What's The Right Way To Invest 15% Of Your Income?
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- čas přidán 15. 12. 2021
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The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. $52k dividends received in july 2022.
That's why it is advisable that you have to invest while you still have a regular job or earning a regular income, and do it constantly. You still need to have something that will keep you going even if you're investing. Good financial planning and money allocation is the key.
I had my share of up and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured some money in value stocks and digital asset, i accrued over $80K in dividends last year
I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
I have “Sonya lee Mitchell” as my investment manager. She has a solid reputation when it comes to diversifying portfolios and making. Them less vulnerable to market downturns. She may be a name you are already familiar with from Newsweek.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
I am an active Navy captain and have been investing for a few years. I have reached a point where I could benefit from financial advice to improve my $160,000 portfolio, which seems to be stagnant, and to maximize the return on my investments.
You didn't provide detailed information about your portfolio makeup. However, I recommend seeking guidance from a financial advisor for a well-informed portfolio restructuring.
De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a fiduciary financial advisor to guide you, that’s what works for my wife and I. It's been 6 years now and we've grown our portfolio to $1m.
Your advisor seems competent. Could you share how I can reach out to them? I've recently sold some property and i am interested in investing in stocks.
*Jennifer Leigh Hickman* is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Wow, her track record looks really good from what I found online. I'll take a chance and see how it goes. Thanks for the info
Interesting video I'm in my 50s and I'm more interested in investments that could set me up for retirement , I mean I've heard of people that netted hundreds of thousands during these crash, I listened to someone on a podcast who earned over $650K in less than a year, what's the strategy behind such returns?
You're not doing anything wrong, you just don't have the required skillset to profit off a down market, folks that are making profit in this market are pros and experts with in-depth knowledge and skillset.
A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
This sounds great. Is there a way I could connect with your advisor or any other whom you think is very good? I'll appreciate.
Credits goes to " Sonya lee Mitchell" one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
Investing in Roth IRA can be a good choice. I have been managing my portfolio myself, When I withdraw from my Roth IRA in retirement, I won’t have to pay tax on it, which will help me keep more of my hard-earned money.
bet you didn't do that without a financial advisor. I’m also closing in on retirement and I have benefitted much from using a financial advisor.
@@DanielPanuzi Haha. I definitely didn't pull that in myself. I knew next to nothing in finance. A good financial advisor really does make a lot of difference.
@@DanielPanuzi My partner recently hinted on going same direction. who is your adviser please, if you don’t mind me asking?
@@Angelavaldess Sure, the likes of the popular lady Alicia Estela Cabouli does a good job. Just look up the name, you’d find details on the web to set up an appointment as she offers free consultations from first timers like yourself.
@@DanielPanuzi Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé
An Actual financial question? Not about bachelorette parties or deadbeat relatives ? Nice
I just sold a property in Portland and I'm thinking of putting the cash in stocks, I know everyone is saying it's ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.
@@sallym.chesser7072 It all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro.
@@sallym.chesser7072 Hi, please who is the expert assisting you and how do I reach out to them?
@@sallym.chesser7072 Thanks, I just googled her and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
Once I got out of debt. I started investing like 40% because I felt behind after being in debt my whole adult life. I know most can't or won't do it but I am doing what nobody else will do now so later I can live, give and retire early like nobody as can or will.
I’m doing a mix of both. I’m still going on two or three vacations a year, but I live in a cheap townhouse and rent out the basement, and drive a modest car that’s paid off in cash. This way I’m still able to scuba dive and travel the world, but I’m also investing
right, you want to get out of debt and stay out. i do about 25% right now but I want to make it 50%. 15% in retirement and another 10 to 15% or so in a regular taxable account you have access to because you want your house to be so stable so that you can weather just about any financial hardship that comes your way. if you have a job making 75k and 150k in a taxable account and another 500k in retirement, you will never see debt again.
@@charlesg7926 cool. I paid off my car then a month later I wrecked it. Haven't looked back. By not having a car I have more money to invest and travel.
40%!! Nice!!!
@@erikhopkins9488 I wish I can do more but the govt only lets you put $6K in th roth and my job only allows me to do 30% in 401K. Probably more but its around there.
I love this caller. She's committed to the process, thinking long-term, and did her research before calling. It's nice listening to the smart callers instead of people who bought dumb things and want Dave to think they were the exception.
We shouldn’t judge people, the fact the that those people find Dave and follow him is a sign that they are taking accountability for their mistakes. We don’t know what those people went through.
@@dopeminguez24 you know what, you are right.
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow my retirement savings to about $3M over time?
Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin or you can just seek the help of a financial advisor.
Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for a while now mostly and I made over $800K within a short time
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
My financial consultant is *Sharon Louise Count* whom I reached out to after finding her on a CNBC interview where she was the guest speaker. She's provided entry and exit points for the stocks I primarily focus o
Thanks, I just googled her full name and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a call.
