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Old 01-05-2014, 08:13 PM   #21
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I have to admit that I would be quite interested in hearing some stories of the failed ER's since we rarely encounter those on this board.
I don't have a whole lot of details but I'll try and post a couple anecdotes.

Regarding my taxable/protected investments, my portfolio breaks down like this:
  • 401(k) Index Funds - 53%
  • Roth IRA Index Funds - 1%
  • Taxable Index Funds - 34%
  • Liquid Cash - 12%
The cash I'm going to re-allocate. My question is about the taxable index funds and the IRA. I started the IRA a long while back but haven't been under the income limits to add to it since then. Last year, when I wasn't working, I was an idiot and missed the opportunity to shift some of my cash into the IRA. This year, I'm not sure, but I might be able to contribute.


Questions:
  1. If I can contribute to the Roth IRA, should I?
  2. How do I determine if I should max out the 401(k) and put the rest into taxable index funds OR contribute the minimum to get a company match into the 401(k) and put more into the taxable index funds?
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Old 01-05-2014, 09:42 PM   #22
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Originally Posted by CoolChange View Post
I have to admit that I would be quite interested in hearing some stories of the failed ER's since we rarely encounter those on this board.
Go any place cheap and warm and hang around some bars and you will find Americans from 30s to mid 60s who are drunks, who messed up marriages, who lost money speculating on dumb projects, and who fell prey to almost every other character weakness one could think of. Most people do much better with more structure and with people who care about them trying to keep them straight.

Not only is there a lot of survivor bias here, the people here are mostly very unusual. Where else are you going to find people in early middle age with $3mm willing to live on $60-65K gross? It isn't quite normal, if normal means according to the norm.

Ha
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Old 01-13-2014, 09:37 PM   #23
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+1 If I was 35 with a steady job, tolerant of risk and looking to make up lost ground, I would be 100% equities other than my emergency fund. (BTW, I was 100% equities at 35).
The only reason I have any funds in bonds is because everybody tells me to I'm fine with 100% equities. If the dropped in value 50% tomorrow I wouldn't notice (except for the news reports). I'm highly tolerant of risk because I have no plans to spend this money until I can start gliding down into ER.

The only question this brings to mind ... I met someone on the road who manages his investments at a very macro-level. When the market looks like equities are going to fall (debt ceiling debate, looming shutdown, etc) he shifts his pricey equities into bonds before they lose value. When he senses an upward shift is coming, he shifts back into equities.

It seems sane, but I'm not willing to do the research to try and make those gambles. I'll probably just go 100%, or nearly 100%, into equities, set up an auto-investment to move funds from my checking account into equity index funds, and go back to ignoring all this stuff.

Now, if I decide to get out of bonds, that means I have to transfer my 401(k) funds out of that Vanguard Target Retirement fund into a couple of individual index funds. That target fund alone holds ~12% bonds. Can I do this without a penalty? I'll have to play on the Vanguard site and see if I can just do a transfer.
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Old 01-13-2014, 10:22 PM   #24
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There should be no penalty to exchange your target retirement fund for a stock fund as long as you stay inside your 401k.
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Old 01-13-2014, 10:30 PM   #25
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...

What forums do you find useful?
Bogleheads Investing Advice and Info

Mr. Money Mustache

http://http://www.mrmoneymustache.com/forum/

Quote:
Originally Posted by haha View Post
Go any place cheap and warm and hang around some bars and you will find Americans from 30s to mid 60s who are drunks, who messed up marriages, who lost money speculating on dumb projects, and who fell prey to almost every other character weakness one could think of. Most people do much better with more structure and with people who care about them trying to keep them straight.

Not only is there a lot of survivor bias here, the people here are mostly very unusual. Where else are you going to find people in early middle age with $3mm willing to live on $60-65K gross? It isn't quite normal, if normal means according to the norm.

Ha
+1
There are many dimensions to retirement: physical/health, psycho/social, as well as financial/material. It's good to think through all of them. Bernstein states that all of life is full of the unexpected and unthinkable. This applies to the personal side of retirement as much as the financial. Question is, how prepared/resourceful is a person when/if unexpected black swans occur? Resourcefulness and flexibility are akin to black gold in retirement.

You may or may not benefit from the above MMM links, but your posts do remind me of him and his attitude toward life, ER, and risk. Personally, I much more risk adverse, although I have benefited from his attitude towards being conscious when spending.
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Old 01-15-2014, 08:06 PM   #26
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You may or may not benefit from the above MMM links, but your posts do remind me of him and his attitude toward life, ER, and risk. Personally, I much more risk adverse, although I have benefited from his attitude towards being conscious when spending.
There's some good stuff in there - quite inspiring towards getting my fiscal house in order.

His situation is a bit different than mine - he made a couple smart house purchases/rentals, combined incomes with a partner, took on the expense of raising a kid ... but his overall approach makes a lot of sense to me.

I've taken the first steps towards solving my asset allocation. Will post more once I've decided exactly what to do. I'm leaning towards 95% equities, 5% cash ...

Now back to the grind. Gotta earn.
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Old 01-16-2014, 01:51 PM   #27
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Thanks for all the advice and thoughts. I'm almost ready to put this to rest.

I'm at 90% equities and 10% cash. I will adjust that to 95% equities and 5% soon. Not quite decided on whether I'll stay in domestic stocks or throw in some international/emerging markets.

The one question that is vexing me, as I don't quite know how to model it in Excel, is how much of my portfolio should be in a taxable Vanguard account vs my company 401k.

Currently I am:
  • 52% in the 401k (VINIX - S&P 500 index)
  • .74% in a Roth IRA (VTSMX - total market index) I've been ineligible to contribute to in years
  • 40% in a taxable account (VTSAX - total market index)
Given that I want to start drawing down on these funds as soon as possible (~5 years), I feel like I should divert everything but the minimum to get the company match from my 401k to my taxable Vanguard account.


That way I can touch the funds before I'm 59 1/2 (25 years away) and I'll be taxed for long-term capital gains on my income.


Not sure how to model this in order to be sure ...
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