Comments on: Flexo’s Investment Portfolio, 1Q 2010

By: Financial Uproar

Financial Uproar — Mon, 19 Apr 2010 22:27:15 +0000

Having half of your non-retirement portfolio in your company’s stock seems like a little much, but if you look at your whole portfolio it isn’t that big of a percentage. I’m curious whether you feel comfortable with having that much invested in your employer’s stock and depending on them for a paycheck as well.

By: Investor Junkie

Investor Junkie — Sat, 10 Apr 2010 03:04:32 +0000

It’s pretty safe to say taxes will be higher at least in the next 5-15 years. After this who knows. Who knows if the country will even exist in it’s current form? At least for me I’m not ruling anything out.

The government risk of changing Roth withdrawals is a very real risk. I don’t believe it will be direct tax though. VAT tax is one indirect way. Same could even apply to 401(k) in what can be invested (The idea of your 401(k) must have US bonds has been tossed around in Congress)

What stinks at one point with retirement investing we only had to worry about inflation, return risk and default risk. Questioning the government (tax and rule changes) was really never part of the equation. Now government risk is becoming a larger risk to consider and addition to already complex and messy risk assessment :-( UGH!

If you were really diversified you would have things like commodities and real estate (at least primary residence). Of course primary RE depends upon other personal factors.

By: Flexo

Flexo — Sat, 10 Apr 2010 02:38:01 +0000

I’m trying to remain diversified with my tax situation… part of my 401(k) is characterized as Roth. I don’t know what tax rates will be like 30 years from now. Probably higher, so paying tax now doesn’t hurt. But perhaps the rules will change and we’ll have to pay tax on Roth withdrawals in the future.

Maybe this is the wrong approach and I’m interested in hearing thoughts and opinions.

By: Investor Junkie

Investor Junkie — Sat, 10 Apr 2010 00:39:45 +0000

Ah I understand about the 401k investing and disclosure then. In my case I once worked for a company that had only actively managed, non publicly traded investment options. Returns and expenses were a mess. Got out as soon as I left.

Regarding Roth IRA to the SEP. Shouldn’t you stop putting $5k in your Roth IRA and do the SEP instead since it’s 100% pre-tax? That to me would be a no brainier in our future tax hike environment we are going to see. The Roth IRA would be the last option in filing up.

In my case I don’t have a SEP but I am wanting to invest me money taxable accounts. Though I suspect I’ll be creating a SEP also.

By: Flexo

Flexo — Sat, 10 Apr 2010 00:29:06 +0000

Good questions. The company I work for offers a wide variety of financial services, and that includes group retirement plans. So my company or its affiliates manages the mutual funds available in the 401(k). Some of the funds have discounted management fees, but there’s no option as nice as VTSMX. Most have tickers, but I didn’t include them because I am trying not to disclose the company I work for.

I’m maxing out the 401(k) and the Roth IRA. In a perfect world, I’d be maxing out the SEP IRA as well, but I cut back on that for 2009. I added $5,000 to the SEP IRA for 2009, keeping more cash available for non-retirement endeavors.

By: Investor Junkie

Investor Junkie — Sat, 10 Apr 2010 00:18:53 +0000

Just curious about your company’s 401k funds. Who are the funds managed by and how are the expenses? I see no tickers so I assume they are not publicly traded funds (ack! that spells trouble).

Based upon this do you max out your 401k and then Roth IRA? Or do you just go up to your company’s matching and then max your Roth IRA?

I assume since you now have a SEP IRA you’ll be placing less in your Roth IRA and funneling any money you make directly into the SEP instead?