In light of the current volatility of the stock market, I believe investors should be concentrating on undervalued companies. Currently, 35% of my $270k portfolio is made up of once highly regarded stocks that are now falling, and I'm at a loss for where to turn from this devastation.
I believe the safest approach is to diversify investments. They can mitigate the effects of a market meltdown by diversifying their investments across asset classes such as bonds, real estate, and international stocks. It is important to seek the advice of an expert.
Please how can I engage in this activity
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Just keep holding, you only lose money when you sell. It will go back up.
@@samodehThey’re bots.
I genuinely mean it when I express my stress and concern regarding the market crash and high inflation, particularly in relation to my retirement. I have been experiencing losses for quite some time, and while some may argue that crises can present opportunities, I am feeling overwhelmed. However, I understand that investing is a long-term endeavor, and it is crucial to maintain focus on the bigger picture and the long run.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $760k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
how do I get in touch with this consultant that assist?
STEPHANIE KOPP MEEKS, that's whom i work with look her up and thank me later
Thanks for the info . Found her website and it really impressive
Unless you invest individual stocks, you're lying. Anyone invested for a 'few' years, if began anywhere from 2020-2022, and invested in basically any sp market fund, you would have returns higher than 10%. Goofys always make up random scenarios like we all don't use the same markets.
Its nice hearing from normal income callers and not "I make 150k a year and just dont know how to get outta debt"
$150 is pretty normal. An income of $75k is only the 63rd percentile, so with dual incomes that's just barely above average.
Stocks are falling and bond yields are rising, but markets still don’t seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $117k stocck portfolio, what’s the best way to take advantage of this bear market?
The strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
I enjoy my day to day market decisions being guided by a portfolio-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not outperform, been using a portfolio-coach for over 2years+ and I've netted over $300k .
Please can you leave the info of your investment advisor here? I’m in dire need for one.
Thanks, I merely looked her up on Google and was highly impressed by her credentials; I got in touch with her because I need all the help I can get. I just set up phone call.
Scam. Also stocks are at all time highs
Now this is a great video. Perfectly lists out a game plan on how to invest the first 15% of your gross income.
Thank you for the great information!
Best video! Thank you Dave!
I watch this video over and over. So much information in this video - thank you for this.
Love it when you break things down like this
Thanks for watching.
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I’m excited, Just started watching Dave Ramsey today! I never even heard of a 403b before
I needed this video so bad thank you Dave
Love this kind of videos! Super informative 👏💪
Yes very practical
Amazing advice
Thanks!!!
Awesome video!!!!!
This lady is awesome!! She has studied and learned well. This couple will be millionaires. They aren't falling for financial scammers like those mentioned in the comments. Just keep following Dave and they'll do great!!
My biggest mistake at a debt free 30 year old was not investing ANY in retirement. Great for her!
Useful.
What is the best way to profit from the current market, meanwhile I'm still undecided about investing $400k in my stock portfolio to get some dvidends and minimize risk
Remember that investing in the stock market carries risks, and it’s important to do your own research and consult with a financial advisor before making any investment decisions.
With the help of an investment advisor, I was able to diversify my $550K portfolio across multiple markets, and in just a few months, I was able to earn over $950K in net profit from high dividend yielding stocks, ETFs, and bonds
Pls who is this coach that guides you? I’m in dire need of one
My consultant is NICOLE DESIREE SIMON She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
I Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds soon. Thanks
Rashaad:
I’m with you! I hope to have the problem when I get older of having too much for Retirement! I just believe we should all MAXIMIZE our Savings!
We just can’t hurt anything to have more saved!
Half my coworkers don’t know or don’t care about the 401k, they just kinda laugh it off. The ones that are in their early 20’s, I tell them to open up a 401k and they laugh at me later on and say I might just open a CD at the bank. The ones that are around their 35, 44 and 46 would tell me No I don’t need one. I started when I was in my early 20’s with 5% and now I’m 44 and putting 15%. I saw money than I cant ever saved by myself. So happy I started my 401k earlier on in my 20’s. Now I might want to start a mutual fund just boost my retirement cash flow when I retire
Company matches are great BUT it is best to convert those after you get them. My company contributes to our match every month. Every month, I call our 401k manager and tell them to convert that to a Roth 401k contribution. Every month I go through the acknowledgement that I understand it will be taxable. My thinking is that it is easier to chop down/convert the Traditional to Roth early than let it grow and have to pay much more tax later.
Got 23% out of S&P 500 and MARA
How did that work out for u in 2023
So the 15% includes the 401k and IRAs? This whole time I assumed those were considered separate and that I should allocate 15% towards non retirement investments.
Dave I always want to ask this but why not Match, HSA, Roth, Traditional with the self-discipline of never using HSA funds for health care until retirement? This is how I do my 15%.
Except my HSA has been a huge blessing to pay for health expenses, too. It’s a very versatile account. Pro- HSA!
