new to investing...[a little] help please?

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flatman123
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new to investing...[a little] help please?

Post by flatman123 » Fri Jun 16, 2017 6:47 am

Hello,

all.. i'm in of need of some help..i can't afford a financial adviser, so i've been doing ALOT!! of reading about..watching videos on investing ( stocks, ETF's, index funds etc..)--been studying for about 2 months 5 days aweek....and now i'm reaching out for assistance....i'm 34 years old and have 9 months worth of emergency fund stashed away ( still building it up to 2 years).. i have a 401K, with my job...i only have it because its free money.....but don't have a lot of faith in it giving the bad publicity it gets...so i don't max it out.

I have $3,000 to invest in the market and was thinking about starting to invest in Index funds as the "CORE" of my portfolio and later on coat the "outside" with some risky stocks etc....My purpose for investing is for long-term..i dont care to consistently trade( like a day trader)....i wanna by and hold and sell/buy only when necessary.-- so yes i'll be paying close attention to the market and making decisions accordingly..

Any advise?.. any assistance would be greatly appreciated.
thanks in advanced.

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David Jay
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Re: new to investing...[a little] help please?

Post by David Jay » Fri Jun 16, 2017 10:05 am

Start with the BH Startup Kit, on the WIKI here: https://www.bogleheads.org/wiki/Boglehe ... art-up_kit

In particular, read "If You Can", free PDF at link above.

A couple of questions:

1. Will the $3000 be inside a Roth or will it be a taxable account?
don't have a lot of faith in it giving the bad publicity it gets
2. This seems unusual to me, what are your specific concerns about your 401K?
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

pkcrafter
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Re: new to investing...[a little] help please?

Post by pkcrafter » Fri Jun 16, 2017 11:04 am

Welcome,
so yes i'll be paying close attention to the market and making decisions accordingly..
Not a good idea.

Here's a study you can add to your reading lest. :happy

http://www.businessandeconomics.mq.edu. ... r.docx.pdf




Paul
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.

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 7:07 am

Will the $3000 be inside a Roth or will it be a taxable account? -- yes it will be in a Brokerage account with TD Ameritrade

thanks for the links, I will read up on that today.

2. This seems unusual to me, what are your specific concerns about your 401K? the fees associated with my 401k and the unknown tax-bracket when I get older.---

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 7:22 am

FYI...I originally had 1,000 to start investing...but I saw that TD Ameritrade doesn't have a minimal deposit to open an account...in-addition..they have had a deal where if you start of with a deposit of 3,000 that you get 60-days of free trading...

now I don't plan on trading often ( I just wanted to buy and hold)---so i figured i'd mainly started out with Index-funds (example VTI etc..) ..and establishing some long-term Blue-chip stocks( the ones that pay a decent dividend and have a long-standing payout ratio..( just to get my feet-wet).. and after reading and understanding how to properly buy/choose ( non-emotionally) stocks...I already have an Idea as to what I wanted...so i figured, let me take advantage of the 60-day commission-free option since I already know what I wanted to buy ?

so I don't plan on using the full $3,000 to invest in one shot...i just want to take advanced of the 60-day commission-free to buy.

retiredjg
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Re: new to investing...[a little] help please?

Post by retiredjg » Sun Jun 18, 2017 8:20 am

flatman, welcome to the forum. :happy

I think you are headed off in the wrong direction. Even a bad 401k should be used and there is no indication yet that yours is actually a bad one. Might be, might not be, but experience here is that it is probably not nearly as bad as you think. Of course, you could be the exception.

Why don't you let us give you a little help on that? Tax deferral is a good thing.

Even if your 401k is not great, you should probably use it and a Roth IRA (if eligible) before considering investing retirement money in a taxable account (an account that does not have a tax advantage like a 401k, IRA, Roth IRA, etc).

People here can help you figure out an asset allocation (stock to bond ratio) and how to set up a portfolio for your retirement. If you are interested, post your information in the format suggested in the link at the bottom of this message.

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 8:21 am

Paul,

I just finished reading the article on Myopic Loss aversion ( also read another article to clear a few things up in the one that you provided).....the topic of MLA makes perfect sense...thanks for sharing.

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BL
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Re: new to investing...[a little] help please?

Post by BL » Sun Jun 18, 2017 8:47 am

Suggest your read the above-mentioned free online pdf to get off to a good start:
https://www.etf.com/docs/IfYouCan.pdf

Investing should be simple, not complex.

Share with us your available 401k funds, with name, ticker, and ER (Expense Ratio). Filling your 401k and/or a Roth IRA is probably your best way to get started with investing. Look for lower-ER funds such as S&P 500 fund if they are all above ER= 0.50% or higher. That is often the cheapest. Anything with the words index, Vanguard, some Fidelity may have low ERs, but there are more. The 3 funds mentioned in the PDF above are a guideline and finding something similar in your 401k is a good goal. Try to get the basics established for your retirement before going off on individual stocks, etc. The Boglehead's Guide to investing is a good book to read to get started.

"Getting Started" in the Wiki here is a good way to start. Then read a suggested book or two.

