Author Topic: Thoughts for retirement savings (case study)  (Read 16493 times)

ggnoob1337

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Re: Thoughts for retirement savings (case study)
« Reply #15 on: August 01, 2014, 01:35:58 AM »
My suggestion: Move your IRA and invest in traditional investment products. Open a taxable account with LC and deposit some of your play money and have fun.

This is pretty much in line with what my thoughts have been. Keep Lending Club as more of a "fun money" account and use my limited Roth IRA space to invest in traditional index funds.

General rule for investing priority is:
1 Company plan (401k, 403b, etc.) up to the company match
2 Roth IRA or deductible traditional IRA up to maximum contribution limit, depending on personal circumstances and eligibility.
3 Company plan up to maximum contribution limit
4 Taxable investing

I'm planning on retiring before 59 1/2 so I'm going to use 72(t)(2)(A)(iv), https://www.google.com/search?q=72(t) , and LendingClub/Prosper to have spending money and to cover my health insurance.

That order has pretty much been my priority, with the addition of an HSA:
1. wife's 401k up to match (no match on my 457 Plan)
2. max out HSA
3. Max out IRA (we are doing Roths)
4. Max out my 457 Plan then wife's 401k
5. Taxable

We have completed step 3 and are working on 4.

I'm aiming to retire around 50. I'm sure my wife and I could do a lot sooner, but 50 should allow us to enjoy want we want up to and after retirement without any sacrifices. Because my work offers a 457 Plan, I can use taxable accounts and then my 457 Plan for early retirement.

I'm currently doing Betterment so with that I can dollar cost into the market through ETF's. Once the accounts are large enough, I may switch over to Vanguard. The fee's for a $100k+ account at Betterment are around 0.24% (including advisor and fund fees). It's not horrible, but I could average more like 0.09% at Vanguard with a diversified portfolio. But I'm going to at least stick with Betterment for the next year or two while I build up my accounts.

Thanks everyone for the input! Keep it coming, this has been helpful.

thezinfan

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Re: Thoughts for retirement savings (case study)
« Reply #16 on: August 01, 2014, 11:51:17 AM »
Hi Logan,

A few comments: 1) I highly recommend Vanguard. 2) I started with a cash account at LC. I'm moving my interest payments over to my LC IRA accounts (one for me one for my wife). Eventually, I'll have a mix of taxable and tax free money cash flow that will help fund my retirement. BUT, LC isn't a very liquid investment, so make sure it isn't the majority of your retirement accounts. I'm 48, and currently my accounts are earning about 20k/year. Hoping to build that to 30k/40k/50k.... :)

Jon

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Re: Thoughts for retirement savings (case study)
« Reply #17 on: August 01, 2014, 01:07:48 PM »
This thread got me looking at Electronically Traded Funds (ETFs).

If you have a brokerage account, and do not wish to open an account with Vanguard or other mutual fund house, here is a list of cheap (low expense ratio) ETFs that trade like any stock.  I was surprised how many of them may be cheaper to own than some Vanguard funds. 

http://etfdb.com/compare/lowest-expense-ratio/

Why did I say "may be cheaper?"  I haven't confirmed the info yet. 

You'd have to do the math to see if it makes sense to pay your brokerage commission every time you invest in the ETF vs the lack of commission on new money into a Vanguard mutual fund.... and about 120 other aspects that I'm not qualified to imagine, let alone preach about.

I love http://en.wikipedia.org/wiki/John_C._Bogle.  He was a pioneer champion for the individual investor.  Without him, I'm pretty sure I'd be flapping in the wind wake of high powered money moguls and high priced retail investing products, services and slick sales professionals.

-Jon
« Last Edit: August 01, 2014, 01:10:18 PM by jdcaples »

lascott

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Re: Thoughts for retirement savings (case study)
« Reply #18 on: August 01, 2014, 01:22:43 PM »
This book was one of the most educational I have read on personal investing and impact of fees.  It is written by the CIO of Financial Engines. It  comes with a year subscription to Financial Engines Personal Online Advisor.