Careful with those "high-growth mutual funds" as they can have exorbitant expense ratios, sales loads, commissions, etc. I'd strongly suggest putting everything into a low-cost index fund tracking the S&P500. No fees, no nothing, best rate if return. The financial planning industry may very well be the most treacherous for those who aren't well-versed in it.
Thats why I do. 100% VTSAX
@@johnyang1420 same. My VTSAX averages a better return than my 401k
What about FNILX through Fidelity?
@@jfresh2054 I believe that is Fidelity’s version of VTSAX. It should be equivalent. Lower fees as well. Can’t go wrong with either
@@jfresh2054 That's equally good. Fidelity has some more good options as well.
Good advice. The only two things I'd add are that index funds outperform mutual funds over time and they should be investing more than 15%, like 20% or more, especially since they're getting started in their 30s as opposed to 20s.
I like dividend paying stock funds. I also like the Traditional IRA because it lowers your current taxes.
@@deanalbertson7203 I'm a lazy investor, which is why I go for index funds.
You increase above 15% after you pay off your mortgage.
@@jxgreen1985 you appear to be confused. I am unaware of a single mutual fund suggested on his program. You seem to be struggling with him and lieing.
I'm new to this channel, wish I would have found it 10 years ago. I am being forced to retire at the end of the year. Who can I talk to about what to do with my Thrift Savings Plan?
Also, the new Secure Act 2.0 allows employers to match into the Roth.... icing on the cake.
I’m having a hard time figuring this out since Walmart only matches up to 6% and I got a Roth
Thank you....
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 5 million dollars
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Credits goes to "Sharon Lee Peoples" one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
Pay attention to anyone who immediately diverts you to financial advisors aka “smartvestor pros” rather than just pointing you to some books to get financially literate FIRST. I dont think its necessarily BAD to use a helper for investing. BUT, you should at the very least be able to speak the language and understand the impact that the fees from a helper is going to affect your bottom line after 20-30 yrs. Spoiler, its not insignificant .
Dave always tells people to only invest in things they understand and says you should tell your pro what to do, not the other way around.
Welcome to generic financial advice for idiots 101 invest your money, save, put it in a Roth it's all platitudes for people who make 8k a month and blow it all.
This is amazing. *“How to build wealth”*
The first step to building wealth is figuring out your goaIs and risk toIerance - either on your own or with the heIp of a financiaI pIanner, and foIIowing through with an inteIIigent pIan, you wiII gain financiaI growth over the years and enjoy the benefits of managing your money.
I am fortunate I made productive decisions that changed my finances through my financiaI planner. Got my house in Feb, and hoping to retire soon.
researvh the name, if you care.
REBECCA MARTIN WATSON
What is a roth 401k I'm from Australia is it like super annuation for retirement
Sort of. Roth in US is taxed on front end opposed to deferring tax at withdrawal. I work at BHP in US where we also get an employer funded account of 8.25% to align to your superannuation benefit
any word on HSAs? Should those be considered part of 15%. they are for health but I know you can use them later on for non medical. Gracias
It’s a great vehicle to save so do it if you can.
But you cannot use it to pay for non-medical expenses or other approved expenses. It has a hefty penalty worse than 401k.
Match then max out Roth IRA with index funds.
Thanks for watching.
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You can invest into a 403b with a Roth sleeve
If my job offers a HSA what would you recommend with that? Should I put money into that before the Roth or after the Roth?
You do that concurrently. I set my deductions up in December for the next year.
There's so much I want to spread my investment VOO, VTI, VNQ how should I divide it?
I would go for 10% dividend paying ETFs if you have a retirement account. If you have a brokerage (taxable), 10% stocks. Those above will get eaten up by inflation.
If you invest in VTI and VOO, you are buying some of the same stocks in each fund.
VTI is the entire US stock market.
VOO is the S&P500, a subset of VTI.
VNQ is also a subset of VTI.
I’m 26. My net worth is embarrassingly just under 20k. I do 17% for my company 401k which includes a 6% match. Plus $500 a month for my Roth
Hey, at least it's not negative. I'm 26 too and my net worth is 23k. I feel your pain but it's just onwards and upwards. That's my liquid net worth. I don't really count assets like cars, jewelry, etc cause it doesn't seem wise counting those things in.
Most people in the US that are in their 20s are in the negative man. Don’t be embarrassed, just keep grinding!
Sounds like a HUMBLEBRAG to me. Cut it out.
You guys are young. Just stay out of debt. That's why they call them baby steps. Have your money work for you!
@Ronald FlobJobbin people go above the match in their 401k to avoid putting that extra money in taxable investment accounts.
So what’s the best way to divide it? 40% Large Cap, 25% international and the rest small, mid cap?
25% each for
-Growth
-Growth and income
-Agressive growth
-International
Can anyone tell me why it’s 15% vs a different number while in conjunction with paying off your house when you’re in baby steps 4-6? I know especially in your 20’s and 30’s, the value of each dollar invested is worth so much more than in your later years so why not invest 20% or more while paying down the house on a 15 year to ensure better investment growth?
