financial advisor's portfolio for me..........yes or no?

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cals400ex
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explain pretax, posttax and taxable accounts?

Post by cals400ex » Wed Aug 01, 2012 9:08 pm

Hello, I am new to the investing scene but I need to learn and get started. I have been told it is good to invest in all of these 3 accounts. I understand a roth ira will not be taxed when you remove money, and a traditional ira/401k is the opposite. I don't really understand what a taxable account is?

I have a feeling it will be easiest to stick to the "3-fund portfolio" or a target retirement fund. I am 30 years old and I will be putting in around 15K a year, for now. I currently have a roth ira through td ameritrade with my financial advisor. After I max out my roth, would it be best to open a traditional? I currently do not put anything into a 401K because they do not offer any sort of match. Or would I want to invest the extra money somewhere else? I appreciate any help you can provide.

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financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Wed Aug 01, 2012 9:30 pm

Single
6-months of emergency funds in high interest checking account (~2-3%)
$190K student loans at 6.8%
$170K mortgage at 3.4%
Illinois 5% tax bracket, Federal 28% tax bracket
30 years old
Asset allocation: 70/30
I am not exactly sure what % of international allocation I would like....Probably between 30-40%.
I currently do not have a 401K because I am not eligible to contribute until 2013. They do not have any match. The only fund available is:
DFA Global Allocation 60/40 Portfolio Institutional Class (DGSIX). It is a 60/40. The expense ratio is 0.54.

I have my current portfolio through td ameritrade with my financial advisor (larson financial group), besides the putnam mutual fund (is with edward jones). Here is what I have:

ETF: Vanguard total bond market fun (BND)......37 shares......market value ~$3100

Mutual
Funds: DFA US Core Equity 2 (DFQTX)........663 shares........market value ~$7550
DFA Emerging MKTS PTF (DFEMX)....43 shares..........market value ~$1065
DFA INTL Value PTF (DFIVX)..........403 shares.........market value ~$5865
Putnam Voyager Fund CL A (PVOYX)....264 shares.....market value ~ $5440

Insured deposit account.....~ $1000

The putnam fund is one my parents got me when I was young. I figured this one needs changed. Do you think everything else needs changed too?
Last edited by cals400ex on Thu Aug 02, 2012 10:22 pm, edited 3 times in total.

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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Wed Aug 01, 2012 9:38 pm

Welcome! I merged your posts, as these questions are related, and will let the members answer your questions better.

First things first. Take your time and do some reading. Have you looked at the wiki? Getting Started

A taxable account means that you pay taxes on the interest earned in the year you collect the interest. For example, a bank savings account is a taxable account. If you earn interest on your savings account in 2012, you will pay taxes on this interest in your 2012 tax return.

A tax deferred account means that you earn interest now, but don't pay taxes on what you take out until later. A Traditional IRA is a tax deferred account, meaning you pay taxes on the money withdrawn - after you retire.

You are probably asking about using "pre-tax" and "post-tax" contributions to a retirement account. You don't pay taxes on a Traditional IRA now (you will later - it's deferred), so the contributions are deducted from your salary before the tax is figured out - that's "pre-tax". If you contribute to a retirement account after you've already paid taxes on them, that's "post-tax" - a Roth IRA falls in this category.
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Re: explain pretax, posttax and taxable accounts?

Post by mhc » Wed Aug 01, 2012 10:29 pm

cals400ex wrote:Hello, I am new to the investing scene but I need to learn and get started. I have been told it is good to invest in all of these 3 accounts. I understand a roth ira will not be taxed when you remove money, and a traditional ira/401k is the opposite. I don't really understand what a taxable account is?

I have a feeling it will be easiest to stick to the "3-fund portfolio" or a target retirement fund. I am 30 years old and I will be putting in around 15K a year, for now. I currently have a roth ira through td ameritrade with my financial advisor. After I max out my roth, would it be best to open a traditional? I currently do not put anything into a 401K because they do not offer any sort of match. Or would I want to invest the extra money somewhere else? I appreciate any help you can provide.
Since you want to invest $15k a year and you can only put $5k a year into an IRA/Roth, you should be using your 401k as long as it is not too ridiculous.

