Fearless Money » Retirement

ETF Performance

Bruce Kroeze — Sun, 24 Dec 2006 08:52:18 +0000

I continue to be astounded at how well the ETFs I bought for my IRA this this summer are performing.

I thought they’d be good

I was sure they’d do well, I just didn’t know I’d see this kind of result so quickly.

FXI: Up 33.58%
EWW: Up 22.54%
IVE: Up 11.35% (it is my “conservative one”)

Technorati Tags: IVE, FXI, EWW, investing

Loving those Foreign ETFs

Bruce Kroeze — Tue, 14 Nov 2006 03:49:50 +0000

Wow, the ETFs I purchased in my rollover IRA this summer are spanking the market.

FXI: Up 18.2%
EWW: Up 20.52%
IVE: Up 9.62%

Total percent increase, corrected for my share allocation: $15.93%, approximately 60% annualized. Sweet.

Technorati Tags: eww, fxi, ira, investments

New IRA Investments, IVE, FXI, EWW

Bruce Kroeze — Wed, 09 Aug 2006 03:56:37 +0000

A couple weeks ago, my rollover transfer from my last employer’s 401K to a dedicated IRA finally completed. For some reason, we had to do it via check, so it was much more time consuming and laborious than it needed to be.

I’ve decided to allocate this money in a very aggressive way. One-third to an in-country (U.S.) value stock ETF and two-thirds to out-of-country index ETFs. I am not optimistic about the growth of the U.S. economy, but I don’t necessarily think it is going to go into the tank. I simply think that out-country investments are likely to out perform the U.S. for at least the next 4-6 years.

My choices:

IVE – iShares S&P 500 Value Index. It focuses on S&P stocks that have the lowest price-to-book rations.
FXI – iShares FTSE/Xinhua China 25 Index. A simple index fund which tracks the major China index. It’s gotten less popular recently, but I think it is an incredible long-term purchase (and it is still up, despite losing popularity).
EWW – iShares MSCI Mexico Index. This index fund tracks a major index in Mexico, and it has been an incredible performer. With the conservative win in the recent elections, it has rebounded nicely after the dip due to the uncertainty. Luckily I guessed it would and bought in the dip.

Technorati Tags: ira, investments, fxi, ive, eww

Open a college savings account anyway

Bruce Kroeze — Thu, 27 Apr 2006 14:40:48 +0000

I changed my mind and opened college accounts for each of my three kids. Up to now, I’ve been thinking that I shouldn’t do that until I was already maximizing my contributions to every tax advantaged retirement account. The idea there is that people will always loan money for school, but no one will loan money for retirement.

I still think that is a very rational and reasonable stance. However, it misses one key point. Your relatives aren’t going to subsidize your retirement, but they probably will help with college. Naturally, they don’t want to just hand you the money either, they want it to go into a college savings account.

Solution, a "429 plan"

According to CollegeSavings.org:

Most Section 529 state college savings plans allow parents, grandparents, other relatives, and friends to contribute to a childâ€™s higher education fund.

This means that when my parents or other relatives ask what they should get the kids for Christmas or birthdays, I can tell them a trinket the child wants, and suggest the main gift be a contribution to their college fund. Very nice.

Only $25 a month

My state, Oregon, has a plan run by Oppenheimer. I think the fees are a little steep, but not nearly as bad as some states. The nice thing is that I could open the account with no deposit at all, and only a $25 per month per child auto-deposit. I may be saving the bulk of my money for retirement, but I can afford $75 to keep the account open for relatives to be able to contribute.

Technorati Tags: 429 plan, grandparent college contributions, college savings

Paid myself first

Bruce Kroeze — Mon, 24 Apr 2006 06:15:55 +0000

Last year was the first year I’ve ever managed to pay myself first! Almost every book tells you to do that, to take a certain percent of your income and sock it away before you pay the rest of your bills. We all know we should, but it is so hard to actually do it!

I’m incredibly pleased to report that I actually saved about 12% of my gross income last year. That is a true first for me. 38 Years old and I’ve finally started doing what I should have been doing since I was twenty. Oh well, that’s water under the bridge. The important thing is that I did it, and I didn’t really miss the money.

OK, I did miss the money, but not as bad as I thought I would.

Now, I’m changing jobs May 1, so I have a bunch of financial moves to make. These are pretty interesting ones I think. Lots of options open up during a job change. I’m planning to open a new self-directed IRA for the 401K money from my current employer. I favor Roth IRAs for regular saving, but this is already tax-deferred and I’m going to leave it that way. I’ll invest it in a couple funds for this purpose. Unlike many, I do think individual investors can do very well hand-picking stocks (and I’ve done very well doing just that), but I like to buy and hold in my retirement accounts. Currently I plan to use UDPIX (Ultra DOW 30, leveraged for double-DOW returns … or losses) and DODFX (a stellar international fund) to grow this money.

