As was foretold, we've added advertisements to the forums! If you have questions, or if you encounter any bugs, please visit this thread: https://forums.penny-arcade.com/discussion/240191/forum-advertisement-faq-and-reports-thread/
Options

Cha-ching, it's the [Financial Literacy] thread

1454648505179

Posts

  • Options
    Phoenix-DPhoenix-D Registered User regular
    If by "nearly recovered" you mean "down almost 10% from where you started" sure. You went from 100->75->90. You've only gained back 60% of what you lost despite putting in a bunch of money.

  • Options
    Marty81Marty81 Registered User regular
    My allocation is 100% stocks. Not counting contributions, I'm down about 12.5% from the peak.

  • Options
    JragghenJragghen Registered User regular
    My accounts are all in the 15-12% down from peak, looks like.

  • Options
    MugsleyMugsley DelawareRegistered User regular
    edited April 2020
    Smrtnik wrote: »
    Mugsley wrote: »
    Alright. I've been trying to write this post for a while and the verbiage keeps going in circles in my head. So let's start here. Here's a graph of running percentage of TSP balance with 3/2/2020 as the 100% reference point: https://imgur.com/a/UBhTH7p
    (Excel is being a bitch and won't post dates on the X axis, so that's day number (i.e. 3/2/2020 is Day 1)).

    This is VERY high level. All I did was take daily balance numbers, so there were contributions added along the way.

    First off: note that the worst balance decline was a total ~25% decline round about 3/23/2020. The past ~10 days, I've been floating around the 90% level, and I had another scheduled contribution today.

    Big takeaway: if you changed NOTHING through all this, your investments should nearly be recovered at this point. The caveat of course is it depends on your allocations. I actually have a fairly aggressive distribution (I'm 42 and have 11% fixed income, 14% Small Cap, 22% International, 52% "Common Stock" (basically US Stocks)). My regular contributions are 50% US Stocks, 20% Small Cap, 30% International (the fixed income portion is what I already had in the account and haven't added to it for a few years now).

    I have more to say but I want to go eat first.

    TSP I'm thinking of (maybe you are thinking if something else?) has about a dozen different funds you can choose to put money in. If that's your personal balance it only reflects whichever funds you have picked.

    https://www.tsp.gov/InvestmentFunds/FundsOverview/index.html

    https://www.tsp.gov/InvestmentFunds/FundPerformance/index.html

    All of the L funds are life cycle funds that have different allocations of G, F, C, S, I. So in my mind, there are only 5 funds.

    I may be confusing what's being said. My percentages above are across G, S, I, and C funds. I'm not using a life cycle fund

    Mugsley on
  • Options
    MugsleyMugsley DelawareRegistered User regular
    Phoenix-D wrote: »
    If by "nearly recovered" you mean "down almost 10% from where you started" sure. You went from 100->75->90. You've only gained back 60% of what you lost despite putting in a bunch of money.

    This is correct. I have my analysis wrong.

  • Options
    MugsleyMugsley DelawareRegistered User regular
    Some thoughts that have been bouncing around in my head. Just trying to spur a little discussion here:
    * Those who kept forecasting the "next recession" or "next correction" will say they were correct because this dip/recession/word was slightly over 10 years since the last major one. I also think a lot of those people will not return to the same distribution they had prior to this period. Which brings me to the next thought

    * I'm very worried that many younger investors and a good number of people my age are going to be more conservative with their investments than they would have otherwise; and I think it's going to manifest with the 'Millenials' (I hate generational terms) being forced to stay in the workforce for even longer than people are predicting they were going to. Everyone will be so worried about the next major event like this that they won't be willing to take advantage of what the market is providing.

    * I am very curious how the current financial market situation is going to affect real estate over the next 1-2 years, at least. Will there be a depressed market? Will it shoot back up? I have "play money" in a REIT fund in Vanguard that I'm not going to touch, but I don't expect it to do much of anything, except maybe have short term losses. I think all the effects of the quarantine on small businesses will cause a major glut of vacant business real estate that won't recover for a while (my personal theory is closer to 3 years).

