new to investing

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okiedokie
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Joined: Tue May 11, 2021 11:59 pm

new to investing

Post by okiedokie »

Howdy y'all!

up until a few months ago the only stocks I ever bought was swanson chicken stock. goes good in rice. then game stop happened. obviously I saw that news and wanted in on that racket. toss in a few bucks and be a millionaire! but knowing things can be too good to be true, started learning about investing. turns out jumping in that stock would have likely cost me money.

I happened to come across the three fund passive portfolio thing and this website and the arguments for it makes sense. it's easy so even a goof like me can do it. I set one up in my new m1 finance app, and all I have to do is put money in it and over time watch it grow.

I chose VTI 75%, VXUS 15% and VTEB 10% (tax exempt bonds due to this being a taxable account) if you're wondering, yes I also have a new 401k set up but since I can't touch that until I'm at least 60, wanted a second account I could tap into sooner if I wanted. the 401k is set up for 15% of my income plus my employer matches it 6% more for an effective rate of 21% of my income. and that account is automatic. its in an account called "2050 fund" and they slowly adjust the account from high risk and make good returns to low risk and avoid losses as I reach old age. the money goes in and when I'm old, I cash in. nothing more to think about with the 401k. I'll just let it do its own thing.

the taxable m1 finance portfolio is mine and thus I wanted to put m ore thought into it, just to make sure I have it right.

then like the 401k maybe I can just not think about it anymore. let it ride and cash in when ready.

so anyway I found a website called portfolio visualizer where you can punch in differing portfolios and it sees how it would have done over the past 25 or 30 years compared to the others.

turns out a portfolio of 90% VTI and 10% VNQ crushes both an all VTI, a 90% VTI and 10% bond and the 75% VTI 15% VXUS and 10% bond. I also compared VTI and bond vs VTI, VXUS and bond and the VTI and bond only beat the VTI, VXUS, bond but both were beaten by the 90% VTI, 10% REIT.

apologies as I am guessing questions like this have been asked many times but being new to all of this and not wanting to wade through a bunch of stuff and try to pick nuggets that relate to specifically what I am thinking about, thought I'd put this out there and see what feedback I get.

Thanks for your time and patience with a newbie. :)
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Wiggums
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Re: new to investing

Post by Wiggums »

Why not put your bonds in your 401k?

whether it makes sense to buy taxable bonds or tax-free municipal bonds, you first need to find out your marginal federal and state income tax brackets. Let’s say you are in the 32% federal income tax bracket and a 7% state tax bracket. Meanwhile, suppose you are choosing between a muni bond from your own state that yields 3.05% and a corporate bond that pays 4.95%. Both have similar credit quality and duration.

Which is the best bet, given your tax situation? You would need to calculate the tax-equivalent yield for the muni bond. To that end, you would take your tax brackets (32% and 7%), convert them to decimals (0.32 and 0.07), add them together (0.39) and then subtract that figure from 1. You would then divide the resulting number into the muni’s yield.
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Wiggums
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Re: new to investing

Post by Wiggums »

https://www.bogleheads.org/wiki/Tax-eff ... _placement

See chart under “Tax efficiency of various asset classes”
FoolMeOnce
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Re: new to investing

Post by FoolMeOnce »

okiedokie wrote: Wed May 12, 2021 12:25 am turns out a portfolio of 90% VTI and 10% VNQ crushes both an all VTI, a 90% VTI and 10% bond and the 75% VTI 15% VXUS and 10% bond. I also compared VTI and bond vs VTI, VXUS and bond and the VTI and bond only beat the VTI, VXUS, bond but both were beaten by the 90% VTI, 10% REIT.
Crushed, not crushes. That's what happened in the past. I think your allocation is fine, but if you want to add a dash of REITs, go ahead. The important thing is picking an allocation you are comfortable with and sticking with it. You don't want to chase something shiny and then give up on it when it underperforms for a year, and then keep switching to some new shiny thing.
anil686
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Re: new to investing

Post by anil686 »