I have used www.financialengines.com for probably a decade and this book was very enlightening on what all that service does and accounts for.  So many subtle subtle things that make a difference beyond the
basics you read about elsewhere.

https://web.archive.org/web/20130822054453/http://www.theintelligentportfolio.com/poa.html
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ggnoob1337

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Re: Thoughts for retirement savings (case study)
« Reply #19 on: August 01, 2014, 01:36:18 PM »
This thread got me looking at Electronically Traded Funds (ETFs).

If you have a brokerage account, and do not wish to open an account with Vanguard or other mutual fund house, here is a list of cheap (low expense ratio) ETFs that trade like any stock.  I was surprised how many of them may be cheaper to own than some Vanguard funds. 

http://etfdb.com/compare/lowest-expense-ratio/

Why did I say "may be cheaper?"  I haven't confirmed the info yet. 

You'd have to do the math to see if it makes sense to pay your brokerage commission every time you invest in the ETF vs the lack of commission on new money into a Vanguard mutual fund.... and about 120 other aspects that I'm not qualified to imagine, let alone preach about.

I love http://en.wikipedia.org/wiki/John_C._Bogle.  He was a pioneer champion for the individual investor.  Without him, I'm pretty sure I'd be flapping in the wind wake of high powered money moguls and high priced retail investing products, services and slick sales professionals.

-Jon

Vanguard ETFs usually have the expense ratio of the equivalent Admiral Shares mutual fund. You can also trade Vanguard ETF's for free with your account at Vanguard. TDAmeritrade and similar brokers also offer some commission free ETFs.

My stock/bond investment account is at Betterment. So while I'm not paying commission, I'm paying advisor fees (0.25% currently). For the time being, I like that as it's easy to invest in while I figure out my long term plans. After that, I'll probably move to a 3 fund portfolio at Vanguard.

Jon

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Re: Thoughts for retirement savings (case study)
« Reply #20 on: August 01, 2014, 01:59:38 PM »
Vanguard ETFs usually have the expense ratio of the equivalent Admiral Shares mutual fund. You can also trade Vanguard ETF's for free with your account at Vanguard. TDAmeritrade and similar brokers also offer some commission free ETFs.

My stock/bond investment account is at Betterment. So while I'm not paying commission, I'm paying advisor fees (0.25% currently). For the time being, I like that as it's easy to invest in while I figure out my long term plans. After that, I'll probably move to a 3 fund portfolio at Vanguard.

Good to know about the changes at Vanguard and free ETF exchanges.   For complicated reasons my tax deferred accounts are held elsewhere. 

It sounds like you have your situation well-assessed and a good plan going forward.

Best of fortune to you!

-Jon

Jon

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Re: Thoughts for retirement savings (case study)
« Reply #21 on: August 01, 2014, 02:03:11 PM »
Love your attitude man.  On many Vanguard index funds when get over $10K the expenses drop. The is a beautify thing.
<snip>

Thank you for the prop and the info on expenses that are on a curve.  Good to know!

-Jon

Booleans

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Re: Thoughts for retirement savings (case study)
« Reply #22 on: August 02, 2014, 11:40:07 AM »
Quote
I've also learned a lot about investing in stocks since I opened my first LC account, so they sound a lot more tempting now.

If you've learned anything about stocks then you should have learned that the vast majority of people are better off sticking with low cost index funds as opposed to trying to pick individual stocks.
« Last Edit: August 02, 2014, 12:22:38 PM by Booleans »

ggnoob1337

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Thoughts for retirement savings (case study)
« Reply #23 on: August 02, 2014, 02:16:33 PM »

Quote
I've also learned a lot about investing in stocks since I opened my first LC account, so they sound a lot more tempting now.

If you've learned anything about stocks then you should have learned that the vast majority of people are better off sticking with low cost index funds as opposed to trying to pick individual stocks.

