Author Topic: Investment Order  (Read 37953 times)

arebelspy

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Investment Order
« on: December 08, 2016, 12:53:59 AM »
This thread has the recommended order in which you should invest your money.

1. USA

2. Australia


Anyone from another country (Canada, UK, etc.), willing to step up and create one for your own country, please do so and PM me to get it added!
« Last Edit: May 07, 2017, 11:28:07 PM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

MDM

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Re: Investment Order
« Reply #1 on: December 08, 2016, 10:51:59 AM »
This ordering is appropriate for investors in the US.

It is up to you whether to consider "saving for a house down payment" as a "day to day expense", vs. lumping the down payment savings in with "taxable investments" at the end.

If you are renting, you may not be throwing away as much on rent as you might think.  See            
   http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/         
for some thoughts.            
            
In the lists below, thinking "first your 457 (if you have one), then your 401k and/or 403b" wherever "401k" appears is likely correct -            
   unless your 457 fund options are significantly worse than those in the 401k/403b -         
   due to penalty-free access to 457 funds at retirement, even if younger than 59 1/2.
   "Max _____" means "contribute up to the maximum allowed for _____, subject to your ability to pay day-to-day expenses."            

The benefits of employee stock purchase plans (ESPPs) relative to other opportunities is highly dependent on tax rates, because ESPP benefits all occur in taxable accounts. 
 - For someone paying 15% tax on ordinary income, and 0% on dividends and capital gains, ESPPs can be very favorable, perhaps competing with high interest rate loans in step 2. 
 - For someone paying 25% tax on ordinary income, and 15% on dividends and capital gains, ESPPs are not as favorable, perhaps coming between steps 6 and 7.
         
Differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules).            
            
Current 10-year Treasury note yield is ~2%.  See            
   http://quotes.wsj.com/bond/BX/TMUBMUSD10Y         
            
WHAT            
0. Establish an emergency fund to your satisfaction            
1. Contribute to your 401k up to any company match            
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.            
3. Max HSA             
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level            
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)            
6. Fund a mega backdoor Roth if applicable.         
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.            
8. Invest in a taxable account with any extra.            
            
WHY            
0. Give yourself at least enough buffer to avoid worries about bouncing checks            
1. Company match rates are likely the highest percent return you can get on your money            
2. When the guaranteed return is this high, take it.
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs for that purpose.
    At worst, the HSA behaves much the same as a tIRA after age 65.
4. Rule of thumb: traditional if current federal marginal rate is 25%; Roth if 10% or lower, or if MAGI is too high to deduct a traditional IRA; flip a coin otherwise. 
   See Credits can make Traditional better than Roth for lower incomes and other posts in that thread about some exceptions to the rule.
   See Traditional versus Roth - Bogleheads for even more details and exceptions.  State tax (or lack thereof) should also be considered.
   The 'Calculations' tab in the Case Study Spreadsheet can show marginal rates for savings or withdrawals*.
5. See #4 for choice of traditional or Roth for 401k.  In a 401k there are no income-based limits for deductions or contributions.      
6. Applicability depends on the rules for the specific 401k            
7. Again, take the risk-free return if high enough.  Note that embedded in "high enough" is the assumption that your alternative is "all stocks" or a "fund of funds"
   (e.g., target retirement date) that provides a blend of stock and bond returns.  If you wish to consider separate bond funds, compare the yield on a fund
   with a duration similar to the time remaining on the loan, and put your money toward the one with the higher interest/yield.
8. Because any earnings, even if taxed, will help your FI journey.

Similar to "put on your own oxygen mask before assisting others," you should fund your own retirement before funding 529 or similar plans for children's college costs.

Speaking of things to do first, see Getting started - Bogleheads if this is all new.  Working through that post and the links therein is also a good refresher, even if personal finance isn't completely new to you.

The emergency fund is your "no risk" money.  You might consider one of these online banks:            
   http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001      
               
If your 401k options are poor (i.e., high fund fees) you can check            
   http://forum.mrmoneymustache.com/investor-alley/to-401k-or-not-to-401k-that-is-the-question-43459/         
for some thoughts on "how high is too high?"            
            
Priorities above apply when income is primarily through W-2 earnings.  For those running their own businesses (e.g., rental property owner, small business owner, etc.),            
   putting money into that business might come somewhere before, in parallel with, or after step 5.         
            
Why it is likely better to invest instead of paying a low interest rate mortgage early, if you have a long time until the mortgage is due:            
   http://allfinancialmatters.com/wp-content/uploads/2013/08/SandP500_5-Year_Rolling_Returns_with-CPI_calendar_year.pdf         
   http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html


*Estimating withdrawal tax rates is not an exact science, but here is one approach:
1) Include any guaranteed pension amount that you can't defer in return for higher payments when you do start
2) Take current traditional balance and predict value at retirement (e.g., with Excel's FV function) using a conservative real return, maybe 3% or so.  Take 4% of that value as an annual withdrawal.
3) Take current taxable balance and predict value at retirement (e.g., with Excel's FV function) using a conservative real return, maybe 3% or so.  Take 2% of that value as qualified dividends.
4a) Decide whether SS income should be considered, or whether you will be able to do enough traditional->Roth conversions before taking SS.
4b) Include SS income projections (using today's dollars) if needed from step 4a.
5) Calculate marginal rate using today's tax law on the numbers from step 1-4.
6) Make your traditional vs. Roth decision for this year's contribution
7) Repeat steps 1-6 every year until retirement

The steps above may look complicated at first, but you don't need great precision.  The answer will either be "obvious" or "difficult to choose".  If the latter, it likely won't make much difference which you pick anyway.

