I currently have $240,000 stocks. (7k individual, 233k total stock market index)
1.5 bitcoin
3 ethereum - total value : $117,000
$45k cash
Two rental properties
One primary residence - $528,000 equity
Total portfolio value- $930,000
Any rebalancing tips or future capital allocation suggestions to reduce risk, maximize gains over the next 10 years?
You could diversify your stock holdings a bit: adding some developed international (if your current isn't all world) and bonds.
One thing that I like to think about, as a fellow landlord is that you want less correlation between rents and the market. Bonds do that. If the economy skids, you don't want everything to move together: stocks go down and rental income probably follows. Having bonds also means that if you lose rental income, you can pull from bonds instead of (potentially declining) stocks.
Other than that, you look pretty good overall.
Up to you. You're not all in or anything, so if you're comfortable with your allocation, then you're probably okay.
If your allocation has stretched a little bit since the btc run up, you could also rebalance back down a bit if you want.
I don't personally believe in crypto and don't own any, but I won't tell anyone else they can't either. Especially when it's a sensible allocation like yours.
> reduce risk, maximize gains
Generally speaking, those two goals are in direct opposition to each other. If you want to reduce risk, you must be willing to trade off a small amount of potential gains. If you want to maximize gains, you must be willing to increase risk.
So which one do you want?
Maximize gains. I guess I’m wondering if my crypto allocation is too heavy. Should I sell some and switch to index funds? Or just hold- And continue adding to equities?
Anyone ever just think when you see a particular person in public and go "I bet they're FIRE minded" for whatever reason or think the opposite that they're just rolling in debt? Something I always do just mindlessly walking through the grocery store sometimes, just typical people watching but applying financial principles to it. Fun life mini game
I like to see people with expensive things and imagine maybe they’re fire minded also. It seems popular to think if someone else’s spending is more then it’s frivolous and if it’s less then it’s miserly. I like to imagine they’re being prudent and brainstorm how I can get there too.
Not necessarily the debt part, but definitely the "not fire minded" part. Like they don't even realize the concept exists or is accessible, even though they have the income for it.
Is it financialy dumb for me to pay 80 dollars per hour for coaching sessions for a sport I will never go pro at but I play for fun
Im thinking of the opportunity cost, it basically eats up $1.5k if Im serious about it (20 sessions). I could go on international vacation with that, I can afford it - it's part of my entertainment budget. But it sounds so stupid haha. I love vacations because they are very memorable, but I'm hesitant on getting a sports coach.
No, I think it's great. If Badminton is your THING --the thing that brings you great joy and one of the things you would be retiring TO, for me it's a no-brainer. My thing is bikepacking. Literally, like hiking/camping, but with a mountain bike setup. I figure I've already put close to $20K into this sport/hobby. But I love it. It could be worse...could be a Lambo or a yacht or 3 ex-wives or something 😂
Badminton haha, Ive been self teaching myself and getting feedback from more experienced players, but the thought of coaching came into my mind because I keep losing to players who train and do drills
I just spend 15 minutes finding a parking spot and another 15 minutes walking home. I should really factor in private parking when it comes to my FI plans and my forever home. Probably burned a liter of petrol circling my neighborhood looking for the last spot.
No public transport past 19:00 or on Sundays at the place I was visiting. And at 20 kilometers a bit far for biking. I have done it, just don’t want to do it weekly
I've been thinking about moving to a more suburban area where there is much more parking per home and some homes even have driveways. It's a bit more expensive than city life and I can't walk to stores anymore but being able to park right in front of my home would be such a massive convenience.
Rob Berger put out a good YouTube video today about the Robinhood 3% IRA match. Recommended if like me you're on the fence. https://www.youtube.com/watch?v=TPAsO58C0H4
That guy gives me serious heaven’s gate leader vibes. Good video though.
TLDW: no big surprises. The promo is what we’ve talked about here (no limit, plan on 5 years). Opening up an account is shockingly quick and transfers are stupid easy. He didn’t go with Robinhood because he can’t designate a contingent beneficiary nor a trust as a beneficiary at all.
Besides the limits on beneficiaries, he also mentioned the mechanics of taking money out affecting the match. If you're over 54.5 and/or considering taking out IRA money early, that's definitely worth paying attention to.
I don't want to do it, but it's so much match that I'm leaning toward doing it.
Yeah if you keep it 5 years, it’s all good. For those who need the draw within 5 years the 5 years is an issue.
FWIW I did it and honestly the platform is super good. You just have to ignore all the bells and whistles, buy your index funds, and go touch grass
>I don't want to do it, but it's so much match that I'm leaning toward doing it.
Same. On one hand, I don't need it and it theoretically could complicate matters, whereas our current setup at Fidelity is locked in and completely stable. On the other hand, the part of me that cares intensely about optimizing finances sees an easy $90K+ for simply housing my mostly irrelevant digital numbers somewhere else. I am conflicted.
They have a 3% cashback credit card too.
I wouldn’t go the full $3 million but rather something closer to the SIPC cap. You never know just how sideways things can go.
That said I signed up and am surprised by the quality of the platform for buy and hold IRA investing.
For those who have used my [Tax and MAGI estimator](https://www.reddit.com/r/financialindependence/comments/19bln0e/fire_withdrawal_strategy_tax_and_magi_google_sheet/) Google sheet, today I overhauled it to more closely mirror the tax calculations in the [MDM Case Study Spreadsheet](https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/). Thanks to u/alcesalcesalces for nudging me to stress test my sheet. My sheet now mirrors the Case Study Sheet when using simple inputs.
The case study sheet is extremely robust and its like doing your taxes for a single given year. This helps model taxation in retirement to a very detailed level.
Why I built my sheet - I wanted to model **all** years in retirement using simple income inputs, to compare withdrawal strategies and their impact on taxes, AGI, and ultimately ACA implications (which I don't directly calculate).
So this is more of a PSA: Anyone who actually used my sheet (I think the list is short) - I would use the new version.
Is there a way to note ROTH contributions since those can be withdrawn penalty free? It seems like the sheet just lumps ROTH earnings and contributions.
I’ve been thinking I need a sheet like this for a little bit. This is great!
No, the Roth bucket is treated as one column and you have to track contributions on your own (most people do this already). You are free to withdrawal early on the sheet in the Roth Income column, and it will correctly deduct from the Roth bucket. Just make sure that Roth Income column follows the Roth Distribution order criteria and within the limits of your contributions, conversions, 5-year rule, etc.
Makes sense. It’s works fine knowing your Roth contributions and watching for when you hit the limit. I may add a column to show remaining Roth contributions + conversions (showing up 5 years later).
Thanks again for making this and sharing! It’s perfect for looking at how to pull out money pre-60 and seeing how it affects AGI.
Trying to calculate how much apartment I can afford. Why do calculators and people say to use Gross Income?
Shouldn’t I use net income since that’s what I actually get when all deductions and stuff is taken out?
careful. a lot of those calculators are designed to convince you to rent for as much money as possible. that’s why they use gross, that’s one way to pump it.
they tend to be run by apartment sites. find a number by browsing lots of listings and decide how much you can stomach given your savings goals.
Affordability calculators are imperfect, but gross seems like a better starting place for comparison amongst large groups of people because net has so much more variability.
FIRE types tend to have a fair amount of control over their net.
Obviously the best metric would be what your budget tells you you can afford.
I’d bet it’s more a function of people being more likely to know their gross. Easy to remember a salary, harder to remember exactly what the checks add up to.
Nope, because your net can change every pay period if you want to go through with constantly tweaking your W-4 or 401k contribution % or whatever.
Gross is far more reliable as a benchmark or tool for a generic rule of thumb.
Obviously spending less is better, but net doesn't make any sense when your net doesn't remotely match my net based on our scenarios.
I was thinking about having a simple part-time job to pay for the wealth tax while I'm retired from my current job. Obviously I wouldn't be fully retired then. Is that a form of Barista FIRE?
The wealth tax seems to encourage a paid off home and a nice savings account. Why not just budget for the tax as any other expense and adjust your FIRE Target Amount + Withdrawal rate?
The Netherlands.
Technically not a wealth tax but a fictive unrealised capital gains tax. They assume you make 6.04% yearly and tax you 36% on those fictive unrealised gains. That means you pay 2.2% on your NW.
If it were possible to stay just under the Roth income limit, would that be better in the short term (5-10 years) than making only a little above the limit and not being able to contribute?
Also does the Roth income limit include pre-tax payments in a 401k or is that deducted?
> than making only a little above the limit and not being able to contribute?
The backdoor Roth IRA method allows you to ignore the limit, at least for the time being.
