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Everything posted by EdLaFave

  1. Scott, here is a shorter Minecraft version of that video:
  2. Probably an unpopular take, but Amazon is a dumpster fire from a user experience perspective. When I search for products: I consistently get results that in no way match my query; this is a well solved problem in computer science. I consistently get results that I'm not allowed to buy because I don't have Prime or Pantry or whatever other package they sell. I don't believe they allow you to sort on a price/unit basis. They also don't show you the all in cost of buying something....some include shipping while others hide the cost of shipping until checkout. I understand the barrier to entry is extremely high, but what a weakness in their system. It's shocking. ...also, no human being could ever need more than a couple million and no human being has ever done something that is "worth" billions and those who have come closest were definitely not paid billions.
  3. I’m struggling to think of a lie bigger than the economy awards hard work with money. I promise you every time I got a higher paying job, it requires less work. The wealth distribution in America is a result of political choices we started making in the 70s that hurt working people. It isn’t complicated. ...and somebody with 2.8M who doesn’t consider themselves to be rich and thinks by consolidating even more wealth they’ll be helping everyday people, do we really need to hear anything that person has to say on wealth? Completely out of touch.
  4. You have to do what is comfortable for you. I'll show you how safe I think it is. With this information folks could give me pretty specific answers to financial questions: Basics Status: Single Emergency funds: 2 months in cash. Tax Bracket: 22% federal, 0% state State of Residence: Florida Age: 36 Current Retirement Assets Portfolio Size: $1,025,000 Asset Allocation: 70% Total Domestic, 30% Total International, 0% Bonds Taxable: 75% of portfolio Traditional Accounts: 20% of portfolio Roth/HSA Accounts: 5% of portfolio Funds Available Taxable/IRA/HSA: Anything Employer 401k: Vanguard index funds for small, mid, and large cap domestic stocks. Everything else is expensive. Contributions = $105,000/year Taxable: $71,450 Traditional 401k: $24,000 Roth IRA: $6,000 HSA: $3,550
  5. Can you please list the following information: What is your desired asset allocation? How much money do you have to invest per year? What accounts do you currently have? How much is in each account? What funds are available in each account? What about a spouse and their answers to these questions? Do you mix finances? That'll really help.
  6. If I didn't already give you this link, I'd recommend you read the Investing 101 page I wrote. It gives you 90% of what you need to know in a few short pages.
  7. Scott almost certainly said that for the same reasons I said what I said about it. As a general rule, people buying stocks accept the volatility in exchange for larger expected returns over the long run. As a general rule, people use bonds to smooth out that volatility, knowing it will reduce their expected returns, because they know their personality would fold under the pressure of their portfolio dropping by 50% in a crisis. This bond fund is invested in "high yield" bonds, which means it invest in bonds (i.e. loans) that are more likely to never be paid back. The flip side of that coin of course is that the interest on those bonds are higher to compensate for the risk. Ultimately these funds behave much more like stocks than a traditional bond fund. I wouldn't say high yield bond funds are garbage. Just like people want to hold international stocks in addition to domestic stocks, maybe it makes sense to diversify by also holding high yield bonds. However, if you want to own high yield bonds then you definitely shouldn't be viewing them as a "safe" investment the way you traditionally view bonds.