The 3-fund approach is a great idea. Spend a little time learning, and you will be able to get rid of your financial adviser. The financial adviser is a drag on your portfolio.

If you post according to the suggested format in the Getting Started link already provided to you, you will get better specific advice.

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Re: financial advisor's portfolio for me..........yes or no?

Post by pkcrafter » Wed Aug 01, 2012 11:28 pm

You can only invest 5k total in an IRA or Roth combined. You aren't getting a match on your IRA contributions so let's asses the 401k potential, you need the room. Please list the available funds or just the lowest cost ones if there are too many. Include the ticker symbols if any and the expense ratios. What is your tax bracket and does the 401k have a Roth option?

If you have to have an advisor, DFA is a preferred choice, but the 1% advisory fee is an anchor. If you are interested in the three fund portfolio or a TR fund, I don't see why you need an advisor, you can do that easily on your own.

Paul
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 10:47 am

I have done some reading to catch up on some things. I have also updated my 2nd post with more valuable information to help you give advice. Thanks again.

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Re: financial advisor's portfolio for me..........yes or no?

Post by BL » Thu Aug 02, 2012 11:19 am

It sounds like your financial advisor isn't giving you any financial information. So what are you paying him for?

I would read up on information here on the Wiki and read some of the recommended book(s). After that, consider dumping the "adviser".
There may be some charges in selling off the accounts and also tax consequences (not if it is all in a Roth) so investigate that before selling. It will cost more in the future when you have more money with him. Move your Roth IRA to Vanguard for best prices. A target retirement fund at Vanguard has a $1,000 minimum and Expense Ratio of about 0.19. If you have more than $5,000 available to invest, your 401k is usually where you should invest even without the match. It is not clear whether or not you can put any money into your 401k this year. If not allowed, you could put money into a traditional IRA this year instead of a Roth and save on your current taxes. If you do have a retirement fund available, you may be making too much money to use a t IRA. The total amount you could put in is still $5,000 per year.



You will want to "invest" in paying off your student loans as that may be the best return. With your income, that should be possible to handle but being a homeowner already adds to your financial problems. Is there any way you can rent out a room, or cut other expenses so you can wipe out this expensive loan? I would consider investing only in the Roth this year and putting everything else into paying off the 6+% student loan.

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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 12:24 pm

I would prefer to invest more while I am younger and pay off my student loans at a slightly slower rate. I know the interest will be quite high, but with me investing quite a bit each year I believe, with compounding, I would be better off in the end. Everyone has a different thought process here and this is mine. I do not have to pay my financial advisor anything out of pocket. They make money off of what my portfolio does. I understand this costs me money, but I had them do it to choose my portfolio, due to my limited knowledge. I can not put any money into my 401K this year. I will be able to starting in 2013. I may or may not make too much money to invest in an IRA this year. I am guessing that I will gross around 125K, but that is just a guess.

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Re: financial advisor's portfolio for me..........yes or no?

Post by ap985 » Thu Aug 02, 2012 12:28 pm

Could you please say where you get a checking account paying 2-3% interest?

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Re: financial advisor's portfolio for me..........yes or no?

Post by BL » Thu Aug 02, 2012 1:10 pm

cals400ex wrote:I would prefer to invest more while I am younger and pay off my student loans at a slightly slower rate. I know the interest will be quite high, but with me investing quite a bit each year I believe, with compounding, I would be better off in the end. Everyone has a different thought process here and this is mine. I do not have to pay my financial advisor anything out of pocket. They make money off of what my portfolio does. I understand this costs me money, but I had them do it to choose my portfolio, due to my limited knowledge. I can not put any money into my 401K this year. I will be able to starting in 2013. I may or may not make too much money to invest in an IRA this year. I am guessing that I will gross around 125K, but that is just a guess.

