot then fill the other buckets after, see #2.
4. I would use the S&P 500 fund and the Pimco bond fund as your core holdings in the 401k and fill the IRA with an international fund like VXUS.
Most 401k's will have some target date funds, do they offer some? They maynot be very sexy but if the ER is not to crazy it maybe worth a look.
Brian2d wrote:Just some clarification on the feedback regarding employer stock.
You're doing something quite common, which is thinking that a company being a "good company" is a reason to own lots of its stock. This is not necessarily the case. Apple when it was at $700 may well have been a good company, but it was overvalued, and anyone owning Apple has lost 38% of its value at a time the market went up. Any single company, no matter how well managed, has diversifiable risk, which is uncompensated risk.
Further, as an employee of the company, you are more likely to be adversely affected if the company has difficulty than if it does well. If the company has troubles, you don't want a large portion of your portfolio tanking at the same time your job is in jeopardy.
Vanguard's portfolio analysis warns people of risk in a single stock that is greater than 5% of the portfolio. Anything higher than that is usually unnecessarily risky, no matter how good the company is. Even if everything your management is correct, it's still too high an allocation in a single stock.
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