FoolMeOnce wrote: Wed May 12, 2021 7:49 am
okiedokie wrote: Wed May 12, 2021 12:25 am turns out a portfolio of 90% VTI and 10% VNQ crushes both an all VTI, a 90% VTI and 10% bond and the 75% VTI 15% VXUS and 10% bond. I also compared VTI and bond vs VTI, VXUS and bond and the VTI and bond only beat the VTI, VXUS, bond but both were beaten by the 90% VTI, 10% REIT.
Crushed, not crushes. That's what happened in the past. I think your allocation is fine, but if you want to add a dash of REITs, go ahead. The important thing is picking an allocation you are comfortable with and sticking with it. You don't want to chase something shiny and then give up on it when it underperforms for a year, and then keep switching to some new shiny thing.
+ 1 - too easy to do this. Keeping it something you can do for a long time and have conviction in is very important. If you continually backtest various portfolios, there will always be a “better” answer. JMO though....
Topic Author
okiedokie
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Re: new to investing

Post by okiedokie »

I did the tax equation thing and if what I'm seeing online is right with the tax calculator, I'm being taxed at 9.16% by the feds and 1.2% by my state. so doing the decimal conversion and adding it makes the number 0.108. with that in mind do you think I should stay with VTEB or go with BND?

as for the 401k, and why not put a bond in there, its all automatic. I don't do anything to it. its adjusted by the experts who run it. apparently they make it more risky at first to generate more returns and then slowly make it more risk averse as I get closer to retirement so as to prevent bad losses right when I needed it. I'm sure they got whatever bonds they think works best and what percentage works best. given I'm a complete newbie I'll give them the trust on that.

but I can't touch it for at least 20 more years. and preferably for 27-30 years to get maximum return. That's why I wanted a second account that I can cash in whenever I want.

and that second taxable account is through my m1 account. it will be up to me to decide how that portfolio is run. they have like 80 expert created portfolios that they call pies to choose from and I can make my own.

I figured I'd just make my own pie based on the 3 portfolio thing and then once I'm happy with my set up, I plan to leave it alone and let it ride. put money in it each month and then when the time is right, cash it in. say 10-15 years from now (aiming for 10 years but depending on how the market is doing, I may delay it up to 5 more years if the stocks or down in 10 years. basically wait for them to bounce back, then take it out)

as for the comment about past results not predicting future results, that's true, but then that's also true of the 3 fund thing too. who is to say it will work best in the future just because that system beat experts in the past? but then I'm not sure how to figure out what set up to go for other than seeing which ones seemed to work best in the past over a long period of time.

I was going to go with the 60% VTI, 20% VXUS and 20 BND, but then saw BND could cause tax issues (but maybe my income is low enough to make that moot, but I don't know so then I found VTEB)

then it was basically trying to figure out what set up would most likely make me the most money. tweaking the numbers of the three assets, leaving one of them out or swapping one for a REIT or maybe even doing a two asset portfolio.

I don't know. there's so much to take in. I did just buy the bogglehead books and plan to read them. but if I can get tips here and get a head start, and just make the pie now, then read the book to learn why it works, while the pie is already doling it's thing, that's great! :)
FoolMeOnce
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Re: new to investing

Post by FoolMeOnce »

okiedokie wrote: Wed May 12, 2021 8:13 am as for the comment about past results not predicting future results, that's true, but then that's also true of the 3 fund thing too. who is to say it will work best in the future just because that system beat experts in the past?
Nobody. Some other mix will certainly beat it over any given period of time. Tell me what it will be and I'll happily invest in it! The problem is we don't know which sectors or assets will outperform. So you accept market returns (for your level of risk) instead of trying the most-likely-losing game of guessing how to beat the market.

Stated another way, the three-fund portfolio (or simliar) is not about picking a winning strategy; it is about avoiding a losing one.
Topic Author
okiedokie
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Re: new to investing

Post by okiedokie »

You and me both! LOL just got to find a crystal ball.

in the meantime I guess you could say past results don't guarantee future results but if certain tactics have seemed to work pretty well over a very long time, its likely they are sound tactics as compared to tactics that haven't worked.

take dogecoin. people who went all in on that a few months ago and sold it Saturday morning, are millionaires now. obviously it worked well for them but if you asked me to invest in dogecoin I'd say no way! because for the past like 100 years, investing in a diversified portfolio in the bonds and stock market consistently brings solid returns to people, whereas cryptocurrency is new and seems to have worked out well for many but not enough time has passed for me to be convinced of consistent results, say over 20-30 years. (where it may dip but always bounces back and over time is higher)

This is what sold me on the 3 fund thing. they showed that past results over say a 20-30 year span consistently had the 3 asset portfolio beating even most experts who tried to game the system.

now it's just a matter of figuring out what 2-3 things to make my pie with and what percentage and after that I'm done. I'm not planning on day trading or constantly changing things. take VTI. its tanking hard right now. I'm not worried about it. it will almost certainly bounce back. and the buys that shrank will grow back and the cheap buys when its low will grow too. I'm fairly sold on making VTI the primary asset.