Yes, that's exactly what I invest in.

lascott

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Re: Thoughts for retirement savings (case study)
« Reply #24 on: August 03, 2014, 04:14:23 PM »
Vanguard ETFs usually have the expense ratio of the equivalent Admiral Shares mutual fund. You can also trade Vanguard ETF's for free with your account at Vanguard....
One of the main reasons I didn't go with ETFs if that I like to setup automatic monthly investments (dollar cost averaging) and you can't do that with the ETFs from my discussion with them.
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BruiserB

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Thoughts for retirement savings (case study)
« Reply #25 on: August 04, 2014, 06:26:40 PM »
See this thread.....

http://www.lendacademy.com/forum/index.php?topic=2551

Looks like this could make investing in ETFs efficient.

turing

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Re: Thoughts for retirement savings (case study)
« Reply #26 on: August 05, 2014, 01:34:41 PM »
One of the main reasons I didn't go with ETFs if that I like to setup automatic monthly investments (dollar cost averaging) and you can't do that with the ETFs from my discussion with them.

That is one of the main reasons I went with an index mutual fund too.  I don't want to think about making the deposits every month.  Automate it and forget about it.  Then I don't need to worry about my emotions getting in the way where I say "I will put in $300 this month because the market is doing great" or "I will skip this month the market is down".

I agree with most other comments.   Keep LC account but extra money after funding retirement accounts.

Your ranking is very good too with 401K with match as #1.  That has a 100% return the first year :)

AnilG

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Re: Thoughts for retirement savings (case study)
« Reply #27 on: August 05, 2014, 02:24:56 PM »
I use a slightly different strategy. I don't put a fixed amount in index MF every month. Instead, I have a preset asset allocation. Every 3 months, based on the deviation from preset asset allocation, I spread the new contribution between different index MF/ETF. This way, typically I land up putting more in index MF/ETF that declined and less in the ones that rose.


That is one of the main reasons I went with an index mutual fund too.  I don't want to think about making the deposits every month.  Automate it and forget about it.  Then I don't need to worry about my emotions getting in the way where I say "I will put in $300 this month because the market is doing great" or "I will skip this month the market is down".

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PeerCube Thoughts blog https://www.peercube.com/blog
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PeerSocialLending

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Re: Thoughts for retirement savings (case study)
« Reply #28 on: August 05, 2014, 03:16:35 PM »
I use a slightly different strategy. I don't put a fixed amount in index MF every month. Instead, I have a preset asset allocation. Every 3 months, based on the deviation from preset asset allocation, I spread the new contribution between different index MF/ETF. This way, typically I land up putting more in index MF/ETF that declined and less in the ones that rose.

(How) do you include p2p lending in your asset allocation? I too have a desired allocation that I re-balance usually at the beginning of each year when I open up more ROTH space.  I basically ignore p2p lending as it pertains to my overall portfolio as this $ is after taking full advantage of 401k/Roth...the only thing left to destroy would be my mortgage @ 3.65% :/   I am constantly asking myself the "How much is too much" question...
-Ryan
p2p lending blogger @ www.peersociallending.com

AnilG

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Re: Thoughts for retirement savings (case study)
« Reply #29 on: August 05, 2014, 04:56:02 PM »
I don't include p2p lending in my asset allocation either. It is still part of my play money. As I mentioned earlier in thread most likely, p2p lending can be considered part of your allocation in Junk Bond.

If you can afford to pay off mortgage, I will say go for it. Paying it off in full a few years ago was the best decision we made. Most people will tell you to make a logical decision comparing the higher return you could get somewhere else compared to low interest you are paying on mortgage. IMO, leverage works both ways. But I will suggest make an emotional decision "Debt is bad and is shackles to your financial freedom."


(How) do you include p2p lending in your asset allocation? I too have a desired allocation that I re-balance usually at the beginning of each year when I open up more ROTH space.  I basically ignore p2p lending as it pertains to my overall portfolio as this $ is after taking full advantage of 401k/Roth...the only thing left to destroy would be my mortgage @ 3.65% :/   I am constantly asking myself the "How much is too much" question...
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com