Investing

Invest for Retirement with Robinhood

May 20th, 2019  |  Published in Investing  |  Comments Off on Invest for Retirement with Robinhood

A great way to invest for retirement is to use the Robinhood brokerage app. The app allows you to buy and sell stocks, ETFS, and options from your phone. Although Robinhood does not offer an IRA, they are a great place to invest some of your after-tax funds as they do not charge any commissions.

When you sign up for a free brokerage account with Robinhood through my referral link they will give us both a free share of stock. The stock you receive is chosen at random and will be worth between $2.50 and $200. When I signed up the stock I received was worth about $2.93. The value of the stock you receive will most likely be worth about $2.50, but some people get lucky and get a more valuable stock. According to Robinhood you have a 1 in 250 chance to get a share of Apple, Facebook, or Berkshire Hathaway. That isn’t bad odds for something that will only cost you a few minutes of your time.

Robinhood is an app that allows you to make commission free stock, option, and ETF trades from your phone. They also have a desktop site you can use if you don’t want to use your phone. I was skeptical about buying stocks from my phone, but now that I have been using the app for a while I prefer using my phone and rarely use the desktop site. I like being able to just open the app on my phone and see how my portfolio is doing. Although that does lead to me checking my portfolio way more often than I should.

Of course, if you find the Robinhood brokerage account useful signing up for the free stock is an even better deal. When I signed up, I did it only for the free stock and didn’t have any plans to buy stocks through Robinhood. After selling my free stock and cashing out, I left my account dormant for about a year. Then I decided to take a flyer on the parent company of MoviePass (HMNY) and see if they could recover. That didn’t work out to well. I ended up selling the stock for pennies. I only invested $10 so it wasn’t too big of a loss.Since that purchase I have been buying stocks on a pretty regular basis. My focus is on dividend growth stocks. I’m not sure what return I’ve made on my stocks. They have done pretty well although probably not quite as well as the market overall since it has mostly been a bull market since I’ve started investing in dividend stocks. I’m not too concerned whether my stocks trail the total market a little since this is a small part of my total portfolio. The bulk of my retirement accounts are invested in index funds. I think of investing in these dividend stocks as a profitable hobby that leads to me saving more money than I would otherwise. It allows me to have a little bit of the thrill of gambling but with the odds in my favor.

If you would like to sign up for Robinhood please use my referral link and we will both get a free stock.

Rolling Over a 401k or IRA to a Betterment IRA

March 13th, 2014  |  Published in Investing  |  Comments Off on Rolling Over a 401k or IRA to a Betterment IRA

If you are thinking about rolling over your old 401k to a Betterment IRA to take advantage of their low investment fees the process is pretty simple. They use the direct rollover method to transfer the old 401k to the IRA. For a 401k the first thing you need to do is create an IRA at Betterment if you do not already have an IRA at Betterment.  After you have created your IRA you just need to click on the “Rollover money from an IRA/401k” tab under the gear button on the IRA summary page. Once you click on that you will be prompted to answer a couple of questions and then you will be sent an email with further personalized instructions.

If you want to rollover an existing IRA into your Betterment IRA the process is different, but still pretty simple.  For IRA rollovers, Betterment uses the indirect rollover process rather than the direct rollover process they use for the 401k.  The first thing you need to do is ask your current IRA provider for an early distribution with no withholding.  That way no tax will be withheld from the distribution.  The next thing you need to do is deposit the money from the early distribution in your Betterment IRA within 60 days in order to avoid tax penalties.  To do that you log in, go to the transfer tab, and select “IRA rollover” as the contribution type.  Note that a traditional IRA can only be transferred to a traditional IRA and a Roth IRA can only be transferred to a Roth IRA.  If you have used the indirect rollover process in the previous 12 months you may not be able to use it again to make the transfer to Betterment.  There are a few other special situations to be aware of that you can read about at Betterment before transferring your IRA.

If you would like to open an account with Betterment, be it an IRA account or just a normal investment account, please consider using my referral link.  You will get a $25 bonus for using my link and I’ll get $10 to boot. That is a win-win. Let me know in the comments if you have any questions about Betterment.

