Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

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zayd13
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Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by zayd13 » Sun Jan 01, 2017 11:58 am

Hey everyone,

So I have an emergency fund, contribute the max to my pension plan (I work at a public university), plan to contribute the max to my Roth IRA, and have no forms of debt (cc, student loan, or mortgage..going to buy in a couple years though). I also have VTSMX in a taxable account, and so I was wondering: with all major priorities accounted for, would it hurt to contribute monthly to my taxable VTSMX? I'm thinking something really small like 25 or 30$/month. I know that doesn't seem like much, but I can afford it and otherwise it would sit in a MM (to be clear, overall I am saving more money per month after contributing to everything above but I want to keep that liquid because I am saving for a dp on a house in the long run. 20/30/even 40 month I can do without and put to other things ).

What are your thoughts? I feel like it could only help and definitely not hurt, since I don't plan to touch the taxable account for many years, but I wanted to check with you all to see if maybe there's something I am not considering. Thanks in advance for your insight!

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whodidntante
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by whodidntante » Sun Jan 01, 2017 12:11 pm

Sounds good. You've chosen a reasonable investment to hold in a taxable account. You are doing great.

You should consider getting a HDHP and maxing an HSA, with the intent to invest the money to pay future medical expenses and to fund retirement.

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ruralavalon
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by ruralavalon » Sun Jan 01, 2017 5:56 pm

zayd13 wrote:So I have an emergency fund, contribute the max to my pension plan (I work at a public university), . . . . .

In addition to the pension is there a 403b plan or 457 plan that you can contribute to?

Please see the wiki article "Prioritizing investments".
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zayd13
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by zayd13 » Sun Jan 01, 2017 6:37 pm

ruralavalon wrote:
zayd13 wrote:So I have an emergency fund, contribute the max to my pension plan (I work at a public university), . . . . .

In addition to the pension is there a 403b plan or 457 plan that you can contribute to?

Please see the wiki article "Prioritizing investments".


There is a 403b option, but they do not match it. It also doesn't seem like you get to control the fund(s) it goes into or the allocation, but you can choose the provider from the list below. I assume you would rather put the extra 25$/month into a 403b? If so, any insight on any of the providers?

-Ameriprise Financial, Inc.
• ASPire Financial Services, LLC
• AXA/Equitable Life Ins. Co.
• Fidelity Investments
• FTJ Fund Choice
• Lincoln Financial Group
• Metropolitan Life Ins. Co.
• Nationwide
• T. Rowe Price Retirement Plan Services, Inc.
• The Legend Group
• TIAA
• VALIC
• VOYA Financial Advisers

zayd13
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by zayd13 » Sun Jan 01, 2017 6:44 pm

whodidntante wrote:Sounds good. You've chosen a reasonable investment to hold in a taxable account. You are doing great.

You should consider getting a HDHP and maxing an HSA, with the intent to invest the money to pay future medical expenses and to fund retirement.


Although I do not accrue very many health costs, I think that's a good idea to look into. Thanks for the encouragement too - I appreciate it!

livesoft
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by livesoft » Sun Jan 01, 2017 6:47 pm

I would start by investigating the options from these providers first:
zayd13 wrote:• Fidelity Investments
• T. Rowe Price Retirement Plan Services, Inc.
• TIAA

One of them might be a standout. Full disclosure: I've had a 403(b) at TIAA, my spouse has a 403(b) at TIAA, and we have joint acccount at Fidelity.
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Duckie
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by Duckie » Sun Jan 01, 2017 6:54 pm

zayd13 wrote:There is a 403b option, but they do not match it. It also doesn't seem like you get to control the fund(s) it goes into or the allocation, but you can choose the provider from the list below.

Almost all 403b plans have mutual fund options. Unfortunately many are expensive.

I assume you would rather put the extra 25$/month into a 403b?

Unless all the 403b options are horrific I would contribute to a 403b before contributing to a taxable account for retirement purposes. Now, if the money is not for retirement, that's something else.

If so, any insight on any of the providers?