Dave usually says "at least 15%"... Which makes sense. I invest about 15 of fulltime paycheck, and invest 100% of any side jobs I pick up on weekends.
@@JohnSmith-zl2ny no. Dave always says "15%, not 10%, not 17%, 15%".
Invest 15% and throw everything above that at your mortgage until it’s paid off. Once mortgage is gone you can invest whatever you please
From Dave's 30 years of teaching and from his real research, an average 15% is just nice from step 4,5 and 6..You can do more if you could. Just imagine excess from your income after deduct all your expenses, pay to your mortgage..Dave's intention is for us to be debt free quickly and happily and invest for our future and change our family tree.
If you follow the baby steps and stay the course, you live a lifestyle where investing 15% of your gross income will provide enough money for the way you live in retirement. If you retire and start jet-setting all over the world and blowing cash on vacations (in other words, change your spending habits), 15% might not be enough.
What did he say? Good growth stock mutual funds with a what? Smart vester pro? What is that
...advisors within his network...
And the downside of some 401(k)'s . . . not all employers cover the fees. My 401(k) is 1/4 match up to 1% and it deducts 1.5% per year off the top of the corpus. It's a killer. My mutual funds in my Roth (same funds) outperform my 401(k) every year -- even including the match.
so if I have a 401k that matches and a roth, how do invest the 15% between those two? Just a little confused
You have to examine the funds offered in your 401k. If they are acceptable, you can just max out the 401k contribution. That is $22,500 for 2023. For a lot of people, that is enough to meet their 15% goal. If you are over 50, you can contribute another $7,500, for a total of $30,000 per year. 401k plans generally offer a set of funds based on your retirement date. They invest in riskier stocks early on and as they get closer to retirement, they become more and more conservative. Some 401ks also allow you to select individual stocks (typically ETFs).
An IRA gives you total control over which funds are used. But, you can only invest $6,500 per year ($7,500 if you are over 50).
So, contribute to your 401k at least enough to get the match. That is an immediate 100% return on your money. Then evaluate your 401k and IRA. If you like the offerings in your 401k, fill that up first. If you still haven't reached 15%, put whatever else it takes to get to 15% into your IRA.
If you aren't thrilled with your 401k offerings, plan to fill your IRA first and then whatever else it takes to get to 15% goes into your 401k.
I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Michelle Stewart
The first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional.
Wow. I'm a bit perplexed seeing her been mentioned here also Didn’t know she has been good to so many people too this is wonderful, i'm in my fifth trade with her and it has been super.
What impresses me most about Michelle Stewart is how well she explains basic concept of winning before actually letting you use her trade signals. This goes a long way to ensure winning trades.
Isn't that the same Mrs Michelle Stewart that my neighbours are talking about, she has to be a perfect expert for people to talk about her so well
I'm new at this, please how can I reach her?
How does one contribute more than the allowable Roth IRA contributions per year? Dave talks about opening two separate individual ROTH IRAs in order to supply the remaining 15% which was $13,800. I was under the impression that the max allowable contributions is no more than $6500 for individuals under the age of 50. I’m new to investing and hope someone can clarify here.
The caller is talking about 15% of their combined income. Each person can contribute to Roth IRA.
Btw the limit increased to $7000 in 2024.
Btw2, if you’re married, both can contribute up to max even when only one of them has an income.
Help!!: correct if Im wrong. All of Ramsey math is based on the idea that stocks will increase value over time right?? If the prices go down when the person is going to retire, then she may even lose money, right??
I understand since always, stocks prices have been on the rise. But this plan could fail completely. No??
He advocates investing in mutual funds, where your money is spread across a sector of stocks. These funds use different criteria to select the stocks that are included in the fund. In general you can expect the price of the stocks to go up. Stock prices can AND DO go down, sometimes, but if given enough time, generally rise. If a given stock fails, the fund replaces it with a different stock. Based on the selection criteria, the stocks in a fund can change even through a given stock i doing well. Over time, you will see stocks and the funds that hold them, go up in price.
If a mutual fund fails, something went terribly wrong. If you buy into a fund like the S&P500, you are spread across the top 500 companies in America. The chances of that fund failing are virtually zero. They represent "the Market" that the talking heads are always talking about. In 2020 and 2008, they did drop dramatically and took a while to recover. But to a savvy investor with cash ready to go, those events are huge opportunities to buy in at low, low prices.
There are stock equivalents to mutual funds, called Exchange Traded Funds (ETFs). For instance, you can go to Vanguard and buy into their Admiral Class S&P 500 mutual fund or you can buy VOO on the stock exchange, and it is almost the exact same thing. Mos mutual funds have an ETF equivalent, now.
Set up a plan to buy into the market at regular intervals (e.g. each payday). Sometimes you will be buying high, sometimes you will be buying low. This is called Dollar Cost Averaging.
