Anyone use a robo-investment service like Betterment?

[OverVolt]

Oh believe me, if you want safety you should totally bury your dollars in the backyard. Or hide it in your mattress.

There is no such thing as "safety" in terms of actual dollars. You can lose to inflation or you can put it to risk.

Correct, even cash is an investment.

A really, really bad one.

 

[brianmanahan]

Often there's also something trickling down the ladder, making it a bit slick slick: It's the people at the top, pissing on the ladder.

it beats the old days though, when people would just kill you and take your stuff

 

[RossMAN]

I know the last thing we need is another sub-forum but sometimes I wish we had a food & finance forum.

 

[Dr. Zaus]

What's wrong with bonds?

In 08 the treasury real yield curve hit 4%

Today?

0.4%

... brianmanahan is a real thug who don't afraid of nothin'

 

[brianmanahan]

... brianmanahan is a real thug who don't afraid of nothin'

heck yes i am

got %25 bonds now, still gonna have %25 bonds when i die

for rebalancing and whatnot

 

[Dr. Zaus]

heck yes i am

got %25 bonds now, still gonna have %25 bonds when i die

for rebalancing and whatnot

Unless they're inflation adjusted, new fed-bonds:

1) are returning less than inflation and
2) have no where to go but down

Get out now and buy Chevron stock with it... you know it's the right thing to do.

 

[OverVolt]

I know the last thing we need is another sub-forum but sometimes I wish we had a food & finance forum.

A "P&N stay out!!!" forum would suffice.

 

[pete6032]

Vanguard index fund portfolio is a you need. You don't need some fancy algorithm to invest money.

 

[edro]

Piggybacking again on this thread...Sorry, but this thread is the "happening place" right now.

I just noticed that Traditional IRA deductions are phased out if MAGI is over $118,000. (if your employer offers a retirement account)

So if your MAGI is >$118k, Traditional IRAs are POST TAX?
Essentially the same as Roth, except Traditional IRA gains are also taxed when withdrawn?
Does that mean if MAGI is $118k-$193k, Roth is the clear winner? (Roth phases out over $193k income)

That doesn't seem right?! I always thought IRAs were for "rich people", but it appears they are really for only middle class.

https://www.irs.gov/Retirement-Plan...-You-Are-Covered-by-a-Retirement-Plan-at-Work

 

[turtile]

Looking into this, you had me at "gains".

https://personal.vanguard.com/us/funds/etf/all

 

[Jeff7]

it beats the old days though, when people would just kill you and take your stuff

Of course, that did have the benefit of making the other person's intentions quite unambiguous.

 

[maddogchen]

Piggybacking again on this thread...Sorry, but this thread is the "happening place" right now.

I just noticed that Traditional IRA deductions are phased out if MAGI is over $118,000. (if your employer offers a retirement account)

So if your MAGI is >$118k, Traditional IRAs are POST TAX?
Essentially the same as Roth, except Traditional IRA gains are also taxed when withdrawn?
Does that mean if MAGI is $118k-$193k, Roth is the clear winner? (Roth phases out over $193k income)

That doesn't seem right?! I always thought IRAs were for "rich people", but it appears they are really for only middle class.

https://www.irs.gov/Retirement-Plan...-You-Are-Covered-by-a-Retirement-Plan-at-Work

Yes, as my salary had risen, I could not get a deduction for trad IRA. So ROTH until you hit that limit and then you can only contribute to the trad IRA with no deduction and tax when you withdraw. But at least if you buy/sell along the way you don't get taxed until you actually withdraw. But the trad IRA forces you to start withdrawing at a certain age while ROTH does not

 

[jlee]

Piggybacking again on this thread...Sorry, but this thread is the "happening place" right now.

I just noticed that Traditional IRA deductions are phased out if MAGI is over $118,000. (if your employer offers a retirement account)

So if your MAGI is >$118k, Traditional IRAs are POST TAX?
Essentially the same as Roth, except Traditional IRA gains are also taxed when withdrawn?
Does that mean if MAGI is $118k-$193k, Roth is the clear winner? (Roth phases out over $193k income)

That doesn't seem right?! I always thought IRAs were for "rich people", but it appears they are really for only middle class.

https://www.irs.gov/Retirement-Plan...-You-Are-Covered-by-a-Retirement-Plan-at-Work

Traditional IRA's start to lose their advantage once you go past $61k MAGI (single).

Not only do you pay more taxes, you lose tax-advantaged stuff too. Isn't it great?

 

[SketchMaster]

You should look up tax loss harvesting and the wash-sale rule.

Thats because of the wash-sale rule. the loss will be disallowed if the same stock is purchased within 30 days even if its in another account.

This. You will get wicked burned if you turn on TL harvesting and have not verified you aren't invest in the same funds somewhere else.

On the topic of Betterment:

I gave betterment a try for a fun short term savings experiment, but I'll likely pull the money out and put it somewhere else by the end of the year. While could be nice for a "set and forget" way to earn more than a savings account or CDs in the span of a couple years (IF, and only IF, you are able to tolerate short-term losses), I would not give this company my life savings or put money in expecting to earn more than if I did a few days of research on an ETF fund.

The accounts I manage myself are mostly Vanguard ETFs and they beat the snot out of the betterment accounts hands down. If you truly want a retirement vessel that requires no effort then I would say a target fund. A target fund is better than nothing, and will at least keep you money growing past the rate of inflation by a % or two.

 

[Baasha]

In 08 the treasury real yield curve hit 4%

Today?

0.4%

... brianmanahan is a real thug who don't afraid of nothin'

The fact that so many people reflexively call bonds a 'safe' or 'good' investment is mind-boggling.