Note the possibility of self-defeating predictions:
a) predict high taxable retirement income > contribute to Roth > get low taxable retirement income
b) predict low taxable retirement income > contribute to traditional > get high taxable retirement income

Also, if you pick traditional and that ends up being wrong it will be because you have "too much money" - not the worst problem.
If you pick Roth and that ends up being wrong it will be because you have "too little money" - that can be a real problem.
Thus using traditional is a "safer" choice.
« Last Edit: October 22, 2017, 02:46:41 PM by MDM »

deborah

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Re: Investment Order
« Reply #2 on: December 08, 2016, 03:37:19 PM »
AUSTRALIA

WHAT           
0. Pay the minimum required on all debts.
1. Establish an emergency fund to your satisfaction.  See https://www.bogleheads.org/wiki/Emergency_fund.  Use your mortgage offset account OR use springy debt http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/  .       
2. Pay off any debts with interest rates above your mortgage rate (if you have one)
3. Put money into your PPOR mortgage offset account (if you have one).           
4. If your taxable income is less than $51,021 (before salary sacrifice) consider contributing $1000 per year to superannuation to get the Government co-contribution.
5. Pay off any debts above the return you can get on your investments.
6. If you taxable income is more than $37,000 optimise Salary Sacrifice into Superannuation - you need to work this out individually, because how much depends on at what age you will ER, how much is already inside/outside superannuation, and your marginal tax rate.
7. Invest any extra into low cost index funds (long term investments - 10 years) or high interest accounts (short term - 2 or 3 years).           
           
WHY           
0. Don't get yourself into trouble.           
1. Give yourself at least enough buffer to avoid worries about paying bills.
2.& 3. Because it's untaxed, the effective return on a mortgage offset account is likely to be the highest percent return you can get on your money           
4. When the government is giving you money - take it.
5. It's better to pay off expensive debt than to invest.
6. Salary sacrifice is taxed at 15% as it goes into superannuation and people on low incomes have a lower tax rate. You will need other money to last you between when you retire and when you are eligible for superannuation. However superannuation tax rates are low.           
7. Because earnings, even if taxed, are beneficial. If you are saving for the short term (eg. a house deposit whether PPOR or IP), you want to be absolutely sure that you will get back what you saved, but longer term savings are better off in an index fund.

Note: This assumes that you are employed. If you are a business, make sure that you put the 9.5% superannuation guarantee for yourself because if the business fails, you will at least have that money in old age.
« Last Edit: December 08, 2016, 03:51:47 PM by deborah »

erp

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Re: Investment Order
« Reply #3 on: December 24, 2016, 07:45:19 AM »
CANADA

What:
0: Pay off any high interest debts and establish emergency fund based on your risk tolerance
1: Max out your contributions to your TFSA
2: Contribute to your RRSP (remember that $25,000 can be used for a down payment through the first time home buyer's plan if you have not owned a house in the last 4 or 5 years)
3: Pay off your mortgage and low interest debt
4: Invest in non-registered funds

Why:
0: High interest debt is a huge drag on your money, and you'll be much happier without it. An emergency fund is a fairly personal decision, if you are risk averse or work in a boom/bust industry then a substantial emergency fund can help you sleep at night. If you have a very stable career and are comfortable with 'springy debt' as described in the Australia section you probably don't need much.
1: The TFSA is a pretty amazing investment vehicle, particularly if you're young. You contribute after tax dollars and never pay tax again on the money, regardless of how much it grows. You have the option of withdrawing money and preserving the contribution room in the following year, but withdrawals should be avoided unless there's a really good reason for it (people often invest their mortgage downpayment in their TFSA, which may be appropriate if you're planning on buying 'in a few years').
2: RRSP are a reasonable tax deferred investment vehicle, you don't pay tax (or are refunded taxes if you contribute after tax dollars) on the contributions, but do pay tax when the money is withdrawn. You will pay taxes on the withdrawn money as income, rather than potentially more favourable capital gains and dividend tax rates. In general, the fact that your RRSP can grow for years tax free should balance the potential tax consequences. If you are discovering MMM after working for a few years, you will probably find that you have fairly vast contribution room in your RRSP (it grows at 18% of your salary/yr).
3: Low interest in this context means 'close to or less than the expected return on your investments'. Less debt is pretty great. You may decide to invest in non-registered (taxable) accounts rather than paying off your mortgage at this phase, either way is fine and it will depend primarily on your risk tolerance and what your best guesses are on what your interest rate will be.
4: Shovel money into your taxable accounts. Remember that eligible Canadian dividends are taxed at a preferential rate (as are dividends from VCN or similar index funds), but that this is not true of international dividends.

Possible Variations:
- If your income in retirement is likely to be higher than your working income, you should avoid investing in your RRSP. This is possible if you have a lot of money in your RRSP, a relatively low income and are approaching 71, when you you will be required to start withdrawing a percentage of your RRSP. You can probably avoid this by retiring earlier and drawing down your RRSP in a controlled manner prior to control your taxes.
- If your income is very high, and you expect it to be lower in retirement (eg. you started saving late in life but have a high salary) then it might be optimal to be contributing to your RRSP before your TFSA.
- RRSP income is considered as 'income' for tax purposes, as is your Canadian Pension Plan (CPP).  In a perfect world you'll be able to keep your income below ~ $71,000/yr after you reach 65 years so that you can receive the Old Age Supplement. It's hard to know whether this program will change if you're currently relatively young, but if you're in your 50s then it's worth looking at your taxes pretty carefully to try and make sure you're not inadvertently limiting your wealth by having a suboptimal withdrawal strategy.
- Mortgage choices are pretty personal, and depend a great deal on where you live. Between the TFSA and First Time Home Buyer Plan you should be well on your way to a downpayment if you don't own a house. If a purchase is imminent (6 months or a year?) then you should be invested in something very safe (eg. GICs) or in cash.

jooniFLORisploo

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Re: Investment Order
« Reply #4 on: January 03, 2017, 04:29:06 PM »
re: Canada, and probably other regions, too, I would make the following Step 2.

Find out which accounts offer matching grants from your employer or government, and optimize those. e.g., If you are eligible for the RDisabilitySP, shovel money in there to get $10,500/yr in cash gifts. If you or a child might ever do any version of formal learning after high-school, shovel $5k/yr in there to get $1k (or more) free. Etc.

Eucalyptus

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Re: Investment Order
« Reply #5 on: January 28, 2017, 06:44:44 AM »
re: Canada, and probably other regions, too, I would make the following Step 2.

Find out which accounts offer matching grants from your employer or government, and optimize those.

Agree, this should be clear for most countries.

