Credit cards, savings accounts, CDs…

[Royale with Cheese]

5 minutes ago, Jauronimo said:

Fees are usually based on a % of assets invested and range from 0% to 2% depending on style of management (Active vs passive).  What does $1,250 get you? Sounds like a newsletter with their picks.

 

I am not sure exactly what it gets me.  They are going to go over the agreement with me next week.  I've never worked with Financial Investors before so I have no idea what a typical process is....or if I'm being taken advantage of.

[Jauronimo]

3 minutes ago, Royale with Cheese said:

 

So essentially, long term investing is probably the best and smartest path?

Basically, unless you want to bank on luck or make picking stocks your full time pursuit.  

 

If you want to treat the $16k like a scratch off ticket then you could pick a stock or 2 or throw it into bitcoin/crypto.  I have done things like that with old 401k funds.  Every time I open that account I can't help but think that I would be a little happier had I just stuck the money I earned into something sensible.  

 

Anybody with fiduciary responsibility is unlikely to be suggesting stocks to you that will be a short term moonshot with extreme risk of bust, I would think.

[Orlando Buffalo]

1 hour ago, Royale with Cheese said:

I have an investment question for those who might know.  @Augie I think this is your field.

 

So I have a Traditional IRA account that I completely forgot.   My first job in 2008 is when I opened it because that company didn't have a 401K.

I got a letter in the mail that my account was moved and currently has roughly $16,000 in it.

 

I have a 401K now so I'm not really concerned with this IRA account...I view it as house money.  

 

I'm thinking about cashing this out and use it to invest...aggressively invest in something like stocks.  I believe I would have a 10% penalty along with my tax bracket....I'm probably looking around a total of 40% hit?  So roughly $10,000 after all this?

 

I'm not cashing this out to buy a car or anything like that....I would use it to invest.

 

Anyone have thoughts on this?  

 

Some of this has to do with your age and how confident you are in high growth. The next decade is likely to be high inflation, so how much you grow is important. Losing 40% though is a lot and unlikely to be gained back unless you hit a home run each of the next set of years 

[Royale with Cheese]

3 minutes ago, Orlando Tim said:

Some of this has to do with your age and how confident you are in high growth. The next decade is likely to be high inflation, so how much you grow is important. Losing 40% though is a lot and unlikely to be gained back unless you hit a home run each of the next set of years 

 

You hit the nail here.

[Orlando Buffalo]

I am wondering at what dollar amount does it make sense to move money from a 401k to a ln active money manager? My 401k has very low fees but the returns are always with 2% of the overall market. Is the right time at $100k $250k or is it more like a $1million

[Jauronimo]

2 minutes ago, Royale with Cheese said:

 

I am not sure exactly what it gets me.  They are going to go over the agreement with me next week.  I've never worked with Financial Investors before so I have no idea what a typical process is....or if I'm being taken advantage of.

Take the meeting and come back and share some details.  It never hurts to talk. 

 

Most asset managers for us regular people require initial investments of around $50k, charge between 0.1% and 2% depending on how active they trade and that percentage trends down until your total assets are over $500k or so.  These managers put your money into funds or often funds-of-funds depending on your goals, future cash needs, and overall risk tolerance.  

 

It sounds like the guys you're talking to have a subscription service for stock tips or strategies but you still manage your own money.  If this is a couple of guys with a Discord server or a website called UltraCalls, be very wary.  Lots of pump and dump schemes out there promising huge returns.  If they say anything about penny stocks, run for the nearest exit.

[Captain_Quint]

Just cashed in $500 of cash back money, and the bank gave me a 50% bonus so I got $750. Most big banks have this if you keep some money with them and have a cash rewards credit card. 3%/2%/1% card. 

[Royale with Cheese]

27 minutes ago, Jauronimo said:

Take the meeting and come back and share some details.  It never hurts to talk. 

 

Most asset managers for us regular people require initial investments of around $50k, charge between 0.1% and 2% depending on how active they trade and that percentage trends down until your total assets are over $500k or so.  These managers put your money into funds or often funds-of-funds depending on your goals, future cash needs, and overall risk tolerance.  

 

It sounds like the guys you're talking to have a subscription service for stock tips or strategies but you still manage your own money.  If this is a couple of guys with a Discord server or a website called UltraCalls, be very wary.  Lots of pump and dump schemes out there promising huge returns.  If they say anything about penny stocks, run for the nearest exit.

