I'd suggest that OP look to buy real estate when good opportunities arise in the coming years (and to have enough cash on hand or be able to become liquid in short order, if needed, for down payments). I think it is important to take advantage of tax benefits/company matches/so on and have a healthy retirement account, but for perspective... my first rental (CO mountains) nets 30k and has appreciated 500k (almost 200% appreciation) in just under 10 years.. the down payment was 65k.
Young Ag asking for investing advise
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Last: 11 mo ago by AgsMyDude
You are asking a very broad question, obviously it doesn't have simple answers. I think you need to decide what you want first.
The simple answer is to put as much into your 401k that the company matches. Don't put in any more. It really doesn't help unless you are in high tax brackets and if you get into those brackets then you really don't care about 7500 bucks a year anyway. The same is true with Roths. The amounts are just so small. Sure you can grow a comfortable retirement, but if you want real money then they are irrelevant. 529 plans suck even more. Just open up a custodial account for your kid and put money in every month. Half in VOO and half in whatever you want.
From there you have to make a decision. Do you want real money or a comfy retirement? Because if you want real money, there are only three paths and if you are asking here, one of those didn't happen.
The three paths to real wealth in America are:
1. be born to it - most rich people have rich parents - this didn't happen to you or you wouldn't be asking this question on this forum
2. Real Estate - not just house appreciation but working it for real - develop, rentals. Every self made billionaire made it through real estate or...
3. Have people work for you - general rule is 1/3 goes to their salary, 1/3 goes to overhead, and 1/3 goes to ownership. You make a third of 20 employees and that adds up. Make a third of 5000 employees and you are a legend.
Last thing - the Ramsey plan will get you a comfy retirement at the cost of missing your life. Do you really want to live in a crappy house, driving a crappy car, eating crappy food, and working your butt off so you can retire at 60 instead of 65. F that. You only get one chance, why be miserable for all of it.
The simple answer is to put as much into your 401k that the company matches. Don't put in any more. It really doesn't help unless you are in high tax brackets and if you get into those brackets then you really don't care about 7500 bucks a year anyway. The same is true with Roths. The amounts are just so small. Sure you can grow a comfortable retirement, but if you want real money then they are irrelevant. 529 plans suck even more. Just open up a custodial account for your kid and put money in every month. Half in VOO and half in whatever you want.
From there you have to make a decision. Do you want real money or a comfy retirement? Because if you want real money, there are only three paths and if you are asking here, one of those didn't happen.
The three paths to real wealth in America are:
1. be born to it - most rich people have rich parents - this didn't happen to you or you wouldn't be asking this question on this forum
2. Real Estate - not just house appreciation but working it for real - develop, rentals. Every self made billionaire made it through real estate or...
3. Have people work for you - general rule is 1/3 goes to their salary, 1/3 goes to overhead, and 1/3 goes to ownership. You make a third of 20 employees and that adds up. Make a third of 5000 employees and you are a legend.
Last thing - the Ramsey plan will get you a comfy retirement at the cost of missing your life. Do you really want to live in a crappy house, driving a crappy car, eating crappy food, and working your butt off so you can retire at 60 instead of 65. F that. You only get one chance, why be miserable for all of it.
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Worse than the "401ks are for suckers" posts above. Hopefully this is a joke too
Knoxtom with some real wisdom there. Legit. Kind of ties into my point of focusing on making more money, but more direct.
In a more tactical approach for OP, do you have a Fidelity brokerage account?
If not, I'd create one.
Then link it to your checking account where your paycheck is deposited.
Move some money to Fidelity and invest in an index fund.
That's the first and most basic steps I'd recommend.
Keep learning. Develop your own ideas about what works for you and what doesn't, everyone is different.
In a more tactical approach for OP, do you have a Fidelity brokerage account?
If not, I'd create one.
Then link it to your checking account where your paycheck is deposited.
Move some money to Fidelity and invest in an index fund.
That's the first and most basic steps I'd recommend.
Keep learning. Develop your own ideas about what works for you and what doesn't, everyone is different.
Charismatic Megafauna said:
Worse than the "401ks are for suckers" posts above. Hopefully this is a joke too
Which post are you saying is worse than the 401ks are for suckers?
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Knoxtom's, right above mine, particularly his statement that there are only 3 paths to wealth in America and the implication that if he wants to be wealthy his only chance is to go full port risk on right out of the gate
I think he qualified it as the paths to "real wealth".
401Ks and IRAs and saving 40%+ of your salary and investing in stocks can only take you so far. Granted that can be a very comfortable, and high probability of success approach, but, The upside is limited.