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 9:15 am

Retiredjg,

]Even if your 401k is not great, you should probably use it and a Roth IRA (if eligible) before considering investing retirement money in a taxable account (an account that does not have a tax advantage like a 401k, IRA, Roth IRA, etc).
hmm.. so i should max it out just to cover my bases and have a Roth, max out the roth then put funds towards a taxable account? ( for the roth i'll have to do it individually since my company doesn't have one.


yes i would like some assistance with ( stocks, bonds etc..) much appreciated.
here is my information:


Emergency funds: 9-months
Debt: school loan with about $5k left ( I actually plan on utilizing the the loan company's deferment feature and pay this off in one lump some to avoid the monthly interest rate)
Tax Filing Status: Married filing Jointly, no dependents
Tax Rate: 15%
State: 6.45%
State of Residence: New York City , NY
Age: 34
Desired Asset allocation: don't know yet( need assistance with this).
Desired International allocation: don't know yet( need assistance with this).



Current retirement assets

Taxable
xx% cash (for investing – do not include emergency funds) -- $3k
xx% stock company name (ticker symbol) -- non-yet..

His 401k
xx% fund name (ticker symbol) (expense ratio) --- I need to look into this.. i accidently locked myself out of my online login..need to wait till tomorrow for this infor :|
Company match? 3%

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 9:23 am

BL,
Share with us your available 401k funds, with name, ticker, and ER (Expense Ratio). Filling your 401k and/or a Roth IRA is probably your best way to get started with investing. Look for lower-ER funds such as S&P 500 fund if they are all above ER= 0.50% or higher. That is often the cheapest. Anything with the words index, Vanguard, some Fidelity may have low ERs, but there are more. The 3 funds mentioned in the PDF above are a guideline and finding something similar in your 401k is a good goal. Try to get the basics established for your retirement before going off on individual stocks, etc. The Boglehead's Guide to investing is a good book to read to get started.

as stated to retiredjg, i'll provide that information tomorrow.---much-appreciated.

retiredjg
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Re: new to investing...[a little] help please?

Post by retiredjg » Sun Jun 18, 2017 9:26 am

flatman123 wrote:hmm.. so i should max it out just to cover my bases and have a Roth, max out the roth then put funds towards a taxable account? ( for the roth i'll have to do it individually since my company doesn't have one.
The 401k and Roth IRAs should come before investing retirement money in a taxable account, even if your 401k is mediocre. If it is VERY poor, maybe not but we don't run into many that are so bad that they should not be used. And even a very poor 401k should be used up to the match (free money!)

The order of 401k and Roth IRAs depends on a few things such as the quality of your 401k, the match, your tax brackets, how much you save, and personal preference.

yes i would like some assistance with ( stocks, bonds etc..) much appreciated.
here is my information:
We cannot do anything without the rest of the information so just include it here (click on the little pencil thing to edit) and then make a new reply to this post so that people will be notified.


Desired Asset allocation: don't know yet( need assistance with this).
Desired International allocation: don't know yet( need assistance with this).
Do you have any investments now? Did you have anything invested in the last crash (seems unlikely considering your age, but not impossible).

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Sun Jun 18, 2017 9:55 am

Do you have any investments now? Did you have anything invested in the last crash (seems unlikely considering your age, but not impossible).
aside from the 401K i don't have any other investments and i didn't have anything invested during the last crash ( kinda wish i did :annoyed ..i feel like 34 is kinda late in the game)....most of my time was invested in establishing a decent emergency fund and investing in items to advance in my career ( books, computer equipment and other study material etc..)..which i'm really glad i did because it definitely paid off....i'd like to correct my previous statement ..i actually have 10-months of an emergency fund not 9.
We cannot do anything without the rest of the information so just include it here (click on the little pencil thing to edit) and then make a new reply to this post so that people will be notified.
no problem, i'll get this over to you-all soon.

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Mon Jun 19, 2017 5:03 am

Ok all here is my info

Emergency funds: 9-months
Debt: school loan with about $5k left ( I actually plan on utilizing the the loan company's deferment feature and pay this off in one lump some to avoid the monthly interest rate)
Tax Filing Status: Married filing Jointly, no dependents
Tax Rate: 15%
State: 6.45%
State of Residence: New York City , NY
Age: 34
Desired Asset allocation: don't know yet( need assistance with this).
Desired International allocation: don't know yet( need assistance with this).



-------------------------------Current retirement assets---------------------------

Taxable
xx% cash (for investing – do not include emergency funds) -- $3k
xx% stock company name (ticker symbol) -- non-yet..

-----------His 401k-----------------
As per the below...my general Annual-contribution towards my 401K is currently set to 9% of my pay.
The last time I made any adjustments to the below allocations were in 2015.

contributions 37.81%
Fund name: Small Cap Index Fund
Ticket: (JESIX)
Expense ratio as of 3/31/17 = 1.43%

My contributions 42.19%
Fund name: Vanguard Small Cap Growth index fund (VSGAX)
Expense ratio as of 3/31/17 = 1.43%

My contributions 9.97%
Fund name: 500 Index Fund (JFIVX)
Expense ratio as of 3/31/17 = 1.38%

My contributions 10.03%
Fund name: Vanguard Growth Index Fund (VIGAX)
Expense ratio as of 3/31/17 = 1.43%

Company match? 3%


...expense ratios are really high...most of the other funds on my 401K are the same...

