What would "you" do?? [in this case]
What would "you" do?? [in this case]
[Please consider this thread closed. After taking the suggestions from this thread, I decided my time horizon, and have a specific discussion here]
Hey guys,
I got a lot of help from many of you in optimizing my 401(k). So thanks
Can you imagine yourself in the following situation today, and tell me what would you do?
(based on your experience, knowledge)
Your situation:
Age: 31
Emergency funds: 6 months
Debt: Zero
Tax filing status: Single
State: TX
Tax bracket: 25%
Renting
Paid off car
No kids
Portfolio:
401(k): set to max contribution, and set to your liking
Roth IRA: maxed for year, and set to your liking
(not eligible for deductible traditional IRA)
40K in checking acct to invest. How would you invest this money?
If possible, please be as specific For example:
(I know it's a lame example )
- 2K, I'll put in a savings acct at citibank
- 1K, I'll buy a 2-year CD at chase
- Buy 2 gold bars from xyz
- 3K, in Vanguard REIT
- 2K, buy Appl stock :p
....
I would really appreciate it!!
(Note: I'm just curious to see what you would do, even if you think it's not applicable to anyone else in the world but you ....like:
I'd put away $X to start a fund to visit Italy in 5 years..)
Hey guys,
I got a lot of help from many of you in optimizing my 401(k). So thanks
Can you imagine yourself in the following situation today, and tell me what would you do?
(based on your experience, knowledge)
Your situation:
Age: 31
Emergency funds: 6 months
Debt: Zero
Tax filing status: Single
State: TX
Tax bracket: 25%
Renting
Paid off car
No kids
Portfolio:
401(k): set to max contribution, and set to your liking
Roth IRA: maxed for year, and set to your liking
(not eligible for deductible traditional IRA)
40K in checking acct to invest. How would you invest this money?
If possible, please be as specific For example:
(I know it's a lame example )
- 2K, I'll put in a savings acct at citibank
- 1K, I'll buy a 2-year CD at chase
- Buy 2 gold bars from xyz
- 3K, in Vanguard REIT
- 2K, buy Appl stock :p
....
I would really appreciate it!!
(Note: I'm just curious to see what you would do, even if you think it's not applicable to anyone else in the world but you ....like:
I'd put away $X to start a fund to visit Italy in 5 years..)
Last edited by kayanco on Fri Jun 13, 2014 10:32 am, edited 12 times in total.
- cheese_breath
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Re: What would "you" do?? [in this case]
What's your time horizon for this money? That will affect the investment advice.
The surest way to know the future is when it becomes the past.
Re: What would "you" do?? [in this case]
Time horizon, I don't really know, to be honest with youcheese_breath wrote:What's your time horizon for this money? That will affect the investment advice.
What should it be?
- whaleknives
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Re: What would "you" do?? [in this case]
Ask yourself, what am I saving for?kayanco wrote:Time horizon, I don't really know . . . What should it be?
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 8/17/07) ☕ Maritime signal flag W - Whiskey: "I require medical assistance."
- cheese_breath
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Re: What would "you" do?? [in this case]
Until you figure that out I would suggest you 'invest' the money in a FDIC insured online bank savings account.kayanco wrote:Time horizon, I don't really know, to be honest with youcheese_breath wrote:What's your time horizon for this money? That will affect the investment advice.
What should it be?
The surest way to know the future is when it becomes the past.
Re: What would "you" do?? [in this case]
I would buy Vanguard Target Retirement 2020 in all accounts for now with all the money I had.
Then I would spend the next 2 years figuring out why someone on the internet recommended that and perhaps figure out what to change.
Then I would spend the next 2 years figuring out why someone on the internet recommended that and perhaps figure out what to change.
Re: What would "you" do?? [in this case]
Leave $10k in the checking account for the free safe deposit box and the free checks.*
Put $15k into TSM
Put $15k into CA IT-TE. (unlike many posters, I know where I live).
*
http://www.bogleheads.org/forum/viewtop ... 1&t=140056
http://www.bogleheads.org/forum/viewtop ... 1&t=140496
Put $15k into TSM
Put $15k into CA IT-TE. (unlike many posters, I know where I live).