401Ks and IRAs and saving 40%+ of your salary and investing in stocks can only take you so far. Granted that can be a very comfortable, and high probability of success approach, but, The upside is limited.
Agreed. Many generalizations in that post and I'm not sure what "real wealth" is.
Completely incorrect thinking here.
The upside is "limited", but so is the downside. If you want to put your money in much riskier vehicles and risk losing your ass and years of your retirement, you do you.
I can go to Vegas right now and put all my savings on red and double my money in one day, but it's not exactly the smart play.
The upside is "limited", but so is the downside. If you want to put your money in much riskier vehicles and risk losing your ass and years of your retirement, you do you.
I can go to Vegas right now and put all my savings on red and double my money in one day, but it's not exactly the smart play.
I said the slow consistent saving route had a high probability of success.
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Yes I'm all about making high risk reward investments, but you don't do it recklessly, you do it from a position of strength. So you hustle while you're young, keep your overhead low and build up a base (financially and professionally) you can fall back on once you start making risky investments so failure doesn't mean flipping burgers or data entry. The key is keeping a store of dry powder and never stop looking for opportunities and learning more about how to recognize and evaluate them. Most of all don't get comfortable enough with your 9-5 that you decide to buy that pool or raptor and figure you'll just do it until you're 65 and retire on ss and your 401k, because as soon as you get complacent is when the rug gets pulled out from under you
So many cliches... sorry about that
So many cliches... sorry about that
Cars are a money suck. Get over your ego, and drive something that runs.
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
Obviously it's immediate 100% return on matching 401k funds so that much should be a no brainer. I'd say max out your annual max contribution beyond the match but that's certainly open to some debate. It's what I did tho.
I'm not so sure the actual investments in 401k matter all that much. You won't go too wrong with something like an s & p 500 index fund tho. Research your options and just make a call. You'll do fine .
I'm retiring in the next 6 mos after 43 yrs in the E & P space . We will not see any drop off in lifestyle in retirement and likely will pass quite a bit on to the kids for whatever that's worth.
I went to a Continuing Education class after I started working and it helped me to some degree. My degree was in Engineering and no real financial background or guidance from home. Engineering economics was a decent basis in concepts but no help with regard to investment options nor taxes. I'd suggest you invest an hour or two a week for maybe 6 mos in something like a Continuing Ed class to get better understanding of terminology and investment vehicles . It helped me.
I'm not so sure the actual investments in 401k matter all that much. You won't go too wrong with something like an s & p 500 index fund tho. Research your options and just make a call. You'll do fine .
I'm retiring in the next 6 mos after 43 yrs in the E & P space . We will not see any drop off in lifestyle in retirement and likely will pass quite a bit on to the kids for whatever that's worth.
I went to a Continuing Education class after I started working and it helped me to some degree. My degree was in Engineering and no real financial background or guidance from home. Engineering economics was a decent basis in concepts but no help with regard to investment options nor taxes. I'd suggest you invest an hour or two a week for maybe 6 mos in something like a Continuing Ed class to get better understanding of terminology and investment vehicles . It helped me.
The point of 401ks is to keep you working until you're 60. Where as if you take the capital and invest it in a down payment you may end up becoming an accredited investor quicker. Which will open doors to private equity groups and becoming a limited partner in LPs. Which can yes be riskier than your index fund locked away for 40 plus years but also have much much higher upside. Which as someone as young as he can leverage his future earning potential as a hedge against that risk. Again Just another way to look at things. Also important to associate with those also invested in PEs ans LPs to keep the investment train flowing through your life.
There is no such thing as free money. The matching for your 401k is costing you something. Just have to determine if it's worth it.
There are for more articulate and eloquent people on this subject matter.
But I would highly recommend Charlie Mungers book as your next investment dollars spent.
There is no such thing as free money. The matching for your 401k is costing you something. Just have to determine if it's worth it.
There are for more articulate and eloquent people on this subject matter.
But I would highly recommend Charlie Mungers book as your next investment dollars spent.
Yukon Cornelius said:
The point of 401ks is to keep you working until you're 60. Where as if you take the capital and invest it in a down payment you may end up becoming an accredited investor quicker. Which will open doors to private equity groups and becoming a limited partner in LPs. Which can yes be riskier than your index fund locked away for 40 plus years but also have much much higher upside. Which as someone as young as he can leverage his future earning potential as a hedge against that risk. Again Just another way to look at things. Also important to associate with those also invested in PEs ans LPs to keep the investment train flowing through your life.
