Is there a camp on which is better for younger people to invest in?Roth vs. Traditional IRA just means whether you pay taxes when you put the money in or when you take it out.
You probably want a Roth IRA.Is there a camp on which is better for younger people to invest in?
Is there any sort of precedent for a company matching the amount you put into personal investments? I'm familiar with 401k matching, but my work is different and there's opportunity for haggling on stuff like this and since I can't write it off myself, I wonder if the company would be able to write it off.You probably want a Roth IRA.
This means you don't get a tax deduction when you make the contribution, but your withdrawals in retirement will be tax free. This makes a lot of sense, since that money will grow for a long time and you're currently (most likely) not in a high tax bracket.
With a regular IRA, you get to deduct your contributions from your income, but you will have to pay taxes when you make withdrawals in retirement.
I think employers usually provide matching only for the 401(k) plans they sponsor (where I imagine they get a cut from the management fee), so if they don't do that, you're mostly out of luck. It's actually no different from them paying you an extra $x and you transferring that $x to the 401(k) yourself. In both cases it's not taxable income. They don't get to write it off any different... in both cases it's simply a labor expense to them.Is there any sort of precedent for a company matching the amount you put into personal investments? I'm familiar with 401k matching, but my work is different and there's opportunity for haggling on stuff like this and since I can't write it off myself, I wonder if the company would be able to write it off.
Good book. One caution: last time I looked at it, their rates of return calculation did NOT account for inflation. I think they address it somewhere, but it's not incorporated into their retirement savings projections. So your actual savings need to be significantly higher than what they predict. 8% real rate of return just isn't going to happen, period. (The average real rate of return over a 35 year period is closer to 6% - and that two percentage point makes a big difference over the years.)Fedor_sl said:Amazon - The Bogleheads' Guide to Investing
read that
This is the annual cut the fund takes from your investments. So if you invest $10,000 and the expense rate is 0.3%, you pay $30/year in fees. Doesn't sound like much, but by the time you retire you should probably have over a million in savings, at which point 0.3% is $3k. (Also keep in mind that it's annual... so over 30 years, that's going to add up to a chunk of money.)What exactly does expense ratio mean and how does it affect me when I am doing something similar to what Tmac is doing and having $100 ish a month tossed into it after initial start up?
Depends on your time horizon. Let's say you're 30 and you get a real rate of return of 6.5% (geometric mean over the period, expected with 100% stocks - as you rebalance, and of course you must do that, your actual return is going to be less than that). After fees, you're comparing 6.3% vs. 6.35% - doesn't sound like much.But the difference even over the long term between 0.2% and 0.15% is going to be pretty negligible.
With a 401k, the money is deducted from your paycheck and you are not taxed on the amount you contribute. So, if you make 50k a year and contribute 6k, you are taxed as if you make 44k. You pay long-term capital gains tax when you withdraw it at retirement. There can be very substantial penalties for early withdrawal.Is there a camp on which is better for younger people to invest in?
You've received very good advice from this thread. I 100% agree with what's been said: open a Roth IRA and buy a Vanguard retirement fund. You can actually do all of this on Vanguard's website. As you read more, and learn more, over the years, you can get out of the retirement fund if you want, but the truth is the retirement fund is already pretty damn well diversified (basically you'll be in a total stock market index fund, a total bond market index fund, and I believe a total international market index fund), and the chances of you investing in a way that does better than the retirement fund will do is pretty dang slim.Is there a camp on which is better for younger people to invest in?
Yeah, absolutely. I was just saying that once you're down to Vanguard-type MER's worrying about a couple hundredths of a percent difference is likely focusing on the wrong things. Transaction costs, proper allocation, rebalancing, taxes and the like are all going to have a far larger impact on portfolio value than a tiny difference in MER.Soriak_sl said:Bottom line: expense ratios matter.