*
http://www.bogleheads.org/forum/viewtop ... 1&t=140056
http://www.bogleheads.org/forum/viewtop ... 1&t=140496
Re: What would "you" do?? [in this case]
Set up a taxable account that followed my IPS. Would likely put Total Stock and Total international in it and reserve part of my advantaged space for bond allocation. Or do what sscritic suggested.
Re: What would "you" do?? [in this case]
I don't know, really!....that's why I'm asking what would other folks do...maybe someone 35 is reading this and says, "If I were in this situation, I would save for xyz..."whaleknives wrote:Ask yourself, what am I saving for?kayanco wrote:Time horizon, I don't really know . . . What should it be?
And that might make me think..Ahhh, I never thought about that
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Re: What would "you" do?? [in this case]
Did not provide your tax filing status and if you rent or own a home or plan on buying a home. What are your monthly expenses and your emergency fund?
How about need of a car?
Needs like these dictate the time horizon of investing . If all these are taken care of and you still have money left, then invest as per your AA.
Also, since you already invested in this years quota of Roth IRA, you cannot invest in deductible traditional IRA
How about need of a car?
Needs like these dictate the time horizon of investing . If all these are taken care of and you still have money left, then invest as per your AA.
Also, since you already invested in this years quota of Roth IRA, you cannot invest in deductible traditional IRA
Re: What would "you" do?? [in this case]
I would set 10k aside for miscellaneous expenses (or to increase our emergency fund) and perhaps to buy some I bonds.
The other 30k would go into total US stock / total int'l stock funds, as dictated by our asset allocation.
The other 30k would go into total US stock / total int'l stock funds, as dictated by our asset allocation.
Re: What would "you" do?? [in this case]
I would increase my emergency fund. Right now I keep 18-24 months in my EF simply because I sleep better with that much vs only 6 months. If you said that was foolish I wouldn't necessarily argue with you but that's what I do.
Choice B would be open a taxable account and invest the 40k in accordance with your AA.
Any kids? Consider a 529 if I felt my retirement savings was on track. I have one of these as well.
Choice B would be open a taxable account and invest the 40k in accordance with your AA.
Any kids? Consider a 529 if I felt my retirement savings was on track. I have one of these as well.
Re: What would "you" do?? [in this case]
I wouldn't invest it. I'd use it to do the landscaping I've been wanting to do and to get a shed so I can use my garage for its intended use. Then I'd post on Bogleheads.org asking what to do with an "extra" $20k.
- cheese_breath
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Re: What would "you" do?? [in this case]
How about a catered dinner for Bogleheads in your now empty garage?Kosmo wrote:Then I'd post on Bogleheads.org asking what to do with an "extra" $20k.
The surest way to know the future is when it becomes the past.
Re: What would "you" do?? [in this case]
I like it! If it ever happens you'll be top of the invite list!cheese_breath wrote:How about a catered dinner for Bogleheads in your now empty garage?Kosmo wrote:Then I'd post on Bogleheads.org asking what to do with an "extra" $20k.
Re: What would "you" do?? [in this case]
Without knowing the purpose and time horizon for this money, it’s impossible to give a good answer.kayanco wrote:40K in checking acct to invest. How would you invest this money?
Consider this analogy.
You jump into your car and pull up to the edge of your driveway.
You then open your window and ask a pedestrian: “Which way should I turn?”
“Where are you going?” asks the pedestrian, confused but trying to help.
“I don’t know,” you reply. “Just tell me which way I should turn.”
To quote Yogi Berra, if you don’t know where you’re going, then you might not get there.
Re: What would "you" do?? [in this case]
You are 31 with no debt, 6 months emergency savings, reading this forum, and ready to invest extra money that you aren't spending on extra crap. Congrats, you are on the right track already.
Listen to livesoft. Continue to max your 401k, roth and put everything into a target retirement fund with vanguard until you think you have a better plan. Many people will never have a better plan. If someday you think you have a better plan, post it here and these folks will give you feedback.