For Australia, Deborah's list is awesome. Perhaps one thing to highlight along these lines is what to do about any HECS-HELP debt if you have one. Lots of people are often unclear on this. As of 2017, there are no longer bonus % contributions from the federal government for upfront payments. Its also still only indexed to inflation. Also, depending on when you completed your degree, and which field, if you are then employed in that field, for several years you may be eligible for extra free repayments from the gov...you just have to fill out a form each year. Its not insignificant, I think for me in Science I worked out it will save me a few years of repayments. Rates vary depending on field (includes education and nursing also I think). Because of this, it would work out a super dumb move if you are in a qualifying degree+ field to make upfront payments on your HECS-HELP debt....effectively the debt is far below inflation, probably even "backwards" depending on your debt level.

EDIT: It now seems that the HECS-HELP Benefit disappears after this current financial year! Sad :-(

Excellent idea for a thread, by the way!
« Last Edit: March 06, 2017, 05:55:38 PM by Eucalyptus »

Prairie Stash

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Re: Investment Order
« Reply #6 on: March 03, 2017, 01:02:50 PM »
Canada - invest in non registered accounts under certain circumstances first. The correct order depends on income, its not universal.

For example if you earn under $42,000/year in Ontario dividends are taxed at -6.83% (that's a negative tax rate). In Alberta its -0.03%, basically zero. That's a case where non-registered come first (low income spouse scenario).

Low income earners should tackle TFSA/nonregistered while high income earners benefit from RRSP. Eligible dividends are held outside and non-eligible held inside TFSA. That's the basic rule.

Hooray for tax laws ;) Not every Canadian should be following the same order, don't forget to tailor to your own province. It gets more complicated when you add in the clawbacks for children (depends on number and age of kids). there's a $65,000 tax bracket, because of the clawback percentage change, that most people are unaware of. I've used RRSP contributions to increase benefits, in later years I won't get benefits (as kids age), then the allocation shifts again to be optimal.

Well Respected Man

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Re: Investment Order
« Reply #7 on: March 16, 2017, 09:54:07 AM »
This ordering is appropriate for investors in the US.

<snip/>

- For someone paying 25% tax on ordinary income, and 15% on dividends and capital gains, ESPPs are not as favorable, perhaps coming between steps 6 and 7.
         
Differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules).            
            
Current 10-year Treasury note yield is ~2%.  See            
   http://quotes.wsj.com/bond/BX/TMUBMUSD10Y         
            
WHAT            
0. Establish an emergency fund to your satisfaction            
1. Contribute to your 401k up to any company match            
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.            
3. Max HSA             
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level            
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)            
6. Fund mega backdoor Roth if applicable            
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.            
8. Invest in a taxable account with any extra.            
            
<snip/>

I believe the ESPP belongs between 1 and 2, whatever your tax rate. For a typical plan, there is a 15% discount on the purchase price, which over a 6-month offering period with equal contributions each month, is equivalent to 6% per month, or 100% annualized return. That assumes no increase in the stock price. With a look-back period and/or a stock price increase, it can be even more profitable. Even with a decline in stock price, there is usually a 15% discount off the lower price, with some limits on how much you can buy. So, take the free taxable money, sell the stock immediately, and consider it as a pay raise. Then use that money to pay down the debt, max HSA, etc.

Buying and holding ESPP stock for 2+ years is OK, with a lot of downside risk (bad quarter = 25% drop + lose job), and so probably belongs where you suggested, between 6 and 7, or maybe even between 7 and 8.

MDM

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Re: Investment Order
« Reply #8 on: March 16, 2017, 12:32:56 PM »
I believe the ESPP belongs between 1 and 2, whatever your tax rate.
You are correct that if one can swing the cash flow, getting in and out of an ESPP is ~"free money".  But if one has to make a choice between deferring income in a 401k vs. taking the income and using it for an ESPP, it isn't the same.

Assumptions:
- 30% current tax (e.g., 25% federal, 5% state)
- 20% 401k withdrawal tax (e.g., 15% federal, 5% state)
- 5% taxable withdrawal tax (e.g., 0% federal, 5% state)
- 20% tax on dividends in taxable (e.g., 15% federal, 5% state); all dividends reinvested
- total return  of 7%, 5% from growth and 2% from dividends
- 15% "bonus" from ESPP
- 20 years growth

Starting with a $5000 initial pre-tax amount available, one gets the results below, indicating the tax-advantaged account would be better.
ESPP401k
Initial cash50005000
Tax bite-15000
Start35005000
Bonus5250
Bonus tax-157.50
Investment3867.55000
After 20 yrs1388619348
Withdrawal tax3803870
Net spendable1350615479

Growth in the taxable account:
cgt = capital gain tax rate, %5.0%
d = annual dividend rate, %2.0%
g = annual growth excluding dividends, %5.0%
n = years invested, yr20
P = principal invested, $$3,868
t = tax rate on dividends, %20.0%
e = tax-adjusted annual growth, %6.60%
ecgt = tax-adjusted cap. gain tax rate, %3.788%
F = Future, after tax, value $13,506

One could even make the case that if the ESPP can be paid in a single lump sum, and the paperwork takes a few weeks to process, using emergency funds to get a guaranteed 15% for the cost of having a lower e-fund for those few weeks is worthwhile.  But if it's a choice between tax-advantaged vs. ESPP, see the tables above.

Well Respected Man

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Re: Investment Order
« Reply #9 on: March 17, 2017, 04:07:17 PM »
Yes, I guess the ESPP should be considered a cash management tactic to make more money become available for investing, and not an investment strategy in itself.

Heckler

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Re: Investment Order
« Reply #10 on: March 19, 2017, 11:01:28 AM »
Wow, this thread will get confusing with multiple countries posting in random order. 

Arebelspy, can I recommend your first post gets locked and stickied with links to a new thread for each country who is interested before it gets out of hand?  The thread for each country don't need a sticky, as they'd be referred to here with a link.




MustacheAndaHalf

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Re: Investment Order
« Reply #11 on: March 22, 2017, 05:49:16 AM »
I believe the ESPP belongs between 1 and 2, whatever your tax rate. For a typical plan, there is a 15% discount on the purchase price, which over a 6-month offering period with equal contributions each month, is equivalent to 6% per month, or 100% annualized return.
You don't double your money from a 15% discount on ESPP stock purchases.  You save 15%, and your $85 purchase of $100 worth of stock is like a +17.6% gain.  You do not roll over this purchase or multiply it: you have a limit on how much you can buy, and you can't buy more.  Each ESPP purchase is a separate decision, not something that multiplies each month.