Dave mentions Match beats Roth and Roth beats Traditional. But does a Non matching 401k beats a Roth IRA? Also where does a annuity, pension and social security fit into this equation?
No. Matching beats roth but Roth beats traditional 401k.
I just started a federal job. Was going to adjust tsp up to 15% with first check i saw the gov is already taking 4.4% for my pension. I suppose I invest 11% into tsp
Anything that matches is an instant 100% return on your money.
Keep in mind that 401k and IRA are just different types of accounts. In and of themself, one is not better than the other. You can contribute more money each year into a 401k. There are contribution limits for each type of account (401k = $22,500 IRA = %6,500). The real difference is Roth versus Traditional.
Contributions to a Roth account (401k or IRA) cannot be deducted at tax time each year. But all the money comes out tax-free.
Contributions to a Traditional account (401k or IRA) are deducted from gross income at tax time, but everything that comes out in retirement is taxed.
Pensions are getting pretty rare. They are outside of the realm of IRA and 401k. A pension is money an employer pays you in retirement.
Social Security is also outside of the realm of IRAs and 401ks. That is money the government send you. How much they send depends on how much you have earned over your lifetime. The government measured the 35 highest earning year of your career. Whatever number that comes up to determines how much they pay out to you.
@@chief5981 15% is not a magic number. If you can afford to contribute more, you should do it.
Well all I know is I have very limited income and I just happen to get lucky enuff to get a little bit of extra money and ALL I want to do is the right thing for my daughters future.. everythings so confusing with Stocks and investing And CD Accounts. I just want to do something with the little extra money I have I don’t want to endup spending My Money instead of using it to make money?
Open an account with Vanguard. Set up automatic withdrawal from your bank account. Have them buy shares of VOO or VTI.
VTI is an index fund buying shares of the entire US stock market.
VOO is an index fund that buys stock in the companies that make up the S&P500 (the 500 biggest companies in VTI).
Either one is a good choice.
roth is definitely safe but all the math I see is max contributions you contribute 250k which is over 40-45 years it only turns to 1mil so its a 4x profit with no tax, ive been tripling my money every 2 years just from investing in the biggest most established companies in the world and some in the index which leaves me with alot more money to play with for more profit and learn things but my entire life is work and investing 16 hours a day no wife no kids no family so probably not a life most people want to live to ensure the risk pays off but ive had it all before been rich and lost it and family lost it had wife lost it and im happier then ever now
When/where/how do I add my HSA to my plan if I'm adding 15% to retirement?
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HSA before everything except match unless it has a match. If it has a match max it out first. The reason why is that HSA is the only retirement option that's quadruple tax-free. Roth is Tax Free when you pull money out. IRA/401k is tax free when you put money in.
HSA is tax free when you put money in AND when you tax it out, AND when the money grows (capital gains) AND is exempt from social security tax. As far as I know it's the ONLY retirement investment exempt from SS tax.
The HSA is the best investment, however it's not as liquid as the Roth, since you can pull Roth contributions out for anything without penalty or tax. You should be funding both, ideally. Eventually, HSA funds can be used for anything but that's years down the road.
How does pensions contributions impact the 15%
That where I disagree with people. Always contribute the percentage that is matched. You’re losing money if you don’t.
Does a roth401k have a cap like a roth ira ?
Yes, for 2023 the max is $22,500. If you are over 50, you can contribute up to $30,000.
401ks and IRAs all have contribution limits, regardless of the Traditional or Roth designation.
As of yesterday i put 15% of my paycheck into a roth account with my current job but i was told from my boss that they don't match it should i still keep the Roth and keep it moving?
The only time I hear Dave tell people to do traditional is when they are in their late 50s/ early 60s. If that helps.
Sucks they don’t match but nice work
Yes. It's still a retirement account, with special tax rules. Your 401k allows you to contribute $22,500 per year. Why not take advantage of that?
You can only contribute $6500 into your IRA each year. Put money into your 401k and if you still have money to invest, put it in your IRA. That's $29,000 per year.
The other consideration is type of 401k and IRA. If you go Traditional, you can deduct the contributions at tax time. But everything is taxed as it comes out.
If you go with the Roth versions, you can't deduct your contributions, it everything comes out tax-free.
Do you want the tax break each year you work, or do you want it all to come out during retirement tax-free?
Seems to me she should already be investing 3% into her 401K even while hammering down their debt. Given the employer match of 3%, based on her annual income of $40,000, she's leaving $1,200 a year on the table that she could otherwise be investing in deferred compensation.
Following the baby steps, she should not invest in anything until she has the emergency fund, the debt is gone and she has 3-6 months of living expenses set aside in savings. Generally, this is accomplished in two years or less, so it is not the end of the world to not get the match. Dave's plan alters your mindset, how you think about money and wealth. That can be hard for anyone who likes to crunch the numbers. Another example is paying off a 3% mortgage when you can get an 8-10% return in the stock market.
@@damondiehl5637these are the comments that make me nuts. 8-10 percent in stock market?