I'm just not sure what bond ETF to settle on BND, VTEB, or none, and/or adding a REIT like VNQ or O. or not.

right now I'm leaning toward 75% VTI, swapping the VXUS for VNQ (or O) at 15% and the final 10% a bond, either BND or staying with VTEB. and I welcome suggestions on changing the percentage of the pie too. maybe the bond is too low for instance. who knows.

once I feel like I got a good pie set up, I plan to leave it that way, and not think about it anymore, just put 100 dollars in every month and let it grow. I know there is no promise based on past results but I want to make sure I have a good pie with a high probability of sound results. then I plan to not worry about it anymore. :)
FoolMeOnce
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Re: new to investing

Post by FoolMeOnce »

A lot of people here have 10% in REITs. Nothing wrong with that. But I wouldn't sub it in for international. Of you want international, keep it and use four funds.
pkcrafter
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Re: new to investing

Post by pkcrafter »

Welcome to the forum,
- -
Some basic information:

Getting Started

https://www.bogleheads.org/wiki/Getting_started

The 3-fund portfolio

viewtopic.php?f=10&t=88005

Consider all retirement accounts as one portfolio - 401k, taxable, IRA, Roth...

Do you have an IRA or Roth now?

SPIVA Report

https://www.ifa.com/articles/despite_br ... d_-_works/
I chose VTI 75%, VXUS 15% and VTEB 10% (tax exempt bonds due to this being a taxable account) if you're wondering, yes I also have a new 401k set up but since I can't touch that until I'm at least 60, wanted a second account I could tap into sooner if I wanted.
Your savings rate is excellent. You can have accounts for other goals, but be careful. If you are saving for something in the near future (5-6 years) then you don't want too much stock because stocks are volatile and the saved money may not be there when you need it. If it's for retirement, then it's really not available. Be sure you have an emergency fund.
its in an account called "2050 fund"
What is the name of this fund, and what is the expense ratio?


Paul
Last edited by pkcrafter on Wed May 12, 2021 7:33 pm, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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abuss368
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Re: new to investing

Post by abuss368 »

okiedokie wrote: Wed May 12, 2021 12:25 am Howdy y'all!

up until a few months ago the only stocks I ever bought was swanson chicken stock. goes good in rice. then game stop happened. obviously I saw that news and wanted in on that racket. toss in a few bucks and be a millionaire! but knowing things can be too good to be true, started learning about investing. turns out jumping in that stock would have likely cost me money.

I happened to come across the three fund passive portfolio thing and this website and the arguments for it makes sense. it's easy so even a goof like me can do it. I set one up in my new m1 finance app, and all I have to do is put money in it and over time watch it grow.

I chose VTI 75%, VXUS 15% and VTEB 10% (tax exempt bonds due to this being a taxable account) if you're wondering, yes I also have a new 401k set up but since I can't touch that until I'm at least 60, wanted a second account I could tap into sooner if I wanted. the 401k is set up for 15% of my income plus my employer matches it 6% more for an effective rate of 21% of my income. and that account is automatic. its in an account called "2050 fund" and they slowly adjust the account from high risk and make good returns to low risk and avoid losses as I reach old age. the money goes in and when I'm old, I cash in. nothing more to think about with the 401k. I'll just let it do its own thing.

the taxable m1 finance portfolio is mine and thus I wanted to put m ore thought into it, just to make sure I have it right.

then like the 401k maybe I can just not think about it anymore. let it ride and cash in when ready.

so anyway I found a website called portfolio visualizer where you can punch in differing portfolios and it sees how it would have done over the past 25 or 30 years compared to the others.

turns out a portfolio of 90% VTI and 10% VNQ crushes both an all VTI, a 90% VTI and 10% bond and the 75% VTI 15% VXUS and 10% bond. I also compared VTI and bond vs VTI, VXUS and bond and the VTI and bond only beat the VTI, VXUS, bond but both were beaten by the 90% VTI, 10% REIT.

apologies as I am guessing questions like this have been asked many times but being new to all of this and not wanting to wade through a bunch of stuff and try to pick nuggets that relate to specifically what I am thinking about, thought I'd put this out there and see what feedback I get.