If you are not eligible for any retirement plan all year, you can make any amount of income and still deduct it on your taxes. So you would save 33% of $5,000 in taxes by putting it into a traditional IRA for 2012. This is also why you will want to put money into your 401k next year even if you don't get a match.

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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 1:53 pm

I updated my 401K details in my 2nd post.
I get between 2-3% interest from my checking accound at First National Bank (Staunton Illinois) with their value checking account (up to 15K in the account).
I would like to invest in a Roth IRA if I can this year. If not, I may have to look into a traditional.

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Re: financial advisor's portfolio for me..........yes or no?

Post by scone » Thu Aug 02, 2012 2:08 pm

Fire the advisor. DFA funds are great, but you should look around for an even better deal. Sell PVOYX-- 1.17% expense ratio is ridiculous. Take another look at the 401(k) offerings. If they have cheap index funds in there, especially if it's cheaper than retail, it's worth it. Part of the reason 401(k) works is, they take out the money before you see it. Which brings me to the student debt. See if you can make accelerated payments on that, taken out of your paycheck before you see it. If you get used to living on less when you're young, you can bank your salary increases without much psychological pain. Remember, saving early means more money and more freedom later. Maybe even early retirement.
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Re: financial advisor's portfolio for me..........yes or no?

Post by pkcrafter » Thu Aug 02, 2012 2:32 pm

cals400ex wrote:I would prefer to invest more while I am younger and pay off my student loans at a slightly slower rate. I know the interest will be quite high, but with me investing quite a bit each year I believe, with compounding, I would be better off in the end. Everyone has a different thought process here and this is mine.
Well, yes, everyone has a different thought process, but you did come here looking for opinions from more experienced investors, right? When just starting out, your saving/investing rate is much more important than the returns you get, so you are correct in thinking it's a smart thing to do to accumulate assets. However, the other side of this is it's highly unlikely you will get returns higher than 6.8%, so paying down this loan also makes sense, and that loan balance is a lot higher than your total assets, so you are effectively losing money. If you can't invest in the 401k for a awhile, direct money that would have gone to the 401k toward the loan. Any chance you might be able to convert that loan to a lower rate?
I do not have to pay my financial advisor anything out of pocket. They make money off of what my portfolio does.
I'm assuming you are paying 1%, is that correct? As for making money off what your portfolio does, yes and no. They make their 1% off your total assets, but that 1% then directly reduces your earnings by that amount. Paying this way is actually worse than just paying out of pocket, because returns get reduced and therefore, compounding gets reduced.
I understand this costs me money, but I had them do it to choose my portfolio, due to my limited knowledge.
OK, but now you are going to learn how to manage yourself, and if you want to keep things simple, the three fund portfolio is a very good idea, and that you can do yourself. I think a target retirement fund in your Roth would work well for now. When you are eligible for the 401k, post the choices and expense ratios and we can go from there.

:?: I just noticed you said the only fund available in the 401k is DFA Global Allocation. Only one fund?? Or only one DFA fund?
I can not put any money into my 401K this year. I will be able to starting in 2013. I may or may not make too much money to invest in an IRA this year. I am guessing that I will gross around 125K, but that is just a guess.
Since you do not have access to a 401k plan this year, there is no income limit for traditional IRA contributions. I'd use the traditional IRA instead of a Roth because of the income reduction.

Paul
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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Thu Aug 02, 2012 3:14 pm

pkcrafter wrote:
I do not have to pay my financial advisor anything out of pocket. They make money off of what my portfolio does.
I'm assuming you are paying 1%, is that correct? As for making money off what your portfolio does, yes and no. They make their 1% off your total assets, but that 1% then directly reduces your earnings by that amount. Paying this way is actually worse than just paying out of pocket, because returns get reduced and therefore, compounding gets reduced.
Here's what pkcrafter means: Expense Ratios

Take a look at the graph "Reducing expense ratios by 1% per annum over lifetime." You're 30 years old. Look what happens if you cut 1% off your expenses now and put it back into your investments. You get an extra 10 years of retirement spending.

The "miracle of compounding" is called the 8th wonder of the world for a reason. You get the same effect by increasing your contributions or lowering your expenses. It's a big deal.

