I already reported him. I just hope Italian doesn't go and invest all his money with him before his post is deleted.

I'm not sure this is proper thread for this ?, but I don't really know where else to put it. Any thoughts about using Ally (or a different online bank?) to hold my emergency fund? I had a 9 month emergency fund that I kept in my checking account (lol) and as you can logically deduce it has been diminished to a 4 month emergency fund.

I'm obviously looking to separate it from my living capital, but there are just so many banks to choose from and reading through thousands customer reviews is pretty meh. Also I'm pretty new to the online bank thing, are they safe/reliable?

I use Ally for my EF. They're fine. Actually, I keep about two months in my local bank savings account where I also have a checking account. I then put the rest in Ally. I keep a 2-3 months in their online savings and then split the rest up into CDs. They have a really good early withdrawal penalty. They only charge 2 months interest, so I feel pretty comfortable putting 3-5 months of expenses into CDs to get better returns. It's highly unlikely I'll ever need more than the 4-5 months of expenses I have in my local savings and online savings anyway.

And, yes, online banks are FDIC and all that. No worries there.

many people use this to compare rates:

http://www.depositaccounts.com/

make sure the bank is fdic insured and you'll probably be fine. i don't use ally (currently, though i would consider it) but do use a different online bank.

fwiw, this:

is not funny, but a serious leak in your financial behavior. i would look into understanding and correcting this problem before you do anything else.

Thank you for the info. I was looking at their early withdraw penalty on CD's and it is pretty exceptional. I was considering putting at least half of my emergency fund (2 months) into CD's.

Thanks for the link Tyler.


I know, and I feel pretty crappy about it. This is the main reason I'm looking to move it to an online bank. Having money that is available to withdraw via a debit card was killer. The money just kind of just flows in and out quickly before you even realize what you've spent the money on. I rather make this mistake now at 26 and learn from it while I am able to withstand more variance in my life (parent help, no dependents) than when I am 50 and the consequences of being reckless are more severe.

I am thinking about investing around 100k into index funds, and ive been told world stock funds would suit me best. Im willing to let this money grow for 10+ years as I already have bankroll, emergency fund and real estate to my net worth. My issue is I'm french living in Vietnam so its unclear to me how I can make this type of investment. Are there any kind of 'international' and reliable online banks that would allow me to invest money like this easily? I know the advice on this forum is mostly US residents oriented but are there any Vanguard type of stuff available for foreigners and non US residents?

Is the money in Euros? Are you planning on returning to France? If so, I would contact financial services companies in France about this. I have to believe it would be easier to keep the money in euros and in France that getting all froggy with it.

Sorry couldn't resist. J'adore la France et j'ai habite a Paris deux fois. Bonne chance.

Most of my available cash is in euros (but quite easily convertible to USD if need be) but Ive been out of the country for 4 yrs and dont plan on coming back to france anytime soon. Also about 2/3 of my networth is in france already and its quite hard to transfer money from vietnam to france (all of my poker cashouts are paid in euros in vietnam but I get like 0.25% a year there), plus poker money is kind of a grey area in france atm, plus financial products are quite heavily taxed in france. Thats a lot of plus so I would like to find something more 'international' (if that makes any sense) and with lower fees/taxes.
Thanks for any advice

Where do you see yourself living permanently?

Country you live in: USA

Income: ~50K

Risk Tolerance: High

Time frame for investment: This is all retirement (I'm 23) so long term

Debt: None

Any other information you might have that would help us

Currently have 26.5K in a roth IRA at vanguard, 70% total stock market and 30% total international stock market.

Also have 4300 in a 401k which is 34% S&P500, 33% random small cap active fund and 33% random mid cap active fund.

I want to to be something like 85/15 stock:bonds and 30% of stocks in international. My 401k options are ****ty and the only index fund is S&P500. I'm thinking 100% of 401k in S&P500, and then buy S&P500 and extended stock market at vanguard to give me total stock market. I'm not adding any money to my roth this year but contribute 15% to my 401k (there is a 25% match). How important is the ratio of S&P500 to extended stock market? My understanding is it should be about 4:1 to get you to total stock market?

What would you recommend for the bond component? Is total bond market the way to go here or are other options preferable? Keep in mind that 15% of my current portfolio is only ~$4,600 so I'm limited by minimum investments with a lot of vanguard funds.

Thanks!

Total Bond Fund is pretty standard. And, yes, 4:1 is about right.

I am probably being a nit here, but 15% bonds seems too conservative for someone your age. Vanguard has plenty of bond funds that have a $3,000 minimum which I think would be more appropriate for someone with your risk tolerance.