  8. First, the quality and the specificity of the responses I can offer are directly related to your willingness to provide a full picture of your finances: What is your desired asset allocation? List all of your accounts. How much money is in each account? What funds are available in each account? How much do you invest per year? If there is a spouse involved then all of their information is relevant to varying degrees depending on whether you mix finances or not. If you provide limited information then it really hamstrings our ability to give great suggestions and insight. Second, I'm getting the impression that you really need to take the time to understand the basics of investing. I'm happy to explain it all, but I'm getting the sense that you're wanting to move forward in ignorance...and that's fine I guess because I can give you great input if I have the necessary information, but if I were you, I'd take the time to understand this stuff. Third, you're moving forward without investigating the Charles Schwab option. I think that's a significant mistake. Unless of course, you plan to get things in order within this plan and then look into Schwab and possibly go through a second round of restructuring. That's fine I suppose even though it wouldn't be my approach. Annuities are basically always good things to get out of. By moving your funds from an annuity/bonds to a pure stock fund, you've significantly increased the risk of your portfolio. This isn't inherently good or bad because it depends on your psychology. However, this underscores the importance of understanding what you're doing before making changes and the importance of picking out your asset allocation, which is absolutely critical. The plan you're in only has two bond funds and they're both more expensive than I think is fair, but that doesn't mean they should be dismissed outright. The BlackRock bond fund is referred to as "high yield," another name for that is often "junk bonds" and you can think of it as being "risky". You can see here that it lost almost as much money as the Vanguard stock fund did last year. I'm not saying that you should or shouldn't own that fund, but I am saying that you should believe this is a safe fund. The Pimco bond fund on the other hand contains bonds with much better credit ratings, I would consider this to be a bond fund that provides safety in bad times. I don't know what this means. I don't know what "them" is? Maybe the bond fund and annuity? I don't know what you mean when you say the asset % were small. I don't know what you're referring to as safe. Generally speaking you want your assets with the highest expected return to be in your Roth accounts because that growth won't be taxed when you pull it out. I've already commented on the Blackrock fund and steering away from a financial advisors advice is generally a good thing. However, I want to push you towards the idea that your decisions should be made based on you and sound investment logic. Again, this goes back to your desired asset allocation and knowing your complete financial picture would help. If you want international then paying 0.53% for it is high, but still worth considering. However, you may be way better off using your IRA to purchase an international fund that charges between 0% and 0.11% to meet your desired international asset allocation. Also, I don't think this fund includes developing markets, which is what the other fund has. So if you wanted to maximize your international diversification you may want to own both. I'd have to take a closer look. I can't answer this without knowing about your other accounts and your desired asset allocation. The only thing I can say is that this would give you an account with the lowest possible costs, no bonds, and no international exposure.
  9. All you really need to know: Minimize your spending so you can maximize your investing. Abandon the notion that you or anybody else can predict and therefore outperform the market in the long term. Understand that stocks can drop by 50% very quickly, pick a bond percentage that will stop you from behaving foolishly during a crash. Know that stocks have the higher expected return. Total market index funds give you diversification at rock bottom costs, which are the two keys to successfully picking funds. You can own three individual total market index funds (bonds, domestic stocks, international stocks). Alternatively you can own an all in one fund, which internally holds those individual funds (see target date funds that get more bond heavy over time or LifeStrategy funds that keep the same asset allocation over time). Max out tax advantaged accounts first (IRA, 401k, 403b, 457b, etc.) and then put the rest of the money in a taxable account. Whenever you have extra money, invest it regardless of what the market is or isn't doing. It really isn't rocket science. Tony is 100% right.
  10. The general answer to this question is always now. When you buy or sell a mutual fund you have to get the order in by 4 PM eastern, if you do the transaction will close based on prices at the end of the day.
  11. EdLaFave

