Lsus and northwestern state, Shreveport campuses. My girlfriend went to UM, Miami campus. Identical experience.
Retirement investing...
- Thread starter Ws6
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I have 15 1/2 years of post secondary education: 1/2 year of chartered accountant apprenticeship, 4 years of engineering college, 1 year of pre-med plus engineering master's classes, 5 years of medical school, 5 years of medical residency.
I enjoyed the studies. I didn't do it all in one stretch, won several scholarships, and at no point had any debts. I had a thoroughly enjoyable career which was also financially rewarding. We're well beyond comfortable in retirement.
So, that’s two data points… from which you cannot draw a trend.
“College” is a much more broad group than you* describe. All six of my kids went to college, all six graduated (debt free thanks to our sacrifices and support) and NOT ONE of them had the experience you describe.
Every single one of them is in a great career, and college was a critical step to those careers.
So, there, six data points that are different than your two.
However, did you wanna make this thread about your college experience and your opinions on a college, or on financial acumen, the ability to plan and the ability to succeed?.
College, and your opinions about it, are only tangentially related to that topic, the one on which you started the thread.
Quit drawing red herrings across the path of your central question - how to retire comfortably - and focus.
* To be brutally honest, I have not heard of any of the schools that you mentioned. Perhaps the acronyms are throwing me off, but a school without a broad reputation, may not have been the best value in education. Are they in Louisiana? What was your major? What is your career field now?
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I did make some good friends for sure. Life long, man.
You don't know LSUS? Tigers? University of Miami? Cmon. I went to school for Healthcare related things and work in the field I am degreed in, utilizing that degree. Yes it enabled that, no I'd not do it again.
Also, glad you were able to provide for your kids. Super cool. But you're right, this thread has gone on safari. My whole point in bringing college experience up was to explain why further education in a formal setting is off the table for me.
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Back on topic, I'm going to max my Roth out in a few weeks for 2024, and wanted to ask, probably ignorant as hell of me, but...I know I can only put in 7k/year, but will I run foul of that setting it to DRIP?
Why? College is a dumpster fire. Is what it is. It's doesn't keep me up at night, it's just a negative experience that I had to go through to get where I am today.
Might I make a suggestion or two?
First one. If you are able to make your plan work, you are going to have lean years in terms of income after you retire, before you are able to draw from your retirement accounts or collect Social Security. My normal recommendation is to stuff all you can into a Roth, but your current 6 figure income will probably benefit more from the tax exemption now, so loading more of your available funds into the regular 401k or a regular IRA makes sense. Then, in the lean years, you can roll from the regular accounts into the Roth at a very low tax rate.
Second one. You are going to need a regular brokerage account balance to tide you over in those initial years after you retire. Don't forget you need to build up a significant balance there.
That's what one of our MDs basically just told me. They also clarified that our salary match for 401k is only 50% match up to 6% up to 3500/year, max, so that's kindof what I expected. Trash. He did say exactly what you said about 401k though. I may forego the Roth in lieu of the 401k, as I cannot afford to max the 401k AND Roth. Should one be a priority, or mix and match?
I do have an individual brokerage already.
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First priority is the 401k up to the point you max out the matching funds. Always. Otherwise you are giving up free money. I've never had enough to pass up on free money. After that, I'd split my funds into a normal IRA and a Roth IRA, the % of the split designed to keep me in a lower marginal tax rate. Just me, but I might put a little more into the Roth because I expect higher tax rates in the future.
As you get expenses down and job raises, I'd funnel as much of savings and increases into the brokerage account as you can. In order to meet your retirement goal you should do some research on FIRE (Financial Independence, Retire Early). There is a whole community that is planning to do the same thing you are. Mr. Money Mustache and the Bogglehead (Vanguard) forums are good places to get info.
As you get expenses down and job raises, I'd funnel as much of savings and increases into the brokerage account as you can. In order to meet your retirement goal you should do some research on FIRE (Financial Independence, Retire Early). There is a whole community that is planning to do the same thing you are. Mr. Money Mustache and the Bogglehead (Vanguard) forums are good places to get info.