Listen to livesoft. Continue to max your 401k, roth and put everything into a target retirement fund with vanguard until you think you have a better plan. Many people will never have a better plan. If someday you think you have a better plan, post it here and these folks will give you feedback.
- ruralavalon
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Re: What would "you" do?? [in this case]
If this is to be a long term or indefinite term investment, then buy some Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) in a taxable account, reduce your holding of the International Index Fund (" FTSE All-World ex US") in the 401k, and adjust all other holdings in the 401k to match your desired asset allocation of 80/20. link.To quote Yogi Berra, if you don’t know where you’re going, then you might not get there.
If this is to be a shorter term investment, what purpose or time frame do you have in mind? Perhaps a nice car, a tropical vacation (Maui or the Big Island of Hawaii), a down payment for a home or condo?
Last edited by ruralavalon on Wed Jun 11, 2014 9:13 am, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: What would "you" do?? [in this case]
Since your question was about what I would do, and not necessarily for any particular situation you may be in,
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
At the 2008 Berkshire Hathaway annual meeting there was a question to Warren Buffett (the question was from the author/blogger Tim Ferriss):kayanco wrote:...(Note: I'm just curious to see what you would do, even if you think it's not applicable to anyone else in the world but you ...
That is what I do.“If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings? Thank you in advance for being as specific as possible with asset classes and allocation percentage.”
Buffett let out a small laugh and began. “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: What would "you" do?? [in this case]
Invest in Vanguard's Tax Managed Balanced Fund (50% muni bonds, 50% domestic equities) OR invest in 50% intermediate term muni fund, 50% total world stock fund. We are comfortable with up to a 25% drop in assets so 50/50 is fine for us.
Re: What would "you" do?? [in this case]
I'm adding these details to the original postniceguy7376 wrote:Did not provide your tax filing status and if you rent or own a home or plan on buying a home. What are your monthly expenses and your emergency fund?
How about need of a car?
Needs like these dictate the time horizon of investing . If all these are taken care of and you still have money left, then invest as per your AA.
Also, since you already invested in this years quota of Roth IRA, you cannot invest in deductible traditional IRA
Re: What would "you" do?? [in this case]
Hey, thanks!bcjb wrote:I would set 10k aside for miscellaneous expenses (or to increase our emergency fund) and perhaps to buy some I bonds.
The other 30k would go into total US stock / total int'l stock funds, as dictated by our asset allocation.
Set aside meaning leaving them in a checking acct?
Where/how would you buy the I bonds?
The US and Int stocks funds, you would buy in a brokerage account? And no bond funds in there, right?
Thanks
Re: What would "you" do?? [in this case]
Having larger emergency makes sense I think...where do you put the emergency fund? In a checking/savings acct?Bracket wrote:I would increase my emergency fund. Right now I keep 18-24 months in my EF simply because I sleep better with that much vs only 6 months. If you said that was foolish I wouldn't necessarily argue with you but that's what I do.
Choice B would be open a taxable account and invest the 40k in accordance with your AA.
Any kids? Consider a 529 if I felt my retirement savings was on track. I have one of these as well.
Re: What would "you" do?? [in this case]
+1JoMoney wrote:Since your question was about what I would do, and not necessarily for any particular situation you may be in,At the 2008 Berkshire Hathaway annual meeting there was a question to Warren Buffett (the question was from the author/blogger Tim Ferriss):kayanco wrote:...(Note: I'm just curious to see what you would do, even if you think it's not applicable to anyone else in the world but you ...That is what I do.“If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings? Thank you in advance for being as specific as possible with asset classes and allocation percentage.”
Buffett let out a small laugh and began. “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
This is great advice. Keep what you need for regular and moderate unexpected expenses in a savings account (or something similar). Then put the rest in low cost index funds. Jo's strategy of putting everything in S&P funds is elegant and simple. Another similar approach (the one I would use) would be to split the money 50/50 between total US and total international funds (like VTSAX and VTIAX).
Re: What would "you" do?? [in this case]
Google I bonds.kayanco wrote:
Hey, thanks!
Set aside meaning leaving them in a checking acct?
Where/how would you buy the I bonds?
