Retirement Investments

[PimTac]

Keep it simple. Go for a S&P Index fund to start. Educate yourself during this process. Charles Schwab has some excellent resources online to help with that.

It sounds old fashioned but review your personal spending. Where are you spending money that is unnecessary? Buying coffee three times a day? Cut that back to twice a day. Cable television? Cut the cord. There are tons of examples.

Do you get a large refund from the IRS every year? STOP! Rework your withholding so you come closer to breaking even.

In all those examples above take that money you have saved and add it to your contributions. Most people are surprised at the amount of what is known as mystery money they spend each month.

 

[Highboy]

Do a Roth outside of the job. Contribute what you can with your after tax dollars. You can use as a savings account also because you can pull your cash without penalty, but not any gains that your money made. Just for emergencies only!!! To keep it simple, look up 3 fund portfolios. Vanguard has low expense etfs like VTI.

 

[Wolf359]

They are a bit conservative but they adjust as the target date gets closer. So one 40 years out might be 90% stocks. They are suppose to decrease risk as you get closer to retirement and they re-balance every year.

I just looked at the Vanguard Target 2065 fund VLXVX. Year to date it is up 12.33%, for Fidelity's S&P 500 index fund, FXAIX, it is up 18.68%. That's from yesterday, doesn't include todays number. You can look at their long term results, too, other years the S&P 500 was up 2-6% over the Target fund and didn't go as far down as the Target fund did (about 3.5% worse) in 2018 when the market was down.

VLXVX - Vanguard Target Retirement 2065 Fund | Fidelity Investments

Analyze the Fund Vanguard Target Retirement 2065 Fund having Symbol VLXVX for type mutual-funds and perform research on other mutual funds. Learn more about mutual funds at fidelity.com.

fundresearch.fidelity.com

FXAIX - Fidelity ® 500 Index Fund | Fidelity Investments

Analyze the Fund Fidelity ® 500 Index Fund having Symbol FXAIX for type mutual-funds and perform research on other mutual funds. Learn more about mutual funds at fidelity.com.

fundresearch.fidelity.com

Like I said, not a fan. There's theory and reality. Those funds don't always do what they claim they're supposed to do. Or rather they don't always achieve their objective.

 

[Dave Hess]

I opened up Roth IRAs for my kids when they turned 18 and were working part time jobs while in college.

IRA and 401K have the ‘snowball effect’ over a 30+ year timeframe.

You just need 4 or 5 low cost , high quality ETFs or mutual funds for the long run.

.

 

[JeffKeryk]

Like others have said, max out your 401K; don't leave money on the table.
Like others have said, starting early is really smart. Some of my best money is my oldest money.
Like others have said, talking to an investment house like Schwab is a great idea.
Like others have said, watch your spending. A lot of my coworkers bought drop dead gorgeous Beemers and Benzes early on; I drove used Hondas and Toyota 4 banger strippie pickups. Now I can buy any car I want. They are stuck trying to pay horrible mortgages...

Roth grows tax free, but you buy with taxed dollars. You lose the time value of money for the taxed dollars. Your call, but there is no free ride.
Depending on where you live, real estate can be an incredible investment. People gotta have a place to live. Today's interest rates are free money. My 1st home loan was 10% and was a good loan at that time.

#1 - Invest in yourself. College. With work and luck, you may get to pay more in income tax than most people gross. It's a great problem to have. If you are worth something special to an employeer, you might be in line for some golden handcuffs. They can make you stupid rich.

Good luck.

 

[Nick1994]

#1 - Invest in yourself. College. With work and luck, you may get to pay more in income tax than most people gross. It's a great problem to have. If you are worth something special to an employeer, you might be in line for some golden handcuffs. They can make you stupid rich.

Good luck.

Thanks, fortunately I graduated college 2 years ago debt free. I think not paying student loans for decades is going to help tremendously.

 

[AutoMechanic]

I contribute 5% of each paycheck. Or I was and will after 90 days at my new company as well. I’ve been there 30 tomorrow so still a little while but they match all of it up to a certain amount I believe. Mine is also not an IRA but a 401K though I do have an IRA that I probably will use also. I am probably going to up it soon. But we learned in personal finance in high school to max it out if you can.