    * Slightly different from above, I think the housing market is going to have a short term increase in inventory, as people who wanted to move will be able to finally move, and a number of people who were barely able to afford their housing will be forced out. What this will do for rental properties, I have no idea. Will apartments have fewer people in them? Will they fill up with people who had to sell their houses? Who knows!

    * I think at least one, if not two, of the major cruise lines will fold after all this. I think the airline bailout will keep them going, but I would not be surprised if there was some sort of merger in the next 2-3 years, if at least one of the airlines can't return to reasonable success after things reopen (TBH I'm actually surprised there wasn't some sort of minor outbreak based on someone infecting an entire flight of passengers).

    * I want to say something about the gig economy, but I don't know anything about it, and there's a separate thread for those people. I expect they are getting hit very hard, but I don't know if a significant portion are considering going back to "corporate"/"normal" jobs. A good number of those people may have actually found as much or more work, with everyone stuck at home, so maybe it's not as bad as I think.

    That's about it for now. I'm getting distracted at home again. Anyone have any thoughts? Anyone changing their allocations/distributions based on the recent market changes? Has anyone had to pull money from investments to make it through the quarantine?

  • Options
    mRahmanimRahmani DetroitRegistered User regular
    My big fear is getting laid off and having to dump my 401k to get by. I'm about 2 years away from having my student loans paid off, and I've been throwing all my excess income there. Basically following the Dave Ramsey baby steps (maybe I should link them in the OP?) so I haven't been building savings outside of my 401k match, just paying off debt.

    I would get by, but losing what I've built up over the last 8 years or so would really suck.

  • Options
    MugsleyMugsley DelawareRegistered User regular
    Do you have an emergency fund set up yet? If you don't, it's worth channeling some of the excess income toward that. Especially if you think you have a legitimate fear of being laid off.

  • Options
    DoodmannDoodmann Registered User regular
    It's not play money if it's in a Vanguard, unless by play money you mean you're eventually looking to buy a boat with it or something.

    Whippy wrote: »
    nope nope nope nope abort abort talk about anime
    I like to ART
  • Options
    TuminTumin Registered User regular
    Depends on your debt rates. If I was holding <7% debt and couldnt refinance it, I would stop putting more than the minimum towards it while this was ongoing. Paying interest sucks but running out of cash sucks more, and you dont want to get stuck with a CC balance.

  • Options
    monikermoniker Registered User regular
    Mugsley wrote: »
    Do you have an emergency fund set up yet? If you don't, it's worth channeling some of the excess income toward that. Especially if you think you have a legitimate fear of being laid off.

    Even without that fear, or, you know, a pandemic, you should always prioritize an emergency fund until you have a decent cushion since emergencies are the kind of thing you can't predict by definition.

  • Options
    mRahmanimRahmani DetroitRegistered User regular
    I keep a rolling $1000 balance to dip into and a little over a year's max out of pocket saved up in my HSA, so I'm covered on medical and usually have enough for "oh shit the furnace broke" or whatever. But outside of that, I haven't built any emergency savings because I've been dumping it all into debt payments. It's been a good strategy so far... I owed $65k in 2013 and i've brought it down to about $14k now, so I'm almost done. My plan was to build up savings after that was paid off.

    I do have a paid off third car that could be parted with pretty quickly if the need arose (older Camaro in nice shape, basically a toy.)

  • Options
    PaladinPaladin Registered User regular
    edited June 2020
    So what's going on in the market these days, and what's this I hear about bonds being bad?

    I just started saving towards a Roth at 30% large cap, 40% mid cap, 20% international, and 10% bonds provided by vanguard since there's like 1% or more fees on the target date fund offerings. Is that stupid or just dumb?

    Paladin on
    Marty: The future, it's where you're going?
    Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
  • Options
    a5ehrena5ehren AtlantaRegistered User regular
    90/10 is fine, it’s what I do.

    The Vanguard target date funds are more like 0.12%, but you get the funds cheaper if you roll your own once you can get Admiral shares or use ETFs.