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Mon Jun 19, 2017 5:18 am

guys,

my apologies..i made some errors in my previous post for the 401k info: contribution currections are below:


Emergency funds: 9-months
Debt: school loan with about $5k left ( I actually plan on utilizing the the loan company's deferment feature and pay this off in one lump some to avoid the monthly interest rate)
Tax Filing Status: Married filing Jointly, no dependents
Tax Rate: 15%
State: 6.45%
State of Residence: New York City , NY
Age: 34
Desired Asset allocation: don't know yet( need assistance with this).
Desired International allocation: don't know yet( need assistance with this).



-------------------------------Current retirement assets---------------------------

Taxable
xx% cash (for investing – do not include emergency funds) -- $3k
xx% stock company name (ticker symbol) -- non-yet..

-----------His 401k-----------------
As per the below...my general Annual-contribution towards my 401K is currently set to 9% of my pay.
The last time I made any adjustments to the below allocations were in 2015.

My contributions 20.85%
My Employers contributions: 79.86%
Fund name: Small Cap Index Fund
Ticket: (JESIX)
Expense ratio as of 3/31/17 = 1.43%

My contributions 59.21%
Fund name: Vanguard Small Cap Growth index fund (VSGAX)
Expense ratio as of 3/31/17 = 1.43%

My contributions 9.94%
My Employers contributions: 10.04%
Fund name: 500 Index Fund (JFIVX)
Expense ratio as of 3/31/17 = 1.38%

My contributions 10.00%
My Employers contributions: 10.10%
Fund name: Vanguard Growth Index Fund (VIGAX)
Expense ratio as of 3/31/17 = 1.43%

Company match? 3%


...expense ratios are really high...most of the other funds i can choose from on my 401K are the same... :|

flatman123
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Re: new to investing...[a little] help please?

Post by flatman123 » Mon Jun 19, 2017 5:25 am

In addition to my post above, here is a general snap-shot of my allocation

42% Vanguard Small Cap Grow Index
38% Small Cap Index Fund
10% 500 Index Fund

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BeBH65
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Re: new to investing...[a little] help please?

Post by BeBH65 » Mon Jun 19, 2017 5:53 am

Hi flatman,

It is best to group all info in your opening post.
You can simply edit it by using the little pencil next to it.

Regards,
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

Swelfie
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Re: new to investing...[a little] help please?

Post by Swelfie » Mon Jun 19, 2017 5:59 am

Your employer match of 3% doesn't quite make sense if the employer has contributed 80% and you only 20%. Does your employer just contribute a flat 3% of your salary, or does the employer match your contributions?

Are there any funds in your 401k with an expense ratio (ER) below 1%?

Here is my humble advice:

Assuming all of your funds in the 401k have a high ER, I would reduce your 401k contributions enough so that you can afford to put $5500 per year into a Roth IRA instead, but not below the minimal amount in the 401k needed to get the biggest contribution from your employer. Also, your tax bracket is quite low, so see if your employer allows Roth 401k contributions instead of traditional and think about switching to that until you are in the 25% bracket.

In that 401k I would move everything to JFIVX, since that is the lowest expense ratio of the funds you list, and is a standard s&p500 fund, which means it is well diversified.

Take your $3000 and open a Roth IRA, as you planned. Determine your asset allocation based on your tolerance for risk. I would recommend 80% stocks, 20% bonds if you have no idea, but this is a very personal decision. You can adjust this ratio as you learn more.

Total the value of your 401k with the value of your new Roth IRA ($3000). 80% of this should be stocks and 20% bonds (or whatever ratio you decide on). So, if your 401k is all in stocks, and let's say for example it was $7000, then in your Roth IRA you would buy $1000 of stocks and $2000 of bonds for an 80/20 ratio. I would recommend you buy VTI for stocks and BND for bonds as these are both very low expense ratio fund ETFs and are also free to buy on TD Ameritrade even without the 60 day deal.

Now, since you lowered your 401k contribution in order to be able to deposit the max $5500 per year into your IRA, every month you are going to be depositing more into the IRA. Each month, figure out your 80/20 ratio based on the new values and buy whatever you are low in with that deposit. Don't watch for good times to sell unless you are rebalancing, just buy more. And you shouldn't need to rebalance for years if you are buying what you are low in every month with the size of the account as it is now.

That should get you started along a good, solid and simple path. I would not worry about individual company stocks at all right now (or ever). Keep it simple and just keep buying more VTI and BND until you are ready to retire. Later you may decide to add an international stock fund, but that's not critical. When you can afford to save more, increase your 401k contributions because even though the ERs are high, the tax deferral is still very valuable.

Good luck and good for you for taking the time to learn!

runner540
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Re: new to investing...[a little] help please?

Post by runner540 » Mon Jun 19, 2017 7:00 am

If your tax bracket is 15% and you are single, your taxable income is less than $38k. Is that correct? I just want to clarify if 15% was the marginal rate or effective rate.

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BL
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Re: new to investing...[a little] help please?

Post by BL » Mon Jun 19, 2017 7:27 am

If married, you should also do a Roth IRA for your spouse, whether she earns income or not, if you can come up with the money after contributing any match to 401k.

A Vanguard Target date fund ($1000 to start) or Life Strategy Aggressive ($3000 to start) are both good single funds to get started,as are several other balanced funds. Fidelity has a target date INDEX fund and a four-in-one index fund hidden among its expensive target funds. The Vanguard ETFs can be purchased at most brokerages, and are also found as index funds at Vanguard. The index fund becomes an Admiral fund when you have $10k in one fund in one account, which has the same ER as its ETF equivalent.