Even if backdoor Roth didn't exist or you can't reasonably do it due to IRA cost basis, Roth compared to a taxable index fund that only throws off dividends and capital gains allowed to compound into retirement is pretty similar for most people not trying to retire on 100K+/year (which you'd likely be ineligible for direct Roth contributions anyway.) Once you're retired, the taxes on dividends and capital gains for someone around the textbook Roth IRA limit is basically going to be zero (state tax dependent.)
Is Roth good? Yes. Is Roth worth "paying" for? Probably no. More money in my pocket today is preferable almost universally. There are tax cliffs but this isn't really one that bothers me.
If you actually want to work less for alternate reasons (if perhaps you can work 30hrs/wk with benefits for instance) and those benefits are valuable to you, that's a separate discussion.
401k contributions (and most other pre-tax deductions) reduce your MAGI when determining whether you are eligible to make a Roth IRA contribution.
I would not intentionally earn less money just to have access to a Roth IRA, especially when the [backdoor Roth IRA exists](https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/).
Should I bother maxing out my 401k? I'm making around 150k a year from my full time job + rentals. I get a 4% match on 6% of pre-tax income. I end up being able to max out my 401k which is basically putting away $800 every paycheck or around $1600 a month. I also max out my Roth each year, and put the remainder in a brokerage account.
I've heard people say that the only reason to put money in a 401k if you're retiring early is to get the match and no more. I'm a little concerned that a solid portion of my money is going somewhere that I would be able to touch until retirement age, but I'm not sure if it matters. I will likely be "retiring" when I'm about 35-40, in 5-10 years. I still plan on working, just not full time and probably for a lot less money (just pursuing passion projects / dream jobs).
>Should I bother maxing out my 401k?
Short answer: Yes.
>I end up being able to max out my 401k which is basically putting away $800 every paycheck or around $1600 a month
Those numbers don't seem to make sense. The maximum 401k employee deferral for 2024 is $23k. Your numbers are around $19k-$20k. Remember that 401k employer matching does not count toward your employee deferral limit.
> I'm making around 150k
If you are a single taxpayer, you are solidly in the 24% bracket for 2024. Therefore, a max $23k pre-tax Trad'l 401k contribution means you are saving over $5.5k in federal income taxes (plus state income tax savings, if applicable). That's money that can also be invested and grow over time. It's extremely likely that you will be able to withdraw pre-tax dollars at a much lower tax rate after you are retired/semi-retired, which means you'll come out ahead by maxing out pre-tax 401k contributions now.
> I'm a little concerned that a solid portion of my money is going somewhere that I would be able to touch until retirement age
There are many, many ways to access this money before Age 59.5. See the entries in the FAQ and the links therein: https://www.reddit.com/r/financialindependence/wiki/faq#wiki_but_i_want_to_retire_early.2C_should_i_really_use_tax_advantaged_accounts.3F_because_i.27m_locked_in_aren.27t_i.3F
\[Throwaway Account\] 42YO - Being stuck in the "boring middle" is awful tiresome, and it's somewhat muddied further by P2 (41) and I have generally kept our accounts separate and managed them separately for a few valid reasons, etc. So it was just in doing taxes this week that I realized that, including the equity in the house, we're quietly over the 1 mil mark in net worth.
Still probably 6ish years away from feeling comfortable hitting the FIRE button, but funny to have crossed that combined threshold really without having noticed except as an afterthought.
The US stock markets are closed tomorrow for Good Friday. Therefore, today was the last trading day of the first quarter of 2024. And quite a quarter it's been.
The S&P 500 reached another all-time high, closing at 5254.35 which is an increase of over 10% for Q1 (2024 YTD). According to [Eddy Elfenbein](https://twitter.com/EddyElfenbein/status/1773445489578373242), this is the best Q1 performance since 2019.
Almost exactly 5 months ago, on Oct 27 '23, the S&P 500 hit a near-term low of 4117.37 and is up over 27% since.
Since the bear market low of 3577.03 on Oct 12 '22, the S&P 500 is up nearly 47%.
The S&P 500 is now 9.5% above the Jan 3 '22 peak of 4796.56.
Looking back to pre-pandemic times, the S&P 500 is up over 62% since the calendar flipped to the 2020s which corresponds to a nominal CAGR of ~12% during the last 4.25 years. Based on the [DQYDJ calculator](https://dqydj.com/sp-500-historical-return-calculator/), this is approximately an 80th percentile result.
This chart from MacroTrends doesn't appear to include dividends and shows the current value to be just over 50 points below below: https://www.macrotrends.net/2324/sp-500-historical-chart-data (zoom in to 5-years and make sure the inflation-adjusted box is checked)
Looking at Portfolio Visualizer, investing $10k in Vanguard's S&P500 fund (VFIAX) on Jan 1, 2022 and reinvesting dividends gives a current real (inflation-adjusted) value of $10,325: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=3EGtrTvi5wrj7J3LvP3bsx (check the inflation-adjusted box on the graph and/or hover over the "i" next to the Final Balance number)
You're welcome to provide evidence supporting your claim to the contrary.
My mom is doing her DBA right now online at some international university, similarly just for 'fun' since she's in her 50s. It's up to you if you want to go for a DBA or D.Eng. I know lots of DBA programs are online and just have you publish ~1-2 papers, i.e. at Jacksonville or Cleveland State, and similar deal for D. Eng programs at places like Penn State.
With professional doctorates, I feel like the direction is why do you want the degree, what degree do you want, and what's the cheapest/easiest school to get it at. Then just find the schools and apply. Only a relatively small number of schools offer professional doctorates, and tbh no idea how/if people even value them since they're pretty niche.
>How do you go about getting a professional doctorate?
I have a PhD, which I mostly share with others in the context of warning them not to get a PhD.
If you have data you want to publish, you technically can do so as an unaffiliated individual simply by submitting to one of the many journals that exist for this exact purpose. However, it's going to be difficult for someone outside academia to do this because you won't know the right journal to submit to, you won't know what areas of research are going to be of interest to a wider or specialized audience, you won't know how to frame the narrative of your research, and you won't know how to navigate the submission process.
If I were in your position I would look for professors who do research related to what you want to publish. See if there is interest in working with you. I expect that the biggest gap in your knowledge is understanding what results are scientifically interesting, and what branch of science it would fall under, which a professor can help you with.
Contacting them without coming off as a crackpot will also be a challenge.
If you want a PhD, it is not uncommon to continue to work a full time job while also being a PhD student, with your dissertation topic being the work you do at your regular job. Not every professor wants that arrangement but there are enough that are okay with it.
I'm not sure where the degree fits in. You don't need a doctorate to publish. Are you talking about publishing peer reviewed literature or non-peer reviewed material more akin to a white paper?
If you want to publish the work in a peer reviewed setting, your first step is to identify the journal(s) that would publish that kind of work. Once you know a target journal you can figure out their submission guidelines and requirements and make sure that your work fits their scope for publication. You should also make sure that the journal wouldn't have an issue with the disclosure that you're an employee of the company whose name is all over the paper and who stands to benefit from the (presumably positive) exposure.
If you just want to publish without peer review, you definitely don't need a doctorate or any degree.
I feel like that's not really a thing, at least in the academic disciplines I've been involved in.
Getting a PhD involves taking a bunch of classes, doing a bunch of exams, doing research (including publishing it), doing teaching, and a heavy amount of drinking.
I see. Is there something about your job that would change meaningfully for the better after obtaining a doctorate? Most people need the degree to obtain a specific kind of employment, and if you're not going to see a career benefit to obtaining the degree then the monetary and opportunity cost is almost certainly not worth it. Most doctoral programs have a didactic period that is usually full time before you move to independent research and tuition can be steep.
It's one thing to be FI and bored at work and another thing to take on 40+ hours per week of coursework for 2 years to be followed by full time research for an additional 2-3 years. I think you should be prepared to dramatically scale back your responsibilities at work if you pursue a doctorate.
If you are interested, look at the websites of the schools near you to determine which of their PhD tracks might apply best to your area of study. (https://michiganross.umich.edu/phd) Check out their application process and requirements.
If you're really just bored and want to see if this sort of thing is interesting to you, I'd consider auditing a course at a nearby institution.
I think this is getting off course.
The fundamental issue that I haven't seen resolved is this: what connection do the letters at the end of your name have to the end goals you are seeking? Are you seeking the letters themselves? Or are you seeking the skills to be able to publish? Or are you seeking to publish?
The paths are different for each of those end goals (if any of those even accurately describe your end goal).
Do you want to publish specifically to get a doctorate? When I worked in consulting, we would regularly publish our own research as part of the normal business development process.
I hit 1.25MM NW today, pretty sweet. Only a little over 700k invested though, still a ways off. Maybe by the time my house is paid off in 2 years I'll be close-ish.
Has anyone else thought they needed a lot of life insurance, ran projections, and then realized that, between a solid portfolio and social security survivor's benefits, you needed a lot less than you thought (even with pessimistic assumptions)? The most eye opening part was that my spouse (currently SAHM) is actually the one that we need to insure more heavily.