Here's another example: The effect of high costs The graph is not as easy to understand, but it makes the same point.
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 7:09 pm

I can not lower the interest rate on my student loans......I have already looked into that. It is the fixed 6.8%, even if I consolidate.
You are correct with the 1%. I do agree with you both, that is a big deal.
I am currently directing all extra money into my student loans, since I am not eligible for the 401K.
Regarding the 401K, this is the only fund. There is only one......I work for a very small company and they informed me this is the only option for us.

So you are suggesting I transfer everything from my financial adviser to Vanguard. I am not exactly sure how I start the 3 fund portfolio and a target retirement fund with Vangard. I realize I will need 9K for the 3-fund portfolio.

BTW, my putnam mutual fund is still with edward jones. Everything else is with TD America. I appreciate all of the help you have been.

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Re: financial advisor's portfolio for me..........yes or no?

Post by Johm221122 » Thu Aug 02, 2012 7:13 pm

Three fund portfolio link
http://www.bogleheads.org/wiki/Three-fund_portfolio
Good luck
John

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Re: financial advisor's portfolio for me..........yes or no?

Post by BL » Thu Aug 02, 2012 7:23 pm

The Target Retirements are 3-fund funds.

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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Thu Aug 02, 2012 7:45 pm

This is the same question I asked when trying to understand how to go from a Target Retirement Fund to separate funds (US Stock / International Stock / Bonds). The pros have done the work for you.

You would like a 70% stock / 30% bond asset allocation, which is the big decision. Now, let's figure out what to do with it.

There are a ton of options here, such as the many choices available here: Lazy Portfolios

However, that's probably more than you want to look at - especially for just starting out. First and foremost, there's absolutely nothing wrong with a Vanguard Target Retirement Fund. They're just fine and you can stop right here. Refer to the "Choosing a Target Retirement Fund" section and be sure that your level of risk is good enough to stick with a 70/30 asset allocation.

The Vanguard Target Retirement 2025 Fund (VTTVX) is the closest match with 72% stocks / 28% bonds.

If you want to go farther with separate funds, just match them to the asset allocation percentages in the 2025 fund. Here's the top 3 funds:

Vanguard Total Stock Market Index Fund Investor Shares 50.3%
Vanguard Total International Stock Index Fund Investor Shares 21.6%
Vanguard Total Bond Market II Index Fund Investor Shares* 28.1%

That's all you need to do. After a year, take a look how everything has performed and then rebalance to get the percentages back on track (don't worry about this until after your portfolio is figured out - it's easy.)

Note: I listed the fund percentages down to the last decimal place because that's how they're reported - you know you're looking in the right place. In practice, to the nearest 5% is fine.

Remember that you need to consider all of your investments (savings, IRAs, etc.) as a single portfolio, i.e. everything together should work out to 70/30.
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 7:47 pm

When I heard "target retirement fund," I thought that was referring to an "all in one" retirement fun in comparison to the 3-fun portfolio. I realize they use the same 3 funds.

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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Thu Aug 02, 2012 7:50 pm

That's why they're called "fund of funds." The expenses are a bit higher because you have to manage them as a package. However, it's not a big deal. It's sometimes worth the (minor) extra expense if it makes things easy for you. Simple is good.

If you are using these funds in a tax deferred (retirement) account you won't pay taxes (now) to buy/sell to another tax deferred account. IOW, there's no penalty to swap from a Target Retirement Fund to something else later on if you change your mind. This is not true in a taxable account.
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 8:03 pm

I honestly don't know how to transfer this over from td ameritrade and edward jones to a tax deferred or a taxable account. How do you have that option? Or, do you transfer it over and then place it where you want it?

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Re: financial advisor's portfolio for me..........yes or no?