Feiread1

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Re: Investment Order
« Reply #12 on: April 02, 2017, 10:01:41 AM »
Need some help here, guys and gals. My income is too high for a deductible IRA. I'm maxing out my pre-tax 401k and using the mega backdoor on after tax 401k contributions up to the 54k limit. Then I've been moving to a taxable account. I haven't put anything into a non-deductible IRA, ever, but reading this through I'm thinking I should be doing that too and using a backdoor roth conversion to get that into my Roth IRA too. Thoughts? Isn't the backdoor and mega back door basically doing the same thing for me in my case? Are there any limits or things I need to consider if using both those options in the same year?

I'm shooting for 75k/yr after tax income in retirement, so I'm not expecting super low or nonexistent federal taxes. Maybe that extra 5k is better off going into a taxable account because 1) both are after tax investments, 2) long term cap gains rate and my fire rate seem like they might be roughly similar, and 3) normal taxable account has no restrictions around withdrawals. That 3rd point, my taxable account, was my plan for covering a good part of my expenses for the years between 'retiring' and reaching 59.5 yrs old. Help!

Feiread1

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Re: Investment Order
« Reply #13 on: April 02, 2017, 10:11:57 AM »
Need some help here, guys and gals. My income is too high for a deductible IRA. I'm maxing out my pre-tax 401k and using the mega backdoor on after tax 401k contributions up to the 54k limit. Then I've been moving to a taxable account. I haven't put anything into a non-deductible IRA, ever, but reading this through I'm thinking I should be doing that too and using a backdoor roth conversion to get that into my Roth IRA too. Thoughts? Isn't the backdoor and mega back door basically doing the same thing for me in my case? Are there any limits or things I need to consider if using both those options in the same year?

I'm shooting for 75k/yr after tax income in retirement, so I'm not expecting super low or nonexistent federal taxes. Maybe that extra 5k is better off going into a taxable account because 1) both are after tax investments, 2) long term cap gains rate and my fire rate seem like they might be roughly similar, and 3) normal taxable account has no restrictions around withdrawals. That 3rd point, my taxable account, was my plan for covering a good part of my expenses for the years between 'retiring' and reaching 59.5 yrs old. Help!

Just re-read my post and to clarify my first question--does that 54k limit for 2017 include the IRA? If that's the case I'm guessing I was right to move to taxable, if not, I'm not so sure...

MDM

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Re: Investment Order
« Reply #14 on: April 02, 2017, 10:24:18 AM »
Just re-read my post and to clarify my first question--does that 54k limit for 2017 include the IRA? If that's the case I'm guessing I was right to move to taxable, if not, I'm not so sure...
No, it doesn't.  401k limits and IRA limits are separate.

Probably better to start a new thread, maybe in "Investor Alley" (or "Case Studies" if you want a full look), if you want to discuss specifics about your individual situation.

Feiread1

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Re: Investment Order
« Reply #15 on: April 02, 2017, 10:39:19 AM »
Just re-read my post and to clarify my first question--does that 54k limit for 2017 include the IRA? If that's the case I'm guessing I was right to move to taxable, if not, I'm not so sure...
No, it doesn't.  401k limits and IRA limits are separate.

Probably better to start a new thread, maybe in "Investor Alley" (or "Case Studies" if you want a full look), if you want to discuss specifics about your individual situation.

Thanks! Just put up a new post on investor alley. Some sites make it seem it's a combined contribution limit for both, but it's not clear.

southpaw328

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Re: Investment Order
« Reply #16 on: April 14, 2017, 12:38:53 PM »

The benefits of employee stock purchase plans (ESPPs) relative to other opportunities is highly dependent on tax rates, because ESPP benefits all occur in taxable accounts. 
 - For someone paying 15% tax on ordinary income, and 0% on dividends and capital gains, ESPPs can be very favorable, perhaps competing with high interest rate loans in step 2. 
 - For someone paying 25% tax on ordinary income, and 15% on dividends and capital gains, ESPPs are not as favorable, perhaps coming between steps 6 and 7.
         


In the 15% tax bracket, the ESPP is favorable to take part of simply to get the discounted stocks, but I should probably be selling and re-investing the money into a Traditional IRA or another taxable account such as my Vanguard indexes or even into my HSA account?

I put 10% of my paycheck toward ESPP and the company makes purchases of stock twice/year. But I have never sold any of the stock, just have it in E-Trade account they setup for me.

MDM

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Re: Investment Order
« Reply #17 on: April 14, 2017, 12:53:26 PM »
In the 15% [any] tax bracket, the ESPP is favorable to take part of simply to get the discounted stocks, but I should probably be selling and re-investing the money into a Traditional IRA or another taxable account such as my Vanguard indexes or even into my HSA account?
As edited, yes.

Jamese20

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Re: Investment Order
« Reply #18 on: April 18, 2017, 11:36:56 AM »
i would love someone from the UK to do this for us UKer's - i am too noobie at the moment for this myself!

hunt2eat

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Re: Investment Order
« Reply #19 on: April 20, 2017, 01:27:59 PM »
This ordering is appropriate for investors in the US.

It is up to you whether to consider "saving for a house down payment" as a "day to day expense", vs. lumping the down payment savings in with "taxable investments" at the end.

If you are renting, you may not be throwing away as much on rent as you might think.  See            
   http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/         
for some thoughts.            
            
In the lists below, thinking "first your 457 (if you have one), then your 401k and/or 403b" wherever "401k" appears is likely correct -            
   unless your 457 fund options are significantly worse than those in the 401k/403b -         
   due to penalty-free access to 457 funds at retirement, even if younger than 59 1/2.
   "Max _____" means "contribute up to the maximum allowed for _____, subject to your ability to pay day-to-day expenses."            