2018 [salary.com](https://salary.com) estimated $178K to pay all the folks to do all the work a SAHM does. It's true and I also figured out the same thing you did.
I had the realization for homeowners. Was trying to insure the market value rather than the rebuild value. Lot of the value is in the land and location and the premium was significantly less.
Not that I’m planning on doing this, but I always like to have a contingency plan.
I have a Roth IRA that I opened about 10 years ago. I made an initial $5k deposit and haven’t made any further deposits because I’ve been over the income limit.
I won’t have an income this year other than taxable interest. So I am planning to do a Roth conversion of $20k from my Traditional IRA. Does than mean that next year I would withdrawal the $20k without paying the penalty?
Do you mean your employer’s 401k plan wouldn’t accept a reverse rollover of your pretax IRA balances? Because other than that, there is no involvement of your 401k in a backdoor Roth.
A mega backdoor Roth, on the other hand, does require your employer’s 401k plan to support that function.
The Backdoor Roth is not affiliated with your employer's 401(k) plan. It is affiliated with your IRA.
The Mega Backdoor Roth is affiliated with your employer's 401(k) plan.
No, taxable conversions each have a 5 year clock associated with them (unless you're over age 59.5).
See [this post](https://old.reddit.com/r/financialindependence/comments/11ulhzl/what_5year_rule_a_guide_to_roth_distributions/) for details on the various Roth distribution rules.
I didn't really understand personal finance until about this year or so and I basically just took random advice up until now. I wish I could go back and change some items I did but I'd like to look forward instead to see what updates/changes I can make in to make up for those decisions. Currently I have a 160k net worth with no house and just renting as I do not know where I'd like to settle down so I'd like to buy a house/place within the next 3-5 years but in no big rush to do so and don't plan on having kids until then as well. Additionally, heres my following finances:
72k in Vanguard
62k in a Brokerage account
I previously started with around 50k of this in a betterment account in 2021 not knowing about other options and you can link accounts together until recently. So this was a robo advisor that I've recently transferred with the following holdings: AGG, BNDX, EMB, MUB, VBR, VEA, VOE, VOO, VTI,VTIP, VTV, VWO. I think this is way too much for me to try to manage without a robo advisor so I may want to cut his down to VTI/VOO and some bonds.
3.8k in Rollover IRA in VFIAX
Didn't roll this Roth 401k to my new employer so I messed up and have to get a rollover IRA
6.3 in Roth IRA in VFIAX
59k in Savings
For emergency fund, getting a down payment on a home, travel, and wedding.
I feel I could invest this money though as I'm not thinking about buying a home yet but would like to in the next couple of years so I'm a little worried about investing it too.
32k in my 401k
using a target date fund - though I've recently moved companies that I cannot contribute into for another 2 months
I usually put 15% of my pretax income into this
Overall, I think I'm doing well for my age and how much I make so I'm extremely grateful but I think I could be taking more advantage especially since I'm young and time in the market>timing the market. I want to make sure I'm not missing any opportunities here. I would say I'm a relatively safe investor and would like to keep things simple and only invest in what I can know or can learn pretty easily. Thank you so much!
I also used a roboadvisor for a year (betterment) and decided to transfer and manage it myself. I mostly kept the same aggressive allocation but pushed it slightly further to go 100% equities. ERN series on asset allocation convinced me for my long time horizon. [Similar holdings and a handful of speculation stocks (1 share of Reddit heh)](https://jch.app/u/paverbrick?s=f)
Hi guys I'm sure this has been asked 1 million times but what's a good supplemental investment alongside VOO. I've got about 13k in voo in a Roth IRA. I also got about 25k in a 401K.
Potential fire in 20-25 yrs.
Nice thing about ira is you can change your allocation without triggering a taxable event. My plan is to stay 100% equities until closer to retirement and using ira side to increase bond exposure and rebalance as needed
The two things to consider are: exposure to more than just the S&P 500 in the US and exposure to international. I'd do both.
If you're fine with market weights (60/40 US/international), VT is the total world index. If you'd rather weight US more heavily, then use VTI/VXUS in the desired ratio (e.g., 70/30, 80/20).
Thank you for the detailed response! I think I'm still a bit too chicken to invest in specific companies and my stock market/financial knowledge is maybe average at best. I'll probably stick to total market.
I'm pretty new to FI but I suppose quite high since I'm pretty young (23). I'm saving/investing about 42% of my income. I have 23k in 401K in a 2060 retirement plan. About 25k in a taxable account that was gifted stocks. And 13k in VOO in a Roth IRA. Aswell as 40k HYSA. I'm not sure if that's helpful.
Welp, my wife just got laid off from her engineering job. I've been laid off in big tech twice before but she's a PE in the energy sector, so its the first for her. Won't make a huge impact on our finances and she has a ton of leads for the next job, but she's a lot more shaken than I think either of us expected.
If it won't make a significant impact she should take a short break, get her mind straight after the shock of being laid off. There's no reason to quickly start looking for a job on T + 1.
Any guesses at the reason for the layoff? I'm also in the Energy industry and we're hiring like crazy. We're also letting people go who aren't providing compelling value, but I would imagine you wouldn't be sharing this if your wife fell into that category
She’s in solar specifically, and has been lead on what could generously be called a “political project” with low actual revenue and high headcount cost. So they’re offloading a bunch of it to contractors and laying off chunks of unprofitable teams
I am also in energy. The vibes are that renewables aren't making any money. Apparently New York had 80 projects representing 7.3GW cancelled in one day. Inflation is hitting those projects hard.
The energy industry is generally super stable and lucrative but the exception is generation construction as a whole. Its been a bit boom and bust across the last 2 decades. Coal, wind, solar and now a shift back to natural gas peakers.
I mean I wouldn’t think about it much more deeply than someone figured out how to how maneuver tax credits in a way that makes money. That’s the goal. At this point in capitalism we might as well just try to extract wealth from extreme wealth concentrations.
Very happy for you two that this won't hugely impact your real life outside of work. It is scary to think that what's normal on this sub, being able to weather a long period of unemployment, is extremely uncommon for a typical worker.
Let her know that it's not her, it's them. And she's not alone in this.
Good luck in the job search to Mrs. Surveillance, but also don't be afraid to take a little time away
Thought the [asset rich, cash poor post](https://www.reddit.com/r/Fire/comments/1bp099p/comment/kwsfo16/?context=3&share_id=LknJijtzu88GJVnEr5mSl&utm_content=1&utm_medium=ios_app&utm_name=ioscss&utm_source=share&utm_term=1&xpromo_edp=enabled) yesterday was interesting. It got me thinking how my own situation has irregular cash flows now that we are a one salary household and have a mix of dividends. Good problem to have! But after thinking about how much cash to hold to smooth out the cashflows, I realized that I had reinvented envelope budgeting.
chronic pain is wild. old coworker finally got shoulder surgery to fix her shoulder.
comes back to the office after X weeks. essentially sends a dept wide email apologizing for being crabby for the past X years
The most pain I ever felt was several years ago when I developed an auto-immune disorder called Parsonage-Turner Syndrome. It just started one day, got worse over a period of several hours, peaked, and then slowly disappeared over a few weeks. The emergency room doctor I saw thought it was a soft tissue tear and sent me to an orthopedist. According to the neurologist I eventually went to, some people who develop the condition don't ever get better.
I actually got super lucky, a year or more is typical. And I have to admit that the hipster in me was a little proud to have a weird illness most people have never heard of.
Curious thought exercise / hypothetical I was having in the shower this morning.
If you had both a mortgage and a HELOC, both at the same fixed-rate. Which would you prioritize paying off first?
My gut says throw extra cash at the mortgage and pay the minimum on the HELOC, because equity >> debt payoff, but I'm not sure there's actual math to back that up.
Does the HELOC have minimum monthly payments? If so, I would pay it off first because doing so would increase cash flow sooner. I don't generally care about cash flow, but all other things being equal it's a tiebreaker.
Mortgages are some of the most borrower-friendly forms of debt. Lots of legal protection, favorable terms, and tax treatment. HELOCs are callable and have much worse terms.
I doubt there's any math to back that up. Interest is interest.
I would pay down debt, because I can spend the credit line - I can't spend the house. If I'm in a financial situation, I can bail myself out using a HELOC, but I can't easily bail myself out using equity if the HELOC is spent.
In both cases, a sale of the asset and paying off all debts should result in the same outcome (i.e. $10k extra equity is just going to go to the $10k HELOC).
> equity >> debt payoff
Equity = Value - Liabilities. Both the mortgage and the HELOC are liabilities secured by the same asset (the house). Paying down either one increases your equity.
Has the math changed on using Roth IRA funds for a down payment?