The US and Int stocks funds, you would buy in a brokerage account? And no bond funds in there, right?
Thanks
No bond funds in taxable account (unless tax exempt).
Re: What would "you" do?? [in this case]
Maybe.kayanco wrote:
Set aside meaning leaving them in a checking acct?
Where/how would you buy the I bonds?
The US and Int stocks funds, you would buy in a brokerage account? And no bond funds in there, right?
You should start with the wiki.
No. and no.
Learning requires more than asking questions. I will ask you some:
1) Where else can you keep money with little risk of loss other than a checking account?
2) What does the wiki say about where you buy I bonds?
3) Does Vanguard have a division that is not a brokerage?
P.S. A long time ago, I suggested buying some bonds. At the time, I knew where I lived and what my tax bracket was. I still do. Do you? I don't know yours because you haven't told us in any of your 8 different versions of your OP.
Last edited by sscritic on Wed Jun 11, 2014 10:08 am, edited 1 time in total.
Re: What would "you" do?? [in this case]
Checking/savings account, CDs, Money Markets, I bonds...kayanco wrote:
Having larger emergency makes sense I think...where do you put the emergency fund? In a checking/savings acct?
Some people use their Roth IRAs as their emergency fund. There's options - as long as the money is reasonably liquid and accessible for emergencies (hence the name), it can be considered an ER.
Re: What would "you" do?? [in this case]
+1sscritic wrote: You should start with the wiki.
Learning requires more than asking questions. I will ask you some:
Re: What would "you" do?? [in this case]
Agree with you 100%!!Regal 56 wrote:Without knowing the purpose and time horizon for this money, it’s impossible to give a good answer.kayanco wrote:40K in checking acct to invest. How would you invest this money?
Consider this analogy.
You jump into your car and pull up to the edge of your driveway.
You then open your window and ask a pedestrian: “Which way should I turn?”
“Where are you going?” asks the pedestrian, confused but trying to help.
“I don’t know,” you reply. “Just tell me which way I should turn.”
To quote Yogi Berra, if you don’t know where you’re going, then you might not get there.
That's why I'm not asking what should I do, but what you would do?
It might not apply to anyone else, but that's the point of this thread...
Re: What would "you" do?? [in this case]
This thread is illegal. You can ask for help with your own "PERSONAL INVESTMENTS," but you can't ask for help with mine as I am neither your family nor your friend.kayanco wrote: That's why I'm not asking what should I do, but what you would do?
.
Read Forum Policy. The link is right over your head.
Now if you change your mind and want help with your own investments, please continue. But don't try to help me; I don't need your help.
Re: What would "you" do?? [in this case]
+1JoMoney wrote:Since your question was about what I would do, and not necessarily for any particular situation you may be in,At the 2008 Berkshire Hathaway annual meeting there was a question to Warren Buffett (the question was from the author/blogger Tim Ferriss):kayanco wrote:...(Note: I'm just curious to see what you would do, even if you think it's not applicable to anyone else in the world but you ...That is what I do.“If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings? Thank you in advance for being as specific as possible with asset classes and allocation percentage.”
Buffett let out a small laugh and began. “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
This is great advice. Keep what you need for regular and moderate unexpected expenses in a savings account (or something similar). Then put the rest in low cost index funds. Jo's strategy of putting everything in S&P funds is elegant and simple. Another similar approach (the one I would use) would be to split the money 50/50 between total US and total international funds (like VTSAX and VTIAX).
Re: What would "you" do?? [in this case]
Thanks!JoMoney wrote:Since your question was about what I would do, and not necessarily for any particular situation you may be in,
...
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
In what form are these savings, or what type of account?
Re: What would "you" do?? [in this case]
I would read sscritic's comments, and follow them. Completely. His writing is almost always concise and clear. (I might quibble with his comment that the last post was "illegal." It might violate this Blog's rules, but I see nothing illegal about the post.
Re: What would "you" do?? [in this case]
Thanks.sscritic wrote: At the time, I knew where I lived and what my tax bracket was. I still do. Do you? I don't know yours because you haven't told us in any of your 8 different versions of your OP.
