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04-02-2006, 07:47 PM
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#21
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Full time employment: Posting here.
Join Date: Jul 2004
Posts: 512
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Re: My IRA with VANGUARD
frujinator-
Your understanding is correct. SEP's, etc. are taxed on withdrawl, therefore trying to manage taxes is such an account is unnecessary.
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04-02-2006, 07:48 PM
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#22
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Dryer sheet aficionado
Join Date: Apr 2006
Posts: 43
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Re: My IRA with VANGUARD
Great, thanks for the clarification!
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04-02-2006, 07:56 PM
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#23
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Full time employment: Posting here.
Join Date: Dec 2004
Posts: 714
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Re: My IRA with VANGUARD
frujinator ... check my post above for some Vanguard international index funds.
I hear Dodge & Cox has a great fund as well, though we're not in it right now ... do a search on the forum, and you'll learn more. I'm sure others here can contribute more ideas of funds they appreciate.
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04-02-2006, 09:20 PM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Re: My IRA with VANGUARD
I just want a list of funds that will appreciate.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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04-02-2006, 09:21 PM
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#25
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Dryer sheet aficionado
Join Date: Apr 2006
Posts: 43
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Re: My IRA with VANGUARD
YES ME TOO!!!!
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04-02-2006, 09:47 PM
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#26
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Thinks s/he gets paid by the post
Join Date: Aug 2005
Posts: 1,375
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Re: My IRA with VANGUARD
Is "My IRA with Vanguard" the sequel to "My Dinner with Andre"?
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
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04-02-2006, 09:58 PM
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#27
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Dryer sheet aficionado
Join Date: Apr 2006
Posts: 43
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Re: My IRA with VANGUARD
Confused
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04-03-2006, 04:44 AM
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#28
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Thinks s/he gets paid by the post
Join Date: Aug 2005
Posts: 1,375
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Re: My IRA with VANGUARD
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
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04-03-2006, 08:55 AM
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#29
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Re: My IRA with VANGUARD
Fruj,
Here's why I mention converting some funds to a Roth.
When you put money in an IRA or SEPIRA, you deduct it from your income now, and pay taxes on it when you take it out.* The way you're going, you'll have lots of money when you take it out, and will be in a high tax bracket. I'm guessing that right now, you're not in such a high tax bracket.* So, although the IRA will compound tax free, you'll be paying a lot of tax on it later. If you take out a million bucks when you're 60, you'll pay taxes on it.
With a Roth, you don't deduct it now (that is, you pay tax on the money now), but you don't have to pay taxes on it when you take it out. If you take out a million bucks when you're 60, you won't pay a penny in taxes.
Other things being equal, and assuming you'll be in a higher tax bracket when you are 60+, it would be much smarter to have more of your money in a Roth IRA. Even if your tax bracket doesn't change, a Roth is usually better.* Google Roth Calculator for more on this.
Other factors may be important, but if you are in a super low tax bracket now, converting to Roth might make you much more money.
You can convert part or all of your SEP-IRA money to a Roth, and you'll pay taxes on it now.* But once in the Roth, it will just be like any other Roth money.
You've done the right thing by starting early, and you don't need to worry about the details.* However, if you want to get into investing as a hobby, details like this can improve your returns significantly.
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04-03-2006, 09:26 AM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,674
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Re: My IRA with VANGUARD
Agree with Spanky.
Vanguard International Stock Index Fund is a fund of funds that has a mix of Euro, Pac, EM to the tune of 62%, 26.2% and 11.8%. There is only a 3% turnover rate and has an ER of .31%.
__________________
Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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04-03-2006, 01:48 PM
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#31
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Re: My IRA with VANGUARD
Quote:
Originally Posted by TromboneAl
Other things being equal, and assuming you'll be in a higher tax bracket when you are 60+, it would be much smarter to have more of your money in a Roth IRA.*
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Aye, there's the rub.
ER'ing in our 40s has put us in our lowest tax brackets ever, and we'll have incremental Roth conversions finished by the time we're in our 50s. I wouldn't necessarily race into a Roth conversion if I was still bringing in more than $15K/year earned income.
__________________
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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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04-03-2006, 07:08 PM
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#32
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Dryer sheet aficionado
Join Date: Apr 2006
Posts: 43
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Re: My IRA with VANGUARD
I hear what you saying Trombone AL, But i have already maxed out my ROTH for 2005, and I will max it out every year as long as I continue investing!
Thanks for the advice!
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