Well said!
“Wailord”
1979 17’ Montauk
90 Johnson
Wilderness Ride 115
bossdog1
The one area where I’d disagree, or better wording clarify your statement. I only contribute to my employer sponsored plan up to the company match. In my case 6%.
The rest goes into Roth IRAs up to the limit and the overflow goes into other mutual funds.
Boat drinks, Waitress I need 2 more boat drinks!
While I agree with the IRA statement, putting the overflow to get to 15% in “other” mutual funds limits your tax break. Putting that money into the 401k plan is tax free and lowers your taxable income each year. Granted, if your 401k plan is terrible and doesn’t offer many choices, then I wouldn’t put it there. Saving 15% on it one time isn’t worth it if you are only going to gain 2%-3% annually for 20 years. You just need to talk to your accountant about what works best for your situation each year.
“Wailord”
1979 17’ Montauk
90 Johnson
Wilderness Ride 115
Yep
I spend some time with my accountant and CFP working out the different scenarios. Just like with my kids, there are short term and long terms saving/investing that needs to take place. I’ve got the full 15% going into retirement accounts; a combination of 401k, Roth and traditional IRAs. The other mutual funds get tapped into from time to time for big ticket purchases.
Boat drinks, Waitress I need 2 more boat drinks!
If he is already wanting to invest at 19, avoids debt like the plague, and is investing in his education, he will be light years ahead of most of his peers. Also show him the power of compounded interest over time.
Pay off current loans before investing.
Even if interest rates are low and you think you can outpace interest rates with good investments, debt is a very bad habit in today’s youths.
“Which of you, if your son asks for bread, will give him a stone? Or if he asks for a fish, will give him a snake? If you, then, though you are evil, know how to give good gifts to your children, how much more will your Father in heaven give good gifts to those who ask him!" - The Messiah
Geronimo, you speak the truth…no forked tongue! Let me clarify my point(Geronimo said the same thing) for Too Busy regarding contributions to the company defined contribution plan. I would advise a minimum of 6% to be eligible for the match(Free Money!), but keep in mind that contributions to the company sponsored defined contribution plan are PRE-TAX. Those 15% pre-tax contributions can grow tax differed for many years. So by contributing pre-tax dollars, and growing them tax differed, you actually get a compounding advantage(powerful money mojo!) on dollars that otherwise would have gone to Uncle Sam. Straight up IRA contributions are made with After-Tax dollars. You can invest outside of the defined contribution plan with other money, and by harvesting tax loses, and avoiding capital gains triggers such as selling appreciated assets, you can keep the money working for you, and limit your tax exposure. It’s a little bit of picking the fly poop out of the pepper, as you sound like a savy guy, but then again it’s real money.
Sol Mate
Mako 20B
225 Optimax
We’re on the same page. I did the full 15% 401k for a long time before I altered my plan after sitting with my accountant.
This year I’ll probably shift back to max out Roth, then balance into 401k. The other savings got converted into a rental house and I don’t have any more short term savings goals. Kids college is paid for, money set aside for Baby Girl to get married. Now we’re going full on squirrel away for retirement.
Boat drinks, Waitress I need 2 more boat drinks!
Don’t forget that any special treatment retirement account has a lot of congress critters’ eyes gazing at them…Just make sure you have some wealth not in “the system.”
Man, you folks obviously have a lot more money to worry about than me. Thanks for all the input, lots to think about.
“Apathy is the Glove into Which Evil Slips It’s Hand”, but really, who cares?