If I understood you correctly, I added more details to the 1st post.
Re: What would "you" do?? [in this case]
I'm 35 and have some thoughts, though as others have pointed out, you have your own needs that may be different from mine. Here are my thoughts for how I would use that money if I were in your situation, which assume that I don't need to get some "fun" out of my system and that I want all of this money to be useful:
1. Buy $10,000 in i-bonds from treasurydirect. (You will, of course, want to read up on what these are.) This can take the place of your emergency fund, if you like.
2. Keep $10,000 in checking. Add small amounts of money to it over time. This will be your car fund so that you never have to buy a car on credit. This will have the added benefit of serving as a stop-gap emergency fund during the year you'd have to wait to cash in your i-bonds.
3. Keep $20,000 in a CD somewhere for the medium term. This will be your house fund. I have no idea whether or not you ever want a house, but often people your age will come to want that fairly soon. If you find that you don't ever want a house or feel that you can take more of a risk, I'd buy an index fund tracking the S&P 500 or a total market fund and just let it sit. You might also decide that you want to use this money to put $10,000 more into i-bonds for the next two years after this year, which would be an appropriate place to stash a house fund assuming you don't need it within one year.
Sounds like a good situation to be in. Best of luck.
1. Buy $10,000 in i-bonds from treasurydirect. (You will, of course, want to read up on what these are.) This can take the place of your emergency fund, if you like.
2. Keep $10,000 in checking. Add small amounts of money to it over time. This will be your car fund so that you never have to buy a car on credit. This will have the added benefit of serving as a stop-gap emergency fund during the year you'd have to wait to cash in your i-bonds.
3. Keep $20,000 in a CD somewhere for the medium term. This will be your house fund. I have no idea whether or not you ever want a house, but often people your age will come to want that fairly soon. If you find that you don't ever want a house or feel that you can take more of a risk, I'd buy an index fund tracking the S&P 500 or a total market fund and just let it sit. You might also decide that you want to use this money to put $10,000 more into i-bonds for the next two years after this year, which would be an appropriate place to stash a house fund assuming you don't need it within one year.
Sounds like a good situation to be in. Best of luck.
Re: What would "you" do?? [in this case]
You added that you live in Texas, which means you (and we) don't have to worry about your state income tax. I live in California, so I do. Do you see now why it makes a difference?kayanco wrote:If I understood you correctly, I added more details to the 1st post.sscritic wrote: At the time, I knew where I lived and what my tax bracket was. I still do. Do you? I don't know yours because you haven't told us in any of your 8 different versions of your OP.
But I still don't see your tax bracket (marginal tax rate on ordinary income). Mine is 25% which means that if I earn $100 in interest in a savings account or taxable bond fund in a taxable account, I have to pay $25 to the feds plus some to the Great State of California.* If yours is 15%, you would only pay $15 to the feds and nothing to the Great State of Texas. So just as Texas vs California matters, so does 15% vs 25% vs 28% and on up.
* This is technically not correct as I deduct what I pay to CA on my federal return so they don't get $25, if not this year, then next year (they don't - I was going to go for a triple negative, but backed out).
Last edited by sscritic on Wed Jun 11, 2014 10:49 am, edited 1 time in total.
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Re: What would "you" do?? [in this case]
+1bcjb wrote:I would set 10k aside for miscellaneous expenses (or to increase our emergency fund) and perhaps to buy some I bonds.
The other 30k would go into total US stock / total int'l stock funds, as dictated by our asset allocation.
This is what I would do as well.
Re: What would "you" do?? [in this case]
Thanks!! This is exactly the format I was looking for!!TSR wrote:I'm 35 and have some thoughts....Here are my thoughts for how I would use that money if I were in your situation..
1. Buy $10,000 in i-bonds from treasurydirect....This can take the place of your emergency fund, if you like.
2. Keep $10,000 in checking. Add small amounts of money to it over time..This will have the added benefit of serving as a stop-gap emergency fund during the year you'd have to wait to cash in your i-bonds.