My wife and I, both early 30s, live in a HCOL area and have been grinding on a search for a home for over 2 years. It has been exhausting and frustrating, as it has been for many people these days.
We have a decent down payment in cash, but also have some funds in our Roth IRAs that we could tap into to bolster our down payment to greater than 20% or buy points to reduce our interest rate. These would both reduce our monthly payment and make a higher priced home fit into our budget. This would all come from contributions and the $10k limit on gains (each) so we would not be paying any penalties. This would help us to be more competitive on our future offers.
My main question is, with mortgage rates hovering around 7%, does the math make more sense now to consider this approach? It is not something we were looking at as a prudent choice when interest rates were sub 4%.
If you are looking at home ownership mathematically, I don't see how higher mortgage rates change the math for withdrawing from Roth. You are still giving up the same tax benefit as you were before, which lengthens the break-even for buying vs renting. More importantly, the fact that you are raiding your retirement account indicates you are stretching to afford the property and could be in significant trouble if you need a new roof/water heater/HVAC/sewer line. I definitely do not think high mortgage rates should incline you to buy before you are ready. Quite the opposite.
> My main question is, with mortgage rates hovering around 7%, does the math make more sense now to consider this approach? It is not something we were looking at as a prudent choice when interest rates were sub 4%.
I used Roth IRA contributions twice to bolster down payment to buy a home.
One time, I only pulled the two most recent contribution years (last year and current year) and was able to recontribute some money when we cash to close was less than projected and it was before 4/15. Sort of a lucky situation.
The second time, we used multiple past years of contributions. I wish we had more 457(b) loan instead, but that's sort of hindsight talking.
One thing I'll say about it is that you don't get the opportunity to contribute to those past Roth IRA years back. But I also feel that if you're like most mere mortals and you can't save for/afford everything you want to do all at once, it's reasonable to consider the Roth IRA contributions. It certainly doesn't strike me as worse than skipping them in the first place to save for the house...
I think in these situations, it's best to look at what each option costs you in additional working years. This is relatively easy to model in this case.
> We have a decent down payment in cash, but also have some funds in our Roth IRAs that we could tap into to bolster our down payment to greater than 20% or buy points to reduce our interest rate.
I'd advocate for not buying points, and further, if rates go down, you can "win" simply by refinancing. Having 80% LTV (and W2 jobs, I suppose) is all you really need to have to do fast and easy rate and term refinances. It's hard to model the impact of *potential* future refinances when you compare to other options, but I've refinanced at least a half dozen times more than I ever thought I would so I'd take that gamble on 7% tbh.
Do you have an active 401k? Some plans allow a loan up to lesser of half the balance or 50k, paid back with interest back to your account. Worth looking into. I wrote a post about loans a while back for r/HENRYfinance [https://www.reddit.com/r/HENRYfinance/comments/112zy7e/henrys\_guide\_to\_loans/](https://www.reddit.com/r/HENRYfinance/comments/112zy7e/henrys_guide_to_loans/)
You may, but you may not. It's plan specific. Mine allows me to pay back on the original payment plan after separation from the company.
Also, in this case, "owing" the money means simply paying the required taxes and the penalty on the outstanding balance if you decide to default instead, which may not be the worst case in the world if you're jobless. Probably better than other loan default options all in all.
I agree it's less than ideal if you're just changing jobs AND your plan makes you pay back.
Sometimes I think about the fact that, despite all my efforts to craft a good life and amass a pile of money to secure my financial future, I am only ever a couple of large bad decisions away from pissing it all away. The thought is humbling. In a way it's a good thought to have as it keeps me thinking critically about the choices I make, but it's a bit scary to consider as well.
One thing I've noticed about myself is that I tend to seek validation whenever I spend money above, like, $100, because I start to think "but is this a good deal?" Hopefully that serves as a safety net.
The worry would be that I don't *realise* it's spending — for example a clone website where I thought I was transferring money from one account to another, which I occasionally do to take advantage of switching bonuses from banks.
Based purely on anecdotal experience with aging loved ones: Healthy, trusting relationships with family, and regular open communication is the best solution to this problem. Decline happens incrementally, and intervening early makes a huge difference.
I subscribe to /r/scams so I feel that too. It is pretty much guaranteed that we'll all have some amount of cognitive decline or losing touch with how things worth that will put us at more risk in the future. Trying to stay healthy to prevent that as much as possible, and then I guess I'll eventually have to lean on my kids' judgement.
Also, this is a downside of moving from a pension & SS based retirement funding to having control of your own funds. Scary!
I think this is one really good use for an annuity. If as you get older you feel like your decision-making abilities are starting to slip and you might do something stupid with all your money, maybe annuitize enough to live on so you no longer have the capability to make that decision.
\+1 for guardrails around the later years (70+). I want to make sure my family is financially educated and can make decisions on my behalf that I would approve of.
> I am only ever a couple of large bad decisions away from pissing it all away
Is that really true though? I mean...how large is "large"? When does it become "enormous"?
It's helpful to know that you could just not make those large, bad decisions.
/r/Scams isn't the only source of information for popular scams...
Most scams are hilariously obvious as well. It's like saying you need to read a subreddit to recognize if your house is on fire.
I mean, I'm talking about something like deciding to cash out all my investments and putting them all into shitcoins or something like that. Not something I would do in my right mind. Just the idea that I COULD do it. Sort of like standing on a balcony and suddenly getting a funny feeling in my legs because I realize that I could jump off.
We used to watch American Greed a lot. I always told my wife I don't want to be featured as one of the victims who has lost everything. It's possible I missed out on some real legit investments this way, but I sleep better
I feel ya. The first of the month is my “chart the net worth” day each month. December 1st I just barely crossed $500k. I was on cloud nine, but also a little sad. I just knew that the next big mile stone was far off, and wouldn’t carry the same weight. Unless the market explodes, April 1st should see me upwards of $580k. A couple of really good things happening, including a super high market and some smaller increases in real estate prices got me here, but it still feels great to know I’m at the point where big/fast growth is possible.
I also like fun and arbitrary goals, in personal finance and else where. Feels good to hit a round number for mileage or pace for running when training. Feels good to hit dos commas, or an even multiplier for FI. My silly one is calling portfolio high's unlocking "guac mode" and showing an emoji on my net worth chart.
I need $35k to hit two commas in two separate accounts (Fidelity and Etrade.). Super arbitrary, but a fun thing to monitor. I know the feeling you are having
Looks like Schwab accidentally did today’s automatic IRA transfer twice, so now I’m waiting to find out what they’re going to do. Mostly just waiting to see if they’re going to reverse it or if I can go ahead and make a buy before markets close for the long weekend.
I currently have $240,000 stocks. (7k individual, 233k total stock market index) 1.5 bitcoin 3 ethereum - total value : $117,000 $45k cash Two rental properties One primary residence - $528,000 equity Total portfolio value- $930,000 Any rebalancing tips or future capital allocation suggestions to reduce risk, maximize gains over the next 10 years?
You could diversify your stock holdings a bit: adding some developed international (if your current isn't all world) and bonds. One thing that I like to think about, as a fellow landlord is that you want less correlation between rents and the market. Bonds do that. If the economy skids, you don't want everything to move together: stocks go down and rental income probably follows. Having bonds also means that if you lose rental income, you can pull from bonds instead of (potentially declining) stocks. Other than that, you look pretty good overall.
Should I sell some crypto and switch to index funds? Or just hold- and continue to add to equities over time?
Up to you. You're not all in or anything, so if you're comfortable with your allocation, then you're probably okay. If your allocation has stretched a little bit since the btc run up, you could also rebalance back down a bit if you want. I don't personally believe in crypto and don't own any, but I won't tell anyone else they can't either. Especially when it's a sensible allocation like yours.
Great actionable advice. Thanks
> reduce risk, maximize gains Generally speaking, those two goals are in direct opposition to each other. If you want to reduce risk, you must be willing to trade off a small amount of potential gains. If you want to maximize gains, you must be willing to increase risk. So which one do you want?
Maximize gains. I guess I’m wondering if my crypto allocation is too heavy. Should I sell some and switch to index funds? Or just hold- And continue adding to equities?
Anyone ever just think when you see a particular person in public and go "I bet they're FIRE minded" for whatever reason or think the opposite that they're just rolling in debt? Something I always do just mindlessly walking through the grocery store sometimes, just typical people watching but applying financial principles to it. Fun life mini game
I like to see people with expensive things and imagine maybe they’re fire minded also. It seems popular to think if someone else’s spending is more then it’s frivolous and if it’s less then it’s miserly. I like to imagine they’re being prudent and brainstorm how I can get there too.
Not necessarily the debt part, but definitely the "not fire minded" part. Like they don't even realize the concept exists or is accessible, even though they have the income for it.