 

I will definitely follow up.

 

I appreciate the responses.  I've been mostly saving for the last 5 or so years and now I'm ready to invest and need to do this smart.

[Royale with Cheese]

Ally Bank has a 4% yield right now on their money market.  I'm going to move a good amount of money in there and keep contributing to it.

[Motorin']

Through my investment platform I see a number of the regional banks putting out 1 month cd's for close to 5%. On the one hand, they have to be cash starved and may be close to going under. On the other, it's FDIC insured. 

[Augie]

1 hour ago, Royale with Cheese said:

Ally Bank has a 4% yield right now on their money market.  I'm going to move a good amount of money in there and keep contributing to it.

 

You are young(ish)! Time is on your side. The best advice I can give to young people is do not wait. Start socking it away ASAP and let it work for you. Max out the 401k, get as much company match as you can, put money away on a regular basis and let time work for you. 

[Beck Water]

On 4/24/2023 at 9:44 AM, SDS said:

I think you misunderstood the question. I’m really talking about the different products that are out there now and if people are starting to take advantage of them. 

 

Capital one 360 performance savings account offers a 3.5% rate. Wells Fargo active cash card gives 2% back on everything, however that companies full of thieves. CIT offer is a 5% six month CD. 
 

This could mean real money compared to the 0.1% types of rates we have been getting for 10 years.

 

We have a Barclays savings account that now pays 4%.  Transfers to and from other bank accounts free.

Mom has Synchrony, 4.15%.  She likes it because they send her a paper statement and she can bank by phone.

Kid has Ally, 3.75%.  She likes it because it lets her organize her deposits into "buckets" for different goals

 

We have respectively had these accounts for years because they consistently offer some of the best interest rates.

 

Vanguard has a federal money market fund which is currently paying 4.95% with a 0.11% expense ratio VMFXX.  They also have a variety of short-term CDs with good interest rates.

 

For longer term, a US I-bond might be worth looking at, depending upon your desire for liquidity and cash reserves.  6.89%

 

We have a Fidelity VISA card that pays 2% cash back on all purchases.  No annual fee, have had for years, cash goes into my brokerage account.  Use it to pay for everything that doesn't charge an extra fee for credit card payment except travel, it has a foreign transaction fee so we have a 0 foreign transaction fee card for that.  Knock wood no problems with disputes etc.  Have never had a balance.

 

HTH

 

I did a bunch of modeling when we were contemplating retirement, and getting even 1-2% interest on cash reserves made a significant difference to our success probability (this probably depends upon how much cash reserve your personal risk tolerance chooses)

 

We used to have a Kasasa account - moved twice, just recently gave it up.  For those who don't know, Kasasa checking (and linked savings if applicable) pay higher interest if you meet certain criteria.  We shopped for best interest and lowest criteria.  It was a way to get 2-3% interest on a portion of our cash when everyplace else was 0.11% (also Barclays was 1% then).  But, it's now not competitive for interest so not worth the PITA of meeting their criteria.

 

[Beck Water]

On 4/24/2023 at 3:15 PM, ICanSleepWhenI'mDead said:

Flat 2% back on all purchases with no annual fee:

 

https://www.nerdwallet.com/reviews/credit-cards/fidelity-rewards

 

You can set up a Fidelity "cash management account" to accept the 2% cash back each month.  The cash back money doesn't need to stay in that account for any specific length of time.  You can set it up so that you can make an online transfer from the Fidelity "cash management account" to your checking account at any bank you choose whenever you want.

 

This is what we have.   4 1/2 stars, recommend.  the 1/2 star off is that it has foreign transaction fees, so I have a Costco visa card to buy gas, stuff at Costco, and travel.

[Beck Water]

5 hours ago, Royale with Cheese said:

I have an investment question for those who might know.  @Augie I think this is your field.

 

So I have a Traditional IRA account that I completely forgot.   My first job in 2008 is when I opened it because that company didn't have a 401K.

I got a letter in the mail that my account was moved and currently has roughly $16,000 in it.

 

I have a 401K now so I'm not really concerned with this IRA account...I view it as house money.  

 

I'm thinking about cashing this out and use it to invest...aggressively invest in something like stocks.  I believe I would have a 10% penalty along with my tax bracket....I'm probably looking around a total of 40% hit?  So roughly $10,000 after all this?