3. Keep $20,000 in a CD somewhere for the medium term. This will be your house fund. .. If you find that you don't ever want a house or feel that you can take more of a risk, I'd buy an index fund tracking the S&P 500 or a total market fund and just let it sit. You might also decide that you want to use this money to put $10,000 more into i-bonds for the next two years after this year, which would be an appropriate place to stash a house fund assuming you don't need it within one year.
...
Re: What would "you" do?? [in this case]
My bad, added.sscritic wrote: But I still don't see your tax bracket.
Re: What would "you" do?? [in this case]
kayanco wrote:Having larger emergency makes sense I think...where do you put the emergency fund? In a checking/savings acct?Bracket wrote:I would increase my emergency fund. Right now I keep 18-24 months in my EF simply because I sleep better with that much vs only 6 months. If you said that was foolish I wouldn't necessarily argue with you but that's what I do.
Choice B would be open a taxable account and invest the 40k in accordance with your AA.
Any kids? Consider a 529 if I felt my retirement savings was on track. I have one of these as well.
There are many options for one's emergency fund. I mostly use a checking and savings account, which of course yields me nearly nothing. I have some of my EF in I bonds as I think others have mentioned, and other good choices would be anything safe and FDIC insured. For example CDs, and some even use things like a short term muni or treasury fund, which is safe, but not AS safe. The Bogleheads wiki has some good info on this
http://www.bogleheads.org/wiki/Emergency_fund
Re: What would "you" do?? [in this case]
For me, it's a combination of my checking account and a Short-Term Bond index fund. But with the current interest rates, and my belief about which way they're headed, I've been thinking that one of the high-yield online checking accounts might be a better option, or possibly splitting the money between a Short-Term corporate index fund and a high-yield checking account. But I've been avoiding doing that primarily for the simplicity of not opening yet another new account, and I don't think it's going to make that much of a difference.kayanco wrote:Thanks!JoMoney wrote:Since your question was about what I would do, and not necessarily for any particular situation you may be in,
...
I have "savings" to help me sleep well at night and for any unexpected expenses, and every extra bit of money on top of my budgeted expenses and savings gets thrown into the Vanguard 500 fund.
In what form are these savings, or what type of account?
I've considered savings bonds or CD's as well, but despite the fact that I haven't needed it, and I have other resources like credit to draw on in an emergency, I still like the ease of liquidity in the short-term bond fund (Vanguard will let you setup check-writing against the funds).
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: What would "you" do?? [in this case]
Have a hell of a weekend in Vegas.
Then you can tell everyone "I spent all my money on hookers 'n blow - the rest I wasted."
Then you can tell everyone "I spent all my money on hookers 'n blow - the rest I wasted."
Re: What would "you" do?? [in this case]
I'm not saving for anything specific, I'm out of tax-advantaged space, and my son's 529 has enough to cover 4 years of tuition, room & board, and fees at our state school (assuming returns keep up with inflation over the next 10 years; let's hope so). So if it was mine (and it will be, I am getting about that amount in a severance package soon but have already started a new job) I would invest it based on the asset allocation that Bogleheads recently helped me come up with:
45% VTSAX
25% VTIAX
30% VWITX (municipal bonds b/c I'm in the 28% tax bracket)
Although I would (and am) reserve $5K to take my son to Disneyland.
45% VTSAX
25% VTIAX
30% VWITX (municipal bonds b/c I'm in the 28% tax bracket)
Although I would (and am) reserve $5K to take my son to Disneyland.
Re: What would "you" do?? [in this case]
Guys,
Thanks all for replying and providing feedback...it's given me much to think about and figure out.
It's all pretty overwhelming for me...I'm still in the process of learning the basics of finances, saving, what all options are there.....and other things in life...what's important, what's not. What other folks save for, how they save, etc....so your comments are very valuable for me.
Thanks all for replying and providing feedback...it's given me much to think about and figure out.
It's all pretty overwhelming for me...I'm still in the process of learning the basics of finances, saving, what all options are there.....and other things in life...what's important, what's not. What other folks save for, how they save, etc....so your comments are very valuable for me.
