Course of Action - Suggestions

[hope2retire]

Hi,
I am a newbie to this forum and have been reading as much as possible so that I can invest and build my portfolio.

Looking for information on what kind of accounts I have to look into or open. From my limited understanding, i am leaning towards the Vanguard funds VTSMX or VTSAX. My question is, can I take money out of these funds as an when i wish?

Also, what should I do with the shares at the end of the year, hold on to it or liquidate and move it to one of the accounts (if so, retirement or non-retirement taxable accts). I have to plan this because I am not really positive, that the company would out perform these other funds. I buy these shares because i get equal employer match up until certain percentage.

Thanks
hope2retire

[forummm]

If you have a taxable account at Vanguard, you can add and remove money at will. If you take money out they want you to wait 2 months before adding money back to the *same* fund again. But you can add money to a different fund for those 2 months.

But you should also put money in retirement accounts. Those funds should not be removed until you are ready to retire (at whatever age). The advantage is that you cut your taxes by using them. It's a huge benefit. You can more than double what you are putting into your 401k--to $18k per year that you contribute (your employer contributions are on top of that). And you can start an IRA at Vanguard as well, putting in $5500 for you, and $5500 for your wife too each year.

[MDM]

My question is, can I take money out of these funds as an when i wish?

You may withdraw money from a fund such at VTSAX whenever you wish.  At any given time, however, there may not be as much to withdraw as you invested, due to market fluctuations.  As long as you understand that going in....

[Frankies Girl]

And you might also want to rethink the health insurance costing you so much now that the ACA is available. With a family of three, I highly doubt you'd be paying $1100 for silver plan if you lost your job...

Definitely look into the Roth/Traditional IRAs if you don't have an employee-sponsored retirement account. You can add one for you and one for your wife and max them out each year (5500 each/11000 total). You'd likely benefit more from the traditional IRA - as Forumm pointed out, you can get a tax advantage using them.

[hope2retire]

Thanks for the reply guys.

Hi Forummm,
Yeah, I am planning to open a taxable account and have multiple funds in it. Yeah may be i have to consider putting more in the retirement account. currently i am putting the employer+ employee contribution of 7200. i am going to increase the contribution.

Hi MDM, Yeah i am aware of the ups and downs as I constantly monitor my retirement acct from my previous employer parked at a vanguard target fund. Although there is some ups and downs, so far i see a decent return even after I stopped contributing well over 16 months ago. it increased by 13% over 16 months.

Hi Frankies Girl,
i got my health ins through the market place EPA Silver along with vision and dental that was close to ~$1050 in the East coast. Not sure if there are other places i can get decent health insurance. This is one thing I am always worried of as I am the bread winner and i don't want to risk all my savings if anything had to happen and I carried a insurance that would screw me over. Not that the EPA Silver wont, and my current employer based health insurance is a high deductible one. around 7k per family per year. Atleast, on paper it is a decent one. How are all the MMM'ians take care of health insurance? If most of them are on their employer based HI, what about the ones who are retired early like Mr.MM himself. Just wanted to get information so that i could save if possible. I actually contribute around $2300 per year to HSA to offset the high deductible, just in case.

Thanks
hope2retire

[hope2retire]

i modified the initial post to add this question as well
"Also, what should I do with the shares at the end of the year, hold on to it or liquidate and move it to one of the accounts (if so, retirement or non-retirement taxable accts). I have to plan this because I am not really positive, that the company would out perform these other funds. I buy these shares because i get equal employer match up until certain percentage."

Thanks
hope2retire

[hope2retire]

Another quick question, If I open a taxable account with these funds, will it be taxable at the time of withdrawal or do I have to include them in my annual tax return filing?

Thanks

[2Birds1Stone]

Don't forget we have experienced one ofthe longest bull runs in history the past 6 years.

Assess your risk tolerance accordingly.....

[Frankies Girl]

Another quick question, If I open a taxable account with these funds, will it be taxable at the time of withdrawal or do I have to include them in my annual tax return filing?

Thanks

You'll be required to report on your taxes any dividends generated each year (and most funds generate some sort of dividends) so that's why you want to check carefully about what sort of funds are held in a taxable account and make sure they are very tax efficient - generally no bonds since they have dividends every month.

http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

Capital gains are only created if you sell funds (short term cap gains if selling off in less than 1 year and they are higher than long term cap gains). You should only be paying taxes on the dividends/cap gains if you are above the 15% taxable bracket.

[hope2retire]

Thank You Frankies Girl.
So the best way is to open an account directly at Vanguard or at other places like where I bank (chase, wellsfargo etc) or through betterment or wealthfront. Which one is cheap and best?

Thanks in advance
hope2retire

[MDM]

So the best way is to open an account directly at Vanguard or at other places like where I bank (chase, wellsfargo etc) or through betterment or wealthfront. Which one is cheap and best?

From those options: Vanguard.

[hope2retire]

Thank You for the reply. I am going to open one at vanguard

Hope2retire

[hope2retire]

Signed up with vanguard and Bought VTSMX with minimum of $3000. Will keep adding over time. VTSAX seem to have $10000 as the minimum. Planning to get that over time.

Hope2retire

[MDM]

Signed up with vanguard and Bought VTSMX with minimum of $3000. Will keep adding over time. VTSAX seem to have $10000 as the minimum. Planning to get that over time.

Way to go!  Congratulations on taking good action.

[hope2retire]

Thanks MDM!

[hope2retire]

Hi All,
Purchased $10k worth of VTSAX today.  Will the purchase price be that of today's or when the actual money is transferred from my bank account? Any Idea?

Thanks
H2R