Investing, Stock Market and Retirement Planning Thread

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Sun Jul 19, 2015 5:05 pm

So I've decided to become a grown up and take this whole 401K thing seriously. Better late than never I guess.

Let us assume I know nothing about 401Ks....cause I don't...

My company matches up to 3% of my salary. Does that mean if I make $100 a year they will match everything I put into it up to a total of $3 in a year?

I read somewhere that something is happening with the global economy in October. A re-evaluation or something (yes I know I should be paying more attention, cut me some slack. I'm trying now...). Should I wait until after this to start putting money in? Does it matter? Should I put all I can in before then?

What could this re-evaluation mean to the housing market? Will prices shoot up for a while before calming down? Will prices fall? No change?

Thanks for any help.

Tomas
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Investing, Stock Market and Retirement Planning Thread

Postby Tomas » Sun Jul 19, 2015 6:41 pm

So I've decided to become a grown up and take this whole 401K thing seriously. Better late than never I guess.

Let us assume I know nothing about 401Ks....cause I don't...

My company matches up to 3% of my salary. Does that mean if I make $100 a year they will match everything I put into it up to a total of $3 in a year?
As far as I understand (at least that's how it works with many other employers), if you put X% of your salary into the retirement fund, and X<3, then your company will also contribute the same X%.

If X >=3, then the company will contribute 3%.

I read somewhere that something is happening with the global economy in October. A re-evaluation or something (yes I know I should be paying more attention, cut me some slack. I'm trying now...). Should I wait until after this to start putting money in? Does it matter? Should I put all I can in before then?

What could this re-evaluation mean to the housing market? Will prices shoot up for a while before calming down? Will prices fall? No change?

Thanks for any help.
Here is my advice - I would pay no attention to any of this. If enough people knew the prices will go up (or down) for sure in October, nobody would patiently wait at trade assets at their current too low (or too high) prices in July. If the shift in prices were to happen for sure in October, the prices should go up (or down) today.

So, I would just set up regular payroll deduction every Y weeks you are getting paid, and ride with it... [Just to be sure - there is a limit one can contribute into a retirement account annually using PRE-tax dollars. You should investigate what it is for you, as it is dependent on age: https://401k.fidelity.com/public/conten ... tionLimits .]

MrKennethTKangaroo
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Investing, Stock Market and Retirement Planning Thread

Postby MrKennethTKangaroo » Sun Jul 19, 2015 7:07 pm

As expected, Thomas pretty much said everything that needed to be said. Your retirement is decades away, so there is no sense in trying to time the market. Just get started now.

Also, if you do not contribute the 3% and get the employer match,it is rather unwise. That is walking away from free money

columbia
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Investing, Stock Market and Retirement Planning Thread

Postby columbia » Sun Jul 19, 2015 7:16 pm

Once you know the available investing options, please post them.

NAN
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Postby NAN » Mon Jul 20, 2015 10:00 am

As expected, Thomas pretty much said everything that needed to be said. Your retirement is decades away, so there is no sense in trying to time the market. Just get started now.

Also, if you do not contribute the 3% and get the employer match,it is rather unwise. That is walking away from free money
:thumb:

Also, the best way to describe the market to young people. It's like someone walking up a hill with a yo-yo. The market is the yo-yo. It is going to go up and down, up and down, but the end game will constantly be appreciating, even at the lows. It's whenever you get closer to retirement age that you have to worry.

Also, and correct me if I'm wrong, the average American our age (30-40) should have around $2M in assets to comfortably retire in 30 some years.

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Investing, Stock Market and Retirement Planning Thread

Postby LITT » Mon Jul 20, 2015 10:03 am

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??

NAN
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Postby NAN » Mon Jul 20, 2015 10:07 am

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
At the time of retirement.

Tomas
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Postby Tomas » Mon Jul 20, 2015 2:07 pm

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
At the time of retirement.
I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Mon Jul 20, 2015 8:31 pm

Once you know the available investing options, please post them.
Railroad stock and frozen concentrated orange juice.