Often there is a lower ER fund lurking among the expensive 401k funds which we/you may catch if you list them all with name, ticker, and ER.

retiredjg
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Re: new to investing...[a little] help please?

Post by retiredjg » Mon Jun 19, 2017 7:50 am

    Flatman, for right now we are not interested in your contributions or the employer's contributions. We are interested in what you actually hold now in the 401k.

    Is that what this is? This only adds up to 90%. It needs to add up to 100%. Can you clarify that please?
    flatman123 wrote:42% Vanguard Small Cap Grow Index
    38% Small Cap Index Fund
    10% 500 Index Fund


    :( You are correct that your 401k plan is poor. But you should still use it up to the match for sure. Any money you want to save for retirement above that should go into Roth IRA (his and hers if you have enough money). If you fill both Roth IRAs and have more to save for retirement, put more into the 401k.

    The choices in your 401k plan can be improved. Your small cap funds represent a very small portion of the stock market. The 500 Index fund - they one you hold so little of - is where most of your money should be.



    Do you expect to stay with your current employer for 20 or 30 years?

    What bond funds or stable value funds are available in the 401k?

    Are there any target retirement funds available in the plan?

    Does your wife have any accounts?

    How much money will the two of you save each year for retirement?

    Do you expect your family income to got up a great deal in the next few years?

    flatman123
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    Re: new to investing...[a little] help please?

    Post by flatman123 » Mon Jun 19, 2017 8:21 am

    Swelfie wrote:Your employer match of 3% doesn't quite make sense if the employer has contributed 80% and you only 20%. Does your employer just contribute a flat 3% of your salary, or does the employer match your contributions?
    hmm.. good question.. i'll need to verify how exactly they match. i'll get back to you on that.
    Are there any funds in your 401k with an expense ratio (ER) below 1%?
    nope..the average is 1.40%...sad, i know..

    Assuming all of your funds in the 401k have a high ER, I would reduce your 401k contributions enough so that you can afford to put $5500 per year into a Roth IRA instead, but not below the minimal amount in the 401k needed to get the biggest contribution from your employer. Also, your tax bracket is quite low, so see if your employer allows Roth 401k contributions instead of traditional and think about switching to that until you are in the 25% bracket.
    They don't allow Roth 401k's..i'll need to open an individual Roth account instead.

    In that 401k I would move everything to JFIVX, since that is the lowest expense ratio of the funds you list, and is a standard s&p500 fund, which means it is well diversified.


    Take your $3000 and open a Roth IRA, as you planned. Determine your asset allocation based on your tolerance for risk. I would recommend 80% stocks, 20% bonds if you have no idea, but this is a very personal decision. You can adjust this ratio as you learn more.

    Total the value of your 401k with the value of your new Roth IRA ($3000). 80% of this should be stocks and 20% bonds (or whatever ratio you decide on). So, if your 401k is all in stocks, and let's say for example it was $7000, then in your Roth IRA you would buy $1000 of stocks and $2000 of bonds for an 80/20 ratio. I would recommend you buy VTI for stocks and BND for bonds as these are both very low expense ratio fund ETFs and are also free to buy on TD Ameritrade even without the 60 day deal.
    sounds like a plan..most of the experienced individuals i spoke to ( outside of this forum) recommended a Roth over a standard brokerage account. Funny you mentioned Vanguards VTI, because i was considering that to be one of my first pick over the SPY ( which TD Ameritrade coincidentally doesn't have).

    .Now, since you lowered your 401k contribution in order to be able to deposit the max $5500 per year into your IRA, every month you are going to be depositing more into the IRA. Each month, figure out your 80/20 ratio based on the new values and buy whatever you are low in with that deposit. Don't watch for good times to sell unless you are re-balancing, just buy more. And you shouldn't need to rebalance for years if you are buying what you are low in every month with the size of the account as it is now.
    I would not worry about individual company stocks at all right now (or ever). Keep it simple and just keep buying more VTI and BND until you are ready to retire..
    This approach makes sense for a noob like myself....i really appreciate the assistance.

    flatman123
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    Re: new to investing...[a little] help please?

    Post by flatman123 » Mon Jun 19, 2017 8:42 am

    retiredjg wrote:
      Flatman, for right now we are not interested in your contributions or the employer's contributions. We are interested in what you actually hold now in the 401k.
      understood
      Is that what this is? This only adds up to 90%. It needs to add up to 100%. Can you clarify that please?
      flatman123 wrote:42% Vanguard Small Cap Grow Index
      38% Small Cap Index Fund
      10% 500 Index Fund
      That was just snapshot i found at on one of the pages when i logged in. here is the info from what they under whats call the "investment options" page

      Small Cap Index Fund 37.81%
      Vanguard Small Cap Grow Index 42.19%
      500 Index Fund 9.97%
      Vanguard Growth Index Fund 10.03%


      :( You are correct that your 401k plan is poor. But you should still use it up to the match for sure. Any money you want to save for retirement above that should go into Roth IRA (his and hers if you have enough money). If you fill both Roth IRAs and have more to save for retirement, put more into the 401k.


      Very sound/similar advise to the above.- thanks! :D
      The choices in your 401k plan can be improved. Your small cap funds represent a very small portion of the stock market. The 500 Index fund - they one you hold so little of - is where most of your money should be.