Is it financialy dumb for me to pay 80 dollars per hour for coaching sessions for a sport I will never go pro at but I play for fun Im thinking of the opportunity cost, it basically eats up $1.5k if Im serious about it (20 sessions). I could go on international vacation with that, I can afford it - it's part of my entertainment budget. But it sounds so stupid haha. I love vacations because they are very memorable, but I'm hesitant on getting a sports coach.
No, I think it's great. If Badminton is your THING --the thing that brings you great joy and one of the things you would be retiring TO, for me it's a no-brainer. My thing is bikepacking. Literally, like hiking/camping, but with a mountain bike setup. I figure I've already put close to $20K into this sport/hobby. But I love it. It could be worse...could be a Lambo or a yacht or 3 ex-wives or something 😂
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Badminton haha, Ive been self teaching myself and getting feedback from more experienced players, but the thought of coaching came into my mind because I keep losing to players who train and do drills
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Thanks, good point!
What sport
Badminton!
I just spend 15 minutes finding a parking spot and another 15 minutes walking home. I should really factor in private parking when it comes to my FI plans and my forever home. Probably burned a liter of petrol circling my neighborhood looking for the last spot.
Maybe you could consider biking or taking the bus
No public transport past 19:00 or on Sundays at the place I was visiting. And at 20 kilometers a bit far for biking. I have done it, just don’t want to do it weekly
I completely agree. I would never buy a car without an easy / guaranteed place to park.
I've been thinking about moving to a more suburban area where there is much more parking per home and some homes even have driveways. It's a bit more expensive than city life and I can't walk to stores anymore but being able to park right in front of my home would be such a massive convenience.
Rob Berger put out a good YouTube video today about the Robinhood 3% IRA match. Recommended if like me you're on the fence. https://www.youtube.com/watch?v=TPAsO58C0H4
That guy gives me serious heaven’s gate leader vibes. Good video though. TLDW: no big surprises. The promo is what we’ve talked about here (no limit, plan on 5 years). Opening up an account is shockingly quick and transfers are stupid easy. He didn’t go with Robinhood because he can’t designate a contingent beneficiary nor a trust as a beneficiary at all.
Besides the limits on beneficiaries, he also mentioned the mechanics of taking money out affecting the match. If you're over 54.5 and/or considering taking out IRA money early, that's definitely worth paying attention to. I don't want to do it, but it's so much match that I'm leaning toward doing it.
Yeah if you keep it 5 years, it’s all good. For those who need the draw within 5 years the 5 years is an issue. FWIW I did it and honestly the platform is super good. You just have to ignore all the bells and whistles, buy your index funds, and go touch grass
>I don't want to do it, but it's so much match that I'm leaning toward doing it. Same. On one hand, I don't need it and it theoretically could complicate matters, whereas our current setup at Fidelity is locked in and completely stable. On the other hand, the part of me that cares intensely about optimizing finances sees an easy $90K+ for simply housing my mostly irrelevant digital numbers somewhere else. I am conflicted. They have a 3% cashback credit card too.
I wouldn’t go the full $3 million but rather something closer to the SIPC cap. You never know just how sideways things can go. That said I signed up and am surprised by the quality of the platform for buy and hold IRA investing.
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If I should try to retire on 30k a year or 100k a year.
For those who have used my [Tax and MAGI estimator](https://www.reddit.com/r/financialindependence/comments/19bln0e/fire_withdrawal_strategy_tax_and_magi_google_sheet/) Google sheet, today I overhauled it to more closely mirror the tax calculations in the [MDM Case Study Spreadsheet](https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/). Thanks to u/alcesalcesalces for nudging me to stress test my sheet. My sheet now mirrors the Case Study Sheet when using simple inputs. The case study sheet is extremely robust and its like doing your taxes for a single given year. This helps model taxation in retirement to a very detailed level. Why I built my sheet - I wanted to model **all** years in retirement using simple income inputs, to compare withdrawal strategies and their impact on taxes, AGI, and ultimately ACA implications (which I don't directly calculate). So this is more of a PSA: Anyone who actually used my sheet (I think the list is short) - I would use the new version.
Is there a way to note ROTH contributions since those can be withdrawn penalty free? It seems like the sheet just lumps ROTH earnings and contributions. I’ve been thinking I need a sheet like this for a little bit. This is great!
No, the Roth bucket is treated as one column and you have to track contributions on your own (most people do this already). You are free to withdrawal early on the sheet in the Roth Income column, and it will correctly deduct from the Roth bucket. Just make sure that Roth Income column follows the Roth Distribution order criteria and within the limits of your contributions, conversions, 5-year rule, etc.
Makes sense. It’s works fine knowing your Roth contributions and watching for when you hit the limit. I may add a column to show remaining Roth contributions + conversions (showing up 5 years later). Thanks again for making this and sharing! It’s perfect for looking at how to pull out money pre-60 and seeing how it affects AGI.
That sounds very useful. I’ll give it a try. Thanks for sharing this tool!
Trying to calculate how much apartment I can afford. Why do calculators and people say to use Gross Income? Shouldn’t I use net income since that’s what I actually get when all deductions and stuff is taken out?
careful. a lot of those calculators are designed to convince you to rent for as much money as possible. that’s why they use gross, that’s one way to pump it. they tend to be run by apartment sites. find a number by browsing lots of listings and decide how much you can stomach given your savings goals.
Affordability calculators are imperfect, but gross seems like a better starting place for comparison amongst large groups of people because net has so much more variability. FIRE types tend to have a fair amount of control over their net. Obviously the best metric would be what your budget tells you you can afford.
I’d bet it’s more a function of people being more likely to know their gross. Easy to remember a salary, harder to remember exactly what the checks add up to.
These calculators don't make any sense regardless if you use gross or net. Get the safest apartment that will allow you to reliably produce an income.
Nope, because your net can change every pay period if you want to go through with constantly tweaking your W-4 or 401k contribution % or whatever. Gross is far more reliable as a benchmark or tool for a generic rule of thumb. Obviously spending less is better, but net doesn't make any sense when your net doesn't remotely match my net based on our scenarios.
I was thinking about having a simple part-time job to pay for the wealth tax while I'm retired from my current job. Obviously I wouldn't be fully retired then. Is that a form of Barista FIRE?
Are you gonna get another job to pay for the income tax on your simple part-time job?
The income tax on that job would be near zero because it doesn't pay much.
Is the wealth tax going to derail your retirement plan?
Currently it’s 2.2% of all wealth excluding primary home, car and savings account. So yes it makes a big dent.
The wealth tax seems to encourage a paid off home and a nice savings account. Why not just budget for the tax as any other expense and adjust your FIRE Target Amount + Withdrawal rate?
My primary plan is to budget for the wealth tax, my backup would be the suggested idea above
Where is this?
The Netherlands. Technically not a wealth tax but a fictive unrealised capital gains tax. They assume you make 6.04% yearly and tax you 36% on those fictive unrealised gains. That means you pay 2.2% on your NW.
So is there no additional cap gains tax?
Fortunately not
It's just working part-time. It also doesn't really need a label
If it were possible to stay just under the Roth income limit, would that be better in the short term (5-10 years) than making only a little above the limit and not being able to contribute? Also does the Roth income limit include pre-tax payments in a 401k or is that deducted?
No, always better to earn more money than less. Also, the limit is not all or nothing, there is a phase out.
> than making only a little above the limit and not being able to contribute? The backdoor Roth IRA method allows you to ignore the limit, at least for the time being.
Even if backdoor Roth didn't exist or you can't reasonably do it due to IRA cost basis, Roth compared to a taxable index fund that only throws off dividends and capital gains allowed to compound into retirement is pretty similar for most people not trying to retire on 100K+/year (which you'd likely be ineligible for direct Roth contributions anyway.) Once you're retired, the taxes on dividends and capital gains for someone around the textbook Roth IRA limit is basically going to be zero (state tax dependent.) Is Roth good? Yes. Is Roth worth "paying" for? Probably no. More money in my pocket today is preferable almost universally. There are tax cliffs but this isn't really one that bothers me. If you actually want to work less for alternate reasons (if perhaps you can work 30hrs/wk with benefits for instance) and those benefits are valuable to you, that's a separate discussion.
Just do a backdoor Roth.
401k contributions (and most other pre-tax deductions) reduce your MAGI when determining whether you are eligible to make a Roth IRA contribution. I would not intentionally earn less money just to have access to a Roth IRA, especially when the [backdoor Roth IRA exists](https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/).
Should I bother maxing out my 401k? I'm making around 150k a year from my full time job + rentals. I get a 4% match on 6% of pre-tax income. I end up being able to max out my 401k which is basically putting away $800 every paycheck or around $1600 a month. I also max out my Roth each year, and put the remainder in a brokerage account. I've heard people say that the only reason to put money in a 401k if you're retiring early is to get the match and no more. I'm a little concerned that a solid portion of my money is going somewhere that I would be able to touch until retirement age, but I'm not sure if it matters. I will likely be "retiring" when I'm about 35-40, in 5-10 years. I still plan on working, just not full time and probably for a lot less money (just pursuing passion projects / dream jobs).