Thanks for your time and patience with a newbie. :)
All asset classes have their day in the sun. REITs have had great run and big drops. They can be volatile.

International? Cumulative is simply has not shown up since 1986. Who knows what the future holds.

Jack Bogle and Warren Buffett state a Two Fund Portfolio of Total Stock (or S&P 500) and Total Bond is all that is needed.

Here is a great thread:

viewtopic.php?f=10&t=188176

Keep investing simple!

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Beensabu
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Re: new to investing

Post by Beensabu »

It sounds like your 401k is in a target date fund. That is an excellent employer match, well worth whatever expense ratio the fund has. Keep doing that.

VNQ is a REIT index fund. REITs are traditionally recommended to be kept out of taxable and in a 401k or IRA instead (for tax reasons). There have recently been some changes to tax law where that's not necessarily the recommendation anymore, so... people are still figuring that one out. However, REITs are pretty volatile. That means they both go way up and way down sometimes. Sometimes, they just go sideways for a long time, with medium ups and downs.

Just add to taxable in a way that you maintain the allocations you have chosen there. If one of those funds goes down one year, post here and ask about tax loss harvesting (after reading the wiki), pay attention, and follow instructions.

Other than that, close your eyes and hold your nose, like you're jumping into the deep end. Because you are. Welcome.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."
Topic Author
okiedokie
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Re: new to investing

Post by okiedokie »

yes my 401k is a target date fund. its all automatic. 15% of my pay goes into it, my employer matches 100% immediately fully vested at 6% for a total of 21% effective rate of savings. it's designed to be more risky at the start to increase returns and then get more risk averse as 2050 arrives so as to preserve the savings. I'm satisfied to just let the 401k do its thing. it will grow and when I get old, I'll tap into it.

on top of that though I want a regular account I can access without penalties. most of my savings goes into the 401k.

I'm only planning to put like $100 a month into the taxable account, or maybe $200-300 later as I can afford it into the taxable account. I set up the taxable account with m1 finance. minimal fees and easy to use.

I'll be slowly digesting all the links provided, and advice given here, and I bought the two boggle head books about investing that John Bogle and Taylor Larimore wrote.

there's alot to take in and I'm a newbie.

one very big appeal of this three fund strategy is that its low maintenance. I don't have to be watching CNBC all day trying to analyze stocks. my 401k is automatically doing its thing without me needing to worry about it and once I feel assured I made the right picks on my m1 finance pie, I'm gonna just put the money in each month and let it ride.

I like VTI and running it through 1980 to now it constantly performs very well, and I'm almost tempted to have just VTI. but as was mentioned above bonds apparently protect from market volatility so I'm willing to have a bond for that reason. right now its VTEB at 10%.

but I am open to using VT or combining VTI and VXUS, it's just that using the portfolio analyzer thing, showed VTI crushing VXUS, VT and the combo of VTI and VXUS. and that's why I'm tempted to do a two asset portfolio with just VTI and VTEB or another bond ETF.

I got interested in the REITS because I was reading an article that we may be headed for a recession and have problems with accelerated inflation and that apparently REITs can offer some protection from that.

playing around with the various projections I have now have my pie set for 75% VTI, 15% O, and 10% VTEB. I literally opened the account a few days ago and only have the bare minimum in it so far so it's not too late to seriously think about how my pie is constructed and hopefully feel reassured so I can just get on with the monthly deposits and not worry about it or feel I missed out on potentially thousands of dollars in savings because I didn't allocate it just right. maybe as was pointed out above my bond is too low and stock swings will screw me. but then maybe the smaller bond allocation would make me more money so I can retire earlier.

I set up my 401k a few months ago and am satisfied to just let it grow. my hope is to do likewise with my m1 account once I feel its at optimal levels. I'll be reading the various links, further advice and feedback given in this thread, reading the books I bought and hope to have settled on my final pie within a week or two. and then I plan to forget about it much like my 401k. just let it do its thing. :) at that point I can relax. I'd rather watch Alison Krauss videos than CNBC. LOL
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ruralavalon
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Re: new to investing

Post by ruralavalon »

Welcome to the forum :) .