There is no such thing as free money. The matching for your 401k is costing you something. Just have to determine if it's worth it.
There are for more articulate and eloquent people on this subject matter.
But I would highly recommend Charlie Mungers book as your next investment dollars spent.
You're joking by this point, right? I mean…all of your posts have to be a joke.
I hope the OP writes off all of your blathering and has garnered some sound advice since that seems to be what he's truly after.
Just offering another perspective, albeit non traditional one.
Here's are far more articulate explanation.
Here's are far more articulate explanation.
how would a 401k bind you?
Or a factual one, apparently.
Well it's interesting a lot of the responses to my posts have been ones just name calling or saying it's a joke etc. no one has addressed the counter points I've made about 401k investing. I assume the majority of y'all are of an older generation than me and so I get tbe responses. However there are other ways to think about investing, especially at such a young age, than "nest egg" building. But regardless I'm not interested in getting into an internet pissing match. I know what's worked for me, and I know what's worked for others and am just sharing a different perspective. Isn't that the point of seeking advice? Get as many perspectives and thoughts? Then parse then down etc.
To me and maybe it's a joke to y'all but the goal should be financial freedom, early retirement and the ability to be entrepreneurial. I see a 401k work against those goals.
Any ways it's just another perspective. Mock it if it makes you feel better.
OP, I hope you have a healthy wealthy life in which more than you dreamed comes to fruition.
To me and maybe it's a joke to y'all but the goal should be financial freedom, early retirement and the ability to be entrepreneurial. I see a 401k work against those goals.
Any ways it's just another perspective. Mock it if it makes you feel better.
OP, I hope you have a healthy wealthy life in which more than you dreamed comes to fruition.
Make a budget x 1.1
Have it be less than you take home
401k to at least company match
Set up a brokerage account
Direct deposit your annual budget to a checking account on a per pay period basis.
Direct deposit all of your surplus to the brokerage account- direct deposit is the key
Buy total market index via ETF of MF as soon as it hits.
You can spend all the money in your checking.
Build up an emergency cash reserve in your brokerage account.
Do it now- you get raises, bonuses- enjoy them, modify your budget to what's reasonable; but all the extra goes to brokerage and total market indexes.
You'll be shocked how powerful the money you invest today has become 20 years from now.
Have it be less than you take home
401k to at least company match
Set up a brokerage account
Direct deposit your annual budget to a checking account on a per pay period basis.
Direct deposit all of your surplus to the brokerage account- direct deposit is the key
Buy total market index via ETF of MF as soon as it hits.
You can spend all the money in your checking.
Build up an emergency cash reserve in your brokerage account.
Do it now- you get raises, bonuses- enjoy them, modify your budget to what's reasonable; but all the extra goes to brokerage and total market indexes.
You'll be shocked how powerful the money you invest today has become 20 years from now.
- stay out of debt, including car payment
- max out your IRA and 401K
- invest in index funds
- recommend dollar cost averaging every month
- max out your IRA and 401K
- invest in index funds
- recommend dollar cost averaging every month
I'm 35.
The point of a 401k is not to keep you working, at least not if used to its maximum potential. Interesting how you've also ignored the points made such as immediate 100% return with the company match.
I sure as hell don't plan on working till 60. With my current rate of growth I'd be able to FIRE by 45 at the absolute latest, and it's only that late because I opened my 401k years later than I should've.
The point of a 401k is not to keep you working, at least not if used to its maximum potential. Interesting how you've also ignored the points made such as immediate 100% return with the company match.
I sure as hell don't plan on working till 60. With my current rate of growth I'd be able to FIRE by 45 at the absolute latest, and it's only that late because I opened my 401k years later than I should've.
Just do this:
As for what to invest in, it will depend on what your 401k offers. For IRA/taxable, I recommend buying the market w/ low cost index funds. Things like VTSAX/VTIAX or just an S&P500 index/VOO. (ticker will change based on brokerage)
As for what to invest in, it will depend on what your 401k offers. For IRA/taxable, I recommend buying the market w/ low cost index funds. Things like VTSAX/VTIAX or just an S&P500 index/VOO. (ticker will change based on brokerage)
Hope you meet your goals and get to retire early. In regards to the matching. Sure the immediate 100% looks nice. But there is no such thing as free money. You have to consider what you're giving up for that free money and why a corporation may want to do matching contributions. You are locking up capital and making certain bets. You will have to wait until you're 60 to withdraw the capital without a tax penalty. So your working capital is locked for that duration. If you want to take some out in the future before the 60 years you'll be taxed on it. And likely at a higher tax bracket than you are today. Also you're betting you don't lose any purchasing power over the next 30 years with an index fund. Which is barely meeting that objective. You haven't paid taxes on the contributions either so federal government has a claim on your capital. It's not clear and free.