As one of the best minds in Finance today, Meir Statman states that investing is like playing tennis with Roger Federer on the other side - get ready to lose big time. People are fooled into investing in the markets thinking they are some god-given savant in investing.

I tell these children, roll your dollars into a blunt son - and light 'em up! That's safer than investing in the 'market' - bonds or otherwise!

Betterment/Wealthfront are gimmicks; old wine in a new bottle.

Thank goodness I don't drink!

 

[Blackjack200]

That doesn't seem right?! I always thought IRAs were for "rich people", but it appears they are really for only middle class.

IRAs are for middle class. Tax breaks for the upper/wealthy are 401(k) plans, NQDC plans, Whole Life Insurance, Muni Bonds, real estate investing, etc.

You're right that there's a bit of a gap for people that earn too much to use IRAs but not enough to participate in deferred comp plans.

Unfortunately people are more interested in villifying each other than solving problems, so saying "hey, $100k isn't as much as it used to be, I need to participate in these programs too" gets you a sneer, while idiotic crap like carried interest loopholes and long term capital gains rates go unfixed.

 

[Dr. Zaus]

The fact that so many people reflexively call bonds a 'safe' or 'good' investment is mind-boggling.

As one of the best minds in Finance today, Meir Statman states that investing is like playing tennis with Roger Federer on the other side - get ready to lose big time. People are fooled into investing in the markets thinking they are some god-given savant in investing.

I tell these children, roll your dollars into a blunt son - and light 'em up! That's safer than investing in the 'market' - bonds or otherwise!

Betterment/Wealthfront are gimmicks; old wine in a new bottle.

Thank goodness I don't drink!

While this is true; equities do have a long history of doing well over time. I agree equities are over price right now, but at full match up to 7.5% of my paycheck, i'd be dumb not to let my 401k build.

Some day there will be a down turn.

You're right that there's a bit of a gap for people that earn too much to use IRAs but not enough to participate in deferred comp plans.

I call it the 'middle class tax trap'. If my wife worked and made the 100k she easily could she would take home about 2k a month. Which would also disqualify us for the ROTH IRA, increase the kind of AMT we pay and after replacing her at home, bring us into the negatives.

And that would also make me the kind of person Bernie Sanders thinks can afford to pay more? Yea, with that thinking, i'll go out of my way not to 'earn' negative money, thank you very much.

Instead we're having her write books, not for the money, but so that those who need what her research provides will be better off.

 

[Born2bwire]

While this is true; equities do have a long history of doing well over time. I agree equities are over price right now, but at full match up to 7.5% of my paycheck, i'd be dumb not to let my 401k build.

Some day there will be a down turn.




I call it the 'middle class tax trap'. If my wife worked and made the 100k she easily could she would take home about 2k a month. Which would also disqualify us for the ROTH IRA, increase the kind of AMT we pay and after replacing her at home, bring us into the negatives.

And that would also make me the kind of person Bernie Sanders thinks can afford to pay more? Yea, with that thinking, i'll go out of my way not to 'earn' negative money, thank you very much.

Instead we're having her write books, not for the money, but so that those who need what her research provides will be better off.

How in the world do you go from a $100K salary to a $2K a month take home? Let's say you're already making about $100K and we simplify things by putting all your wife's salary into the 28% bracket, assume full FICA, and hell put a 10% state tax on it. Then say $1K for health insurance and we come out to $4.4K a month take home. The only way you come close to $2K is if you take out $18K a year for 401(k) and $5.5K for IRA and it still comes to $2.5K take home but you have the tax advantage of the 410(k), the matching, and still the original contribution counting towards effective compensation.

You could also do a backdoor Roth IRA.

 

[Dr. Zaus]

How in the world do you go from a $100K salary to a $2K a month take home? Let's say you're already making about $100K and we simplify things by putting all your wife's salary into the 28% bracket, assume full FICA, and hell put a 10% state tax on it. Then say $1K for health insurance and we come out to $4.4K a month take home. The only way you come close to $2K is if you take out $18K a year for 401(k) and $5.5K for IRA and it still comes to $2.5K take home but you have the tax advantage of the 410(k), the matching, and still the original contribution counting towards effective compensation.

You could also do a backdoor Roth IRA.

Great question, forced me to revisit my particular situation:

100k

-28000 alternative minimum tax
-9000 state income tax
(-15000 additional student loans (over first 10 years))
-15000 self employment
-24000 Autism Treatment (equivalent of what she provides us; we already max-out insurance)

24k or 2k/m ($625 a paycheck over the first 10 years)

-24k Domestic Replacement (we have 4kids, one autistic)

****
If she we were sans children and debt:

100k
-28% income
-9% state
-15% self employment
52% marginal tax rate leaves

48k/y

-12k Domestic Replacement (1k/m if we were single is low)

3k/m is ~ 25% income increase for a 100% labor increase.


It's an Lower Upper Middle Class tax trap I tell ya!

 

[brianmanahan]

This. You will get wicked burned if you turn on TL harvesting and have not verified you aren't invest in the same funds somewhere else.

in reality, you'll only get forced to do the wash sale if you invest in the same funds with the same company

but since vanguard doesn't know about my 401k, nobody will report a wash sale on me if i TLH total US in my taxable vanguard account but continue to buy total US in my 401k

plus as far as i know, irs amendment 2008-5 (http://www.irs.gov/irb/2008-03_IRB/ar08.html) mentions only IRAs, not 401ks, with relationship to wash sale rules

 

[brianmanahan]

The fact that so many people reflexively call bonds a 'safe' or 'good' investment is mind-boggling.

i care more that they are liquid and not correlated with equities

I tell these children, roll your dollars into a blunt son - and light 'em up! That's safer than investing in the 'market' - bonds or otherwise!

smoking is not safe