Some additional information will be useful. Please see my questions below. Please simply add any new information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

okiedokie wrote: Wed May 12, 2021 10:58 pm yes my 401k is a target date fund. its all automatic. 15% of my pay goes into it, my employer matches 100% immediately fully vested at 6% for a total of 21% effective rate of savings. it's designed to be more risky at the start to increase returns and then get more risk averse as 2050 arrives so as to preserve the savings. I'm satisfied to just let the 401k do its thing. it will grow and when I get old, I'll tap into it.
How much (in dollars) do you contribute annually to your employer's plan? The maximum annual employee contribution is $19.5k. The employer match does not count toward the employee maximum, it's extra.

What is the full fund name, ticker, and expense ratio on the target date fund you are using?

What other funds are offered in your employer's plan? Please give fund names, tickers and expense ratios.



okiedokie wrote: Wed May 12, 2021 10:58 pmon top of that though I want a regular account I can access without penalties. most of my savings goes into the 401k.

I'm only planning to put like $100 a month into the taxable account, or maybe $200-300 later as I can afford it into the taxable account. I set up the taxable account with m1 finance. minimal fees and easy to use.
Do you also have an IRA? If so how much do you contribute annually? The maximum annual contribution to an IRA is $6k. Do you have any debt?

In general it's usually best to make maximum annual contributions to both the employer's plan and an IRA, as well as payoff any high interest debt, as a priority ahead of investing in a taxable brokerage account. Wiki article, "Prioritizing Investments", link.



okiedokie wrote: Wed May 12, 2021 10:58 pmI'll be slowly digesting all the links provided, and advice given here, and I bought the two boggle head books about investing that John Bogle and Taylor Larimore wrote.

there's alot to take in and I'm a newbie.

Be patient, this is not difficult.

For a quick education in investing basics I suggest both Dr. Bernstein's short, free, pdf book " If You Can", and the wiki article "Bogleheads® investment philosophy", link.



okiedokie wrote: Wed May 12, 2021 10:58 pmone very big appeal of this three fund strategy is that its low maintenance. I don't have to be watching CNBC all day trying to analyze stocks. my 401k is automatically doing its thing without me needing to worry about it and once I feel assured I made the right picks on my m1 finance pie, I'm gonna just put the money in each month and let it ride.

I like VTI and running it through 1980 to now it constantly performs very well, and I'm almost tempted to have just VTI. but as was mentioned above bonds apparently protect from market volatility so I'm willing to have a bond for that reason. right now its VTEB at 10%.

but I am open to using VT or combining VTI and VXUS, it's just that using the portfolio analyzer thing, showed VTI crushing VXUS, VT and the combo of VTI and VXUS. and that's why I'm tempted to do a two asset portfolio with just VTI and VTEB or another bond ETF.
What is your tax bracket, both federal and state? Ordinarily tax-exempt bond funds are not useful unless in a very high tax bracket.

Ordinarily taxable bond funds are not a good idea in a taxable brokerage account, because they are not very tax-efficient.

In a taxable brokerage account I suggest very tax-efficient stock index funds. Wiki article "Tax-efficient Fund Placement", link. I suggest using Vanguard Total Stock Market ETF (VTI) and Vanguard Total International Stock ETF (VXUS).


okiedokie wrote: Wed May 12, 2021 10:58 pmI got interested in the REITS because I was reading an article that we may be headed for a recession and have problems with accelerated inflation and that apparently REITs can offer some protection from that.
REIT funds do act differently than other stock funds, so can provide a diversification benefit. Also they can provide some inflation protection.

Be aware that a REIT fund can be very volatile.

Vanguard Real Estate ETF (VNQ) is a good REIT index fund, but not in a taxable account. REIT funds are very tax-INefficient. Wiki article "Tax-efficient Fund Placement", link.


okiedokie wrote: Wed May 12, 2021 10:58 pmplaying around with the various projections I have now have my pie set for 75% VTI, 15% O, and 10% VTEB. I literally opened the account a few days ago and only have the bare minimum in it so far so it's not too late to seriously think about how my pie is constructed and hopefully feel reassured so I can just get on with the monthly deposits and not worry about it or feel I missed out on potentially thousands of dollars in savings because I didn't allocate it just right. maybe as was pointed out above my bond is too low and stock swings will screw me. but then maybe the smaller bond allocation would make me more money so I can retire earlier.
Consider dropping Vanguard Tax-Exempt Bond ETF (VTEB) unless in a very high tax bracket.