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Postby dodint » Mon Jul 20, 2015 8:33 pm

Soybean Futures.

columbia
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Investing, Stock Market and Retirement Planning Thread

Postby columbia » Mon Jul 20, 2015 10:37 pm

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
At the time of retirement.
I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.
There's also the variable percentage withdrawal method:
http://www.bogleheads.org/wiki/Variable ... withdrawal

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Wed Jul 29, 2015 9:08 am

Once you know the available investing options, please post them.
@columbia
Not sure if this is what you are looking for. It's the best I could do to get it into the thread.

Name/Inception Date Asset Class Category 1 Year 3 Year 5 Year 10 Year/LOF* Returns As Of Bench- mark
FID CONTRAFUND (FCNTX)
05/17/1967
Stock Investments Large Cap 10.29% 17.42% 17.11% 9.85% 06/30/2015 Show
INVS DIVRS DIVD R5 (DDFIX)
12/31/2001
Stock Investments Large Cap 6.34% 16.99% 15.84% 8.48% 06/30/2015 Show
SPTN 500 INDEX ADV (FUSVX)
02/17/1988
Stock Investments Large Cap 7.39% 17.26% 17.29% 7.86% 06/30/2015 Show
SPTN TOT MKT IDX ADV (FSTVX)
11/05/1997
Stock Investments Large Cap 7.21% 17.61% 17.48% 8.28% 06/30/2015 Show
TRP DIV GROWTH ADV (TADGX)
12/30/1992
Stock Investments Large Cap 7.65% 16.10% 16.28% 7.85% 06/30/2015 Show
NB MDCP GRTH TRUST (NBMTX)
03/01/1979
Stock Investments Mid-Cap 15.96% 17.29% 17.99% 10.29% 06/30/2015 Show
RDGWTH MID CAP VAL I (SMVTX)
11/30/2001
Stock Investments Mid-Cap 0.03% 17.73% 15.77% 10.79% 06/30/2015 Show
SCOUT MID CAP (UMBMX)
10/31/2006
Stock Investments Mid-Cap 2.42% 16.11% 17.16% 11.11% 06/30/2015 Show
SPTN EXT MKT IDX ADV (FSEVX)
11/05/1997
Stock Investments Mid-Cap 6.32% 19.11% 18.17% 9.69% 06/30/2015 Show
ABF SM CAP VAL INV (AVPAX)
12/31/1998
Stock Investments Small Cap 2.65% 17.96% 16.24% 7.81% 06/30/2015 Show
GLENMEDE SMCP EQ ADV (GTCSX)
03/01/1991
Stock Investments Small Cap 4.38% 20.56% 19.56% 9.46% 06/30/2015 Show
JANUS TRITON T (JATTX)
02/25/2005
Stock Investments Small Cap 14.61% 20.04% 20.12% 13.85% 06/30/2015 Show
ALZGI NFJ INTL VL AD (AIVAX)
01/31/2003
Stock Investments International -8.18% 6.85% 7.22% 6.75% 06/30/2015 Show
ARTISAN INTL (ARTIX)
12/28/1995
Stock Investments International -0.66% 13.48% 13.15% 7.67% 06/30/2015 Show
INVS INTL GROWTH R5 (AIEVX)
04/07/1992
Stock Investments International -2.41% 10.94% 10.48% 7.69% 06/30/2015 Show
SPTN INTL INDEX ADV (FSIVX)
11/05/1997
Stock Investments International -4.14% 12.01% 9.89% 5.27% 06/30/2015 Show
COHEN & STEERS RLTY (CSRSX)
07/02/1991
Stock Investments Specialty 5.32% 9.11% 13.77% 7.46% 06/30/2015 Show
FID FREEDOM 2005 (FFFVX)