If you take it yourself instead of locking it up you can invest in riskier assets. Leveraging your future earning potential as a hedge against the risk to increase your net worth faster. Which will help you become an accredited investor.
Which should be everyone's goal. Yet no one here has mentioned it one single time. You want to become an accredited investor ASAP. That will open the door to a wider range of investments than you would have otherwise.
It'll also help you associate with other like minded individuals and generate other investment opportunities.
I posted a video above with someone who is far more articulate than me. Worth the watch. If the ideas and reasons are trash then you can dump them and feel even more confident in your positions. Never hurts to explore more possibilities.
If you take it yourself instead of locking it up you can invest in riskier assets. Leveraging your future earning potential as a hedge against the risk to increase your net worth faster. Which will help you become an accredited investor.
Which should be everyone's goal. Yet no one here has mentioned it one single time. You want to become an accredited investor ASAP. That will open the door to a wider range of investments than you would have otherwise.
It'll also help you associate with other like minded individuals and generate other investment opportunities.
I posted a video above with someone who is far more articulate than me. Worth the watch. If the ideas and reasons are trash then you can dump them and feel even more confident in your positions. Never hurts to explore more possibilities.
I watched the video. The guy says literally nothing that refutes the benefits of a 401k. The history of how it came into existence is entirely irrelevant.
And hilariously, his entire argument (whatever the argument even is) hinges on the assumption that the mutual fund you invest in has 2.5% fees, which is way higher than 99% of people will ever have. Ridiculous.
You say the money is "locked up" as if it's stuffed under a mattress. Except with compounding growth over a number of decades, it's doing exactly what it should be doing.
And you keep saying riskier investments are the only way to wealth. Funny how you're not talking about risk the other way. One or two bad investments and you lose a lot more than 2.5%. You need to stop bringing up higher returns than the market as a given, that's not how it works.
Let's see some hard data showing that the average "accredited investor" is beating the market.
And hilariously, his entire argument (whatever the argument even is) hinges on the assumption that the mutual fund you invest in has 2.5% fees, which is way higher than 99% of people will ever have. Ridiculous.
You say the money is "locked up" as if it's stuffed under a mattress. Except with compounding growth over a number of decades, it's doing exactly what it should be doing.
And you keep saying riskier investments are the only way to wealth. Funny how you're not talking about risk the other way. One or two bad investments and you lose a lot more than 2.5%. You need to stop bringing up higher returns than the market as a given, that's not how it works.
Let's see some hard data showing that the average "accredited investor" is beating the market.
As for accessing your money before 60, that's a whole other discussion. Someone planning to retire early needs to be maxing their Roth, HSA, and doing all the mega backdoor contributions they can afford, as well as maintaining a brokerage account.
The years between your early retirement and age 60 can be easily covered with proper planning, and after tax contributions are accessible at any age
The years between your early retirement and age 60 can be easily covered with proper planning, and after tax contributions are accessible at any age
Accredited investors are also participating in the market. They aren't exclusive.
But I am saying tbe goal should to become one as soon as possible. 401ks will prolong that. Better to stick the money in a house, get renters helping cover mortgage, pay down principle, sell for bigger house, deferring cap gains into it. That asset will help you achieve accredited investor. Find some good limited partnerships. Get involved there and over 30-40 years you'll set yourself up for esrly retirement.
But I am saying tbe goal should to become one as soon as possible. 401ks will prolong that. Better to stick the money in a house, get renters helping cover mortgage, pay down principle, sell for bigger house, deferring cap gains into it. That asset will help you achieve accredited investor. Find some good limited partnerships. Get involved there and over 30-40 years you'll set yourself up for esrly retirement.
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Brian Earl Spilner said:
And you keep saying riskier investments are the only way to wealth. Funny how you're not talking about risk the other way. One or two bad investments and you lose a lot more than 2.5%. You need to stop bringing up higher returns than the market as a given, that's not how it works.
I suspect yc and some others here have fallen prey to survivorship bias
Yukon Cornelius said:
Accredited investors are also participating in the market. They aren't exclusive.
But I am saying tbe goal should to become one as soon as possible. 401ks will prolong that. Better to stick the money in a house, get renters helping cover mortgage, pay down principle, sell for bigger house, deferring cap gains into it. That asset will help you achieve accredited investor. Find some good limited partnerships. Get involved there and over 30-40 years you'll set yourself up for esrly retirement.