  • Options
    a5ehrena5ehren AtlantaRegistered User regular
    edited June 2020
    Some more reading about portfolio structure, etc, if interested:
    3 Fund Portfolio - This is the canonical "Boglehead" portfolio, and it is easy to hold whatever ratio you want. It's cheap to hold and easy to manage. If you don't want International, you can just get Total Stock and Total Bond indexes to make a 2-fund portfolio.

    I personally aim for the Core Four setup, but it's spread across a few different vendors thanks to jobs, etc.

    40% mid-cap feels a bit overweight to me personally...if you want to go the Slice-and-Dice, the general idea seems to be that you want to be overweight in small-cap and value funds.

    a5ehren on
  • Options
    DoodmannDoodmann Registered User regular
    Ya'll keep writing "speculative gold miners and short term F calls" wrong.

    Whippy wrote: »
    nope nope nope nope abort abort talk about anime
    I like to ART
  • Options
    ElvenshaeElvenshae Registered User regular
    Paladin wrote: »
    So what's going on in the market these days, and what's this I hear about bonds being bad?

    Generally speaking, as in very, very generally, bonds and stocks move opposite each other: when stocks are doing well, bonds tend to not be as valuable, and vice-versa. This is because bonds are generally fixed-rate investments (e.g., 2% annually, until maturity) and are therefore a "safe" way to grow your investment, whereas stocks have lots of short-term volatility but higher long-term returns.

    That also makes bonds better for people who are looking to start cashing out their investments soon, because $500k invested in bonds will be worth (most likely) $520k next year, while $500k invested in stocks could be worth $1M or $0 or anything in between. Since I'm going to need to pull out $50k next year to pay rent and buy food, etc., I can't take the risk that my stocks' values drop, and so I move money into bonds.

  • Options
    MugsleyMugsley DelawareRegistered User regular
    Elvenshae wrote: »
    Paladin wrote: »
    So what's going on in the market these days, and what's this I hear about bonds being bad?

    Generally speaking, as in very, very generally, bonds and stocks move opposite each other: when stocks are doing well, bonds tend to not be as valuable, and vice-versa. This is because bonds are generally fixed-rate investments (e.g., 2% annually, until maturity) and are therefore a "safe" way to grow your investment, whereas stocks have lots of short-term volatility but higher long-term returns.

    That also makes bonds better for people who are looking to start cashing out their investments soon, because $500k invested in bonds will be worth (most likely) $520k next year, while $500k invested in stocks could be worth $1M or $0 or anything in between. Since I'm going to need to pull out $50k next year to pay rent and buy food, etc., I can't take the risk that my stocks' values drop, and so I move money into bonds.
    [I'm adding on]

    However, bond rates *also* took a dive in 2009/2010, and haven't fully recovered because interest rates have remained low.

  • Options
    Captain InertiaCaptain Inertia Registered User regular
    And even though bonds have a fixed rate, they can also lose value- there’s credit and interest rate risk, and even market risk (you might have $520k on paper but no buyers to turn it into cash if you wanted to sell before maturity)

  • Options
    monikermoniker Registered User regular
    a5ehren wrote: »
    Some more reading about portfolio structure, etc, if interested:
    3 Fund Portfolio - This is the canonical "Boglehead" portfolio, and it is easy to hold whatever ratio you want. It's cheap to hold and easy to manage. If you don't want International, you can just get Total Stock and Total Bond indexes to make a 2-fund portfolio.

    I personally aim for the Core Four setup, but it's spread across a few different vendors thanks to jobs, etc.

    40% mid-cap feels a bit overweight to me personally...if you want to go the Slice-and-Dice, the general idea seems to be that you want to be overweight in small-cap and value funds.

    Don't forget the fees really are the sticking point in a lot of these equations. For my own retirement savings, it's 90/10 bonds but all domestic index funds even though I'd prefer a bit of international exposure. The slight increase in fees for an international weighted index fund are high enough that the anticipated gains compared to bog standard S&P500 just doesn't seem worth bothering splitting things up. May well be wrong in a few decades, but meh.