    YTD Report

    Ooof, isn't that the truth. I'd argue his accomplishments are greater than any president in modern/post-world war history, but I don't know how to reconcile that with Vietnam. It's maddening.
  12. I haven't heard of it, but it's in my queue now. Thanks.
  13. EdLaFave

    YTD Report

    If you're talking about the progress from the 60s, we can't diminish that progress, but you're absolutely right. Our school system likes to teach us that Dr. King fought for and won the battle against racism so we can just wash our hands of that. They don't teach us that desegregating buses was only the tiniest step in King's vision and was part of a long history of white folks doing the bare minimum, but never putting their money where their mouths are. His philosophy clearly stated that bigotry, economic inequality, and militarism are the three interlocking evils that must be dismantled. In the last year of King's life he gave a speech entitled America's Chief Moral Dilemma, which everybody should read in its entirety, but here is a great excerpt: With respect to the job not being done, I'd also recommend these two clips that came toward the end of his life as well:
  14. EdLaFave

    YTD Report

    Absolutely. Let me turn this on it’s head a little bit. I’m a white guy, but more than that I believe passionately in fairness and morality. There isn’t a monument you could construct that would make me feel more excluded and alienated in a public space than a monument to a confederate.
  15. EdLaFave

    YTD Report

    Arguing for monuments to traitorous white supremacists because it is art 🙄. They invaded a foreign land, exterminated the “savage” natives, and enslaved and brutalized an entire race of people in order to line their pockets and prop up their false sense of superiority. As if that weren’t enough, they were so committed to the expansion (not just maintaining the status quo, expanding on it) of this barbaric way of life that they were willing to start a bloody civil war over it. I only wish the “violence” in which these monuments are being destroyed could mirror the violence the monuments celebrate. Give the autobiography from Frederick Douglass a read, seriously. Absolutely disgusting.
  16. Others have responded qualitatively and I agree with their sentiment. Let me respond quantitatively. Let's assume your balanced portfolio returns an average 6% per year and inflation is an average 3%...I know that likely won't be the case for 2020, but go with it. The annual 0.76% fee consumes 25.33% of your inflation adjusted returns in the first year. If this fee continues for 30 years it compounds to consume 31.21% of your inflation adjusted returns. Is that an amount you're willing to lose? This advisor is essentially promising you that he can pick mutual fund managers who can pick stocks that will out perform the market to such a degree that it'll not only make up for the 25.33% - 31.21% of inflation adjusted profits you're giving up, but they'll do even better and put excess money in your pocket. Do you believe that is the case when something like 10% of actively managed mutual funds beat the index over the long term? I don't know why they'd take such a hard line. If I were running a lawn cutting company, I'd be happy to charge customers who wanted to cut their own lawn. From their perspective, it is in their best interest to charge you and to pick expensive funds that allow them to make even more money. It is still advantageous for them to keep charging you and allow you to pick the cheaper funds. It is their absolute worse case scenario for you to just walk away. From your perspective, the inverse is true. Your financial interests are in direct opposition to theirs because every dollar you don't spend on them stays in your pocket. As Saint Bogle liked to say, "you get what you DON'T pay for." I wouldn't be so quick to accept the advisor at his word that the advisor is required. I'm too lazy to do the leg work for you, but I highly recommend that you keep digging and pushing. I won't repeat my entire backstory, but countless people told me lies/untrue information for months before they finally folded and allowed me to invest without an advisor. So keep pushing. This has been a pet peeve for me for the longest. I don't know why everybody defaults to investing in a Traditional 403b/457b/401k, but those same folks default to investing in a Roth IRA. Sometimes I wonder if people don't understand that tax advantaged accounts can be either Traditional or Roth. A 403b doesn't have to be Traditional and an IRA doesn't have to be Roth. You can read about the Roth vs Traditional discussion we've been having in the 2nd page of this thread: Long story short, I think Traditional is better in the vast majority of cases. To answer your question though, I'd make sure I'm maxing out the low cost IRA and then putting excess money into the 403b/457b. I mean, you're definitely being ripped off if it turns out you have to accept a 0.76% fee, but I suspect the tax advantaged status of the account makes it worthwhile...especially because you can roll it into an IRA when you leave your employer. You'd have to do the math to be sure. I spend tens of minutes per year doing this. You pick an asset allocation (split between domestic stock, international stock, and bonds) for your overall portfolio (notice I said portfolio, not individual account). Then you make sure that as market fluctuations occur, your portfolio stays in line with your goal. When your portfolio is "small" relative to your regular contributions you don't have to do anything because your new contributions (set according to your asset allocation) will overwhelm the market fluctuations in the small portfolio and get you back in line. When your portfolio is "medium" relative to your regular contributions you can choose to direct new contributions to the asset type that makes up a smaller percentage of your portfolio than it should (this means you're regularly buying the mutual fund that is underperforming the others...it may feel bad, but this is what successful investing looks like). When your portfolio is "large" relative to your regular contributions you can do things like choose not to auto-invest dividends from the over-performing assets and instead direct them to the under-performing assets, direct any new contributions to the under-performing assets, and even then you may have to sometimes sell the higher-performing assets to put more money into the under-performing assets. Realistically most people only check on this once a year or when a big market change happens (like the pandemic crash that started in february or the pandemic recovery that started a month or two later). It is trivial.