The benefits of employee stock purchase plans (ESPPs) relative to other opportunities is highly dependent on tax rates, because ESPP benefits all occur in taxable accounts. 
 - For someone paying 15% tax on ordinary income, and 0% on dividends and capital gains, ESPPs can be very favorable, perhaps competing with high interest rate loans in step 2. 
 - For someone paying 25% tax on ordinary income, and 15% on dividends and capital gains, ESPPs are not as favorable, perhaps coming between steps 6 and 7.
         
Differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules).            
            
Current 10-year Treasury note yield is ~2%.  See            
   http://quotes.wsj.com/bond/BX/TMUBMUSD10Y         
            
WHAT            
0. Establish an emergency fund to your satisfaction            
1. Contribute to your 401k up to any company match            
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.            
3. Max HSA             
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level            
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)            
6. Fund mega backdoor Roth if applicable            
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.            
8. Invest in a taxable account with any extra.            
            
WHY            
0. Give yourself at least enough buffer to avoid worries about bouncing checks            
1. Company match rates are likely the highest percent return you can get on your money            
2. When the guaranteed return is this high, take it.*
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.            
4. Rule of thumb: traditional if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between.
   See Credits can make Traditional better than Roth for lower incomes and other posts in that thread about some exceptions to the rule.
   See Traditional versus Roth - Bogleheads for even more details and exceptions.
   The 'Calculations' tab in the Case Study Spreadsheet can show marginal rates for savings or withdrawals.
5. See #4 for choice of traditional or Roth for 401k            
6. Applicability depends on the rules for the specific 401k            
7. Again, take the risk-free return if high enough            
8. Because earnings, even if taxed, are beneficial            

Similar to "put on your own oxygen mask before assisting others," you should fund your own retirement before funding 529 or similar plans for children's college costs.

The emergency fund is your "no risk" money.  You might consider one of these online banks:            
   http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001         
               
If your 401k options are poor (i.e., high fund fees) you can check            
   http://forum.mrmoneymustache.com/investor-alley/to-401k-or-not-to-401k-that-is-the-question-43459/         
for some thoughts on "how high is too high?"            
            
Priorities above apply when income is primarily through W-2 earnings.  For those running their own businesses (e.g., rental property owner, small business owner, etc.),            
   putting money into that business might come somewhere before, in parallel with, or after step 5.         
            
Why it is likely better not to pay a low interest rate mortgage early:            
   http://allfinancialmatters.com/wp-content/uploads/2013/08/SandP500_5-Year_Rolling_Returns_with-CPI_calendar_year.pdf         
            
See http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html for some data on historical returns.

If you're going to retire early and do a Roth conversion I would think maxing out 401K and Trad IRA would be the way to go.  Assuming your income lets you.

MDM

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Re: Investment Order
« Reply #20 on: April 20, 2017, 02:00:15 PM »
If you're going to retire early and do a Roth conversion I would think maxing out 401K and Trad IRA would be the way to go.  Assuming your income lets you.
Probably is.  That's what the guidelines suggest, is it not?

Kooljohn

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Re: Investment Order
« Reply #21 on: April 26, 2017, 07:50:24 AM »
Great idea!

Could someone do this for Ireland please????


southpaw328

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Re: Investment Order
« Reply #22 on: April 29, 2017, 10:17:38 PM »
In the 15% [any] tax bracket, the ESPP is favorable to take part of simply to get the discounted stocks, but I should probably be selling and re-investing the money into a Traditional IRA or another taxable account such as my Vanguard indexes or even into my HSA account?
As edited, yes.

Would you elaborate please?

I have heard many different answers. A popular one I don't totally understand is I should hold the stocks for 12 months in order to avoid capital gains taxes (or something?). The other is that I should look at my entire portfolio of net worth and whenever my ESPP/RSU shares exceed 5% of our total stock investments i.e. ~5% of 80% and sell off down to 5%/reinvest into indexes or w/e. The other is to sell them immediately. I don't feel confident in making a decision on it besides continuing to purchase at 10% rate.

MDM

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Re: Investment Order
« Reply #23 on: April 29, 2017, 11:19:28 PM »
In the 15% [any] tax bracket, the ESPP is favorable to take part of simply to get the discounted stocks, but I should probably be selling and re-investing the money into a Traditional IRA or another taxable account such as my Vanguard indexes or even into my HSA account?
As edited, yes.
Would you elaborate please?
I have heard many different answers. A popular one I don't totally understand is I should hold the stocks for 12 months in order to avoid capital gains taxes (or something?). The other is that I should look at my entire portfolio of net worth and whenever my ESPP/RSU shares exceed 5% of our total stock investments i.e. ~5% of 80% and sell off down to 5%/reinvest into indexes or w/e. The other is to sell them immediately. I don't feel confident in making a decision on it besides continuing to purchase at 10% rate.
Here's the short version: provided the employer imposes no restriction on the sale of the stock, you have a guaranteed return on your money so you should participate.

The long version includes whether you should keep or sell the shares, and if selling, when that should happen.  Because there are many variations possible (e.g., for some ESPPs the IRS imposes some consequences for selling quickly), see Employer stock options.  See also espp site:bogleheads.org - Google Search.
If those don't answer your questions (and there is a good chance they will not), please either resurrect the MMM thread for more discussion or start a new thread. 

It's a good question and this was a good place to ask.  To keep the size of this thread manageable, though, it would be good to spin off detailed discussions about specific investment order nuances to other threads - thanks.

Izybat

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Re: Investment Order
« Reply #24 on: May 05, 2017, 05:55:02 PM »
So question on this. In the original list (for the US), it has #4 as an IRA (either traditional or Roth), and #5 as maxing out your 401k. My husband and I make too much money for the traditional IRA to be deductible. I have been working towards maxing out my 401K (not there yet, but getting there), but haven't looked into a Roth IRA. What is the benefit of doing a Roth IRA ahead of maxing out your 401K?

MDM

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Re: Investment Order
« Reply #25 on: May 05, 2017, 09:15:24 PM »
So question on this. In the original list (for the US), it has #4 as an IRA (either traditional or Roth), and #5 as maxing out your 401k. My husband and I make too much money for the traditional IRA to be deductible. I have been working towards maxing out my 401K (not there yet, but getting there), but haven't looked into a Roth IRA. What is the benefit of doing a Roth IRA ahead of maxing out your 401K?
Good question.