Post by maxim81 » Thu Aug 02, 2012 8:15 pm

cals400ex wrote:I honestly don't know how to transfer this over from td ameritrade and edward jones to a tax deferred or a taxable account. How do you have that option? Or, do you transfer it over and then place it where you want it?
What are you trying to transfer? You can keep whatever you have with TDAmeritrade. Instead, open a IRA account with TD and transfer your money to that IRA account, sell off whatever you have, and buy the VAnguard Target Retirement Fund 2045.

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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Thu Aug 02, 2012 8:32 pm

Understood that this transfer can be intimidating, as you are moving a lot of money to somewhere new using a procedure that you have no experience with.

What should you do? Relax and call Vanguard. It's their business. They've probably heard every question you are going to ask several times over. Let them take care of it. All you need to do is follow their instructions.

By tax deferred, I assume you mean the IRA and Roth accounts. That's a standard transfer process. You can only transfer between the same types of funds, e.g. (old) Roth IRA to (new) Roth IRA.

Now, let's step back a bit. Do we have all the information to help you in the right way? It's a little confusing. Could you edit Post #2 (with your fund details) in the format shown in: Asking Portfolio Questions?

You've mentioned a Roth IRA with a financial advisor, but also a 401(k), and a "mutual" fund. The format will sort things out so we can get the right picture. Take your time to do some reading and post back when you are ready. Or, ask more questions.
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Re: financial advisor's portfolio for me..........yes or no?

Post by nonnie » Thu Aug 02, 2012 10:10 pm

maxim730 wrote:
cals400ex wrote:I honestly don't know how to transfer this over from td ameritrade and edward jones to a tax deferred or a taxable account. How do you have that option? Or, do you transfer it over and then place it where you want it?
What are you trying to transfer? You can keep whatever you have with TDAmeritrade. Instead, open a IRA account with TD and transfer your money to that IRA account, sell off whatever you have, and buy the VAnguard Target Retirement Fund 2045.
Why would he want to do that? If he's going to open a new IRA account to buy Vanguard Target Retirement 2045-- why on earth would he open it at TD and pay a fee to buy that fund at TD-- why not open it at Vanguard? As others have said, Vanguard will help with the transfers and all the rest of the paper work.

That said, the DFA Funds he holds aren't too shabby and if there are tax consequences to sell he can continue to hold them but won't be able to add new shares. It would, however, make things much more complicated if he intends to move everything to Vanguard--this is just a note about selling his DFA Funds and incurring a short or long term capital again this year.

His adviser--Larson Financial Group focuses on the medical profession. There's no info on their website about fees. I do not understand "I do not have to pay my financial advisor anything out of pocket. They make money off of what my portfolio does." I've never heard of any advisor who works this way and I would suspect that fees are automatically debited from his TD Ameritrade Institutional account managed by his adviser.
http://www.larsonfinancial.com/our-firm

I'm someone who uses a financial advisor and often recommends one for posters but you don't have enough investments. Cals400ex-- you can do it yourself. Keep it simple, listen to folks here, do some reading and once you understand your objectives and taxable vs. tax-deferred have Vanguard help you transfer your accounts. With your portfolio values you probably have very small capital gains. You've gotten very good advice here. Call Vanguard and they will help you with the transfers. Start first with Edward Jones--you can ask them the fee to sell and ask the Vanguard the fee to sell and then either instruct Edward Jones to sell your Putnam Fund and then initiate a transfer through Vanguard or you can have Vanguard initiate the transfer from Edward Jones of the Putnam Fund and then sell it when it gets to Vanguard--One of them is probably easier and a few dollars cheapers, not sure it makes that much difference.

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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Thu Aug 02, 2012 11:05 pm

Yes, this is definitely confusing for someone who has not seen it before, like myself. I tried to put everything in post #2 by reading it off of my June 2012 statement. I am sorry that the format is a bit different. I honestly don't know how to put it in your preferred format, even with the link to the template. I might be getting over my head with all of this stuff.

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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Fri Aug 03, 2012 10:00 am

Then don't worry about it. The last thing you want to do is give up. We'll work with what you have posted. Keep reading the wiki, it's chock full of information - but you don't want to get overloaded all at once. Take your time.