  • Options
    PaladinPaladin Registered User regular
    I was going to go all in S&P index due to the conflict of interest inherent in everything else, but my employee retirement fund offers ripoff jp Morgan target date funds with like 1.27% fees and no vanguard value or small cap index funds. Also of course no S&P 500 index funds. International wasn't too bad, like 0.04% for the developed markets index (emerging markets is 0.1%). Overall my options are a little crap but I have them. There is also fidelity brokerage link, but I don't know what that is, and it doesn't matter until I get some money in there.

    Are bonds toxic now? Are target date funds really 50% equity? Should i tell my retiring family members to stay in bonds or not?

    Marty: The future, it's where you're going?
    Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
  • Options
    CauldCauld Registered User regular
    For bonds, prices and rates are inversely related. When interest rates go down, bond prices go up. The effect increases with the longer the term of the bonds (ie 30yr bonds will see bigger price changes than 1 month bonds). Bond yields are currently very low, which means that potential gains are limited since interest rates would have to go even lower for prices to rise.

  • Options
    DarklyreDarklyre Registered User regular
    Bonds aren't toxic, but you should maybe look at going towards the shorter duration even though there's less yield. Rates are so close to zero that the long-term bonds have nowhere to go but down, unless you think negative interest rates will happen. Short-term bonds will take only minor hits from interest rate increases, and things like inflation-protected bonds will actually benefit from larger-than-expected inflation.

  • Options
    a5ehrena5ehren AtlantaRegistered User regular
    Target date funds slope down to 50% bonds at the end date, I think. You'll need to have some stock exposure even in retirement to make sure that your growth replaces at least some of your withdrawals.

  • Options
    enc0reenc0re Registered User regular
    a5ehren wrote: »
    Target date funds slope down to 50% bonds at the end date, I think. You'll need to have some stock exposure even in retirement to make sure that your growth replaces at least some of your withdrawals.

    Target date funds are not done gliding at the target date; but many are around 50/50 at the target date these days. Then they get less equity heavy past retirement and closer to death.

  • Options
    Marty81Marty81 Registered User regular
    Cauld wrote: »
    For bonds, prices and rates are inversely related. When interest rates go down, bond prices go up. The effect increases with the longer the term of the bonds (ie 30yr bonds will see bigger price changes than 1 month bonds). Bond yields are currently very low, which means that potential gains are limited since interest rates would have to go even lower for prices to rise.

    People have been saying this for like a decade, and yet rates continue to find a way to go down.

    FWIW I agree with you, and my bond allocation is 0% right now.

    Nevertheless, rates can still go lower and even negative. It's happened before.

  • Options
    TimFijiTimFiji Beast Lord Halfway2AnywhereRegistered User regular
    Marty81 wrote: »
    Cauld wrote: »
    For bonds, prices and rates are inversely related. When interest rates go down, bond prices go up. The effect increases with the longer the term of the bonds (ie 30yr bonds will see bigger price changes than 1 month bonds). Bond yields are currently very low, which means that potential gains are limited since interest rates would have to go even lower for prices to rise.

    People have been saying this for like a decade, and yet rates continue to find a way to go down.

    FWIW I agree with you, and my bond allocation is 0% right now.

    Nevertheless, rates can still go lower and even negative. It's happened before.

    Yeah I am at 0% now with bonds as well and have been for a few months. Even some of the Bond-related ETFs with low yields can turn negative if the administrative fee for the fund is high enough.

    Switch: SW-2322-2047-3148 Steam: Archpriest
      Selling Board Games for Medical Bills
    • Options
      MugsleyMugsley DelawareRegistered User regular
      Paladin wrote: »
      I was going to go all in S&P index due to the conflict of interest inherent in everything else, but my employee retirement fund offers ripoff jp Morgan target date funds with like 1.27% fees and no vanguard value or small cap index funds. Also of course no S&P 500 index funds. International wasn't too bad, like 0.04% for the developed markets index (emerging markets is 0.1%). Overall my options are a little crap but I have them. There is also fidelity brokerage link, but I don't know what that is, and it doesn't matter until I get some money in there.