For a couple making ~$50K/yr total, the amount available for savings may be limited.  If so, the choice between IRA and 401k (after the match) should be based on which has the better (e.g., lower fee) investment options.  That couple would also be in the 15% bracket, where the choice between traditional and Roth can be a very close call, in which case it could be better to do a Roth IRA instead of a 401k.

Based on "...too much money for the traditional IRA to be deductible" your AGI is at least $99K and both of you have contributions going into a retirement plan at work.  That implies your gross income is at least $99K plus the amount you are already contributing to 401k plans, pre-tax insurance, and any other pre-tax deduction.  You may indeed have some unusual circumstances, but for many that would be enough to maximize both 401ks and IRAs.

runewell

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Re: Investment Order
« Reply #26 on: May 21, 2017, 05:15:56 PM »
I believe the ESPP belongs between 1 and 2, whatever your tax rate.
You are correct that if one can swing the cash flow, getting in and out of an ESPP is ~"free money".  But if one has to make a choice between deferring income in a 401k vs. taking the income and using it for an ESPP, it isn't the same.

Assumptions:
- 30% current tax (e.g., 25% federal, 5% state)
- 20% 401k withdrawal tax (e.g., 15% federal, 5% state)
- 5% taxable withdrawal tax (e.g., 0% federal, 5% state)
- 20% tax on dividends in taxable (e.g., 15% federal, 5% state); all dividends reinvested
- total return  of 7%, 5% from growth and 2% from dividends
- 15% "bonus" from ESPP
- 20 years growth

Starting with a $5000 initial pre-tax amount available, one gets the results below, indicating the tax-advantaged account would be better.

While that scenario is certainly feasible, could you repost using identical 15+5=20% tax rates.  It is clear that you want to reduce your taxable income when in a higher bracket, but I wonder how miniscule the benefit will be when we hold the tax rates equal.  Could do it myself but too lazy.
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

runewell

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Re: Investment Order
« Reply #27 on: May 21, 2017, 05:25:46 PM »
An ESPP is a pretty good investment.  I get a 15% return on my money, assume I sell the stock immediately and pay 20% tax, so I net 12% after taxes.  But I achieved this in six months and as the money is taken out each paycheck, on average the money is only held for three months.  A 12% gain in three months annualizes to a gain of about 50%/yr.  Who wouldn't want that. 

As a side benefit this money ends up in my investment account and pays for our Roth IRA contributions so between the ESPP and my 401k deductions my major retirement contributions come out of my paychecks regularly.
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

southpaw328

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Re: Investment Order
« Reply #28 on: June 06, 2017, 10:25:17 AM »
For California residents where HSAs are not recognized by the state and therefore are treated as taxable accounts on a state level, should HSAs still be maxed so highly on the investment order list?

I just opened an HSA via my employer with Optum Bank. They made their contribution and I made my first. But now that I have learned that CA doesn't recognize it, should I actually go with a Traditional 401k @ Vanguard first?


MDM

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Re: Investment Order
« Reply #29 on: June 06, 2017, 10:54:44 AM »
For California residents where HSAs are not recognized by the state and therefore are treated as taxable accounts on a state level, should HSAs still be maxed so highly on the investment order list?

I just opened an HSA via my employer with Optum Bank. They made their contribution and I made my first. But now that I have learned that CA doesn't recognize it, should I actually go with a Traditional 401k @ Vanguard first?
It's less advantageous than it would be if it were deductible at the state level, but you do avoid all federal tax - both at contribution and at withdrawal - assuming the money can be attributed to medical expenses.   Because federal taxes are usually more onerous than state taxes, the HSA probably remains a better deal.

You could check: what is the after-tax spendable amount for a $1000 contribution if it goes into, grows, and is then withdrawn from
1) an HSA
2) a 401k?

DrF

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Re: Investment Order
« Reply #30 on: June 09, 2017, 08:17:49 AM »
For California residents where HSAs are not recognized by the state and therefore are treated as taxable accounts on a state level, should HSAs still be maxed so highly on the investment order list?

I just opened an HSA via my employer with Optum Bank. They made their contribution and I made my first. But now that I have learned that CA doesn't recognize it, should I actually go with a Traditional 401k @ Vanguard first?

I think you mean traditional IRA?

southpaw328

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Re: Investment Order
« Reply #31 on: June 29, 2017, 12:47:12 PM »
For California residents where HSAs are not recognized by the state and therefore are treated as taxable accounts on a state level, should HSAs still be maxed so highly on the investment order list?

I just opened an HSA via my employer with Optum Bank. They made their contribution and I made my first. But now that I have learned that CA doesn't recognize it, should I actually go with a Traditional 401k @ Vanguard first?

I think you mean traditional IRA?

Yes, I meant Traditional IRA. Thanks.

Kwill

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Re: Investment Order
« Reply #32 on: September 09, 2017, 05:25:23 PM »
i would love someone from the UK to do this for us UKer's - i am too noobie at the moment for this myself!

There's a thread on that now: https://forum.mrmoneymustache.com/uk-tax-discussion/basic-investment-advice-for-uk-beginners/

lax4life93

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Re: Investment Order
« Reply #33 on: September 19, 2017, 03:59:13 PM »
Canada - invest in non registered accounts under certain circumstances first. The correct order depends on income, its not universal.

For example if you earn under $42,000/year in Ontario dividends are taxed at -6.83% (that's a negative tax rate). In Alberta its -0.03%, basically zero. That's a case where non-registered come first (low income spouse scenario).

Low income earners should tackle TFSA/nonregistered while high income earners benefit from RRSP. Eligible dividends are held outside and non-eligible held inside TFSA. That's the basic rule.

Hooray for tax laws ;) Not every Canadian should be following the same order, don't forget to tailor to your own province. It gets more complicated when you add in the clawbacks for children (depends on number and age of kids). there's a $65,000 tax bracket, because of the clawback percentage change, that most people are unaware of. I've used RRSP contributions to increase benefits, in later years I won't get benefits (as kids age), then the allocation shifts again to be optimal.