Remember that you're asking questions to an investing site who's members eat this stuff for lunch. We're more than happy to answer your questions - don't worry if it seems "too simple." The hardest questions to answer are the ones not asked.

Let's be sure you have the funds in the right category. On your statements, are each of the below- an IRA, Roth IRA, or you have to pay taxes at the end of the year (get 1099 form, and must pay taxes on the earnings)?
cals400ex wrote:ETF: Vanguard total bond market fun (BND)......37 shares......market value ~$3100 (IRA, Roth IRA, I pay taxes on what's earned)

Mutual Funds:
DFA US Core Equity 2 (DFQTX)........663 shares........market value ~$7550 (IRA, Roth IRA, I pay taxes on what's earned)
DFA Emerging MKTS PTF (DFEMX)....43 shares..........market value ~$1065 (IRA, Roth IRA, I pay taxes on what's earned)
DFA INTL Value PTF (DFIVX)..........403 shares.........market value ~$5865 (IRA, Roth IRA, I pay taxes on what's earned)
Putnam Voyager Fund CL A (PVOYX)....264 shares.....market value ~ $5440 (IRA, Roth IRA, I pay taxes on what's earned)

Insured deposit account.....~ $1000 (IRA, Roth IRA, I pay taxes on what's earned)
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Fri Aug 03, 2012 10:17 am

Ok, I just made a decision. I transferred everything I have at edward jones and td ameritrade over to the vanguard 2040 target retirement fund. I do not have any taxable or tax deferred accounts, its all in a roth. Now that everything is with vanguard, I can trade things around as I learn more. For example, I might trade this up for the individual 3-core funds so I have more flexibility.

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Re: financial advisor's portfolio for me..........yes or no?

Post by wilked » Fri Aug 03, 2012 10:27 am

What is your monthly payment on that $200,000 student loan?

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Re: financial advisor's portfolio for me..........yes or no?

Post by BL » Fri Aug 03, 2012 10:30 am

Congratulations! You are in a good spot right now. Any costs you had in moving to Vanguard will be more than covered by the low expense rates you have going forward. You can easily change to other Vanguard funds should you choose (without any costs), but you have a perfectly good and simple solution which will work until you get lots more in other funds elsewhere.

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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Fri Aug 03, 2012 11:10 am

I am currently paying 3K a month on my student loans.

Yes, I sure hope I made a good decision. I need to start looking at other ways I can invest since I will likely be making over the 125K a year, making me ineligible to invest in this roth.

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Re: financial advisor's portfolio for me..........yes or no?

Post by nonnie » Fri Aug 03, 2012 11:51 am

cals400ex wrote:I am currently paying 3K a month on my student loans.

Yes, I sure hope I made a good decision. I need to start looking at other ways I can invest since I will likely be making over the 125K a year, making me ineligible to invest in this roth.
Good for you! Stay here and continue to learn. As you have seen there are lots of great people here including folks like Board Administrator LadyGeek with a great sense of humor "Remember that you're asking questions to an investing site who's members eat this stuff for lunch" who will be more than happy to help you with any questions you have.

Nonnie
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cals400ex
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Re: financial advisor's portfolio for me..........yes or no?

Post by cals400ex » Fri Aug 03, 2012 12:21 pm

nonnie wrote:
cals400ex wrote:I am currently paying 3K a month on my student loans.

Yes, I sure hope I made a good decision. I need to start looking at other ways I can invest since I will likely be making over the 125K a year, making me ineligible to invest in this roth.
Good for you! Stay here and continue to learn. As you have seen there are lots of great people here including folks like Board Administrator LadyGeek with a great sense of humor "Remember that you're asking questions to an investing site who's members eat this stuff for lunch" who will be more than happy to help you with any questions you have.

Nonnie

I am glad members like that are here, because as you can tell, I am clueless. haha

pingo
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Re: financial advisor's portfolio for me..........yes or no?