      Do you expect to stay with your current employer for 20 or 30 years?
      yes
      What bond funds or stable value funds are available in the 401k?
      i'll need to review the options and let you know.
      Are there any target retirement funds available in the plan?
      i'll need to review the options and let you know.
      Does your wife have any accounts?
      no shes is currently in the process of filing for disability
      How much money will the two of you save each year for retirement?
      well after whatever bills are paid..i have about $900- 1,000 that i can save a month( I will want to add toward my emergency fund)
      Do you expect your family income to got up a great deal in the next few years?
      yes

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 8:43 am

      runner540 wrote:If your tax bracket is 15% and you are single, your taxable income is less than $38k. Is that correct? I just want to clarify if 15% was the marginal rate or effective rate.
      i'm married and i'm in the $65-70K range.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 8:45 am

      BL wrote:If married, you should also do a Roth IRA for your spouse, whether she earns income or not, if you can come up with the money after contributing any match to 401k..

      Interesting you mentioned to open a Roth for my Wife...i heard someone else say the same thing...whats the benefit of that?

      retiredjg
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      Re: new to investing...[a little] help please?

      Post by retiredjg » Mon Jun 19, 2017 8:58 am

      flatman123 wrote:
      Do you expect your family income to got up a great deal in the next few years?
      yes
      About how high and about how fast?

      retiredjg
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      Re: new to investing...[a little] help please?

      Post by retiredjg » Mon Jun 19, 2017 9:02 am

      One other question. You mention a 3% match. Is that 3% of your salary or 3% of what you contribute?

      For example, 3% of your salary would be something like $1,950 a year. 3% of your contribution would be $540 at most, less since you don't contribute the maximum.

      About how much do you need to contribute to get the full 3%?

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 9:12 am

      Swelfie wrote:Take your $3000 and open a Roth IRA, as you planned. Determine your asset allocation based on your tolerance for risk. I would recommend 80% stocks, 20% bonds if you have no idea, but this is a very personal decision. You can adjust this ratio as you learn more.
      to summarize your advise..... so basically in my case i'd start off with 2k in stocks and have the other 1k in bonds..( within the Roth account). put enough to reach 5,500, annually and have the 401K contributions lower enough to still receive my company's full 3% contribution? or to receive any contribution?

      also, Keep in-mind that I still want to add to my emergency fund from 9-months to about 2-years.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 9:16 am

      retiredjg wrote:
      flatman123 wrote:
      Do you expect your family income to got up a great deal in the next few years?
      yes
      About how high and about how fast?
      i'm expecting to reach about 80-85k within the next 5-6 years.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 9:17 am

      retiredjg wrote:One other question. You mention a 3% match. Is that 3% of your salary or 3% of what you contribute?

      For example, 3% of your salary would be something like $1,950 a year. 3% of your contribution would be $540 at most, less since you don't contribute the maximum.

      About how much do you need to contribute to get the full 3%?
      i'll need to review how my company matches and get back to you.



      I found out that its 3% no matter the amount of what I contribute.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 9:39 am

      hmm...which type of Roth account would i want to open up?

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      David Jay
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      Re: new to investing...[a little] help please?

      Post by David Jay » Mon Jun 19, 2017 9:43 am

      In my opinion, you should do your investing as follows:

      1.Invest in 401K only to the level required to get any employer match. [edit] I just read your post (above).
      2. Invest in (2) Roth accounts (one for you, one for spouse) up to the maximum of $11,000. I recommend this because of your low tax rate, it is reasonable to expect that SS will continue to be taxed in retirement and combined with required distributions from your 401K could easily put you in a tax bracket higher than 15% in retirement.
      3. If you have additional money to invest then put it in the 401K.

      [edit] There is only one type of Roth IRA, you can open one at any brokerage. Most around here would suggest Vanguard, Fidelity or Schwab. I would recommend in that order. Be careful if you select Fidelity as they "hide" their low-cost index funds. You will get lots of help here at BH.
      Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 9:53 am

      David Jay wrote:In my opinion, you should do your investing as follows:

      1.Invest in 401K only to the level required to get any employer match. [edit] I just read your post (above).
      2. Invest in (2) Roth accounts (one for you, one for spouse) up to the maximum of $11,000. I recommend this because of your low tax rate, it is reasonable to expect that SS will continue to be taxed in retirement and combined with required distributions from your 401K could easily put you in a tax bracket higher than 15% in retirement.
      3. If you have additional money to invest then put it in the 401K.

      [edit] There is only one type of Roth IRA, you can open one at any brokerage. Most around here would suggest Vanguard, Fidelity or Schwab. I would recommend in that order. Be careful if you select Fidelity as they "hide" their low-cost index funds. You will get lots of help here at BH.
      hmmm... what are your thoughts on TDAmeritrade Roth IRA's?

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      David Jay
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      Re: new to investing...[a little] help please?

      Post by David Jay » Mon Jun 19, 2017 10:01 am

      flatman123 wrote:
      David Jay wrote:In my opinion, you should do your investing as follows:

      1.Invest in 401K only to the level required to get any employer match. [edit] I just read your post (above).
      2. Invest in (2) Roth accounts (one for you, one for spouse) up to the maximum of $11,000. I recommend this because of your low tax rate, it is reasonable to expect that SS will continue to be taxed in retirement and combined with required distributions from your 401K could easily put you in a tax bracket higher than 15% in retirement.
      3. If you have additional money to invest then put it in the 401K.