Can anyone help me with a brief point of direction? I'm 26, turning 27 this year, I have really low debt - ~$2000-$3000 - and I've got a handle on all of Dave's baby steps except one, THIS one.
I work for a property maintenance company, I'm on salary but I don't have a retirement plan or anything with my company and they don't offer it. My company pays me well for my work, I make a little over 60k/year, but they are lacking in this particular realm. Where can I go with that 15%? Do I NEED to be working for a company that will help me with this or is there an alternative I can strive for in a solo manner?
PS. I'm a bit dumb in terms of economics, I'm learning all of this rather late in life.
Many thanks in advance 🙏
You should open an account with an investment company, bank or brokerage (Vanguard or Fidelity or ETrade or ScottTrade or a similar company). Also set up a Roth IRA with them.
15% of $60k is $9000. The yearly contribution limit to an IRA is $7000. So you can only put $7000 in your Roth IRA. The other $2000 has to go into your regular account.
If you open your accounts with Fidelity or Vanguard, you can put your money in mutual funds. Vanguard has been an industry leader with low fee mutual funds. They will also enable you to buy stocks.
If you open your accounts with a brokerage company like ETrade, you can but something very similar to mutual funds, called Exchange Traded Funds (ETFs). They mimic various mutual funds or stock indices.
But long answer short, you need to create a Roth IRA and a regular account, and max out the IRA ($7k) and put the rest in a regular account.
VOO
I used to have a RothIRA through Edward jones. In 2021 I max it out at 6000… in 2022 I maxed it out at 12,000. In 2023 I had an emergency and had to withdraw 💯 %. When I withdrew it I only got back around 10,000! Does that mean the wrong investments were chosen by my financial advisor? Also when I withdrew it my financial advisor said i wasn’t going to be taxed on it because the funds I withdrew were 100% my own contribution which means it was tax free…… well I just got a 1099-R and now the irs says I owe then just over 2000 because of the early withdrawal. Am I missing something here? Can someone help me understand it all!?
Your contributions to the IRA are supposed to be available for withdrawal at any time with no penalty. Any gain on your investments would be taxed and penalized because you are taking it out in less than 5 years and you are under 59.5. Beyond that, it's hard to say what is going on without more info. It is probably worth your while to have a tax professional look at it. Try the volunteer advisors first and work your way up to the hired professionals if necessary.
Should I match my employers contributions to the retirement plan? I believe its a 401k, but I'm not sure. I work for a nonprofit organization. They contribute 7% equivalent of my salary regardless if I contribute anything at all and then raises to 10% once the amount they contribute reaches like $15k or $20k don't quite remember the exact amount of when it switches. Back before I accepted the role I did the math and it ups to 10% like 2 and a half years after I was hired.
The other option being to start a Roth IRA and put the money into that instead of adding to my employer's contribution.
By the way, only 27 so that's why I think maybe having a bit more diverse retirement plan with my work and the Roth IRA, but I'm not sure if it would be better to just add to my work's retirement plan.
You can put away a lot more per year in a 401k ($23,000) than you can in an IRA ($7000). So don't limit yourself, if you can afford it. And, you want that company match. That is an instant 100% return on your money. And you can invest in both types of accounts. If you can max out your 401k and still have money to invest, switch to an IRA. If you STILL Have money after that, you can put money in your Health Savings Account (HSA). And if you STILL have money after that, use a regular brokerage account.
@@damondiehl5637 yeah but like I said, there is no company match. Just an automatic amount they put in regardless if I put anything in. They put in a set amount. I also went and looked more into it. Its not exactly a 401k. Its an annuity through an insurance brokerage that is like a mix of a 401k and a 403b. Also I only make like 56k per year before overtime and taxes(I make quite a bit of overtime) so no 23,000 not exactly possible.
That seems like a complicated investment vehicle, when there are lots of administrators offering their services. I have several accounts at Fidelity Net Benefits from different employers. I'm not wild about annuities nor insurance brokerages. I would maybe take whatever they give you and be grateful. Then I would recommend opening a Roth IRA and contribute as much as you can to it. 15% of 56k is $8,400, so that exceeds the annual limit, even if you are over 50, but you can't contribute that much, anyway. It's totally up to you to decide what you want to put in your IRA . If you open your Roth IRA with Vanguard or Fidelity, you can buy their mutual funds or you can buy stocks. Vanguard was the leader in low fee index funds, but Fidelity has pretty much caught up to them. They both have funds that mimic the S&P500. If you want to buy stocks, ETF stocks like VOO or QQQ or SCHD are essentially the same thing as the index funds. Plug contributions into your budget and set up automatic payments so you keep plugging money into the account. Then sit back and let it grow. It will seem very slow at first. Your first 100k is 25% of the way to a million. It takes 8 or 10 years to get that first 100k, but each 100K after that comes faster and faster, because of the power of compounding. The jump from 900k to a million is only a year or two. time and rate of return are the big factors.