11/06/2003
Blended Investment* N/A 2.21% 6.17% 7.07% 4.71% 06/30/2015 Show
FID FREEDOM 2010 (FFFCX)
10/17/1996
Blended Investment* N/A 2.64% 7.70% 8.38% 5.35% 06/30/2015 Show
FID FREEDOM 2015 (FFVFX)
11/06/2003
Blended Investment* N/A 3.00% 8.20% 8.76% 5.57% 06/30/2015 Show
FID FREEDOM 2020 (FFFDX)
10/17/1996
Blended Investment* N/A 3.31% 8.97% 9.61% 5.67% 06/30/2015 Show
FID FREEDOM 2025 (FFTWX)
11/06/2003
Blended Investment* N/A 3.59% 10.51% 10.74% 6.05% 06/30/2015 Show
FID FREEDOM 2030 (FFFEX)
10/17/1996
Blended Investment* N/A 4.10% 11.32% 11.34% 6.00% 06/30/2015 Show
FID FREEDOM 2035 (FFTHX)
11/06/2003
Blended Investment* N/A 4.35% 12.46% 12.05% 6.18% 06/30/2015 Show
FID FREEDOM 2040 (FFFFX)
09/06/2000
Blended Investment* N/A 4.30% 12.57% 12.18% 6.15% 06/30/2015 Show
FID FREEDOM 2045 (FFFGX)
06/01/2006
Blended Investment* N/A 4.41% 12.86% 12.36% 5.35% 06/30/2015 Show
FID FREEDOM 2050 (FFFHX)
06/01/2006
Blended Investment* N/A 4.35% 12.94% 12.49% 5.13% 06/30/2015 Show
FID FREEDOM 2055 (FDEEX)
06/01/2011
Blended Investment* N/A 4.39% 13.28% N/A 8.57% 06/30/2015 Show
FID FREEDOM 2060 (FDKVX)
08/05/2014
Blended Investment* N/A N/A N/A N/A 7.14% 06/30/2015 Show
FID FREEDOM INCOME (FFFAX)
10/17/1996
Blended Investment* N/A 1.63% 4.21% 4.91% 4.12% 06/30/2015 Show
FID PURITAN (FPURX)
04/16/1947
Blended Investment* N/A 6.54% 12.84% 12.75% 7.41% 06/30/2015 Show
FED CAP PRESRVN ISP
08/01/1986
Bond Investments Stable Value 0.63% 0.82% 1.27% 2.54% 06/30/2015 Show
BLKRK HI YLD BD INST (BHYIX)
11/19/1998
Bond Investments Income 0.03% 7.91% 9.16% 8.01% 06/30/2015 Show
FIDELITY GOVT INCOME (FGOVX)
04/04/1979
Bond Investments Income 1.93% 1.19% 2.65% 4.14% 06/30/2015 Show
PIMCO REAL RTN BD AD (PARRX)
01/29/1997
Bond Investments Income -3.29% -1.15% 3.00% 4.14% 06/30/2015 Show
SPTN US BOND IDX ADV (FSITX)
03/08/1990
Bond Investments Income 1.78% 1.69% 3.22% 4.11% 06/30/2015 Show
PIMCO COMM REL RET A (PCRAX)
06/28/2002
Bond Investments Specialty -26.52% -10.27% -2.70% -1.64% 06/30/2015 Show
BAIRD CORE PLUS INV (BCOSX)
09/29/2000
Bond Investments N/A 1.77% 2.85% 4.59% 5.30% 06/30/2015 Show
FID US GOVT RES (FGRXX)
11/03/1981
7 day yield as of
06/30/2015 0.01%
Short-Term Investments N/A 0.01% 0.01% 0.01% 1.42% 06/30/2015 Show

Tico Rick
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Investing, Stock Market and Retirement Planning Thread

Postby Tico Rick » Wed Jul 29, 2015 10:22 am

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
At the time of retirement.
I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.
Just to clarify, I think you meant to say "In order to have a very high certainty of your money outliving you", is that correct?
Also, the $2M example is in 2015 dollars, not in 20xx dollars, correct?