"[P]laying around with the various projections " can be a distraction from the business of investing. Tools like Portfolio Visualizer are nice, helpful sometimes, and fun to play around with. But don't put a lot of faith in predictions based on short-term past performance of ETFs. Even the best ETFs have not be around very long.

The most important investing decision you can make is to establish a high rate of contributions, the second most important investing decision is the basic equity/fixed income allocation. Forum discussion, link.


okiedokie wrote: Wed May 12, 2021 10:58 pmI set up my 401k a few months ago and am satisfied to just let it grow. my hope is to do likewise with my m1 account once I feel its at optimal levels. I'll be reading the various links, further advice and feedback given in this thread, reading the books I bought and hope to have settled on my final pie within a week or two. and then I plan to forget about it much like my 401k. just let it do its thing. :)at that point I can relax.
I think it's a great idea to create a simple set-it-and-forget-it type portfolio.

That way you can just concentrate on making contributions, doing your job, and enjoying your life.



okiedokie wrote: Wed May 12, 2021 10:58 pmI'd rather watch Alison Krauss videos than CNBC. LOL
Alison Krauss is great. Almost anything is better than cable news.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
okiedokie
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Re: new to investing

Post by okiedokie »

Thanks for the welcome,

I didn't put info about my 401k and such in my first post because I’m mainly looking to make sure I create a good pie in my m1 finance account to set and forget. LOL (since I'm managing that account whereas my 401k is being managed by experts at Merrill.

I don’t mind answering the other questions about stuff like the 401k and tax brackets and such though. 😊
My 401k plan is called the my retirement 2050 fund, and its ran by Merrill. Its under Walmart's 401k plan.
I can’t find anything about its ticker or rate or whatever. I don’t even know what that means. LOL
I put in right now around $3500. (15% of my income) Walmart puts in another 1400 a year and since I just started it a few months ago its only at 640 dollars right now. I also just recently bumped it up from 6% to 15%.

I trust that the experts at Merrill know what they’re doing and am happy to let them manage the 401k. I also plan to bump up my contributions as I can afford it.

my earned income is maybe around 24000 right now. I think my tax rate is around 9% and that’s state and federal combined. I did the math in an earlier post. 😊

I am happy with letting my 401k do its thing and don’t really need to put any thought into that. Or at least wasn’t planning too. LOL The good folks at Merrill will do that. I’m sure they know what they’re doing. LOL more so than I for sure. I just need to put whatever I can afford into it and don’t touch it until I’m old.

as for my m1 account, which you are now wondering why I am bothering with since I’m nowhere near the limit for what is allowed into my 401k, I have that because I plan to use that within 10 to 15 years. Maybe for down payment for a house. I don’t plan to touch the 401k for 20-30 years, so any money going for the 401k is out of bounds for almost 3 decades. That’s why I chose to make the second taxable account. For some money sooner than that, and right now plan to put like 100 bucks a month in it, if I can.

I’ll be managing the m1 finance account, and creating the portfolio, and I am content to go with BND over VTEB for my bond, given I now know that my tax bracket won’t be effected by it.

I also like VTI and want that as my stock pick. I feel good about those picks now. and that even has some approval here as seen on the two asset portfolio thread link given above by somebody. It’s just figuring out what ratio is best. 90/10, 80/20, etc Also considering if should do VNQ or VXUS, both or neither ands then what percentage of the pie if I do. For a 3 or 4 asset portfolio.

you mentions REITs are not good for taxes. I am not wealthy so I wonder if that would apply to me? I could just go with VTI, and BND and be happy. I was going to do that but I’ve read some stuff about crazy low interest rates and such and that REITs can help with that and grow faster than bonds and can help when we’re in a recession and bonds are tanking and frankly that seems the direction we’re headed, so that’s why I added VNQ. Given how small my account will be, (only adding 100 bucks a month, and that I’m not wealthy would the REIT tax inefficiency effect me? I also only planned for that to be 10-15 percent of my pie if I added VNQ. Right now I’m leaning toward 10-20% of my pie to be BND, 10-15% VNQ and the rest of the pie be VTI. If that sounds like a good pie, than that’s it. I’m done. Toss in the 100 bucks a month and let it grow until I get enough for a house out of it. Or at least a down payment.