 

[tbm5690]

Agreed with all the above. Get the max employer match, then dump into a Roth after that. I'm 31 and 100% invested in total market, SPP 500 and tech stock index funds for both the 401k and my Roth IRA, and have no plans to change that in the near future. What comes down will come up according to history, no need to get scared and go conservative too early.

 

[PandaBear]

Mostly good advises here, in general:

1) contribute enough to match employer's free money.
2) Long term growth with minimum cost: the long term cost is what you can control and everything else that the fund managers charge you on will be rewarded with risk involved, and therefore likely lose out over 35 years vs a low cost fund (i.e. Vangard S&P 500).
3) You do not need bond or cash in your portfolio this early, stick to stocks, don't look at it day to day, maybe once a year and that's about it.
4) Make sure you also save enough on the after tax cash side so you can buy a home in the future, start a family, pay for your emergency need, etc.
5) Invest in yourself so you can earn more, and spend less on entertainment so you can invest more and get the compound return into the future. (you still need to reward yourself once in a while just don't go overboard).

 

[mez]

You are young, pick the most aggressive stocks offered in your 401K. I prefer Roth and your money goes in after taxes but when you are at least 59 1/2 all the money in your Roth 401K including the gains are tax free. I would contribute as much as you can afford up to the federal max contribution in 2020 of $19,500. You will be a multi millionaire by the time you retire. That's what I did and I retired at 52. Living the dream while still young!

 

[Passport1]

Solid advice from all. The unseen trip hazard in the above schemes is that they presuppose nothing will change in our national economic structure. When you are ready to punch out in 30+ years nothing you planted today may yield fruit. I'm not a pessimist but what's happening now makes me fidgety.

My advice, be Semper Gumby. If you can marry into wealth. Don't rely on current orthodox economic pathways to success to remain clear.

 

[doitmyself]

About all that I can add is to talk to several professional financial experts (Schwab, Fidelity, independent, etc.) to form your own opinion. Do that simple planning process questionnaire to determine your goals, risk tolerance, etc.. Invest long term and ride the waves up and down.

Beyond that, my recommendation is not put all your eggs in one basket nor all high risk. Diversification may not earn the highest yields, but it will also not experience the highest losses. That Roth vs. 401K argument is much more complicated than some here portray. Good luck trying to figure this all out.

 

[Killer223]

The absolute best thing you can do is learn from this man.

Curtis Ray | Always Be Compounding

Official Curtis Ray Website

curtisray.com

Go watch his tiktoks. youtube videos. etc.
Roths are ok if started early enough.

 

[Warstud]

Your going to hear "Dont Try To Time The Market" but I've been doing this along time. This is the wrong time to start pouring money into the market. Put that money into a 401K Money Market for the time being

 

[aquariuscsm]

I always say to live within your means. Enjoy life while you're young enough to enjoy it, but don't be reckless or irresponsible. Don't live like a caveman only to die a millionaire. I've actually know people who lived their lives like that, only to have someone else enjoy their riches while they're pushing up daisies.

 

[Dinoburner]

A couple years before retiring a co-worker said he was going take some money out of his 401-K to buy a house, since he had all the toys and money burned a hole in his pocket I cautioned about that. A couple years later his wife divorced him getting the house. Five years later he died of a massive heart attack, good that he didn`t listen to me as his family at least had a home.

 

[loneryder]

Looking for some general advice on retirement investments, that not just I can learn from but perhaps many others on here. I understand there isn’t a one size fits all approach to this. Just looking for tips and tricks.

I’m 26 and started contributing to my 401k 2 years ago in a traditional 401k. I was contributing 6%. Early this year I switched my contributions to my company’s Roth 401k plan, and upped it to 10%, and just last week now 12%. My company matches either 3% of my salary, or $2k, whichever is greater.

Seeking some advice on some other good options for retirement investments? Wondering if I should lower my Roth 401k contribution so that I still get the $2k company match and invest the money I would otherwise contribute to the 401k into a Roth IRA? If so, where do I begin on this?

I’m a noob at all this so pardon my ignorance.

Thanks!