The only way to know is to find out what each provider offers. It's a pain but it's the only way. Start with the non-insurance companies in this order:
    Fidelity Investments
    TIAA
    T. Rowe Price Retirement Plan Services, Inc.
    VOYA Financial Advisers
    ASPire Financial Services, LLC

zayd13
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by zayd13 » Sun Jan 01, 2017 6:58 pm

Awesome. Good advice. The taxable account actually isn't necessarily for retirement purposes. I may tap into it over the years if I feel like I absolutely need to, but it originally was not meant for retirement. For retirement I have my Roth, which I've maxed the past two years and plan to continue matching as much as possible, and my pension which is 10% per month with a 14% match from my employer. I'm hoping that's enough..but I guess enough is never enough when it comes to retirement. I'm 27 y.o. btw..will be 28 in a few weeks, so hopefully time is on my side.

renue74
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by renue74 » Sun Jan 01, 2017 7:01 pm

My wife is a teacher. We just went through the 403b reviews last year and chose Aspire. Most likely your best choice.

Aspire lets you do a self directed plan and the fees are pretty decent: $40/year + 0.15%. They give you access to all Vanguard funds.

livesoft
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by livesoft » Sun Jan 01, 2017 7:19 pm

renue74 wrote:My wife is a teacher. We just went through the 403b reviews last year and chose Aspire. Most likely your best choice.

Aspire lets you do a self directed plan and the fees are pretty decent: $40/year + 0.15%. They give you access to all Vanguard funds.

At $25 a month to start, that $40/year would be kinda like a 13% expense ratio which is a no-go.
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zayd13
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by zayd13 » Sun Jan 01, 2017 7:39 pm

Yea, it kind of makes me wonder with all of those providers having such relatively high fees/expense ratios if it would actually be more sensible to put it in the taxable VTSMX, particularly if my goal isn't for retirement reasons as much as I would just like to put my money to work better and grow my overall net worth (albeit marginally, but still better than not doing anything productive with the 25 bucks a month in my opinion).

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M_to_the_G
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by M_to_the_G » Sun Jan 01, 2017 9:58 pm

You can vary the amount you contribute to your pension plan? I am a federal employee, and we just pay whatever we pay, and then the government pays its share. We can't opt to contribute more or less. Our pension is based on a percentage (determined by length of service) of a "high three" calculation.

Also, can you explain more about how your 403b plan works? Have I understood correctly that the administrator asks you to pick a provider (for example, Fidelity), and then they "assign" you funds, and you are not allowed to provide input into which funds you get?
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PoppyA
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by PoppyA » Sun Jan 01, 2017 10:04 pm

Yes. That is one option. As long as it aligns with your overall asset allocation.
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ruralavalon
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Re: Should I contribute monthly to my taxable mutual fund if I have the leftover funds after important expenses??

Post by ruralavalon » Mon Jan 02, 2017 10:13 am

zayd13 wrote:
ruralavalon wrote:
zayd13 wrote:So I have an emergency fund, contribute the max to my pension plan (I work at a public university), . . . . .

In addition to the pension is there a 403b plan or 457 plan that you can contribute to?

Please see the wiki article "Prioritizing investments".


There is a 403b option, but they do not match it. It also doesn't seem like you get to control the fund(s) it goes into or the allocation, but you can choose the provider from the list below. I assume you would rather put the extra 25$/month into a 403b? If so, any insight on any of the providers?

-Ameriprise Financial, Inc.
• ASPire Financial Services, LLC
• AXA/Equitable Life Ins. Co.
• Fidelity Investments
• FTJ Fund Choice
• Lincoln Financial Group
• Metropolitan Life Ins. Co.
• Nationwide
• T. Rowe Price Retirement Plan Services, Inc.
• The Legend Group
• TIAA
• VALIC
• VOYA Financial Advisers

Usually it's much better to contribute to tax-protected accounts, like a 403b, before taxable investing. Please see the wiki article "Prioritizing investments". This is true even if there is no employer match, as long as there are any decent funds offered in the 403b.

I suggest that you take a look at the funds offered by Fidelity Investments, ASPire Financial Services, LLC, TIAA, and perhaps the funds offered by some of the other investment firms (other than the insurance companies) listed as providers. The insurance companies probably only offer fairly expensive annuity type investments.

Which investment firm(s) offer funds with the lowest expense ratios? What are the funds offered by the firm(s) with the lowest expense ratios? Please give the fund names, tickers and expense ratios. (If the lists are very long, for each firm just give the funds with the lowest expense ratios in each fund category.)
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