Betterment Referral Link

Make Your Own Retirement Target Date Fund

May 7th, 2013  |  Published in Investing  |  Comments Off on Make Your Own Retirement Target Date Fund

You can create your own version of a target date retirement fund with Target Date motifs from Motif Investing.

Target Date motifs are designed to provide you with a disciplined and diversified retirement portfolio that can fit your individual needs. Choose from eight motifs intended to keep your retirement investments allocated properly.

Value. Using ETFs with low expense ratios, Target Date motifs seek to provide steady returns at minimal cost.
Discipline. Target date strategies can provide investors with potential for gains from equities and other high-risk securities, while mitigating potential losses from over-exposure to a single asset class.
Rebalancing. You can choose to follow an annual rebalancing of Target Date motifs to help keep your portfolio moving toward retirement.
Flexibility. As with other motifs, you can easily customize your motif to best suit your own needs.

Detailed Asset Allocation
A key feature of Target Date motifs is the transparency into the security-level asset allocation instead of merely at the asset-class level. This detailed level of allocation allows increased control of the portfolio’s risk profile at every age. Target Date motifs allocate assets across the following securities:

1. Growth-oriented assets

  • US equities
  • International equities

2. Fixed income assets

  • US bonds
  • International bonds
  • Inflation-linked bonds (TIPS)

3. Precious metals

4. T-bills

Beyond Equities
Another key feature of Target Date motifs is the allocation to precious metals such as gold. This exposure to precious metals seeks to provide diversification and a hedge against inflation risk in the face of unprecedented levels of quantitative easing.

From Early Years to Retirement
In the early years, growth-oriented and risky assets make up as much as 75% of the portfolio with the balance allocated to conservative, fixed-income assets.

As you move toward retirement, the allocation to growth assets is gradually reduced in favor of low-risk and conservative assets such as bond ETFs and short-term T-bills. At the target date, growth-oriented assets make up around 25% of the portfolio while fixed-income assets and short-term treasury bills represent 60% and 15%, respectively.

Customers will be informed of the changing allocations and it is up to the customer’s discretion to follow motif rebalances. Just click on the affiliate link below to sign up.

 

American Taxpayer Relief Act – New Dividend and Capital Gains Rates

January 5th, 2013  |  Published in Investing  |  3 Comments

With the passage of the American Taxpayer Relief Act there are new tax rates for capital gains and dividends. Although the new rates are higher they are not nearly as high as they would have been if an agreement had not been reached and the rates were allowed to reset to what they were before the Bush era tax cuts.

The new maximum rate for capital gains and dividends is 20 percent compared to the prior 15 percent maximum rate. The new rate will apply to very few taxpayers though. The new max rate only applies to the extent that income exceeds the thresholds for the new 39.6 percent income tax rate. Those thresholds are set at $400,000 for single filers and $450,000 for joint filers. Qualified dividends will continue to be taxed at capital gains rates for all taxpayers rather than at ordinary income tax rates as would have happened if an agreement had not been reached.

The maximum tax rate for capital gains and dividends for everybody else remains at 15 percent. It is also possible to enjoy a 0 percent rate on capital gains and dividends for income that is below the top of the 15 percent income tax bracket according to a tax tool. The top of the 15 percent tax bracket is projected to be $72,500 for joint filers and $36,250 for single filers according to a report from CCH.

The new tax rates on dividends and capital gains are good news for those who are investing for retirement. For your retirement investments that are not in tax sheltered accounts you will avoid paying the much higher tax rates that would have been enacted if we went off the fiscal cliff. It is still possible that these rates could change again when the debt limit negotiations are held in a couple of months. I doubt the rates would be changed this year though. Hopefully, these favorable tax rates on investments will stay around for a long time, but with the pressure to raise tax revenue it is likely that the government will look at raising tax rates on investments again in the coming years.

Invest with Motifs – $150 Bonus

September 7th, 2012  |  Published in Investing  |  Comments Off on Invest with Motifs – $150 Bonus

Get up to $150 when you start trading at Motif Investing. Learn more.A motif is a carefully researched and intelligently weighted portfolio of up to 30 stocks that reflect real-world trends and investment ideas. Create your own custom retirement motif for just $9.95. They have premade motifs in a variety of categories such as biotech breakthroughs and digital dollars. Select the one that comes closest to what you would like your retirement ETF to be and then you can customize it, their custom tools allow you to add or remove stocks from a motif at no extra cost. You can have up to 30 stocks in a motif. For a limited time you can also receive a $150 bonus when you open a Motif Investing account with at least $2000. You can read some of the bonus details below. For more information about Motif Investing or to open an account just click on one of the affiliate links in this post.