Prairiestache, do you happen to have a calculator or something you use for this?  We are transitioning from DINK to SI1K and I could really use a tool to play through some scenarios

LadyDividend

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Re: Investment Order
« Reply #34 on: October 31, 2017, 12:29:42 PM »
Canada - invest in non registered accounts under certain circumstances first. The correct order depends on income, its not universal.

For example if you earn under $42,000/year in Ontario dividends are taxed at -6.83% (that's a negative tax rate). In Alberta its -0.03%, basically zero. That's a case where non-registered come first (low income spouse scenario).

Low income earners should tackle TFSA/nonregistered while high income earners benefit from RRSP. Eligible dividends are held outside and non-eligible held inside TFSA. That's the basic rule.

Hooray for tax laws ;) Not every Canadian should be following the same order, don't forget to tailor to your own province. It gets more complicated when you add in the clawbacks for children (depends on number and age of kids). there's a $65,000 tax bracket, because of the clawback percentage change, that most people are unaware of. I've used RRSP contributions to increase benefits, in later years I won't get benefits (as kids age), then the allocation shifts again to be optimal.

I have another point to mention. Almost every year, due to rental income, I owe taxes. So every year I am forced to put a large amount of savings into an RRSP so I can drop my taxable income.... I feels better, for example, to invest $4000 than to pay $1000 in taxes.
Straight, sensible financial and lifestyle talk. From one Lady to you.

http://LadyDividend.com

Aga_RockStar

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Re: Investment Order
« Reply #35 on: October 31, 2017, 03:43:14 PM »
CANADA

What:
0: Pay off any high interest debts and establish emergency fund based on your risk tolerance
1: Max out your contributions to your TFSA
2: Contribute to your RRSP (remember that $25,000 can be used for a down payment through the first time home buyer's plan if you have not owned a house in the last 4 or 5 years)
3: Pay off your mortgage and low interest debt
4: Invest in non-registered funds

Why:
0: High interest debt is a huge drag on your money, and you'll be much happier without it. An emergency fund is a fairly personal decision, if you are risk averse or work in a boom/bust industry then a substantial emergency fund can help you sleep at night. If you have a very stable career and are comfortable with 'springy debt' as described in the Australia section you probably don't need much.
1: The TFSA is a pretty amazing investment vehicle, particularly if you're young. You contribute after tax dollars and never pay tax again on the money, regardless of how much it grows. You have the option of withdrawing money and preserving the contribution room in the following year, but withdrawals should be avoided unless there's a really good reason for it (people often invest their mortgage downpayment in their TFSA, which may be appropriate if you're planning on buying 'in a few years').
2: RRSP are a reasonable tax deferred investment vehicle, you don't pay tax (or are refunded taxes if you contribute after tax dollars) on the contributions, but do pay tax when the money is withdrawn. You will pay taxes on the withdrawn money as income, rather than potentially more favourable capital gains and dividend tax rates. In general, the fact that your RRSP can grow for years tax free should balance the potential tax consequences. If you are discovering MMM after working for a few years, you will probably find that you have fairly vast contribution room in your RRSP (it grows at 18% of your salary/yr).
3: Low interest in this context means 'close to or less than the expected return on your investments'. Less debt is pretty great. You may decide to invest in non-registered (taxable) accounts rather than paying off your mortgage at this phase, either way is fine and it will depend primarily on your risk tolerance and what your best guesses are on what your interest rate will be.
4: Shovel money into your taxable accounts. Remember that eligible Canadian dividends are taxed at a preferential rate (as are dividends from VCN or similar index funds), but that this is not true of international dividends.

Possible Variations:
- If your income in retirement is likely to be higher than your working income, you should avoid investing in your RRSP. This is possible if you have a lot of money in your RRSP, a relatively low income and are approaching 71, when you you will be required to start withdrawing a percentage of your RRSP. You can probably avoid this by retiring earlier and drawing down your RRSP in a controlled manner prior to control your taxes.
- If your income is very high, and you expect it to be lower in retirement (eg. you started saving late in life but have a high salary) then it might be optimal to be contributing to your RRSP before your TFSA.
- RRSP income is considered as 'income' for tax purposes, as is your Canadian Pension Plan (CPP).  In a perfect world you'll be able to keep your income below ~ $71,000/yr after you reach 65 years so that you can receive the Old Age Supplement. It's hard to know whether this program will change if you're currently relatively young, but if you're in your 50s then it's worth looking at your taxes pretty carefully to try and make sure you're not inadvertently limiting your wealth by having a suboptimal withdrawal strategy.
- Mortgage choices are pretty personal and depend on a great deal on where you live. Between the TFSA and First Time Home Buyer Plan you should be well on your way to a downpayment if you don't own a house. If a purchase is imminent (6 months or a year?) then you should be invested in something very safe (eg. GICs) or in cash.


Thank you very much for this information. Could you please advise in regards to investing. Currently, as a family, we are investing in TFSAs only, but this is done through a financial advisor. I realized after reading some of the posts and other blogs that our advisor and investments are very badly managed. I need to find a better service, with lower fees and better management. I am in desperate need of some help and advice on where to go. I don't know much about investing and that is why we had someone to help (we live in Alberta, Canada). Any support would be greatly appreciated. I have lost my job this summer and this prompted me to look at the investment since we could not afford the contributions for now. When I looked, it was such a disappointment and embarrassment on my part, that it is hard for me to deal with. Thank you in advance for any information and guidance.


jooniFLORisploo

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Re: Investment Order
« Reply #36 on: November 01, 2017, 12:13:16 AM »
Aga_Rockstar, many of us follow the simple stuff nicely laid out here:
http://canadiancouchpotato.com/model-portfolios-2/

Personally, I do Option 3. You can select these at TD Direct Investing, RBC Direct Investing, etc.

boarder42

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Re: Investment Order
« Reply #37 on: November 01, 2017, 04:23:32 AM »
For California residents where HSAs are not recognized by the state and therefore are treated as taxable accounts on a state level, should HSAs still be maxed so highly on the investment order list?

I just opened an HSA via my employer with Optum Bank. They made their contribution and I made my first. But now that I have learned that CA doesn't recognize it, should I actually go with a Traditional 401k @ Vanguard first?

I think you mean traditional IRA?