 

I'm not cashing this out to buy a car or anything like that....I would use it to invest.

 

Anyone have thoughts on this?  

 

 

So since this is just 5 hrs ago....my $0.02 is if your need for the money is low enough that you can play, don't take the 10% penalty and pay taxes on it.

Instead, look into a self-directed IRA.  If it's beneficial to you to pay taxes at your current bracket, convert it to a Roth IRA and continue to let earnings grow tax free. 

Whoever is managing your 401(k) may have low-fee investment self-directed IRA you could roll it into if you want to segregate the money - that could be your most cost-effective bet and worth looking into.

You might also be able to just roll your IRA into your 401(k), if it has favorable fees and investment options.  At my former employer, we had the option to open an individual investment account as part of our IRA.  We could use it to self-direct our 401(k) contributions into a wider variety of funds, individual stocks, etc. 

 

If your work 401(k) charges too much in fees, consider a Vanguard IRA.  They've been pretty good to work with (knock wood) and the fees are nice and low.  Some studies hold that the best prediction on ROI for mutual funds is low fees.  I'm an "efficient market", Bogle-type investor myself.

 

HTH.  I ain't an investment champ, but we did both retire age 55.
 

[Royale with Cheese]

1 hour ago, Beck Water said:

 

So since this is just 5 hrs ago....my $0.02 is if your need for the money is low enough that you can play, don't take the 10% penalty and pay taxes on it.

Instead, look into a self-directed IRA.  If it's beneficial to you to pay taxes at your current bracket, convert it to a Roth IRA and continue to let earnings grow tax free. 

Whoever is managing your 401(k) may have low-fee investment self-directed IRA you could roll it into if you want to segregate the money - that could be your most cost-effective bet and worth looking into.

You might also be able to just roll your IRA into your 401(k), if it has favorable fees and investment options.  At my former employer, we had the option to open an individual investment account as part of our IRA.  We could use it to self-direct our 401(k) contributions into a wider variety of funds, individual stocks, etc. 

 

If your work 401(k) charges too much in fees, consider a Vanguard IRA.  They've been pretty good to work with (knock wood) and the fees are nice and low.  Some studies hold that the best prediction on ROI for mutual funds is low fees.  I'm an "efficient market", Bogle-type investor myself.

 

HTH.  I ain't an investment champ, but we did both retire age 55.
 

 

That's my goal!

[Augie]

1 hour ago, Beck Water said:

 

So since this is just 5 hrs ago....my $0.02 is if your need for the money is low enough that you can play, don't take the 10% penalty and pay taxes on it.

Instead, look into a self-directed IRA.  If it's beneficial to you to pay taxes at your current bracket, convert it to a Roth IRA and continue to let earnings grow tax free. 

Whoever is managing your 401(k) may have low-fee investment self-directed IRA you could roll it into if you want to segregate the money - that could be your most cost-effective bet and worth looking into.

You might also be able to just roll your IRA into your 401(k), if it has favorable fees and investment options.  At my former employer, we had the option to open an individual investment account as part of our IRA.  We could use it to self-direct our 401(k) contributions into a wider variety of funds, individual stocks, etc. 

 

If your work 401(k) charges too much in fees, consider a Vanguard IRA.  They've been pretty good to work with (knock wood) and the fees are nice and low.  Some studies hold that the best prediction on ROI for mutual funds is low fees.  I'm an "efficient market", Bogle-type investor myself.

 

HTH.  I ain't an investment champ, but we did both retire age 55.
 

 

I guess the rollover talk made me think of this, but……I worked early on for a bunch of community banks, and we just kept getting bought. After one merger I tried to take control of my retirement account, but they refused because it was over $10k with that bank. They said anything over $10k they have to keep and manage. Oh well, I didn’t fight too hard, it was the rule. A couple months later they get back to me and say they have been managing my money, and I can now have the account since they got it down below $10k. Gee! THANKS!  😂 

 

I also retired in my mid 50’s, but not because we are investment gurus. I came to Atlanta kicking and screaming but the wife and son have good jobs here. The types of jobs that are not available in smaller markets. Fortunately, the wife is really good at what she does and she’s not ready to retire. She says she’s afraid of running out of money one day. I think she would have no idea what to do with herself if she retired. Not everybody is cut out to be the sloth that comes so naturally to me!