      [edit] There is only one type of Roth IRA, you can open one at any brokerage. Most around here would suggest Vanguard, Fidelity or Schwab. I would recommend in that order. Be careful if you select Fidelity as they "hide" their low-cost index funds. You will get lots of help here at BH.
      hmmm... what are your thoughts on TDAmeritrade Roth IRA's?
      TDA is fine if you want to use ETFs (Exchange Traded Funds). TDA does not have their own low-cost mutual funds like the three companies mentioned above.
      Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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      David Jay
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      Re: new to investing...[a little] help please?

      Post by David Jay » Mon Jun 19, 2017 10:06 am

      Getting back to your original post, the $3000 needs to be used to open a Roth IRA. At your income level, there is no reason to invest any retirement funds (or funds not needed for 10+ years) anywhere other than a Roth. You can withdraw contributions to a Roth if necessary in an emergency.

      I love the simplicity of investing in a Roth. No worries about taxes, or future required withdrawals. 100% tax free and I can leave it to my kids (and they don't have to pay taxes on the money, although they are required to withdraw the funds on a schedule).
      Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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      Re: new to investing...[a little] help please?

      Post by retiredjg » Mon Jun 19, 2017 10:12 am

      flatman123 wrote:
      retiredjg wrote:One other question. You mention a 3% match. Is that 3% of your salary or 3% of what you contribute?

      For example, 3% of your salary would be something like $1,950 a year. 3% of your contribution would be $540 at most, less since you don't contribute the maximum.

      About how much do you need to contribute to get the full 3%?
      i'll need to review how my company matches and get back to you.



      I found out that its 3% no matter the amount of what I contribute.
      Can you clarify please? Is this 3% of your salary no mater what you contribute? Or 3% of what you contribute, no matter how much you contribute?

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jun 19, 2017 10:18 am

      retiredjg wrote:
      flatman123 wrote:
      retiredjg wrote:One other question. You mention a 3% match. Is that 3% of your salary or 3% of what you contribute?

      For example, 3% of your salary would be something like $1,950 a year. 3% of your contribution would be $540 at most, less since you don't contribute the maximum.

      About how much do you need to contribute to get the full 3%?
      i'll need to review how my company matches and get back to you.



      I found out that its 3% no matter the amount of what I contribute.
      Can you clarify please? Is this 3% of your salary no mater what you contribute? Or 3% of what you contribute, no matter how much you contribute?
      3% of what I contribute, no matter how much I contribute

      retiredjg
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      Re: new to investing...[a little] help please?

      Post by retiredjg » Mon Jun 19, 2017 10:20 am

      flatman123 wrote:3% of what I contribute, no matter how much I contribute
      Thanks. Let us know when you find out about the other funds available.

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      Re: new to investing...[a little] help please?

      Post by Swelfie » Mon Jun 19, 2017 10:20 am

      flatman123 wrote:
      Swelfie wrote:Take your $3000 and open a Roth IRA, as you planned. Determine your asset allocation based on your tolerance for risk. I would recommend 80% stocks, 20% bonds if you have no idea, but this is a very personal decision. You can adjust this ratio as you learn more.
      to summarize your advise..... so basically in my case i'd start off with 2k in stocks and have the other 1k in bonds..( within the Roth account). put enough to reach 5,500, annually and have the 401K contributions lower enough to still receive my company's full 3% contribution? or to receive any contribution?

      also, Keep in-mind that I still want to add to my emergency fund from 9-months to about 2-years.
      Yes, although in lieu of the new information (spouse) I would completely eliminate your 401k contributions, down to the minimum to get that match, then fill up your Roth IRA, and open another for your wife and put the rest in there. Maintain your chosen ratio across all the accounts as if they were a single account.

      And 2 year emergency fund is quite large. That's a lot of money off the table that could be growing more aggressively. If you need that much then I would look at investing anything over 6 months in iBonds or CD's with an early withdrawal option that pay decent rates and count that as part of your bond allocation. Since you probably won't ever need to touch that money, it can be slightly less accessible but earn more, but you can still get to it if you need to. Also realize that if you aren't filling up the $11000 per year Roth contributions then you should be placing your emergency funds in there first. You can withdraw contributions to a Roth penalty free, just not the growth. Check out the myRa program which is the government "G" fund that you can stash up to $15000 in a Roth (excellent, insured, high interest fund that can't lose money). That's an excellent stash of emergency funds.
      flatman123 wrote:what are your thoughts on TDAmeritrade Roth IRA's?
      They are good. They are set up a bit more for active traders then buy and hold investors, but their commission-free ETFs cover the main, low ER indexes (VTI, BND, VXUS, BNDX, BIV) so you won't ever be paying to buy. Fidelity has some of the greatest customer service, and they offer an absolutely amazing checking account like nothing else (except schwabb), so is a great place to consolidate all your personal finances. They have clones of vanguard's index mutual funds that you can invest in commissions free, but you need a bit higher minimum investment then the ETFs offer to get into them. Vanguard is also good, but less feature rich than Fidelity. Personally I'd recommend Fidelity, but I don't think there is a wrong choice amongst those 3.

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      BL
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      Re: new to investing...[a little] help please?

      Post by BL » Mon Jun 19, 2017 3:06 pm

      I am afraid that investing at TDAmeritrade would be an encouragement to "gamble" more in individual stocks rather than buckle down and put everything in the basic index funds which may serve you better as you get to retirement. It is fine to have some play money, but not when you are behind in basic investments.