Yes, I meant Traditional IRA. Thanks.

It's unlikely that even without the state tax deduction that the IRA will be better. You have payroll deduction it appears so this will bypass FICA saving you 7.5%. Plus remember all the gains aren't taxed at a federal level when used for healthcare.
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Aga_RockStar

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Re: Investment Order
« Reply #38 on: November 01, 2017, 09:41:36 AM »
Aga_Rockstar, many of us follow the simple stuff nicely laid out here:
http://canadiancouchpotato.com/model-portfolios-2/

Personally, I do Option 3. You can select these at TD Direct Investing, RBC Direct Investing, etc.

Thank you very much!! This a great site! The issue I have, is that I don't know how to decide what is the best for my situation, and my lack of knowledge is embarrassing, to say the least. Even on this site, it does not say what are "small contributions", does this mean $100/month, $1000/month??? Little things like that I have to find out... thank you again, I will start reading the posts to get more clarity and understanding.

jooniFLORisploo

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Re: Investment Order
« Reply #39 on: November 01, 2017, 10:10:14 AM »
Yeah, Aga_Rockstar, there's a bit of a learning curve still, even though it's really nicely laid out. Definitely poke through the site some. Also, I highly recommend the book Millionaire Teacher by Andrew Hallam. He released a new edition January 2017. This really breaks things down nicely.

I would (in this order):
1. Read MT, newest edition
2. Poke through the CCP site for more CCP understanding
3. Ask here if any further questions (you might start a new thread re: 'CCP preparation')
4. Choose one of the three model portfolios

Aga_RockStar

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Re: Investment Order
« Reply #40 on: November 01, 2017, 10:33:52 AM »
Great advice, jooniFLORisploo!! Much appreciated! I am getting this book right now. I am reading Tony Robbins' "Unshakeable", but lots of information is US based. I tried to use the links and they do not have equivalent once for Canada, BUT this book made me review the current investment. As suggested, I might start a new thread... I need to get my questions organized (too many) :). Thank you again.

jooniFLORisploo

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Re: Investment Order
« Reply #41 on: November 01, 2017, 10:37:57 AM »
You're welcome!

When I did my thread to sort out the details, I asked one question at a time. i.e., Posted one question, got it answered thoroughly, posted the next in the same thread, got it answered...  There were maybe 20 distinct questions, starting with things like "is stocks and equity the same thing?", so you can sense my starting point, lol. The community was AWESOME, and this approach really did the trick for me.

It was partway through that thread that I read MT, and that would have saved us all some effort, lol.

Aga_RockStar

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Re: Investment Order
« Reply #42 on: November 16, 2017, 01:56:14 PM »
Hello, here is another question for fellow Canadians (hopefully you are staying warm, it's snowing again here!!) What do you think about Robo-Advisors??? I just learned about this, still reading The Internet :)
here is the site that I have found to be quite useful: https://youngandthrifty.ca/complete-guide-to-canadas-robo-advisors/

Thank you!

boarder42

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Re: Investment Order
« Reply #43 on: November 16, 2017, 02:29:29 PM »
Hello, here is another question for fellow Canadians (hopefully you are staying warm, it's snowing again here!!) What do you think about Robo-Advisors??? I just learned about this, still reading The Internet :)
here is the site that I have found to be quite useful: https://youngandthrifty.ca/complete-guide-to-canadas-robo-advisors/

Thank you!

i dont think its a country specific question - so i'll chime in... robo advisors are decent but will charge you a higher rate than any value they provide.  You're at this site and have passed the pack by getting here.  You should manage the money yourself and you'll save alot of fees over time.
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Aga_RockStar

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Re: Investment Order
« Reply #44 on: November 16, 2017, 03:31:06 PM »
Hello, here is another question for fellow Canadians (hopefully you are staying warm, it's snowing again here!!) What do you think about Robo-Advisors??? I just learned about this, still reading The Internet :)
here is the site that I have found to be quite useful: https://youngandthrifty.ca/complete-guide-to-canadas-robo-advisors/

Thank you!

i dont think its a country specific question - so i'll chime in... robo advisors are decent but will charge you a higher rate than any value they provide.  You're at this site and have passed the pack by getting here.  You should manage the money yourself and you'll save alot of fees over time.

Thank you!! I am still very very new at this :). I am trying to understand and learn on how to actually do it myself, don't feel confident enough yet. BUT i have to move my investments asap, since we are currently with someone that is charging a lot. So I was thinking to get a robo-advisor for now, and continue to gain knowledge until I can just do it myself.

boarder42

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Re: Investment Order
« Reply #45 on: November 16, 2017, 05:02:09 PM »
Hello, here is another question for fellow Canadians (hopefully you are staying warm, it's snowing again here!!) What do you think about Robo-Advisors??? I just learned about this, still reading The Internet :)
here is the site that I have found to be quite useful: https://youngandthrifty.ca/complete-guide-to-canadas-robo-advisors/

Thank you!

i dont think its a country specific question - so i'll chime in... robo advisors are decent but will charge you a higher rate than any value they provide.  You're at this site and have passed the pack by getting here.  You should manage the money yourself and you'll save alot of fees over time.

Thank you!! I am still very very new at this :). I am trying to understand and learn on how to actually do it myself, don't feel confident enough yet. BUT i have to move my investments asap, since we are currently with someone that is charging a lot. So I was thinking to get a robo-advisor for now, and continue to gain knowledge until I can just do it myself.

Maybe someone from Canada will chime in with the equivalent of dump it into vtsax and forget about it but that's what I'd do while I was learning. Not pay higher fees in between.
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jooniFLORisploo

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Re: Investment Order
« Reply #46 on: November 16, 2017, 07:38:08 PM »
Maybe someone from Canada will chime in with the equivalent of dump it into vtsax and forget about it but that's what I'd do while I was learning. Not pay higher fees in between.

+1. If you want to move it ASAP, skip the first few steps presented above, divvy it up per Canadian Couch Potato ETF model, continue learning, adjust if you wish after that. The first few steps are really just so we feel confident in our CCP step! (We should never do anything we are not comfortable and confident doing. But that caution should apply to the costlier roboadvisers just as much as the cheaper CCP option.)