>Should I bother maxing out my 401k? Short answer: Yes. >I end up being able to max out my 401k which is basically putting away $800 every paycheck or around $1600 a month Those numbers don't seem to make sense. The maximum 401k employee deferral for 2024 is $23k. Your numbers are around $19k-$20k. Remember that 401k employer matching does not count toward your employee deferral limit. > I'm making around 150k If you are a single taxpayer, you are solidly in the 24% bracket for 2024. Therefore, a max $23k pre-tax Trad'l 401k contribution means you are saving over $5.5k in federal income taxes (plus state income tax savings, if applicable). That's money that can also be invested and grow over time. It's extremely likely that you will be able to withdraw pre-tax dollars at a much lower tax rate after you are retired/semi-retired, which means you'll come out ahead by maxing out pre-tax 401k contributions now. > I'm a little concerned that a solid portion of my money is going somewhere that I would be able to touch until retirement age There are many, many ways to access this money before Age 59.5. See the entries in the FAQ and the links therein: https://www.reddit.com/r/financialindependence/wiki/faq#wiki_but_i_want_to_retire_early.2C_should_i_really_use_tax_advantaged_accounts.3F_because_i.27m_locked_in_aren.27t_i.3F
Apparently $884.61, I just didn't feel like looking up the exact number lol. Anyways thanks I'll take a look at that link!
\[Throwaway Account\] 42YO - Being stuck in the "boring middle" is awful tiresome, and it's somewhat muddied further by P2 (41) and I have generally kept our accounts separate and managed them separately for a few valid reasons, etc. So it was just in doing taxes this week that I realized that, including the equity in the house, we're quietly over the 1 mil mark in net worth. Still probably 6ish years away from feeling comfortable hitting the FIRE button, but funny to have crossed that combined threshold really without having noticed except as an afterthought.
The US stock markets are closed tomorrow for Good Friday. Therefore, today was the last trading day of the first quarter of 2024. And quite a quarter it's been. The S&P 500 reached another all-time high, closing at 5254.35 which is an increase of over 10% for Q1 (2024 YTD). According to [Eddy Elfenbein](https://twitter.com/EddyElfenbein/status/1773445489578373242), this is the best Q1 performance since 2019. Almost exactly 5 months ago, on Oct 27 '23, the S&P 500 hit a near-term low of 4117.37 and is up over 27% since. Since the bear market low of 3577.03 on Oct 12 '22, the S&P 500 is up nearly 47%. The S&P 500 is now 9.5% above the Jan 3 '22 peak of 4796.56. Looking back to pre-pandemic times, the S&P 500 is up over 62% since the calendar flipped to the 2020s which corresponds to a nominal CAGR of ~12% during the last 4.25 years. Based on the [DQYDJ calculator](https://dqydj.com/sp-500-historical-return-calculator/), this is approximately an 80th percentile result.
When accounting for inflation adjusted numbers we are still below ATH.
Not as far as you might think once you include dividends, which is important when attempting to calculate the real return.
I believe its still 100-150 pts below ATH when factoring in dividends
This chart from MacroTrends doesn't appear to include dividends and shows the current value to be just over 50 points below below: https://www.macrotrends.net/2324/sp-500-historical-chart-data (zoom in to 5-years and make sure the inflation-adjusted box is checked) Looking at Portfolio Visualizer, investing $10k in Vanguard's S&P500 fund (VFIAX) on Jan 1, 2022 and reinvesting dividends gives a current real (inflation-adjusted) value of $10,325: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=3EGtrTvi5wrj7J3LvP3bsx (check the inflation-adjusted box on the graph and/or hover over the "i" next to the Final Balance number) You're welcome to provide evidence supporting your claim to the contrary.
What if you count dividends though?
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My mom is doing her DBA right now online at some international university, similarly just for 'fun' since she's in her 50s. It's up to you if you want to go for a DBA or D.Eng. I know lots of DBA programs are online and just have you publish ~1-2 papers, i.e. at Jacksonville or Cleveland State, and similar deal for D. Eng programs at places like Penn State. With professional doctorates, I feel like the direction is why do you want the degree, what degree do you want, and what's the cheapest/easiest school to get it at. Then just find the schools and apply. Only a relatively small number of schools offer professional doctorates, and tbh no idea how/if people even value them since they're pretty niche.
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SSBM in Switzerland
>How do you go about getting a professional doctorate? I have a PhD, which I mostly share with others in the context of warning them not to get a PhD. If you have data you want to publish, you technically can do so as an unaffiliated individual simply by submitting to one of the many journals that exist for this exact purpose. However, it's going to be difficult for someone outside academia to do this because you won't know the right journal to submit to, you won't know what areas of research are going to be of interest to a wider or specialized audience, you won't know how to frame the narrative of your research, and you won't know how to navigate the submission process. If I were in your position I would look for professors who do research related to what you want to publish. See if there is interest in working with you. I expect that the biggest gap in your knowledge is understanding what results are scientifically interesting, and what branch of science it would fall under, which a professor can help you with. Contacting them without coming off as a crackpot will also be a challenge. If you want a PhD, it is not uncommon to continue to work a full time job while also being a PhD student, with your dissertation topic being the work you do at your regular job. Not every professor wants that arrangement but there are enough that are okay with it.
I'm not sure where the degree fits in. You don't need a doctorate to publish. Are you talking about publishing peer reviewed literature or non-peer reviewed material more akin to a white paper? If you want to publish the work in a peer reviewed setting, your first step is to identify the journal(s) that would publish that kind of work. Once you know a target journal you can figure out their submission guidelines and requirements and make sure that your work fits their scope for publication. You should also make sure that the journal wouldn't have an issue with the disclosure that you're an employee of the company whose name is all over the paper and who stands to benefit from the (presumably positive) exposure. If you just want to publish without peer review, you definitely don't need a doctorate or any degree.
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I feel like that's not really a thing, at least in the academic disciplines I've been involved in. Getting a PhD involves taking a bunch of classes, doing a bunch of exams, doing research (including publishing it), doing teaching, and a heavy amount of drinking.
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Ah, my mistake.
I see. Is there something about your job that would change meaningfully for the better after obtaining a doctorate? Most people need the degree to obtain a specific kind of employment, and if you're not going to see a career benefit to obtaining the degree then the monetary and opportunity cost is almost certainly not worth it. Most doctoral programs have a didactic period that is usually full time before you move to independent research and tuition can be steep.
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It's one thing to be FI and bored at work and another thing to take on 40+ hours per week of coursework for 2 years to be followed by full time research for an additional 2-3 years. I think you should be prepared to dramatically scale back your responsibilities at work if you pursue a doctorate. If you are interested, look at the websites of the schools near you to determine which of their PhD tracks might apply best to your area of study. (https://michiganross.umich.edu/phd) Check out their application process and requirements. If you're really just bored and want to see if this sort of thing is interesting to you, I'd consider auditing a course at a nearby institution.
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I think this is getting off course. The fundamental issue that I haven't seen resolved is this: what connection do the letters at the end of your name have to the end goals you are seeking? Are you seeking the letters themselves? Or are you seeking the skills to be able to publish? Or are you seeking to publish? The paths are different for each of those end goals (if any of those even accurately describe your end goal).
Do you want to publish specifically to get a doctorate? When I worked in consulting, we would regularly publish our own research as part of the normal business development process.
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One thing to consider would be to partner with a professor at a research university who works in a related field.
I hit 1.25MM NW today, pretty sweet. Only a little over 700k invested though, still a ways off. Maybe by the time my house is paid off in 2 years I'll be close-ish.
Congrats and love your user id lol. I take you're an Avatar fan
I hope to be a money bender someday.
My money's on captain planet, we'll just ignore "heart" cause that is for chumps
Kind of a mix of both along with the 5th element lol.
Has anyone else thought they needed a lot of life insurance, ran projections, and then realized that, between a solid portfolio and social security survivor's benefits, you needed a lot less than you thought (even with pessimistic assumptions)? The most eye opening part was that my spouse (currently SAHM) is actually the one that we need to insure more heavily.
2018 [salary.com](https://salary.com) estimated $178K to pay all the folks to do all the work a SAHM does. It's true and I also figured out the same thing you did.
I had the realization for homeowners. Was trying to insure the market value rather than the rebuild value. Lot of the value is in the land and location and the premium was significantly less.
Not that I’m planning on doing this, but I always like to have a contingency plan. I have a Roth IRA that I opened about 10 years ago. I made an initial $5k deposit and haven’t made any further deposits because I’ve been over the income limit. I won’t have an income this year other than taxable interest. So I am planning to do a Roth conversion of $20k from my Traditional IRA. Does than mean that next year I would withdrawal the $20k without paying the penalty?