  17. What documentary was that? Three quotes from the greatest American to ever live: We must ask the question, "Why are there forty million poor people in America?" And when you begin to ask that question, you are raising a question about the economic system, about a broader distribution of wealth. When you ask that question you begin to question the capitalistic economy...one day we must come to see that an edifice which produces beggars needs restructuring. I am much more socialistic in my economic theory than capitalistic. Capitalism started with a noble and high motive but fell victim to the very thing it was revolting against. There must be a better distribution of wealth and maybe America must move toward democratic socialism.
  18. Quick tidbit if any readers are wanting to dig into the tax code even further. So far we've been talking about Ordinary Income, which comes from your labor, SS, pensions, Traditional Tax Advantaged account withdrawals, and so forth. Ordinary income is taxed based on the 0%, 10%, 12%, 22%, 24%, etc. tax brackets. However, there is also something I'll call Qualified Income, which comes into play with Taxable accounts and is taxed based on the 0%, 15%, and 20% tax brackets. Most of the dividends index funds distribute are taxed as Qualified Income and if you sell shares you've owned for at least a year the profit is taxed as Qualified Income. Back to the Roth Conversions...if you're going to have years where your Ordinary Income is really low then you'll get the best of both worlds. For example, I'll retire early so I'll have plenty of years where the only ordinary income being forced on me is the very small percentage of the dividends from my taxable account that aren't Qualified (i.e. no SS, no pension, no RMDs). The rest of my spending needs will be more than met by something called Tax Gain Harvesting from my Taxable account (but that's another conversation). So I'll have virtually no Ordinary Income, which is awesome! So it is an absolute no brainer to perform enough Roth Conversions to at least fill up the 0% tax bracket and maybe even the 10% or higher (I still have to do the math). What you accomplish by doing this is: 1. You avoided income taxes at your (high) marginal tax rate when you earned the money and put it into a Traditional Tax Advantaged account. 2. You avoided income taxes again by converting a portion of your Traditional Tax Advantaged account to a Roth Tax Advantaged account (because that Ordinary Income was used to fill up the 0% tax bracket in the year the conversion was done). 3. You once again avoided income taxes years later when you pull the money out of the Roth Tax Advantaged account. No taxation at all, you can't beat that!
  19. I think the average reader will miss the complexity buried in this statement. Our tax code is progressive, which means the first block of money you earn isn’t taxed at all, the next block is taxed at the lowest rate, the next block at a slightly higher rate, and so on. Your highest tax bracket is referred to as your marginal tax rate. If you divide all the taxes you paid by all the money you earned, that is your effective tax rate. When you choose to put money into a Roth Tax Advantaged account, each dollar will be taxed based on your marginal tax rate (i.e. your highest tax bracket). When you choose to put money into a Traditional Tax Advantaged account those dollars will not be taxed until you withdraw them. To oversimplify the matter let’s say you retire at 50, the tax code is the same, and you live solely off your Traditional Tax Advantaged account (no SS, no pension). The money you withdraw will be subjected to our progressive tax code (some at 0%, some at 10%, some at 12%, and so on). Therefore, your effective tax rate will wind up being far less than the tax rate you would have paid had you contributed to a Roth Tax Advantaged account. Being able to fill in the lower tax brackets when withdrawing Traditional money is a huge advantage over paying taxes at your marginal bracket when contributing to a Roth. The goal would be to invest just enough money into Traditional accounts such that every dollar you pull out in retirement falls into a tax bracket that is less than or equal to your marginal tax rate at the time you earned that dollar. Unfortunately (or fortunately depending on your perspective) you will likely have other sources of income in retirement like SS or a pension and those dollars will fill up your lower tax brackets first, which increases the effective tax rate you’ll pay on the money you pull from a Traditional Tax Advantaged account. That isn’t to say Traditional is worse than Roth, but the advantage isn’t as strong as you may have initially thought. Another pain point surrounding Traditional is RMDs (required minimum distributions) that you’re required to take when you’re sufficiently old. You may not even need the money, but it has to be withdrawn and taxes have to be paid. There are exceptions to every rule, but if you assume the tax code remains constant, then the people who come out behind with Traditional accounts will have (significantly) more income in retirement than they had in their working years. To those people I say you should have retired sooner (i.e. not saved so much for retirement) or you should have increased your standard of living while working. If you’re set on trying to predict future tax codes and feel like the higher tax progressive/liberal agenda is inevitable, keep in mind that same agenda seeks to disproportionately increase taxes on the top quintile. So if you’re not in that group, I wouldn’t worry too much about it. If you are in that group, you’ll be fine no matter what. Finally, despite all of this detail, I view this to be more of an optimization. Until you’ve focused your effort on minimizing spending and investing in low cost total market index funds, then I wouldn’t spend much energy on Traditional vs Roth.