NAN
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Postby NAN » Wed Jul 29, 2015 10:34 am

If I remember correctly, the $2M is in 20XX dollars. Today, I think the amount is around $1.2MM if you want to retire and like you said, live comfortably and ensure the money outlives you.

Again, this all depends on your lifestyle as well.

Tomas
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Investing, Stock Market and Retirement Planning Thread

Postby Tomas » Wed Jul 29, 2015 4:52 pm

$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
At the time of retirement.
I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.
Just to clarify, I think you meant to say "In order to have a very high certainty of your money outliving you", is that correct?
Also, the $2M example is in 2015 dollars, not in 20xx dollars, correct?
Stupid me. I wrote that exactly the opposite way. "In order to have a very high certainty of your money outliving you" is exactly what I meant.

And the example was: If your future "target" retirement amount is $2,000,000 in 2045 (30 years from now), you should be able to withdraw reasonably safely $80,000 in 2045, and the same amount increased by inflation in every year after that. But, given that your withdrawals are going to be affected by 30 years worth of inflation, the purchasing power of $80,000 in 2045 is somewhere between $33K-$38K in today's (i.e. 2015) dollars.

Just to give a rough idea what it takes to achieve the $2,000,000 target in 2045. If you have no money saved now:

If you are able to achieve 9% appreciation of your retirement account every year, then you have to contribute $14,673 every year for the next 30 years (the first contribution is expected to happen 1 year from today). If you are going to achieve only 7% appreciation, the contributions will have to be $21,173.

columbia
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Investing, Stock Market and Retirement Planning Thread

Postby columbia » Wed Jul 29, 2015 9:19 pm


Tomas
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Postby Tomas » Thu Jul 30, 2015 10:56 am

Very cool article. And one of the reasons I invest pretty much exclusively in index ETFs and mutual retirement funds, and I spend my time and effort at endeavors that has nothing to do with predictive investment analysis... :)

Tico Rick
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Investing, Stock Market and Retirement Planning Thread

Postby Tico Rick » Thu Jul 30, 2015 11:53 am

A belated thanks to NAN and Tomas for answering my question yesterday. :thumb:

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Thu Jul 30, 2015 3:01 pm

A belated thanks to NAN and Tomas for answering my question yesterday. :thumb:
@columbia didn't even bother to respond to me...that Tarnstrom...

columbia
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Investing, Stock Market and Retirement Planning Thread

Postby columbia » Thu Jul 30, 2015 3:03 pm

A belated thanks to NAN and Tomas for answering my question yesterday. :thumb:
@columbia didn't even bother to respond to me...that Tarnstrom...
lol

I was just curious as to what you might choosing. Figured that out?

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Thu Jul 30, 2015 3:05 pm

I don't even know what the hell I'm looking at...

columbia
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Investing, Stock Market and Retirement Planning Thread

Postby columbia » Thu Jul 30, 2015 3:07 pm

In that case, you should probably pick "FID FREEDOM 2050" or whatever year you plan to retire.

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Thu Jul 30, 2015 3:22 pm

What does @ExPatriatePen say about it?

ExPatriatePen
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Investing, Stock Market and Retirement Planning Thread

Postby ExPatriatePen » Thu Jul 30, 2015 3:56 pm

What does @ExPatriatePen say about it?
Assuming you're serious in asking that question and not trolling... You'd be surprised to learn that I agree with Columbia about using index funds and index related ETF's.

I'm not a fan of target date (where you pick a fund based on the year you intend to retire) funds.

I have my reasons. If you're interested in why, I'll share them... otherwise... Good luck to all.

PFiDC
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Investing, Stock Market and Retirement Planning Thread

Postby PFiDC » Thu Jul 30, 2015 4:01 pm

I was serious. I figured getting the opposite side of the spectrum's opinion would be good. Thanks!

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