You and LMCane/Barnes need to join up on this accredited investor opportunities
Yukon Cornelius said:
Hope you meet your goals and get to retire early. In regards to the matching. Sure the immediate 100% looks nice. But there is no such thing as free money. You have to consider what you're giving up for that free money and why a corporation may want to do matching contributions. You are locking up capital and making certain bets. You will have to wait until you're 60 to withdraw the capital without a tax penalty. So your working capital is locked for that duration. If you want to take some out in the future before the 60 years you'll be taxed on it. And likely at a higher tax bracket than you are today. Also you're betting you don't lose any purchasing power over the next 30 years with an index fund. Which is barely meeting that objective. You haven't paid taxes on the contributions either so federal government has a claim on your capital. It's not clear and free.
If you take it yourself instead of locking it up you can invest in riskier assets. Leveraging your future earning potential as a hedge against the risk to increase your net worth faster. Which will help you become an accredited investor.
Which should be everyone's goal. Yet no one here has mentioned it one single time. You want to become an accredited investor ASAP. That will open the door to a wider range of investments than you would have otherwise.
It'll also help you associate with other like minded individuals and generate other investment opportunities.
I posted a video above with someone who is far more articulate than me. Worth the watch. If the ideas and reasons are trash then you can dump them and feel even more confident in your positions. Never hurts to explore more possibilities.
You leave out the tax benefits (immediate and long term) of a 401k as well. Chances are if you're an accredited investor, you're not at the 12% tax bracket and therefore looking for ways to write off income and shelter money from taxes.
Your plan leaves very little room for tax management strategies and is something that will cost you dearly over the long haul.
I think you would do right in assessing fees and costs from a realistic perspective as well. 2.5% is unheard of. The plans that I manage can have portfolios less than .1% of an expense ratio and you can do very much the same within a 401k. Between the low costs of holding, the immediate return of the match, the immediate tax benefit, and the long term tax benefit, there's a ton of benefit to a 401k.
OK - can we stop with the accredited investor stuff, please?Yukon Cornelius said:
Accredited investors are also participating in the market. They aren't exclusive.
But I am saying tbe goal should to become one as soon as possible. 401ks will prolong that. Better to stick the money in a house, get renters helping cover mortgage, pay down principle, sell for bigger house, deferring cap gains into it. That asset will help you achieve accredited investor. Find some good limited partnerships. Get involved there and over 30-40 years you'll set yourself up for esrly retirement.
It's not some magic membership card that allows people into this guaranteed pool of above-average investments. It is a "buyer beware" method that riskier investment promoters use to get around normal fiduciary requirements. It was created to ensure that these sellers wouldn't get sued by letting little guys invest their life savings in overly risky investments. It's closer to a signing a paintball injury waiver or a "risks of standardized options" brokerage disclosure than anything that provides access to an exclusive high-returns club.
You can certainly make money in private placement credit, private equity, syndicates, etc., but risking and sacrificing all your financial resources and eschewing slam-dunk foundational principles such as maxing out company matches in 401(k)s is ABSOLUTELY NOT THE WAY TO DO IT.
The guy just graduated… we aren't talking about some 40 year old. Now is definitely the tkme to take risks. And putting the money into a house vs 401 is hardly a risk. You can roll the sells of the houses into larger more valuable houses deferring capital gains while becoming an accredited investor. Which lets you participate in other investments. No one is saying not to be in the traditional markets too. But dang there are more ways to do than just a 401k. LP can go to zero. No doubt. But that's where you have to parse through them etc. but at least you can participate if you see fit.
For example there is a rise of LPs buying gas and minerals rights which I think will do particularly well into the future. The carry cost of holding mineral rights are extremely low. There are no property taxes on them. They can be flipped or produce income etc.
For example there is a rise of LPs buying gas and minerals rights which I think will do particularly well into the future. The carry cost of holding mineral rights are extremely low. There are no property taxes on them. They can be flipped or produce income etc.
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Yeah investing in real estate at 7% plus pmi, at what could potentially be the top of a massive bubble is a slam dunk for sure
Now is the time to build up a nest egg in a 401k, actually. $1 invested at this age goes much farther than $1 invested in 20 years.
This is the exact opposite advice he needs to take.
OP, please disregard this advice, for the love of Christ.
This is the exact opposite advice he needs to take.
OP, please disregard this advice, for the love of Christ.
Just go watch / listen to The Money Guy Show. Please do not listen to Yukon.
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