Free money is free money, even if it is 50% match not 100% match. Option A, put money anywhere you choose and for every dollar you put in get a dollar credit. Option B, put money in company plan and for every dollar you put in get $1.50 credit. Yeah, even I know take maximum advantage of that option, then do whatever afterward.
So I looked up my 401K options and they look dumb as hell. I can't invest in any mutual fund I want to invest in. They just have these options and that's it. Most of them dont even have tickers. The expense ratios are total garbage, too. Some sre 0.8% or more. Example:
The company used is "Principal". Never even heard of that before. Lots of dead links, like when I click a fund and go to see the holdings it will errornotfound etc. As I suspected, it looks like I need to avoid this avenue, no? Shady.
The only one remotely interesting is the Large Cap SP500 fund, crazy low 0.01% management fee, nearly 1400 holdings, but the fund is only $360mil.
Just seems super sketchy
The company used is "Principal". Never even heard of that before. Lots of dead links, like when I click a fund and go to see the holdings it will errornotfound etc. As I suspected, it looks like I need to avoid this avenue, no? Shady.
The only one remotely interesting is the Large Cap SP500 fund, crazy low 0.01% management fee, nearly 1400 holdings, but the fund is only $360mil.
Just seems super sketchy
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That’s pretty normal but those fees are pretty normal.
If I were you, I’d:
1. Dump all of your contributions (up to their match) into the large cap S&P 500 fund because of the low fees.
2. Switch to your Roth IRA and start maxing that out.
3. Either switch back to the 401K option or into your individual brokerage account depending on if you need to be able to use the cash before 59.5.
Fun story time: I worked for one sketchy small company where my 401K options were all Fidelity “Advisor” funds with 1.2-2.1% fees total. Not .12-.21%, 1.2-2.1%! After inquiring with Fidelity who my advisor was, they gave me a company out of Newport News, VA. I checked agency VA’s that oversees corporations and got the responsible party’s name. Turns out that it was my CEOs brother who lived at the same address as the CEO. I filed a fraud claim with SEC and the CEO. Needless to say, I’m no longer with that company and they got dissolved. I never did get compensated for the 2% that they stole from me for 3 years.
If I were you, I’d:
1. Dump all of your contributions (up to their match) into the large cap S&P 500 fund because of the low fees.
2. Switch to your Roth IRA and start maxing that out.
3. Either switch back to the 401K option or into your individual brokerage account depending on if you need to be able to use the cash before 59.5.
Fun story time: I worked for one sketchy small company where my 401K options were all Fidelity “Advisor” funds with 1.2-2.1% fees total. Not .12-.21%, 1.2-2.1%! After inquiring with Fidelity who my advisor was, they gave me a company out of Newport News, VA. I checked agency VA’s that oversees corporations and got the responsible party’s name. Turns out that it was my CEOs brother who lived at the same address as the CEO. I filed a fraud claim with SEC and the CEO. Needless to say, I’m no longer with that company and they got dissolved. I never did get compensated for the 2% that they stole from me for 3 years.
Okay, but the Large Cap fund was started in 2023 and has less than $400m in assets. It also has no ticker, it's just 1386 stocks they picked. It seems super dicy to me...
I'm already maxing Roth and the rest going into ind. brokerage. Putting 100% into vfiax in both, although Im surely open to criticism for that.
That'd be my choice too.
Running and administering a 401k comes with a cost. One of the ways for a company to manage that is choosing funds, advisers, administrator, etc. that offers favorable costs to the employer and passes the costs to employee. IE the expense ratio. Personally I would pile into the Large Cap fund given the choices described. There are tons of mirror funds that operate just like VOO. As others have pointed out, you get an immediate return on your money via company match, as long as vesting period for that company match is "reasonable" (no one has asked you that yet I don't think, but you should check). @IveBeenRued and @ArrestMeRedZ make interesting points you should think about re Roth IRA (or Traditional IRA) post the company match.
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