If you want to learn more about the buy-it-and-forget-it approach, watch some videos of Warren Buffet or Jack Bogle (founder of Vanguard). Buying into these funds and just letting it be, through the ups and downs has proven to be a winning strategy.
@@damondiehl5637 yeah I mean the max amount would kind of be hard to do, after state and federal taxes and benefit deductions my take home pay is like $3400 per month. Luckily, I've got 0 debt and a 2016 truck that is completely owned. My housing is pricy, but I didn't have a lot of options that weren't in the mexican cartel gangland(we call it the warzone in Albuquerque), so I just picked what I could get that was safe. I only had a week to find housing before moving.
For me I was thinking setting up automatic payments of $200 per month into a Roth IRA, and have the dividends reinvest, plus throw my entire tax return in it every year and because I'm only 27 years old that would be a little cushion once I "retire" in the event something comes up before I pass away and if not just pass my Roth IRA down to my kids. We have a multigenerational family ranch, about when I'm in my mid to late 40s, I'll be leaving the workforce to run that, but luckily with that it has very good consistent income on top of the cattle we raise on it.
@@walterp1028 That sounds like a good plan. I think I would take the employer contribution and be glad for it, but not put any of my own money into it. Dave has never said a positive thing about annuities and frankly I've never read anything about them that appealed to me. Focus on the Roth IRA and as you said, turn on DRIP so the dividends are reinvested.
Question: Wife and I, when contributing to Roth 401K only, will put our combined household income into a higher tax bracket. If we both contribute to some traditional 401K and put the rest in Roth, then it will lower our taxable income into a lower tax bracket. In this scenario, is it better to contribute 100% to Roth only, or to contribute some in traditional 401K to lower our tax bracket?
Question: Do you intend to pay taxes in retirement?
I'm retired ~$100K/yr pension and I don't pay taxes.
Why pay a high rate of taxes when young.
@@aolvaar8792 Good for you. Not many companies still offer pension to younger workforce. Live a healthy lifestyle and live as long as you can.
I would put enough in the traditional 401k to stay out of the higher tax bracket. The pro-Roth crowd doesn't want to acknowledge those downsides of the Roth. Roth isn't always better than traditional in all situations.
@@megalodon1726 Thanks. This is what we've been doing. Contributing just enough traditional to stay below the higher tax bracket, then put the rest to Roth.
@@megalodon1726
Roth was better in my case.
For you it will be interesting.
Many will not understand why until they are retired and it’s too late.
Might even understand why by 2026.
Can pay 40 Grand worth of dead off in 12 months... But it's going to take four to six months to save up 10 grand? Doesn't add up
I imagine she is making rough estimates
They may be expecting an random lump some of cash from something or may have seasonal changes in their career.
@@katherinebartenslager5647 Or they sold stuff.
If they are really true Ramsey believer types, which sounded like they are since she implied they weren't taking the husband's match, they may be planning to turn off the gazelle intensity after getting out of debt. Crazy cheapskatery now, less cheapskatery later.
They may have some things that need cash flowed after finishing the debt ... car, home repairs, vacation after being gazelle intense for so long.
Good video and advise, but the caller should take advantage of the Roth 401(k) match option immediately. She is stabilized and it is no brainer.
Nope. I would listen to Dave.
What should you do if you make too much for the Roth IRA and are above the income limit.
In that case you would look in to what's called a " back door roth "
Is it 15% gross or 15% net
...net...
VTI
What is the best investment just for a retirement? Not wanting to think too much besides contributing to the Roth.
If you invest in an index fund or ETF that tracks the American stock market, you are getting the same return as what they analysts use to determine if "the market" is up or down. You can match the S&P500 or the entire market, or any of the other measuring sticks.
Vanguard's VTI fund mimics the entire US stock market
VOO mimics the S&P500. SPY does the same thing
If you believe in a particular segment of the US market, there is an index fund or ETF that mimics it, whether it is Large Cap, Mid Cap, Small Cap, Dividend, Growth, Value, whatever.
@@damondiehl5637 brother, thank you. I have fidelity and based on the common guideline I’ve been investing the following: FZROX Total market fund; FXAIX fidelity S&P 500; FZILX Zero international fund; FNILX zero large cap fund. …I founded it on the cheat sheet and a lot of people recommended it.
What are your thoughts?
2:46
6500 instead of 6000 for Roth IRA for the 2023 season!
Remember when they say 15% it means 30-50% for us regular people .
No, it means 15% of your gross income. There is no hidden trick, no one is trying to fool you.
Hey Dave I have a 800 scare with bank of america but I want to get a chase bank account but can I keep my score?
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He hates Chase. They copied the financial teaching plans his company created and sell it as their own.
Let's say I make 200,000 and I want to invest 30,000 in retirement. I am 1099, so I only have a Roth IRA and a traditional to invest in. If I put in 6,500 in both maxing them out, where do I invest the other 17,000 in?