      Be sure to double-check about the match at work. It is confusing and some of us are missing what you said as well. My guess is that it is 3% no matter whether you contribute or not, but you said last that it is 3% of what you contribute, which is uncommon.

      Hopefully your work 401k will be improved in the future to include at least one lower-ER fund. There are laws that may require that and punish those who don't offer a decent fund.

      You will be happy to have the max in Roth when you retire. No taxes or rules to take out current contributions after ~age 60.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Wed Jun 21, 2017 5:14 am

      all i'm still in the process of getting the info from my company.

      i've been extremely busy at work with other projects..which makes it so easy to forget other things throughout the day.
      sorry about that.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Mon Jul 17, 2017 5:50 am

      hello, folks,

      sorry about the late reply.. i've been out of town on some pretty big projects.

      I found out about how my employer contributes to my 401K and you were right
      My guess is that it is 3% no matter whether you contribute
      While out of town, i've been looking at some 500-index funds to choose from....

      2-things I noticed....

      1. Alot of folks out there are saying to stay away from ETF's if you don't plan on trading..not good for long-term-investors..( i don't understand the logic in this..) especially since some of the ETF's I see are cheap and do just as well as some Mutual Funds...any thoughts on that?

      2nd --- Charles Schwab has great pricing for their 500-index fund with only .03% expense ratio.. the cost is only $38.21 with no initial-minimum....i'm referring to this ticker : SWPPX..this one is also cheap SWTSX
      I find it extremely weird that ppl are chasing other 500-index funds that cost more yet they do just as well as Charles schwab...I find these to be better than VTI and VOO... any thoughts on that?

      I apologize again for the late response, I don't want you guys to think I dropped in to pull information and left without a proper closing of this thread. I hope some of you are still around.

      retiredjg
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      Re: new to investing...[a little] help please?

      Post by retiredjg » Mon Jul 17, 2017 6:40 am

      flatman123 wrote:1. Alot of folks out there are saying to stay away from ETF's if you don't plan on trading..not good for long-term-investors..( i don't understand the logic in this..) especially since some of the ETF's I see are cheap and do just as well as some Mutual Funds...any thoughts on that?
      There is no reason to "stay away" from ETFs. They are simply a different vehicle and they are more easily day traded, but that does not make them some thing avoid.
      2nd --- Charles Schwab has great pricing for their 500-index fund with only .03% expense ratio.. the cost is only $38.21 with no initial-minimum....i'm referring to this ticker : SWPPX..this one is also cheap SWTSX
      The Schwab 500 Index and Total Stock index funds are good low cost mutual funds.
      I find it extremely weird that ppl are chasing other 500-index funds that cost more yet they do just as well as Charles schwab...I find these to be better than VTI and VOO... any thoughts on that?
      Not sure how you mean "better". The difference in cost is trivial. The performance is about the same.

      I think we are still waiting to hear about other funds in your plan, aren't we?

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Tue Jul 18, 2017 4:45 am

      I think we are still waiting to hear about other funds in your plan, aren't we?
      Ah ,yes. here you go:

      ~Here is what is currently available for me to choose from




      NAME TICKER E-Ratio

      *****Aggressive Growth****
      DFA International Value DFIVX 1.78%
      Intl Equity Index Fund 2 JIEQX 1.47%
      Small Cap Index Fund JESIX 1.43%
      Vanguard Mid-Cap Growth ETF VOT 1.49%
      Vanguard Small Cap Grow Index VSGAX 1.43%
      Vanguard Small Cap Value Index VSIAX 1.43%



      ******Growth******

      500 Index Fund JFIVX 1.38%
      Mid Cap Index Fund JECIX 1.41%
      New Perspective Fund RNPFX 1.80%
      Vanguard Growth Index Fund VIGAX 1.43%
      Vanguard Mid-Cap Value ETF VOE 1.49%
      Vanguard Value Index F VVIAX 1.43%


      ******INCOME******

      Total Bond Market Fun JTBMX 1.41%


      ******CONSERVATIVE*******

      John Hancock Stable Val N/A 1.80%




      Here is what i currently have allocated

      500 Index Fund JFIVX 85%
      Vanguard Mid-Cap Value ETF VOE 15%

      Here is where my employer's contributions go

      500 Index Fund JFIVX 85%
      Vanguard Mid-Cap Value ETF VOE 15%


      I have a question....the expense ratios under my 401K are high compare to what i've looked up on the internet..
      for example...VOE expense ratio is .07% when i use an online screener...but on my 401K it's 1.43% ??...why the increase?..


      as per the above.. sorry i tried to space them out so they wouldn't look so congested
      Last edited by flatman123 on Tue Jul 18, 2017 4:55 am, edited 3 times in total.

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      BL
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      Re: new to investing...[a little] help please?

      Post by BL » Tue Jul 18, 2017 9:19 am

      Yes, 0.07 is a lot less than
      -----1.43
      The third digit is not so important (hundredth of a %); (0.01 to 0.09 doesn't matter much until you have a million $)
      The digit after the decimal is pretty important (tenth of a %), but
      Having a digit before the decimal is extremely important (%), even for relatively small $

      They are paying for all their costs and profits directly from the ER, so that is a reason for being so ridiculously high.