  20. haha, you're cracking me up Tony, but in all seriousness I wholeheartedly believe: Everybody should have uninhibited access to medical care because it is immoral for people to suffer or die unnecessarily. Everybody should have uninhibited access to education and skill development because it advances civilization and maximizes individuals' potential. Everybody should have uninhibited access to life's basic necessities: healthy food, clean water, safe housing, etc. Everybody should have a climate and environment that allows life to flourish. These things cost money and I'm happy to help pay for them :)
  21. I think everybody has covered this, but your only fairly priced fund in that lineup is the Vanguard Institutional fund. Unfortunately, that doesn't include any bonds or international stocks so it would be best to use another account (like an IRA) to buy bonds or international stocks if you so desire. I don't think you've said how much you invest per year. The 2020 IRA limit is $6,000 for those under 50 and $7,000 for those over 50. IRAs have rock bottom costs and basically let you buy any fund you want. You should be maxing out your IRA and only invest in the 403b/457b if you have extra money after maxing the IRA. I'm not sure people have pointed this out yet, but it looks like your plan gives you the option to open up a Schwab account. I'd look into that because if they aren't charging you an arm and a leg then you might be able to get access to really low cost funds that'll let you build a fully diversified portfolio. For most people, this is very likely false. Unfortunately, nobody can definitively answer this question because it depends on unknowable information and unknowable future events. For those with pensions, it is more likely (notice that I didn't say likely, I'm not saying the odds are higher than 50%, I'm just saying it is more likely) that after-tax contributions will be superior relative to those without pensions. If you want to get into the details, I'm ready to go. In my view, the only reason for bonds is to prevent behavioral errors that destroy portfolios. Stocks have a higher expected return over the long haul (significantly so). If you can handle situations where you lose 50% or 60% of your money in an economic downturn and you keep investing just as you did when the stock market was soaring, then that's what matters. If you'd do something foolish like sell stocks or stop investing, then you need bonds to prevent your portfolio from taking such big hits, but know that you're reducing your expected returns in order to stop yourself from sabotaging your own portfolio! They both seem to have the same investments and fee structures. I believe the 457b has more attracted withdrawal conditions so I'd favor that one. However, what I'd really favor is maxing out that IRA first! You may be right, you may be wrong. Based on my personal politics, I REALLY hope you're right. However, my advice to you is to take any political views you have and any predictions you have for the future (political or otherwise) and completely throw them away. The only thing we can accurately predict is that short of civilization collapse, the stock market is going to generate positive returns in the long term.
  22. As well you should. You could open an IRA at Vanguard, Fidelity, and many other vendors that would give you complete diversification with rock bottom fees. In fact, Fidelity even has a total market domestic fund and a total market international fund (both stocks, no bonds) that charge 0%!!! So I’d definitely encourage you to leave this “manager” behind.
  23. This fee means you should prioritize maxing out your IRA and any excess money should then go into the 403b and 457b. If you could talk your district into adding Vanguard/Fidelity to their lineup then you could replace this 0.15% fee with a flat yearly fee. This is particularly advantageous if you have a lot of money in your account.
  24. You don't need all of those funds. Not only do you not need them all, but most of them are needlessly charging you high fees.You may want to read the Investing 101 page I wrote to give you a foundation to understand how to build a portfolio...it's a short read Once you understand the stuff in the Investing 101 page, it's only a matter of picking the right percentage for each of these funds: The Vanguard International fund (VTSNX) has you completely covered on foreign stocks. The Vanguard Institutional fund (VINIX) is 0% small cap, 11% mid cap, and 89% large cap. The total US market is 5% small cap, 16% mid cap, and 79% large cap. So VINIX is a good approximation of the US market, but it can be paired with Vanguard' Extended Market (VIEIX) if you want to be "pure" and get the exact proportions. The Vanguard Total Bond Fund (VBTIX) has you completely covered on bonds. Quick note: you should think of the summations of all of your accounts as your portfolio. Every account doesn't have to meet your asset allocation, collectively all of your accounts have to meet your asset allocation. This approach allows you to use certain accounts to buy a particular fund if it is more expensive to buy in one of your other accounts. All of those funds listed above have rock bottom fees. Together they give you complete diversification. There is no value in holding the other funds. In fact, they hurt you because they're expensive.
  25. Your fortunate that your district negotiated well. Both your 403b and 457b have the index funds that will allow you to own the entire market. The index funds have rock bottom fees. The one question you need to answer is if there are any other fees. A lot of these plans will charge an AUM (assets under management) fee in addition to the fees associated with each fund. If there aren’t any other fees then you can invest in whatever account you want (IRA, 403b, or 457b). They each have slightly different rules (sometimes there are withdrawal differences, I think some have different protections, etc), but these differences are minuscule. I’m primarily concerned with getting you fully diversified with minimal fees and all three of your options do that (as long as their isn’t an AUM fee).
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