You can't do that. It is not 6,500 per IRA, it is 6,500 (7000 for 2024) per year, between any and all IRAs.
I think as a 1099 employee, you can open a SEP IRA. You should research that. You can contribute 25% of your income, or up to $69k into a SEP IRA.
Great advice for the financially illiterate
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i.e. 95% of the population
I prefer solo Dave Ramsey.
Forgoing a 401(k) even when paying off debt is taking a voluntary pay cut. Very foolish.
...you're filling a bucket with a hole in the bottom...genius...
@@user-mf4gz3sp1q (1) that's an incompetent analogy.
(2) a bucket with a hole in the bottom _will_ fill if the hole is smaller than the rate of fill.
But it is generally for only a short period of time. The point is to change your mindset on debt. Get rid of it and never let it back into your house. Guard against it.
@@damondiehl5637it's possible to do two things at the same time.
Too vad he didn't suggest some HSA investing
There are industries that never give people raises in their entire career. What a jerk!!
In Tesla
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Was cheaper ten years ago.
You’re late to the game.
invest 15%, adjust 15% for inflation of course...
S&P500 index fund. That is all
10-12 thousand a month 😮
Why wouldn’t she just put her full
Amount in her 401k? Over just the match and rest into Roth?
I believe the unqualified withdrawal rules are different. If you make an unqualified withdrawal from a Roth 401k, you have pay income taxes on some portion of it, plus an early withdrawal penalty. But you can withdraw your contributions from a Roth IRA with no tax or penalty.
Roth is superior to 401K unless 401K has employer match.
@@Random-yq1wu but she is a getting up to a 3% match and he still didn’t tell her to contribute it all into her 401k. He just told her to meet the match and put the rest into the Roth. This is why I’m
Confused. The more you put into something, the more it compounds over time so wouldn’t it make sense to go all in the 401k since she isn’t maxing her 401?
It about when u retire.... u need to pay income tax on your 401k but u pay no taxes on the Roth.
Dave said to be sure to put at least enough in the 401k to get the 3% match. Then however they decide to invest, make sure it is a Roth account. IRAs give you more control over what you invest in. With a 401k, you generally have to pick from a set of funds it offers. If you like what they offer, it is no big deal.
15% of their income is $15,000. She needs to put $1200 into her 401k to get the entire match available. That leaves $13,800 for them to invest wherever they decide. They can each contribute $6500 in their IRA, so that accounts for $13,000. (He needs to get a Roth IRA, the one he has is a Traditional) So, they still have $800 that should go into either her Roth 401k or his 403b. She did not say his 403b was Roth, so her Roth 401k might be the best choice.
You can contribute up to $22,500 in a 401k (max for 2023), so they don't have to use an IRA at all. She could contribute it all into her Roth 401k. They can split it up any way they want. Dave is saying to make sure it goes into a Roth account, wherever it goes.
With the current inflation, being a “millionaire” in the future means squat.
Cyclical
Possibly
Millionaire has become “Middle Class”.
Not really
@@PabloRodriguez-xj1yk 😆
Right, I would definitely rather retire with a million than without because “it doesn’t mean squat”
Wish I could just get a direct answer what to do with my money. Idont have time to Jeep wasting money and building no future financially for my daughter
Create an account with Vanguard, set up automatic payments to invest in VTI or VOO. Then sit back and let it grow.
Has anyone here actually really been helped by Dave's advice? Baby steps seems maybe too good to be true?
The $1k emergency fund has saved me multiple times from going into debt
Yes. Millions of people.
you're kidding right!!! Paid off 75k and have 40k invested now with 25k saved!!! It works
Didn’t need his advice.
It’s all common sense.
Or just watch the CZcams video of the Baby Steps. It's around 45 minutes long.
What happens to the money you invested if you don’t make it to retirement?
It goes to your beneficiaries
When you set up your account you specify beneficiaries. You can change them out or change how much each one gets (as a percentage).
So...as a gigging musician would 15% of entire income look like 15% of each check that comes from a gig?
Yes, 15% of $1000 multiplied twelve times is the same as 15% of $12,000.
Live below your means, and invest the rest in Real Estate. Save for the down payment and buy a couple of rental units.
It’s very simple,
401k up to the match for a 100% return
Max out the ROTH IRA
That’s it…
That is shorting yourself. You can put $22,500 in the 401k. You can only put $6,500 in your IRA. That's a total of $29,000 per year (and it is more if you are over 50) If you make over 50,000 per year, your IRA plus 3% in 401k doesn't get you to 15%.
Get the match, but then contribute more, too. Max out the 401k and if you still have money to burn, put some in your IRA, too. Unless you don't like the offerings in the 401k, then fill the IRA first and then put whatever you have to in the 401k.
Why not put the entire $15k into her Roth 401k? Please advise.
Wouldn't you want to take advantage of putting it all in the Roth 401k to take advantage of the compound interest, rather than separating it into a Roth 401k + two more Roth IRAs?