      Agree to fill 2 Roth IRAs first, then consider whether to pay off your loan or hold your nose and put some in 401k. Hopefully they will improve it and you will have some money to benefit from that as well as your tax benefits the year you contribute.

      Vanguard has mostly all low-ER funds available for a Roth, and they won't give you expensive advice.
      Fidelity has some low-ER index funds and index balanced funds (Target and 4-in-1) hidden among their high-ER target and other funds. You have to look carefully and be careful of advice (buyer beware) if you don't know exactly what you want. Schwab is pretty much the same. They also have some low-ER funds.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Tue Jul 18, 2017 1:23 pm

      Agree to fill 2 Roth IRAs first, then consider whether to pay off your loan or hold your nose and put some in 401k. Hopefully they will improve it and you will have some money to benefit from that as well as your tax benefits the year you contribute.
      I only have about a two months left for my loan, then i'll officially be debt-free. so i figured i'd just rid that first, it'll only take me an additional 2-3 months to get things ready for opening a roth. :happy .. within that time i'll just keep investing in my financial-education ( books, videos , and you people :D )

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      Re: new to investing...[a little] help please?

      Post by retiredjg » Wed Jul 19, 2017 9:29 am

      flatman123, I was going back through this thread. It's a bit of a mess. Information is everywhere and information that we need to help you is missing.

      What we do know
      • -you have a poor 401k, but it is not too poor to use, especially since you have a match

        -you are in a lower tax bracket (appears to be 15%) making Roth IRA a good type of account to use in addition to the 401k; His and Hers if you can save enough money to fill both

        -I think your 401k is currently filled mostly with small cap funds; this is not well diversified and is very risky

        -in the 401k, the 500 index is the lowest cost fund available; is is also well diversified; most (if not all) of the money in the 401k should be in the 500 Index fund

        -you need some bonds or CDs or some kind of fixed income investment; I'm not sure that you have any

        -you are working toward being debt free and that is outstanding! :happy
      When you have some time to devote to this issue, I think you should give another stab at it, getting all the information together and getting it all in one post, following the format we use to help people with their portfolios. The way things are going, it is very difficult to help you because each time you ask a question, people have forgotten what your situation is and have to comb back through the entire thread trying to figure it out again. Most will not do that and even the ones who do that may give you unreliable help because information is either not there or gets missed.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Fri Jul 21, 2017 5:27 am

      When you have some time to devote to this issue, I think you should give another stab at it, getting all the information together and getting it all in one post, following the format we use to help people with their portfolios. The way things are going, it is very difficult to help you because each time you ask a question, people have forgotten what your situation is and have to comb back through the entire thread trying to figure it out again. Most will not do that and even the ones who do that may give you unreliable help because information is either not there or gets missed.

      I will def put that information together for everyone. Thanks again!

      retiredjg
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      Re: new to investing...[a little] help please?

      Post by retiredjg » Fri Jul 21, 2017 7:04 am

      flatman123 wrote:
      When you have some time to devote to this issue, I think you should give another stab at it, getting all the information together and getting it all in one post, following the format we use to help people with their portfolios. The way things are going, it is very difficult to help you because each time you ask a question, people have forgotten what your situation is and have to comb back through the entire thread trying to figure it out again. Most will not do that and even the ones who do that may give you unreliable help because information is either not there or gets missed.

      I will def put that information together for everyone. Thanks again!
      Good! If all the info is together in one place, it is easier to help you, even if there is some time between posts while you are busy at work.

      flatman123
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      Re: new to investing...[a little] help please?

      Post by flatman123 » Fri Sep 08, 2017 6:18 am

      Hello all, sorry for the late reply.( work has been extremely insane)

      "retiredjg" - i'm sorry i didn't have the time to put that information together, so my deepest apologies if i've wasted your time.

      However, in regards to where i currently stand, I have decided to go with "Swelfie's " advise ( I asked others as-well who suggested a similar approach) However instead of starting with VTI, i'll be starting out with SCHB since they pretty much are Neck-n-neck with VTI and a tad cheaper..

      I have 60-days of no transaction-fee trading so for starters, i can buy a lot more shares of SCHB than i would VTI ( keeping it simple for now).
      Once the transaction fees kick in i'll start adding VTI and since they have more holdings than SCHB. I'll be putting it in a Roth-ira.
      In addition, Since my 401K isn't great, i've re-allocated it to just buying the 500 index ( its the cheapest thing there). I make enough to max my roth so i'll be doing that as well.


      Im in the middle of traveling so i wanted I wanted to stop in and tell everyone that they've been a big help and i really appreciate the time you all took to assist me in my journey. Much-appreciated.

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      Re: new to investing...[a little] help please?

      Post by 22twain » Fri Sep 08, 2017 6:36 am

      flatman123 wrote:
      Fri Sep 08, 2017 6:18 am
      i can buy a lot more shares of SCHB than i would VTI
      SCHB is about $60 per share whereas VTI is about $126 per share, so with (say) $3000 you can indeed buy more shares of SCHB. That doesn't make any difference except that with SCHB you're more likely to have less money left over from the fractional share that you can't buy. You still have the same dollar value of the stocks that they contain, ignoring differences in composition. Comparing the share price of two funds or two stocks is meaningless. It's as if you had Coke in 12-ounce bottles versus Pepsi in 24-ounce bottles, with Pepsi at twice the price per bottle.

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