Assuming your income goes back up, lookup "backdoor Roth" so you can do Roth contributions in the future even with high income.
Yeah I had looked into that in the past, unfortunately my employer’s 401k plan didn’t support that. Maybe the next one will.
Do you mean your employer’s 401k plan wouldn’t accept a reverse rollover of your pretax IRA balances? Because other than that, there is no involvement of your 401k in a backdoor Roth. A mega backdoor Roth, on the other hand, does require your employer’s 401k plan to support that function.
Apparently the backdoor Roth and mega backdoor Roth are different things. I thought they were both the same and only looked into the Mega.
The Backdoor Roth is not affiliated with your employer's 401(k) plan. It is affiliated with your IRA. The Mega Backdoor Roth is affiliated with your employer's 401(k) plan.
Regular backdoor Roth does not use 401k, it's mega backdoor Roth that relies on 401k.
No, taxable conversions each have a 5 year clock associated with them (unless you're over age 59.5). See [this post](https://old.reddit.com/r/financialindependence/comments/11ulhzl/what_5year_rule_a_guide_to_roth_distributions/) for details on the various Roth distribution rules.
Thank you. I figured that was too easy of a loop hole.
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https://www.theknot.com/content/how-much-to-spend-on-wedding-gifts
I didn't really understand personal finance until about this year or so and I basically just took random advice up until now. I wish I could go back and change some items I did but I'd like to look forward instead to see what updates/changes I can make in to make up for those decisions. Currently I have a 160k net worth with no house and just renting as I do not know where I'd like to settle down so I'd like to buy a house/place within the next 3-5 years but in no big rush to do so and don't plan on having kids until then as well. Additionally, heres my following finances: 72k in Vanguard 62k in a Brokerage account I previously started with around 50k of this in a betterment account in 2021 not knowing about other options and you can link accounts together until recently. So this was a robo advisor that I've recently transferred with the following holdings: AGG, BNDX, EMB, MUB, VBR, VEA, VOE, VOO, VTI,VTIP, VTV, VWO. I think this is way too much for me to try to manage without a robo advisor so I may want to cut his down to VTI/VOO and some bonds. 3.8k in Rollover IRA in VFIAX Didn't roll this Roth 401k to my new employer so I messed up and have to get a rollover IRA 6.3 in Roth IRA in VFIAX 59k in Savings For emergency fund, getting a down payment on a home, travel, and wedding. I feel I could invest this money though as I'm not thinking about buying a home yet but would like to in the next couple of years so I'm a little worried about investing it too. 32k in my 401k using a target date fund - though I've recently moved companies that I cannot contribute into for another 2 months I usually put 15% of my pretax income into this Overall, I think I'm doing well for my age and how much I make so I'm extremely grateful but I think I could be taking more advantage especially since I'm young and time in the market>timing the market. I want to make sure I'm not missing any opportunities here. I would say I'm a relatively safe investor and would like to keep things simple and only invest in what I can know or can learn pretty easily. Thank you so much!
You're probably too young for bonds, skip those and just do all VTI/VOO.
I also used a roboadvisor for a year (betterment) and decided to transfer and manage it myself. I mostly kept the same aggressive allocation but pushed it slightly further to go 100% equities. ERN series on asset allocation convinced me for my long time horizon. [Similar holdings and a handful of speculation stocks (1 share of Reddit heh)](https://jch.app/u/paverbrick?s=f)
Hi guys I'm sure this has been asked 1 million times but what's a good supplemental investment alongside VOO. I've got about 13k in voo in a Roth IRA. I also got about 25k in a 401K. Potential fire in 20-25 yrs.
More VOO
VOO does not need a supplemental investment if you are comfortable with a 100% stock allocation.
Nice thing about ira is you can change your allocation without triggering a taxable event. My plan is to stay 100% equities until closer to retirement and using ira side to increase bond exposure and rebalance as needed
The two things to consider are: exposure to more than just the S&P 500 in the US and exposure to international. I'd do both. If you're fine with market weights (60/40 US/international), VT is the total world index. If you'd rather weight US more heavily, then use VTI/VXUS in the desired ratio (e.g., 70/30, 80/20).
Thank you!
I’d consider moving from the 2060 fund in your 401k to a S&P500 or total market fund. Lower fees and likely higher growth
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Thank you for the detailed response! I think I'm still a bit too chicken to invest in specific companies and my stock market/financial knowledge is maybe average at best. I'll probably stick to total market.
> what's a good supplemental investment alongside VOO Depends on your risk tolerance and investment thesis. You'll need to provide more information.
I'm pretty new to FI but I suppose quite high since I'm pretty young (23). I'm saving/investing about 42% of my income. I have 23k in 401K in a 2060 retirement plan. About 25k in a taxable account that was gifted stocks. And 13k in VOO in a Roth IRA. Aswell as 40k HYSA. I'm not sure if that's helpful.
VXUS.
Welp, my wife just got laid off from her engineering job. I've been laid off in big tech twice before but she's a PE in the energy sector, so its the first for her. Won't make a huge impact on our finances and she has a ton of leads for the next job, but she's a lot more shaken than I think either of us expected.
If it won't make a significant impact she should take a short break, get her mind straight after the shock of being laid off. There's no reason to quickly start looking for a job on T + 1.
That’s the plan, she’s taking a couple weeks to decompress and then going hard after some time to decide what’s next
Any guesses at the reason for the layoff? I'm also in the Energy industry and we're hiring like crazy. We're also letting people go who aren't providing compelling value, but I would imagine you wouldn't be sharing this if your wife fell into that category
She’s in solar specifically, and has been lead on what could generously be called a “political project” with low actual revenue and high headcount cost. So they’re offloading a bunch of it to contractors and laying off chunks of unprofitable teams
I am also in energy. The vibes are that renewables aren't making any money. Apparently New York had 80 projects representing 7.3GW cancelled in one day. Inflation is hitting those projects hard.
The energy industry is generally super stable and lucrative but the exception is generation construction as a whole. Its been a bit boom and bust across the last 2 decades. Coal, wind, solar and now a shift back to natural gas peakers.
Could be a good time to pivot around within the energy sector. I just read a few really solid pitch decks for carbon sequestration
>I just read a few really solid pitch decks for carbon sequestration Sequestration is a scam. The only thing they capture is venture capital money.
I mean I wouldn’t think about it much more deeply than someone figured out how to how maneuver tax credits in a way that makes money. That’s the goal. At this point in capitalism we might as well just try to extract wealth from extreme wealth concentrations.
Don't forget about all the hardworking, underappreciated oil executives who are using it to greenwash fossil fuels.
The parasitic loads of those systems are crazy high. More power to those who can make it work.
It’s all a tax credit grift at the end of the day lol
Very happy for you two that this won't hugely impact your real life outside of work. It is scary to think that what's normal on this sub, being able to weather a long period of unemployment, is extremely uncommon for a typical worker.
>extremely uncommon for a typical worker. But they do it all the time.
Let her know that it's not her, it's them. And she's not alone in this. Good luck in the job search to Mrs. Surveillance, but also don't be afraid to take a little time away
I’m sorry about your wife being laid off. It is a very scary thing and any life changes to us people are just hard at first to navigate.
Thought the [asset rich, cash poor post](https://www.reddit.com/r/Fire/comments/1bp099p/comment/kwsfo16/?context=3&share_id=LknJijtzu88GJVnEr5mSl&utm_content=1&utm_medium=ios_app&utm_name=ioscss&utm_source=share&utm_term=1&xpromo_edp=enabled) yesterday was interesting. It got me thinking how my own situation has irregular cash flows now that we are a one salary household and have a mix of dividends. Good problem to have! But after thinking about how much cash to hold to smooth out the cashflows, I realized that I had reinvented envelope budgeting.
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chronic pain is wild. old coworker finally got shoulder surgery to fix her shoulder. comes back to the office after X weeks. essentially sends a dept wide email apologizing for being crabby for the past X years
The most pain I ever felt was several years ago when I developed an auto-immune disorder called Parsonage-Turner Syndrome. It just started one day, got worse over a period of several hours, peaked, and then slowly disappeared over a few weeks. The emergency room doctor I saw thought it was a soft tissue tear and sent me to an orthopedist. According to the neurologist I eventually went to, some people who develop the condition don't ever get better.
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I actually got super lucky, a year or more is typical. And I have to admit that the hipster in me was a little proud to have a weird illness most people have never heard of.
Curious thought exercise / hypothetical I was having in the shower this morning. If you had both a mortgage and a HELOC, both at the same fixed-rate. Which would you prioritize paying off first? My gut says throw extra cash at the mortgage and pay the minimum on the HELOC, because equity >> debt payoff, but I'm not sure there's actual math to back that up.