Post by pingo » Fri Aug 03, 2012 12:39 pm

cals400ex wrote:DFA Global Allocation 60/40 Portfolio Institutional Class (DGSIX). It is a 60/40. The expense ratio is 0.54.
By the way, congratulations on having one truly great fund in your 401k. (It's all most of us can hope for!) From the looks of DGSIX your 401k could be far worse. By that I really do mean that it looks like a winner. Be sure to use it once you're eligible.

Some other good news: DGSIX looks like it will give you in one low cost fund pretty much everything the adviser was aiming for in the other funds held through TDAmeritrade.

Check to see if your 401k accepts rollovers from Traditional IRAs. If so, you may be able to save a lot on taxes by contributing enough to the 401k to be eligible for deductible TIRA contributions, too. When you're income makes you no longer eligible for deductible TIRA contributons, conribute to a Roth. When you're no longer Roth eligible directly, move the TIRA to the 401k, make non-deductible TIRA contributions and then convert them to Roth assets with little-to-zero tax consequence. Search this forum and google "thefinancebuff.com: Backdoor Roth".
Last edited by pingo on Sat Aug 04, 2012 1:54 am, edited 1 time in total.

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Re: financial advisor's portfolio for me..........yes or no?

Post by nonnie » Fri Aug 03, 2012 1:24 pm

cals400ex wrote:
I am glad members like that are here, because as you can tell, I am clueless. haha
If you were *totally* clueless you wouldn't have come here :) and you've already made a smart decision to transfer your accounts! Now-- wasn't that easy?
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Re: financial advisor's portfolio for me..........yes or no?

Post by LadyGeek » Fri Aug 03, 2012 1:46 pm

pingo wrote:Check to see if your 401k accepts rollovers from Traditional IRAs. If so, you may be able to save a lot on taxes by contributing enough to the 401k to be eligible for deductible TIRA contributions, too. When you're income makes you no longer eligible for deductible TIRA contributons, conribute to a Roth. When you're no longer Roth eligible directly, move the TIRA to the 401k, make non-deductible TIRA contributions and then convert them to Roth assets with little-to-zero tax consequence. Search this forum and good google "thefinancebuff.com: Backdoor Roth.
This advice is for "experienced" investors. You don't need to understand this now (or even later :wink:). Focus on getting the basics under your belt, take your time.

(I fixed a typo in the quote.)
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Re: financial advisor's portfolio for me..........yes or no?

Post by wilked » Fri Aug 03, 2012 4:02 pm

cals400ex wrote:I am currently paying 3K a month on my student loans.
Well, just think of how much you can save once you have those loans paid off! It probably seems like a long way off, but I would look to get out from under those in 5-7 years. That will free up a ton of cash to invest. I know you are worried about lost time on investing, but the payment / interest on those loans is a big anchor until removed

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Re: financial advisor's portfolio for me..........yes or no?

Post by TF Hutch » Fri Aug 03, 2012 10:49 pm

Net Worth = Assets (savings) - Liabilities (debts)
The objective is to create a large positive Net Worth as quickly as possible.

Pay down the debt (6.8%) after maximizing tax differd space.
Hutch | A fool and his funds are soon parted! - Thomas Tusser (English Farmer and Writer. 1524-1580)

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Re: financial advisor's portfolio for me..........yes or no?

Post by pingo » Sat Aug 04, 2012 1:59 am

LadyGeek wrote:
pingo wrote:Check to see if your 401k accepts rollovers from Traditional IRAs. If so, you may be able to save a lot on taxes by contributing enough to the 401k to be eligible for deductible TIRA contributions, too. When you're income makes you no longer eligible for deductible TIRA contributons, conribute to a Roth. When you're no longer Roth eligible directly, move the TIRA to the 401k, make non-deductible TIRA contributions and then convert them to Roth assets with little-to-zero tax consequence. Search this forum and good google "thefinancebuff.com: Backdoor Roth.
This advice is for "experienced" investors. You don't need to understand this now (or even later :wink:). Focus on getting the basics under your belt, take your time.
Yikes! I did get ahead of myself. And thanks for the edit. I also went back and changed the original, too.

So...pay debt, save money, 401k good! :wink:

('Nuff said?)

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