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Old 04-14-2014, 05:13 PM
 
Location: Great State of Texas
86,093 posts, read 72,575,594 times
Reputation: 27566

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Quote:
Originally Posted by rational1 View Post
> There are still enough financial firms that let you open an IRA with a couple of hundred dollars.

Yes- but are there annual fees?

The thing with a small account is that ANY fees are going to bleed the account.

>I got over 4% return last year with money in a conservative type investment. And here they are tooting their horn at 1.47% ?

ANYBODY can open a 401k retirement account. And it will offer a range of investments- and at the moment anything like a bond yields...essentially zero. MUCH less than 1.47%. AND you need to subtract fees, if any.

Not a very good return- but better than bonds at the moment.
I think you meant that anybody can open an IRA, not 401K.
Forget bonds..this is not a bond market at all.

You can open an AIP account (automatic investment) with several funds.
Here's one for example that I found:

Artisan International
$50/month automatic investment
1.20% expense ratio
Fund returned over 16% over the past 5 years.

Now that is something a young person not making much money can do.
Once they get a sizable balance then do a direct transfer to one of the bigger firms.

That's exactly what I did. I don't even remember the firm/fund I started with but it was AIP for $50 or $100 a month. Then I did a direct transfer to fidelity where their funds are in the range of $1000-$2500 min investment.

ARTIX - Artisan International Fund Investor Class Mutual Fund Quote - CNNMoney.com
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Old 04-14-2014, 05:22 PM
 
Location: Near a river
16,042 posts, read 18,997,544 times
Reputation: 15649
Quote:
Originally Posted by rational1 View Post
> My long-term credit union CDs are doing better than that (2.5%3%). When they mature I'm going to have to rethink.

I was looking at bonds...and the only way right now to get much above zero is to (1) go long (and I expect bond yields to increase in the near future, so this would be a bad idea) or (2) to buy "high yield" corporate bonds- commonly referred to as junk bonds.
My mother used to say pretty soon we're going to be paying the financial institutions to hold our money for us. That would send the rate into the minus zone, lol.
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Old 04-14-2014, 06:40 PM
 
29,812 posts, read 34,900,894 times
Reputation: 11730
Quote:
Originally Posted by newenglandgirl View Post
My mother used to say pretty soon we're going to be paying the financial institutions to hold our money for us. That would send the rate into the minus zone, lol.
Fees aside banks are considering that for a few reasons
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Old 04-14-2014, 08:12 PM
 
48,516 posts, read 84,010,700 times
Reputation: 18050
Quote:
Originally Posted by HappyTexan View Post
I got over 4% return last year with money in a conservative type investment.
And here they are tooting their horn at 1.47% ?

There are still enough financial firms that let you open an IRA with a couple of hundred dollars.
If you're going to do an IRA I wouldn't do it with the FedGov that's for sure.
They are not savvy money managers IMHO
Sounds like SS really. government makes itself the only borrower and pays low rate they set.Likely antheor money in and part out and the rest spent.
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Old 04-15-2014, 01:23 AM
 
1,789 posts, read 1,452,587 times
Reputation: 3680
Quote:
Originally Posted by golfingduo View Post
Unveiled this January in the President's "State of the Union" speech is a new Roth style IRA. .....
Exactly what could be done with this that a regular Roth IRA wouldn't do?

There are several brokerages that offer zero cost, low initial deposit IRAs.

The only reason to spend all the money to set up and run this is to eventually create a new revenue stream for the government. I mean this is exactly how SS was established. A voluntary program that saved for retirement that turned into a mandatory tax and wealth distribution entitlement slush fund for congress. Thats exactly where this is heading.
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Old 04-15-2014, 01:43 AM
 
Location: Stephenville, Texas
957 posts, read 1,446,201 times
Reputation: 1884
Nothing against the idea of a myRA, but I'll just stick to my Roth IRA (and 401k).
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Old 04-15-2014, 01:53 AM
 
Location: Stephenville, Texas
957 posts, read 1,446,201 times
Reputation: 1884
Quote:
Originally Posted by golfingduo View Post
Well in response to your retorical question more years then the low income worker has. Trouble is that they don't save anything as it is. Any step forward is better then the non-step they are making now. I think this is the beginning of the change over from SS to another form of retirement system. "myRA" may not be the final name or the final product but it is a step in a direction.

We know the argument in Congress on this subject. The Republicans want to try to fix it by replacing it with something. Anything is better than what is currently happening is the thought. The Democrats want to fix it by changing the existing system into something else. Anything is better than what is currently happening. Gee it don't take a fortune teller to know that the system will have to change. It also will have to be gradual so that people are not lost in the shuffle.
I guess it depends on how you define "low income worker". I have had low wage jobs for much of my working years, but managed to start putting away contributions in a 401k in 1981 at my first full time job out of college. Obviously I wasn't making enough to "max out" my 401k each year, but even a low-wage employee can fairly easily contribute $2k-3k per year. And many employers provide a company match as well.

The myRA is a small step, but it isn't the total answer to the retirement crisis for most.
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Old 04-15-2014, 08:49 AM
 
Location: Jamestown, NY
7,841 posts, read 7,341,108 times
Reputation: 13779
Quote:
Originally Posted by golfingduo View Post
Well in response to your retorical question more years then the low income worker has. Trouble is that they don't save anything as it is. Any step forward is better then the non-step they are making now. I think this is the beginning of the change over from SS to another form of retirement system. "myRA" may not be the final name or the final product but it is a step in a direction.

We know the argument in Congress on this subject. The Republicans want to try to fix it by replacing it with something. Anything is better than what is currently happening is the thought. The Democrats want to fix it by changing the existing system into something else. Anything is better than what is currently happening. Gee it don't take a fortune teller to know that the system will have to change. It also will have to be gradual so that people are not lost in the shuffle.
The problem is that the low income worker doesn't have the income to save in the first place!!!

A job that pays $12/hour doesn't even gross $25,000 a year ... and that's before payroll taxes which lop off about 8+% off the top.
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Old 04-16-2014, 06:40 AM
 
8,208 posts, read 11,929,872 times
Reputation: 18031
Quote:
Originally Posted by texdav View Post
Sounds like SS really. government makes itself the only borrower and pays low rate they set.Likely antheor money in and part out and the rest spent.
This isn't really correct. The Government doesn't "set" the rate per se on the securities held by Social Security or the TSP's G Fund; the interest rate that is paid uses a formula that is based on the average market yield on regular marketable interest bearing securities that are not due for four years or more. The government does not set the rates on those marketable securities; they are sold at auction. IOW, when market realities force interest rates to rise on 5 year notes, 10 year notes, etc., then the interest rate paid on the special-issue government securities held by Social Security and the Thrift Savings Plan also rise.
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Old 04-16-2014, 07:07 AM
 
29,812 posts, read 34,900,894 times
Reputation: 11730
In what asset allocation world is a 22 year old told to put all of their investments in a fund like the proposed MYra? Talk about a self made wealth gap maker! Does the White House understand diversification and age appropriate investments? Hopefully participants will be encouraged to eventually transfer their assets to normal IRA's.
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