Honestly, anywhere from 10-20% bonds seems about right for a 23yo. In the end, the difference is going to be insignificant.

for ratios:
http://www.bogleheads.org/wiki/Appro...l_Stock_Market

how important is it? not all that important. s&p 500 is the lion's share of TSM, so even 0% extended wouldn't be the end of the world. however, i like the risk/reward profile that is captured by small caps, so i might even overweight extended a bit. as long as you're in the ballpark you should be ok.

TBM is the standard and simple advice. i own it (via FSTVX).

if you'd like to hold TBM, hold it in your Roth. 4600 is above the minimum for vanguard's tbm.

you could also hold I Bonds, which come with built-in tax advantages and don't need tax-advantaged space. i'd focus on the Roth and 401k first though.

cohiba,

the modern rule of thumb seems to be around Age to Age-10 in bonds, so op is in a reasonable range. i agree 85% stocks is aggressive and only appropriate for someone with a long investment horizon, high risk tolerance, and who won't sweat at all about holding and rebalancing through a 2008-esque crash.

there are some authors/theorists who state that bond percentage should never be less than 20-25%. usually this has to do with the Efficient Frontier (i.e. you are not appropriately compensated for the riskiness of holding more than about 80% stock).

I dont see myself living permanently anywhere anytime soon, thats why am looking for the type of investments where the place of residence is more or less irrelevant, if there are any.

Age: 27
Country: USA
Income (2): ~$170K base
Expenses: low ~$3k/mo

401K's/Roths: ~$125K (max out Roths annually, 10% 401k deferral)
Cash: ~$140K
Debt: $0

time frame to invest: medium
risk tolerance: medium/high

I've recently opened a brokerage account in an attempt to invest some of the extra cash sitting in my bank account.

Q's:

1) Should I just load up my 401K's with the extra cash? Basically where do you guys put money next if you are satisfied with where your retirement accounts are at?

2) My retirement accounts are pretty equity based (About 75/15/10 equity/fixed/other). Is it even worth it to purchase fixed income right now when interest rates are so low?

i would max out tax advantaged space before doing anything else, especially at your income level.

when i am satisfied with my retirement accounts, i will retire!

10% "other"?

your question about FI is hot right now so we could get into a long discussion, but the short answer is: yes. you are buying FI because that's what your asset allocation tells you to do. anything else is market timing and wrong-headed. remember that being well-diversified means some assets will do poorly at any given time.

that said, some folks are moving to fixed income vehicles with less interest-rate risk: I Bonds, CDs, short-term treasuries and bond funds. my timeline is long so i continue to buy Total Bond Market (and i bonds) and not worry about it.

Also, keep in mind that Total Bond Fund is an intermediate fund. The duration is 5 years. So for every one percent rates go up the fund will lose 5 percent in capital. If rates go up to a more normal environment (say 5% for a 10 year note from the current 2.60%), then you're looking at a total loss in your depreciation of about 12%, but you'll make up for that in 5 years because of the higher yield. That's not exactly devastating or anything and you will make your money back if you hold for the length of the duration.

this isn't *quite* correct because there could be multiple rate hikes and bond funds are rolling ladders.

this is a nitty point but as i alluded, i've read quite a bit about this in the past few months .

I know it's not precisely correct, but it is pretty close to accurate, right? According to the boglehead wiki, duration is the "point of indifference" to increasing rates. Of course, you have to notionally think of it as rolling as if you bought a bond fund new every day, etc.

btw, here is a thread started on the topic in bogleheads:

http://www.bogleheads.org/forum/view...=unread#unread

yeah, that thread illustrates what you were saying. but note that he has to make the simplifying assumption that there is only one rate hike.

consider his example, but the interest rate goes up another 1% one year into your original 5 year (== duration) holding period.

no increase: 1000 + (.02 * 1000) * 5 = 1100
one 1% increase: 950 + (.03 * 950) * 5 = 1092.5
one 1% increase then another: 900 + (.03 * 950) + (.04 * 900) * 4 = 1072.5

you said "you will get your money back if", and i'm sensitive to claims like those. so yes, mostly correct, but not quite .

a better illustration of my point:

http://www.bogleheads.org/forum/view...=unread#unread

Thanks. I just don't understand why so many definitions of duration refer to the point of indifference, since it is apparently not accurate. Serious question. I don't get it.

i guess because it's the only reasonable way to do it? what other mental model could we use to explain the relationship between bonds, duration, par value, and interest rates?