      Are bonds toxic now? Are target date funds really 50% equity? Should i tell my retiring family members to stay in bonds or not?

      Fidelity funds are quite good, depending which ones your employer chose. Even without money in them, you should be able to read up on them.

      If your choices are that (relatively) bad, then only contribute to your match and put the rest in your own Vanguard account.

    • Options
      PaladinPaladin Registered User regular
      Mugsley wrote: »
      Paladin wrote: »
      I was going to go all in S&P index due to the conflict of interest inherent in everything else, but my employee retirement fund offers ripoff jp Morgan target date funds with like 1.27% fees and no vanguard value or small cap index funds. Also of course no S&P 500 index funds. International wasn't too bad, like 0.04% for the developed markets index (emerging markets is 0.1%). Overall my options are a little crap but I have them. There is also fidelity brokerage link, but I don't know what that is, and it doesn't matter until I get some money in there.

      Are bonds toxic now? Are target date funds really 50% equity? Should i tell my retiring family members to stay in bonds or not?

      Fidelity funds are quite good, depending which ones your employer chose. Even without money in them, you should be able to read up on them.

      If your choices are that (relatively) bad, then only contribute to your match and put the rest in your own Vanguard account.

      Fidelity is the servicer, but all the assets are vanguard or JPMorgan. There are only 22 I can choose from

      Marty: The future, it's where you're going?
      Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
    • Options
      ChaosHatChaosHat Hop, hop, hop, HA! Trick of the lightRegistered User regular
      I have a question: when/how are fees taken out of my investments? So I have a Roth IRA and I'm invested in some index funds that have a fee. Are those just taken out of my principle? And over what time horizon? Let's say that the market was totally stagnant for 100 years, would my account just end up empty?

    • Options
      Marty81Marty81 Registered User regular
      ChaosHat wrote: »
      I have a question: when/how are fees taken out of my investments? So I have a Roth IRA and I'm invested in some index funds that have a fee. Are those just taken out of my principle?

      Yes. It's taken directly from the value of the fund.
      And over what time horizon?

      Gradually over the course of the year. Maybe monthly or quarterly? You don’t see it directly in your account. it’s only reflected in the market price of the shares, and it’s going to be way less than the daily movement of the shares, so it’s basically invisible.
      Let's say that the market was totally stagnant for 100 years, would my account just end up empty?

      No, because fees are a percentage of the current value. Even if the fee were 1% every year (very high), after 100 years you’d still have 36.6% of your original investment (.99^100).

    • Options
      CauldCauld Registered User regular
      Has anyone signed up for the Amex platinum recently for their signup bonus? I'm thinking of doing it, since I should pretty easily hit the spending threshold to get the signup bonus, but not sure I really want another card with that high of an annual fee. Anyone have any thoughts on this?

    • Options
      SixSix Caches Tweets in the mainframe cyberhex Registered User regular
      Cauld wrote: »
      Has anyone signed up for the Amex platinum recently for their signup bonus? I'm thinking of doing it, since I should pretty easily hit the spending threshold to get the signup bonus, but not sure I really want another card with that high of an annual fee. Anyone have any thoughts on this?

      It’s a great card if you can use the benefits. You can easily get $550/year of value in it if you travel a lot, for instance. Lounge access and and the airline and Uber credits can pay for it, basically.

      With quarantine that might be harder to do, though. I haven’t gotten on a plane since March, so there’s way less opportunity for me to get value from it, for instance.

      can you feel the struggle within?
    • Options
      manwiththemachinegunmanwiththemachinegun METAL GEAR?! Registered User regular
      edited July 2020
      Marty81 wrote: »
      My allocation is 100% stocks. Not counting contributions, I'm down about 12.5% from the peak.

      I lost a grand on NRGU X3 ETN for oil. Seemed like a decent play for a fast recovery, and I bought in riiiight when it was starting to crash from $7. More than made up for by hanging tough with Nvidia and Amazon. Those two are the gift that keeps on giving.