as for debt, I do have debt and I’m paying that off too. Its mostly in a debt management program now with very low interest (like 1%) I plan to bump up my contributions to my 401k as those are paid off. Most of my extra money is going to debt as mentioned above, but I wanted to get started on an investment account sooner than later because otherwise I’ll be old and gray before I can ever move out of my apartment into an actual house. LOL

I did just downloads that PDF book in your post to add to the other books I bought and plan to read this weekend. the bogleheads guide to investing, and the bogglehead guide to the thee fund portfolio. I also bought how a second grader beat the stock market by Alan Roth and winning investment strategy by larry swedroe.

I'll be doing quite a bit of reading, and hopefully not make any stupid mistakes like those people that bet the farm on things like gamestop and dogecoin nd lost their shirts. LOL

once it's all rocking and a plan is rolling I don't plan to think much more about it. :)
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Beensabu
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Re: new to investing

Post by Beensabu »

okiedokie wrote: Thu May 13, 2021 7:41 pm My 401k plan is called the my retirement 2050 fund, and its ran by Merrill. Its under Walmart's 401k plan.
I can’t find anything about its ticker or rate or whatever. I don’t even know what that means. LOL
See page 8 of this:

https://boluicdn.benefits.ml.com/CDN/AT ... vGuide.pdf

There is a number you can call to request the Annual Participant Fee Disclosure Notice. I would if I were you, just so that you know. That's important information - if you change jobs later, you might want to rollover that 401k into a new 401k or an IRA, depending on what the fees are.

Your myRetirement 2050 is not a mutual fund and does not have a ticker. It is composed of several underlying funds that likely includes some mix of US stock, international stock, and maybe a bit of bonds. There may be other stuff in there. Each of those underlying funds has an expense ratio (they charge some % - hopefully less than 1% - of what you have in there every year). The people managing that 2050 fund will add more bonds as we get closer to 2050. That's called a glide path. People tend to follow a glide path of some sort even when they're DIY investors.

As an example, Vanguard Target Retirement 2050 fund is currently 90% stocks and 10% bonds. Yours is probably similar as far as overall stock to bond ratio. You can try asking them if you want to know for sure. If you would like that to be your asset allocation for your whole portfolio, then you could do 90/10 in taxable. Or you could do something different. If you get within a few years of needing the money in your taxable for a huge expense (like a down payment), then it is important to move the funds you will need out of stocks and into a short term treasury or money market fund at that time (edit: this is actually more complicated than this, because "taxes", so you'd probably move a part of it over year to year for a few years in anticipation of needing it soon).

I hope this helps.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."
Topic Author
okiedokie
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Re: new to investing

Post by okiedokie »

uncle Sam always wants his piece of the action. LOL

taxes are an issue for sure, at least in the future. I figured on being aggressive for at least 5-10 years, then waiting for a time when the stocks peak, switch over to bonds or just cash out and close the taxable account.

the 401k is my retirement nest egg and it's where most of my investing dollars will go, including extra money when debts are paid, and raises and such.

the taxable account is really just a way for me to save up for a house (or at least a down payment) quicker than would be just putting money in a savings account. if I save 100 bucks a month, in 10 years I'd have $12,000. according to my investment calculator, investing that same amount would have me with around 19,000 dollars. that'd be enough to pay a down payment on a house for sure. and if in 10 years the market is crashing, then I wait for the bounce back then cash in. (and likely have even more money as a result)

when that time comes I'll certainly need to keep the tax man in mind so I don't get screwed. maybe all those investment books I bought will cover this topic. in the mean time I'm glad my 401k is tax free as that's my actual nest egg. the taxable account isn't a nest egg.
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Beensabu
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Joined: Sun Aug 14, 2016 3:22 pm

Re: new to investing

Post by Beensabu »

Don't worry about anything other than making regular contributions to your accounts for now. Good job getting started. Read those books you bought and ask if you have questions about anything you read.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."
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