Re: What would "you" do?? [in this case]
Keep reading here and learning. The biggest lesson to all of this is patience -- there's no hurry, especially for a "good problem" like yours.kayanco wrote:Guys,
Thanks all for replying and providing feedback...it's given me much to think about and figure out.
It's all pretty overwhelming for me...I'm still in the process of learning the basics of finances, saving, what all options are there.....and other things in life...what's important, what's not. What other folks save for, how they save, etc....so your comments are very valuable for me.
- StormShadow
- Posts: 1005
- Joined: Thu Feb 09, 2012 5:20 pm
Re: What would "you" do?? [in this case]
What I'd do:
$15k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
$15k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
$10k Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
$15k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
$15k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
$10k Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
Re: What would "you" do?? [in this case]
kmmm wrote: 45% VTSAX
25% VTIAX
30% VWITX (municipal bonds b/c I'm in the 28% tax bracket)
1.StormShadow wrote:What I'd do:
$15k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
$15k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
$10k Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
Is this assuming that the total money in these funds is for long-term/retirement time horizon?
Can you please clarify?
2.
If you wanted 80/20 stock/bond, you couldn't use VWIUX, because it would require 10K out of the total 40K, right?
Then the ETF would work maybe?
3.
I didn't see any say Vanguard Total Bond index....I'm assuming that's because it's not good in a taxable account, right?
(just trying to clarify my understanding, since these are all very fresh concepts that I'm assimilating...)
Thanks
Re: What would "you" do?? [in this case]
Hi kayanco, to answer your questions:kayanco wrote:kmmm wrote: 45% VTSAX
25% VTIAX
30% VWITX (municipal bonds b/c I'm in the 28% tax bracket)1.StormShadow wrote:What I'd do:
$15k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
$15k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
$10k Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
Is this assuming that the total money in these funds is for long-term/retirement time horizon?
Can you please clarify?
2.
If you wanted 80/20 stock/bond, you couldn't use VWIUX, because it would require 10K out of the total 40K, right?
Then the ETF would work maybe?
3.
I didn't see any say Vanguard Total Bond index....I'm assuming that's because it's not good in a taxable account, right?
(just trying to clarify my understanding, since these are all very fresh concepts that I'm assimilating...)
Thanks
1. Yes this is generally intended for long-term retirement savings. I already have an emergency fund and targeted savings for other needs, and don't anticipate tapping the money earlier than retirement (though of course that could change).
2. I use VWITX which is Investor Shares and starts at 3K. VWIUX Admiral Shares require $50K, which I won't reach for quite some time.
3. Exactly, Total Bond is not as tax-efficient as VWITX/VWIUX and that matters in my bracket.
- StormShadow
- Posts: 1005
- Joined: Thu Feb 09, 2012 5:20 pm
Re: What would "you" do?? [in this case]
1. Yes, this is for the long-term/retirement. The only short term investment anyone should ever consider is either a savings account or CD. Otherwise, you're just speculating... which is not recommended in this forum.kayanco wrote:1.StormShadow wrote:What I'd do:
$15k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
$15k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
$10k Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
Is this assuming that the total money in these funds is for long-term/retirement time horizon?
Can you please clarify?
2.
If you wanted 80/20 stock/bond, you couldn't use VWIUX, because it would require 10K out of the total 40K, right?
Then the ETF would work maybe?
3.
I didn't see any say Vanguard Total Bond index....I'm assuming that's because it's not good in a taxable account, right?
(just trying to clarify my understanding, since these are all very fresh concepts that I'm assimilating...)
2. kmmm is right. Investor shares is fine if you don't have enough for the Admiral shares.
3. Tax efficiency. http://www.bogleheads.org/wiki/Principl ... _placement
Re: What would "you" do?? [in this case]
Guys, after reading your comments, further wiki reading, and more thinking...I've been able to decide on my time horizon
Please see consider this thread closed.
I have the new proper question here:
http://www.bogleheads.org/forum/viewtop ... 5#p2088485
Thanks again for everything!!
Please see consider this thread closed.
I have the new proper question here:
http://www.bogleheads.org/forum/viewtop ... 5#p2088485
Thanks again for everything!!