Retirement contibutions

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Aether
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Retirement contibutions

Post by Aether » 2018-01-22 02:04am

First world problems.

I'm in a damn good position right now with salary and debt (mortgage only) and I have been contemplating on how to invest for retirement.
I contribute past my employer's 401k match and fully contribute to a Roth IRA. I also have a brokerage account where I invest in ETFs and a few individual stocks.

I do have an option with my employer to contribute to a Roth 401k as well, but I have not done so. I am trying to see if it is worth splitting the difference in paycheck contributions to the 401k and Roth 401k as the online calculator says there will be no difference in bring home pay but a couple hundred more potential money in retirement.

If I do split the difference, then I would have one tax deferred account (401k), and 3 post-tax accounts (Roth 401k, Roth IRA, and a brokerage account).

Any advice?

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mr friendly guy
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Re: Retirement contibutions

Post by mr friendly guy » 2018-01-22 02:22am

As a non American I can't help much as the system is different from what I am used to. However have you heard of the Dave Ramsay show? He has his own YouTube channel and he seems to know what he is talking about. Apparently you just ring in , although they will most probably record it for the show.
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TheFeniX
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Re: Retirement contibutions

Post by TheFeniX » 2018-01-22 02:35pm

You could check to see if your employer's money managers offer free consulting. Since mine banks through Wells Fargo and we have some kind of 401k derivative through them, the local branch has people on tap who offer options here. That said, your bank itself might also offer free consulting. As I use Wells Fargo for personal banking (just been with them forever because they have branches everywhere I need them), I have access to the same thing.

As I also use State Farm for insurance, since I get a discount because my entire family uses them, they ALSO offer free financial advice. Or at least my personal representative does.

Other than that, it might be worth spending a few bucks to get some professional investment advice.

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Elheru Aran
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Re: Retirement contibutions

Post by Elheru Aran » 2018-01-22 05:30pm

Most banks (in the US at least) will be all too happy to give you at least some level of financial consulting. If you don't have an account with them, there's only so much they can tell you because part of their job is to make you a customer, but they can give you some tips at least. If you have an account with them, they can go into more depth. At the very least, they can give you some idea of the directions you want to go with investment/money management.
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Wicked Pilot
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Re: Retirement contibutions

Post by Wicked Pilot » 2018-01-23 01:13pm

My advice:

You have an emergency fund correct? If not, that is your first priority.

Max out your 401k contributions. Whether to do Roth or transitional depends on your current tax bracket and how it compares to what bracket you think you'll be in at retirement.

With all your retirement funds, may sure you're not pissing away earnings on fees. Any fund over 0.5% is way too much.

After all that, put everything else in paying down the principle in your house. Unlike your 401k and IRA, this is a guaranteed rate of return. This is especially especially true if this is a home you think you'll be in for the long term.

Be careful with advisers. Make sure they have a judiciary responsibility to you. Don't let them steer you into complicated instruments that you don't fully understand.
The most basic assumption about the world is that it does not contradict itself.

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Aether
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Re: Retirement contibutions

Post by Aether » 2018-01-24 07:32pm

Wicked Pilot wrote:
2018-01-23 01:13pm
My advice:

You have an emergency fund correct? If not, that is your first priority.

Max out your 401k contributions. Whether to do Roth or transitional depends on your current tax bracket and how it compares to what bracket you think you'll be in at retirement.

With all your retirement funds, may sure you're not pissing away earnings on fees. Any fund over 0.5% is way too much.

After all that, put everything else in paying down the principle in your house. Unlike your 401k and IRA, this is a guaranteed rate of return. This is especially especially true if this is a home you think you'll be in for the long term.

Be careful with advisers. Make sure they have a judiciary responsibility to you. Don't let them steer you into complicated instruments that you don't fully understand.
I have quite a bit in my emergency fund. I have a year and a half of savings in the bank; I actually pulled some out to put into my brokerage account.

I have not maxed out my 401k. Yearly contribution is $18,000, I put more into it beyond my employers match. I have heard competing advice on matching percentage wise on 401k vs maxing it out. I have considered it.

It's the same with the house. My mortgage interest is 3.75% and the rule of thumb I was told is that if one's % return was higher than this, then just invest rather than pay down the house. So far my annual return is %20; but to be fair this is abnormal. In the long run, I do plan to own the house for quite some time - perhaps retire.

I need to actually sit down and see the numbers in front of me with some projected graphs.
mr friendly guy wrote:
2018-01-22 02:22am
However have you heard of the Dave Ramsay show? He has his own YouTube channel and he seems to know what he is talking about. Apparently you just ring in , although they will most probably record it for the show.
I have watched some of Dave Ramsey's videos on his YouTube channel. I find his opinions on credit cards and debt to be ok if only from a 50,000' view. I know he has suggested ETFs or index funds, so I will probably take a look at what those are.

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Wicked Pilot
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Re: Retirement contibutions

Post by Wicked Pilot » 2018-01-25 06:35pm

Aether wrote:
2018-01-24 07:32pm
I have not maxed out my 401k. Yearly contribution is $18,000, I put more into it beyond my employers match. I have heard competing advice on matching percentage wise on 401k vs maxing it out. I have considered it.
Well matching is a no brainer as that's free money. I would max out your 401k and IRA before before any thing else as a they have a tax advantage.

As far as rates of 401k vs mortgages go, remember that even in a bear market you want to still invest in retirement. When stocks take a nose dive you'll be scooping them up cheap. This is of course assuming you're young and can be aggressive. If you're not young, but getting 20-10 years from retirement, then your 401k should be getting more conservative. If you're at the point in your career where your retirements accounts are being shifted to more safer products, then they could become on par with your mortgage.
The most basic assumption about the world is that it does not contradict itself.

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