      I'm looking at the ARK Innovation ETF for disruptive tech which seems cool. I'm already in ACES and BOTZ as well. The way I figure, the earlier I get a position with risk heavy tech, the more I can mitigate any losses while I let the winner keep winning. This will continue until the singularity occurs and I ascend from this plane of existence.

      manwiththemachinegun on
    • Options
      BrainleechBrainleech 機知に富んだコメントはここにあります Registered User regular
      There was a video I saw pop up on youtube but did not watch as I knew the answer
      It was about the rumored stimulus round 2 and how the video questioned why making 200k+ a year was too much to qualify for it

    • Options
      ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
      Brainleech wrote: »
      There was a video I saw pop up on youtube but did not watch as I knew the answer
      It was about the rumored stimulus round 2 and how the video questioned why making 200k+ a year was too much to qualify for it

      definitely sounds like a video not worth watching

      Allegedly a voice of reason.
    • Options
      JeanJean Heartbroken papa bear Gatineau, QuébecRegistered User regular
      I don't understand how my TransUnion credit rating works.

      df804zl9ovqp.png
      (not sure what I did at the end of last year to make it drop)

      The one thing I did differently this month is than I bought AC ($4K) and paid it with my credit card. Usually my montlhy statement is $1k - $1.2k. In June, it was $5.5K. I was able to pay it off in one go because I got reserves but it feels silly to get rewarded with a higher credit score because of that. I don't net 5K a month, spending that much every month would not be sustainable in the long run. That's the part that bothers me in fact, I feel like I'm being encouraged to go in debt...


      "You won't destroy us, You won't destroy our democracy. We are a small but proud nation. No one can bomb us to silence. No one can scare us from being Norway. This evening and tonight, we'll take care of each other. That's what we do best when attacked'' - Jens Stoltenberg
    • Options
      Phoenix-DPhoenix-D Registered User regular
      Credit scores tend to random walk around a bit, I wouldn't read too much into that swing. Mine went from 720-700-716 recently and all I've done is...steadily pay down debt?

    • Options
      QuidQuid Definitely not a banana Registered User regular
      edited July 2020
      Chanus wrote: »
      Brainleech wrote: »
      There was a video I saw pop up on youtube but did not watch as I knew the answer
      It was about the rumored stimulus round 2 and how the video questioned why making 200k+ a year was too much to qualify for it

      definitely sounds like a video not worth watching

      Hell we used a decent chunk of it to help out unemployed nieflings cause we felt guilty since we’re both still getting pay checks, and we’re nowhere near 200k.

      Quid on
    • Options
      JavenJaven Registered User regular
      Jean wrote: »
      I don't understand how my TransUnion credit rating works.

      df804zl9ovqp.png
      (not sure what I did at the end of last year to make it drop)

      The one thing I did differently this month is than I bought AC ($4K) and paid it with my credit card. Usually my montlhy statement is $1k - $1.2k. In June, it was $5.5K. I was able to pay it off in one go because I got reserves but it feels silly to get rewarded with a higher credit score because of that. I don't net 5K a month, spending that much every month would not be sustainable in the long run. That's the part that bothers me in fact, I feel like I'm being encouraged to go in debt...


      A huge factor in your score is % of total debt. Pay that down to below %10 and your score will shoot up substantially.

      After that, any derogatory marks on your credit score will have an impact, and once they fall off will see your score go up by a lot. They can stick around for up to a decade, though.

      Probably the next biggest impact is hard inquiries (so applying for a credit line or loan) and average length of credit history. Hard inquiries have large initial impacts but dull with time, and only stay on your report for a year or so.

      Scores across the different methods (such as equifax) can vary slightly, but mostly stay in the same general ballpark of each other. 860 is extremely good. You should not go into debt. Having a zero balance won't ever hurt your score, but you DO want to utilize your credit occasionally, as having a card that has a zero balance that you literally never use CAN negatively impact your credit if the issuing company just decides to cancel it.

    Sign In or Register to comment.