The easiest thing to do is look for funds that are designed for retirement at x number of years in the future. For example: "A" fund for retirement in 2030, "B" fund for retirement in 2035 and so on. They are designed for growth for those number of years. My 401k was with T Rowe Price and they had those type of funds. As a layman, you don't have to try to figure out

 

[Wolf359]

The easiest thing to do is look for funds that are designed for retirement at x number of years in the future. For example: "A" fund for retirement in 2030, "B" fund for retirement in 2035 and so on. They are designed for growth for those number of years. My 401k was with T Rowe Price and they had those type of funds. As a layman, you don't have to try to figure out

Read my previous post. If you actually look at the numbers, they can under perform the market. 2-6% a year can add up to a lot over 30-40 years.

Your going to hear "Dont Try To Time The Market" but I've been doing this along time. This is the wrong time to start pouring money into the market. Put that money into a 401K Money Market for the time being

The real question is did you outperform the market by doing so? There's been analysis of this approach and the main problem is that while some can call the top of the market, they're not good about the bottom so they end up underperforming the market by not knowing when to get back in. The other problem is that while you may be good at it, 99% of the people out there may not be. You mind as well say just do what Jeff Bezos or Bill Gates did, start a successful multibillion dollar company. Much easier said than done. The generic advice is generic and will work for most people. I rode out 2000, 2008 and last year. I'm happy with the returns. 75% of managed funds don't beat the S&P 500. 75% is passing.... When you aim for the home run, you may strike out.

 

[xBa380]

Thanks to my Dad for always stressing “don’t give away free money!” I have always took part of the company 401K’s when in high school/college and now of course my ‘grown up job’. So thanks to him, I always made sure to take advantage of any savings plan I could, even when I was making peanuts. But I started at a young age, so that was a benefit.

It was never less than 4% contribution, but usually 6%. I never did less than the company match (free money!). It wasn’t until I got to my current job that I really took a serious look at my contributions. I went from 6% to 8%, then 10% the past few years... Once my liquid emergency fund (my savings account) reached the point to where I can support myself (house/car/food/internet/etc…) for over six months without any income coming in, I wanted to make more money with my extra money. So I then bumped up my 401K from the 10% up to 18% a few months ago and reduced my monthly dump into my emergency savings from $1000 to $500 (but still letting it grow of course). So my checking/bill/play money has really remained unchanged. This year I am on track to contribute around $16-17K into my 401K, and in 2022 I should maximize it.

I mostly invest all into a Roth, but I do split some/small % to a traditional IRA. I chose Vanguard funds for where my money goes, mixed between 3 different ‘buckets’ if I recall, but mostly the more aggressive fund options as I am nowhere near retirement and I can stand to be more risky. Over time, I will switch things over to be a bit more conservative/stable.

According to the 401K planner, right now I am on track to have around $1.5M+ by the time I retire at 62 and have a monthly “allowance” of over $7K until my theoretical death at the age of 90. This does not include the SO’s retirement, assuming we make it to retirement together. My plan is to retire as early as possible. There is no way in hell I am working beyond 62, I plan to be out by 60.

That being said, put as much as you can into your 401K within reason. I am of the mindset that you need to enjoy and live your life NOW if you can financially support it, as well as smart planning for the future. But don’t put off vacations, life experiences, etc… Just because one wants to maximize their 401K to the IRS limits. Who the hell knows if you even make it to retirement… But you need to plan accordingly for it, of course.

 

[Davejam]

I just looked at the Vanguard Target 2065 fund VLXVX. Year to date it is up 12.33%, for Fidelity's S&P 500 index fund, FXAIX, it is up 18.68%. That's from yesterday, doesn't include todays number. You can look at their long term results, too, other years the S&P 500 was up 2-6% over the Target fund and didn't go as far down as the Target fund did (about 3.5% worse) in 2018 when the market was down.

This is not an appropriate comparison. You're looking at a very small finite period of time.
The target funds will have foreign stocks and bonds. Both of which should be included in a balanced portfolio.

Putting all your money in S&P500 is ill advised.
As someone suggested above, research the 3 fund portfolio. Reasearch the risk vs. reward of various portfolio allocations.
Bottom line you don't want to be 100% stocks, ever.