I’ll be making about 20% more at the new job, which I’m going to split 50/50, allocating 10% of the increase to max out my Roths and to get the max company match in the new 401K. The other 10% will go to accelerated pay-down of my remaining debt. In the last year I’ve paid-off five credit cards, and only have one remaining balance. I plan to retire that debt within six months.

Technorati Tags: retirement planning, investment, udpix, dodfx

My Roth IRA gained 26.57% last year

Bruce Kroeze — Wed, 25 Jan 2006 17:20:44 +0000

A few days ago I posted that I made a 21% after-tax profit from my investment/speculation account. I pay a lot of attention to that account, of course, and deliberately do not pay as much attention to my Roth IRA. I prefer a “buy-and-hold” approach in that account. Interestingly, that strategy paid off even better last year. My Roth IRA increased in value by over 26%! Wow.

Now, I just have to repeat that performance for a few years, and I’ll be the talk of Wall Street. Sure.

My Roth investments last year:

April – 48 shares DODFX at $30.24. Now trading at $36.24. A 20% increase.
April – 80 shares VGTSX at $12.60. Now trading at $14.84. A 17.78% increase.
June – 100 shares PTIE at $5.27. Now trading at $8.51. A whopping 61.48% increase!

Please note my site disclaimer. I am not offering investment advice, I am not a licensed financial advisor. Please make your own investment choices based on thorough research, instead of listening to some internet dude like myself.

Technorati Tags: Stocks, Mutual Funds, Roth IRA

First fearless carnival

Bruce Kroeze — Mon, 16 Jan 2006 15:16:43 +0000

The first Carnival of Personal Finance with one of my articles is up at SavvySaver! I’m proud of that entry, and I am increasingly proud of this site. Thank you, readers.

Technorati Tags: Carnival of Personal finance, personal finance, budgeting, retirement, saving, money

Addressing the Social Security Crisis

Bruce Kroeze — Thu, 12 Jan 2006 21:16:14 +0000

If we want to save Social Security for future retirees, we as a society should do what we can to encourage saving now. I hadn’t thought of it that way before, that my personal saving and getting out of debt will help fuel the economy which will enable retirees in 2020 and beyond to live in comfort. It is an excellent point made in a short article posted last February in Slate, and one I am taking to heart.

The debate about private accounts proposed by the Republicans may be dead, but the essential problem is the same. With the current (negative) rate of savings in the U.S., it is difficult to see how we will grow the economy to the booming levels we’ll need to support the increasingly older and retired population. As I discussed before, I refuse to get all worked up about this issue, since I believe that I can’t personally do much to change society as a whole. What I can do is personally save, and teach my children to do the same. The article puts it very well:

There’s not much we can do about dictating the work habits of people in 2020. They’ll choose their own work habits, and they’ll pass their own laws to try to influence each others’ work habits. That means the only thing we can do now to address the underlying crisis is to encourage saving, because saving means investment, and investment means that when 2020 comes around we and our descendants will have more and better machines and factories to produce more and better food and aspirin and television sets.

In other words: If you want to address the Social Security crisis of the future, you must adopt laws that encourage saving in the present. There’s nothing else you can do.

This article has changed my thinking to realize that my personal committment to saving is not selfish at all, and in fact is a net good for society. That makes it a two-time win, and you can never have enough of those.

Link: Save and Save and Then Save Some More (Slate)

Technorati Tags: Retirement, Social Security

Starting a Roth IRA for your kids

Bruce Kroeze — Sun, 08 Jan 2006 22:52:01 +0000

Did you know that starting a Roth IRA or similar investment for your ten-year-old will pay off 24:1 assuming an average and reasonable investment return of 7%? It is true.

I just made a quick calculator to help explore the numbers. A few quick numbers from it are sure to open your eyes, as they have mine. $1000 invested at birth, netting 8% a year will be worth $178,000 at retirement. $4000 at age sixteen, perhaps from a summer job, would grow to $122,281 at retirement.

That’s just for one-time investments. What about if your child were to have $10 a month contributed to an account earning 7% starting at 12 years old, and continuing until retirement? $67,000 return on a total investment of $6360.

Enjoy the calculator, and start an account for your kids.

Article Inspiration: Free Money Finance

Technorati Tags: retirement, roth, calculators

Roth 401K – A new option for 2006

Bruce Kroeze — Tue, 20 Dec 2005 14:24:35 +0000

This time of year, we are all considering adjusting our retirement contributions for next year. Did you max out your Roth IRA? I did not, sadly, but that is now one of my top financial resolutions for the new year. If you have been maxing it out, then you may want to take a look at the new retirement vehicle on the block, the Roth 401K.

Basically, this lets you contribute money to an account which is more open and flexible than a 401K, but less so than a Roth IRA. The maximum amount to contribute is apparently $15K, a shared cap with your regular 401K savings.

Further research: A good article about Roth 401Ks, A more detailed article, A website devoted to them.

Technorati Tags: Roth IRA, Roth 401K, roth, retirement, 401k