The cash bonus offer applies to new, approved Motif Investing brokerage accounts opened between 9/1/12 and 11/30/12 and funded with at least $2,000. The new funds must be posted to the account within 10 calendar days of account opening, and must remain in the account for 45 calendar days. The total bonus will be based on motif trades made within 45 calendar days of funding, as follows: 1 motif trade will receive $50; 3 motif trades will receive $75; 5 motif trades will receive $150. A motif trade is defined as a completed purchase or sale of a motif for $9.95 commission. Individual stock trades will not be considered as part of this offer. The cash bonus will be credited to the account within 30 days after the end of the 45-calendar-day period.

Create a Custom Retirement ETF for $9.95 + $50 Bonus

August 5th, 2012  |  Published in Investing  |  Comments Off on Create a Custom Retirement ETF for $9.95 + $50 Bonus

Create your own custom retirement motif at for just $9.95 and get a $50 bonus. A motif is a carefully researched and intelligently weighted portfolio of up to 30 stocks that reflect real-world trends and investment ideas. They have premade motifs in a variety of categories such as biotech breakthroughs and digital dollars. Select the one that comes closest to what you would like your retirement ETF to be and then you can customize it, their custom tools allow you to add or remove stocks from a motif at no extra cost. You can have up to 30 stocks in a motif. For a limited time you can also receive a $50 bonus when you open a Motif Investing account with at least $1000. You can read some of the bonus details below. For more information about Motif Investing or to open an account just click on one of the affiliate links in this post.

The $50 cash offer applies to new Motif Investing brokerage accounts opened between 7/16/12 and 8/31/12 and funded with at least $1,000. Each customer may receive only one $50 cash offer for NEW accounts of the same type opened under that customer?s name. A customer may qualify for additional $50 cash offers by opening other new accounts with a completely different registration, such as a joint account with a spouse. This offer is not valid for retirement accounts, such as IRAs, and cannot be combined with any other offers from Motif Investing. The new funds must be posted to the account by 9/7/2012, and must remain in the account for 50 calendar days. The $50 cash offer will be credited to the account within 60 calendar days of receipt of the required minimum funding. For more information on the bonus or to open an account just click on one of the affiliate links in this post.

Should I Choose a SIPP?

August 2nd, 2012  |  Published in Investing  |  Comments Off on Should I Choose a SIPP?

If you’re looking to improve your retirement fund, self-invested personal pensions (SIPPs) are a great choice. They offer both flexibility and a range of investments to really help you secure your financial future.

So, should you choose one? Here we’ve got a rundown of the reasons why it just may work for you.

Tax relief

A SIPP gains tax relief in the same way as other pensions. This means that when you pay money into it, you can gain basic tax relief of 20%. For example, if you were to pay £80 into your pension, the value will be boosted to £100 before costs. This is the case for all the money you earn through your investments within your SIPP. High earners can also be provided with higher tax relief when they complete their tax returns.

Range of investments

SIPP pensions from UK providers offer a vast range of investment options enabling you to build up a substantial portfolio with the potential for very high returns. Choosing a provider that offers a broad range of investments, you’ll be able to grow your retirement pot by investing in unit trusts, investment trusts, Open Ended Investment Companies (OEICs), securities quoted on a recognised stock exchange, government bonds, corporate bonds, warrants, exchange traded funds (EFTs) and exchange traded commodities (amongst others).

The chance to make the important decisions yourself

In order for a SIPP to be legal it has to be administered by an authorised provider in order to gain tax relief from HM Revenue & Customs. The decision on what you buy and sell within your SIPP is purely down to you. Whilst for some this may appear a daunting prospect, for the investment savvy it’s the ideal option to really grow your retirement nest egg. If this sounds like an option that may interest you, you may want to seek the advice of an independent financial adviser (IFA) to see which option would suit you best.