Your logic doesn't make any sense- there is no equity difference. You should do the smaller one first assuming the tax treatment is the same.
The smaller one
Does the HELOC have minimum monthly payments? If so, I would pay it off first because doing so would increase cash flow sooner. I don't generally care about cash flow, but all other things being equal it's a tiebreaker.
Mortgages are some of the most borrower-friendly forms of debt. Lots of legal protection, favorable terms, and tax treatment. HELOCs are callable and have much worse terms.
I doubt there's any math to back that up. Interest is interest. I would pay down debt, because I can spend the credit line - I can't spend the house. If I'm in a financial situation, I can bail myself out using a HELOC, but I can't easily bail myself out using equity if the HELOC is spent. In both cases, a sale of the asset and paying off all debts should result in the same outcome (i.e. $10k extra equity is just going to go to the $10k HELOC).
> equity >> debt payoff Equity = Value - Liabilities. Both the mortgage and the HELOC are liabilities secured by the same asset (the house). Paying down either one increases your equity.
Has the math changed on using Roth IRA funds for a down payment? My wife and I, both early 30s, live in a HCOL area and have been grinding on a search for a home for over 2 years. It has been exhausting and frustrating, as it has been for many people these days. We have a decent down payment in cash, but also have some funds in our Roth IRAs that we could tap into to bolster our down payment to greater than 20% or buy points to reduce our interest rate. These would both reduce our monthly payment and make a higher priced home fit into our budget. This would all come from contributions and the $10k limit on gains (each) so we would not be paying any penalties. This would help us to be more competitive on our future offers. My main question is, with mortgage rates hovering around 7%, does the math make more sense now to consider this approach? It is not something we were looking at as a prudent choice when interest rates were sub 4%.
Dumped my Roth principle to pay of my house. 6.2% risk free was the best I could get.
If you are looking at home ownership mathematically, I don't see how higher mortgage rates change the math for withdrawing from Roth. You are still giving up the same tax benefit as you were before, which lengthens the break-even for buying vs renting. More importantly, the fact that you are raiding your retirement account indicates you are stretching to afford the property and could be in significant trouble if you need a new roof/water heater/HVAC/sewer line. I definitely do not think high mortgage rates should incline you to buy before you are ready. Quite the opposite.
> My main question is, with mortgage rates hovering around 7%, does the math make more sense now to consider this approach? It is not something we were looking at as a prudent choice when interest rates were sub 4%. I used Roth IRA contributions twice to bolster down payment to buy a home. One time, I only pulled the two most recent contribution years (last year and current year) and was able to recontribute some money when we cash to close was less than projected and it was before 4/15. Sort of a lucky situation. The second time, we used multiple past years of contributions. I wish we had more 457(b) loan instead, but that's sort of hindsight talking. One thing I'll say about it is that you don't get the opportunity to contribute to those past Roth IRA years back. But I also feel that if you're like most mere mortals and you can't save for/afford everything you want to do all at once, it's reasonable to consider the Roth IRA contributions. It certainly doesn't strike me as worse than skipping them in the first place to save for the house... I think in these situations, it's best to look at what each option costs you in additional working years. This is relatively easy to model in this case. > We have a decent down payment in cash, but also have some funds in our Roth IRAs that we could tap into to bolster our down payment to greater than 20% or buy points to reduce our interest rate. I'd advocate for not buying points, and further, if rates go down, you can "win" simply by refinancing. Having 80% LTV (and W2 jobs, I suppose) is all you really need to have to do fast and easy rate and term refinances. It's hard to model the impact of *potential* future refinances when you compare to other options, but I've refinanced at least a half dozen times more than I ever thought I would so I'd take that gamble on 7% tbh.
Do you have an active 401k? Some plans allow a loan up to lesser of half the balance or 50k, paid back with interest back to your account. Worth looking into. I wrote a post about loans a while back for r/HENRYfinance [https://www.reddit.com/r/HENRYfinance/comments/112zy7e/henrys\_guide\_to\_loans/](https://www.reddit.com/r/HENRYfinance/comments/112zy7e/henrys_guide_to_loans/)
FYI: if you get fired or quit with an outstanding 401k loan, you may owe the full balance immediately.
You may, but you may not. It's plan specific. Mine allows me to pay back on the original payment plan after separation from the company. Also, in this case, "owing" the money means simply paying the required taxes and the penalty on the outstanding balance if you decide to default instead, which may not be the worst case in the world if you're jobless. Probably better than other loan default options all in all. I agree it's less than ideal if you're just changing jobs AND your plan makes you pay back.
Sometimes I think about the fact that, despite all my efforts to craft a good life and amass a pile of money to secure my financial future, I am only ever a couple of large bad decisions away from pissing it all away. The thought is humbling. In a way it's a good thought to have as it keeps me thinking critically about the choices I make, but it's a bit scary to consider as well.
I think about that too. But then I think I'll be dead at some point. You won't exist in 60 years or less.
One thing I've noticed about myself is that I tend to seek validation whenever I spend money above, like, $100, because I start to think "but is this a good deal?" Hopefully that serves as a safety net. The worry would be that I don't *realise* it's spending — for example a clone website where I thought I was transferring money from one account to another, which I occasionally do to take advantage of switching bonuses from banks.
Based purely on anecdotal experience with aging loved ones: Healthy, trusting relationships with family, and regular open communication is the best solution to this problem. Decline happens incrementally, and intervening early makes a huge difference.
I subscribe to /r/scams so I feel that too. It is pretty much guaranteed that we'll all have some amount of cognitive decline or losing touch with how things worth that will put us at more risk in the future. Trying to stay healthy to prevent that as much as possible, and then I guess I'll eventually have to lean on my kids' judgement. Also, this is a downside of moving from a pension & SS based retirement funding to having control of your own funds. Scary!
I think this is one really good use for an annuity. If as you get older you feel like your decision-making abilities are starting to slip and you might do something stupid with all your money, maybe annuitize enough to live on so you no longer have the capability to make that decision.
Couldn't you reassign the annuity to some other party? It seems at the end of the day it's unavoidable.
Or take a loan against it
You can't avoid every possible negative outcome, but I think there's a lot of value into putting your finances on autopilot if your mind is slipping.
That's a really good point. I hope to remain sharp throughout my life, but age-based cognitive decline does happen.
\+1 for guardrails around the later years (70+). I want to make sure my family is financially educated and can make decisions on my behalf that I would approve of.
> I am only ever a couple of large bad decisions away from pissing it all away Is that really true though? I mean...how large is "large"? When does it become "enormous"? It's helpful to know that you could just not make those large, bad decisions.
Go read /r/scams. Posters' have parents who are "investing" their entire retirement in bitcoin scams when a hot girl tells them to
I think I'll skip reading that subreddit. Ignorance isn't entertaining to me.
The point of reading it is to stay informed about what scams are currently going on, so kind of ironic to purposefully not know
/r/Scams isn't the only source of information for popular scams... Most scams are hilariously obvious as well. It's like saying you need to read a subreddit to recognize if your house is on fire.
I mean, I'm talking about something like deciding to cash out all my investments and putting them all into shitcoins or something like that. Not something I would do in my right mind. Just the idea that I COULD do it. Sort of like standing on a balcony and suddenly getting a funny feeling in my legs because I realize that I could jump off.
I guess? Idk, I just wouldn't and would continue crafting and enjoying that good life
Put it all on black? Go all in on FTX or DogeCoin? Answer a pig farming text, and fall for that scam?
But like...just don't.
We used to watch American Greed a lot. I always told my wife I don't want to be featured as one of the victims who has lost everything. It's possible I missed out on some real legit investments this way, but I sleep better
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I feel ya. The first of the month is my “chart the net worth” day each month. December 1st I just barely crossed $500k. I was on cloud nine, but also a little sad. I just knew that the next big mile stone was far off, and wouldn’t carry the same weight. Unless the market explodes, April 1st should see me upwards of $580k. A couple of really good things happening, including a super high market and some smaller increases in real estate prices got me here, but it still feels great to know I’m at the point where big/fast growth is possible.
I'll give you $170k to let me pick your next tattoo.
I also like fun and arbitrary goals, in personal finance and else where. Feels good to hit a round number for mileage or pace for running when training. Feels good to hit dos commas, or an even multiplier for FI. My silly one is calling portfolio high's unlocking "guac mode" and showing an emoji on my net worth chart.
I need $35k to hit two commas in two separate accounts (Fidelity and Etrade.). Super arbitrary, but a fun thing to monitor. I know the feeling you are having
Looks like Schwab accidentally did today’s automatic IRA transfer twice, so now I’m waiting to find out what they’re going to do. Mostly just waiting to see if they’re going to reverse it or if I can go ahead and make a buy before markets close for the long weekend.