So, will it suit me?

If you’re the kind of person who wants to take full responsibly in how your retirement savings are grown, then a SIPP could well be the perfect option for you. If you want to leave the control more in the hands of a third party, it may be wise to look into other options such as a stakeholder pension.

Setting one up

If this sounds like you, and you can’t wait to get going and planning for your retirement future, there’s never been a better time than now to set up a SIPP.

Picking Funds in a 401(K)

July 17th, 2012  |  Published in Investing  |  1 Comment

You probably have some broadly titled funds in your 401(k). Titles like Small Cap Index or Equity Index or Bond Fund or Balanced Fund and you aren’t exactly sure where to put your money and in what percentages. Fret not, I’ll break it down into easier to understand categories and you can go research which funds fit which strategy.

How you invest in your 401(k) should depend on your age (and your aversion to risk). Investments break down into stocks or bonds, domestic or international. Within stocks you have small cap and blue chip stocks. Stocks are riskier than bonds, international is riskier than domestic, and small cap is riskier than blue chips.

Basically, what you want to think about is that your investment portfolio is like a slider with “risky” on one end and “conservative on the other. As you age, you want to slip that slider from risky towards conservative because you don’t want those hard bumps in the road to derail your trip to a comfortable retirement. You trade off the crazy gains in return for not having the crazy losses.

Now, taking the stocks/bonds, domestic/international, and small cap/large cap spectrums… the following are risky: Stocks, International, Small Cap. The following are conservative: Bonds, Domestic, and Large Cap. Now adjust your holdings so you have the appropriate mix and you’re all set.  These are generalizations and an oversimplification of the element of risk but you get the general idea.

Now… what is the appropriate mix? That’s for another day to discuss but check out the various target-date retirement funds if you want a better idea of what the experts say.

Choosing a Retirement Investment Manager

April 17th, 2012  |  Published in Investing, Retirement  |  3 Comments

The way you have been investing in your retirement account for the last 30 years worked perfectly. Now you have all this cash and the rest of your life ahead of you, but who do you choose to help manage those funds for the next 30 years? A good retirement investment manager will help you watch your funds and investments after you retire.

While your investments were geared for making you money over the long haul, you now need to switch that strategy to help make money in the short term. While past returns are no indication of future performance, many people try to base their decisions on what kinds of returns were done in the past. For instance, if you had an investor who just went with his gut instinct and you made 30% on your investment and you had another investor who knew and understood the markets, guaranteed and produced a 15% return on your investment, which one would you choose?

While that large 30% return looks enticing, the investment manager who went with his gut could have also produced no return, or even worse, lost your money. The 15% return looks less than exciting, but the investment manager knew exactly what he or she was talking about. If they could promise you 40%, you have a good reason to believe that they can get that return the next time. This is why it is more important to base your decision on investment managers who really understand what they are trying to accomplish instead of winging it using past performances.

Here are three qualities many of the Ivy League Endowment investors look for in their investment managers. And if the big boys look for these qualities, it doesn’t hurt for individuals to do the same when it comes to picking out a retirement investment manager:

 

Risk-adjusted returns

These returns must be exceptional. Risk-adjusted returns basically compare the amount of risk used in order to generate the return, which help investors to compare investments as apples to apples. It is basically like the difference in total score and degree of difficulty in a gymnast’s or ice skater’s routine.

Investment rationale

Taking a look at not only how a company is doing financially, but what a company is all about, is a big factor in making investment decisions. Investment rationale is the ability to look past the “hype” and figure out if a company will be around and doing strong for a good number of years.

 

Stickiness

This is where Ivy League investors look at how well investment managers take note of what their clients want and stick to the plan as well as possible. Customer satisfaction is based largely in how well a company sticks a stated investment style and preference.

Keeping these qualities in mind will help individuals looking to find the perfect retirement investment manager. Your retirement is extremely important, so it is imperative that you find someone who knows what they are doing, are able to explain every step of the way, balance risk and return, look beyond the stats, and keep you in their best interest when making decisions. Pick several top choices for your investment manager and sit down with them. Ask them each about their past experiences, but more importantly, ask them how they came to those decisions, because the process matters more than the outcomes.