What's the number?

[Mazderati]

I like the optimism and parts of the ACA but the realism is US healthcare is fucked until the profiteering is removed.

[Name Redacted]

Anyone have any advice for where to put a lump sum of say $20-30K, reduce taxes on it, and have it go toward retirement? Don't need it anywhere else, could pay off some mortgage or a car loan but those are both very low interest.

I have a Vanguard Brokerage account that we contribute to regularly once we meet the max on our IRA contributions so I could do that but I'm hesitant because the market seems overinflated. Also maxed out the HSAs for the year. Hate to just let it sit in a money market account.

Should have bought more ABNB share when I had the chance. Doh!

[El Chupacabra]

I like the optimism and parts of the ACA but the realism is US healthcare is fucked until the profiteering is removed.

There's much room for improvement.

[El Chupacabra]

Anyone have any advice for where to put a lump sum of say $20-30K, reduce taxes on it, and have it go toward retirement? Don't need it anywhere else, could pay off some mortgage or a car loan but those are both very low interest.

I have a Vanguard Brokerage account that we contribute to regularly once we meet the max on our IRA contributions so I could do that but I'm hesitant because the market seems overinflated. Also maxed out the HSAs for the year. Hate to just let it sit in a money market account.

Should have bought more ABNB share when I had the chance. Doh!

Do you have a 401k, or if married, does spouse? Are both maxed out? If not, start there.

IRA? If eligible, use that. Consider Roth vs traditional, there are pros and cons.

HSA? Not FSA, unless you can use within time limits.

[Danno]

Anyone have any advice for where to put a lump sum of say $20-30K, reduce taxes on it, and have it go toward retirement? Don't need it anywhere else, could pay off some mortgage or a car loan but those are both very low interest.

I have a Vanguard Brokerage account that we contribute to regularly once we meet the max on our IRA contributions so I could do that but I'm hesitant because the market seems overinflated. Also maxed out the HSAs for the year. Hate to just let it sit in a money market account.

Should have bought more ABNB share when I had the chance. Doh!

"reduce taxes on it", so it is income? The obvious ways to reduce taxes are to use IRA/401K/HSA (and Roth, which doesn't reduce taxes today).

You don't have to put the money "in the market" through the Vanguard account, couldn't you choose a safe bond fund? If the option you're considering is a money market, you may as well pay off a loan. The whole "don't pay off loans that are low interest" thing is predicated on investing that money to get a higher return, no?

[neufox47]

I think you just found where my dad hangs out on the internet.

That's him in a nutshell, particularly the "don't buy a house unless you're goddamn certain you're going to spend at least a decade in it." That shit haunts me when I think back on the places I've lived over the last 10 years, and the opportunities I had to buy into those markets at the time.

We bought the current house before having kids, things changed, including the school system which is prompting us to move across town. Original plan was to add an ADU and we’re about to be out of space, and we’re dieing for a play room to put all his shit in it. We’ll end up moving after just shy of 3 years. We’re under contract to sell for $100k more than we bought it for, and we put about $50k into the property between solar, a new driveway, and miscellaneous stuff. After all the transaction costs we’ll end up breaking even, so we had a sweet house we lived in for free.

My last condo (starter home) I was in for 5 years and I forget the exact number but I figured I got paid about $2,500 a month to live there. I was renting one of the three bedrooms out for $1k a month.

My brother on the other spectrum has been renting in the Bay Area since 2012. He has paid about $200k in rent over the same period.

Sure these were during property boom years but go look at history and figure out how often over a 5 year period you’re better off renting than owning. It’s pretty rare. If we had rented for 3 years instead of buying we’d be out almost $100k and would have lived in an inferior house.

[shroom]

aaand you’ve highlighted our lending-driven sprint to inequality

[Dantheman]

Between HSA and 401k I saved $21k this year. Last year it was $26k but the wife's income was way down this year due to COVID-related issues (she works at a gym) and a knee replacement. The knee replacement also ate up all the HSA contributions and then some, but at least we had that cash on hand. 401k is administered through Edward Jones, so that's nice.

[skaredshtles]

<snip> 401k is administered through Edward Jones, so that's nice.

Your company selected EJ as the administrator of the 401K?? WTF?

[schuss]

I think part of the problem with determining a number to retirement is the definition of “afford”. For some it’s credit based on future earnings, for some it’s low overhead and availability of liquidity on hand and for others, a mix.

There are plenty of opportunities across the US to make a proportionate $300k gross and mortgage a $450k house especially with work from home. The bummer is everybody is entitled to the most awesome job and the most awesome place to live so not everyone gets high wages and cheap housing and we all hate sacrifices and choices.

Yep, our situation is somewhat close to this, and while we could get more house, the prospect of no mortgage in less than 10 years is great. Honestly figure out some niche in finserv/insurance, live an hour out from a major metro and work from home a few days a week, sucking up the commute other days. Most HQs are close enough to cheap housing.
I'm planning on transitioning to nonprofit or other work in my 50s as big corp will burn you out over time. We'll see though...

[Dantheman]

Your company selected EJ as the administrator of the 401K?? WTF?

I didn't have any say in the matter, though until it came up in this thread I was unaware they were that shitty.

[skaredshtles]

I didn't have any say in the matter, though until it came up in this thread I was unaware they were that shitty.

Yeah - you get what you get when it comes to 401K admins.

The CFO probably got a kickback for selecting them.

[liv2ski]

What we did is really hard to repeat in CA now unless you're making really good money. Bought a few rentals with 25% to 30% down each for cash flow and over 20ish years got them paid off so there is a gross 6 figures coming in annually. Wife was a teacher, so a small pension (better than SS) and she will get a few hundred a month at 67 from SS as will I from a pension. My SSI is projected to be about $2,700 per month at 67, but by then I am sure it will be means tested, reduced or something else. Thankfully rental income goes up with inflation as does the values, so down the road our kids will have a nice little inheritance each.
So we are don't have millions in the bank, but with our IRA/401k savings and monthly cash flow, life is pretty comfy. Now fix the damn health care system so we can end the $1,200 insurance premiums FTMFW.

[k2skier112]

First off calm down with the R word. Yes Edward Jones is not a good company, they’ve been sued, their “advisors” are nothing more than shills for their terrible expensive funds and they charge you hidden fees.
It’s your money but you seem to act like I’m personally attacking your intellect. Edward Jones spends hundreds of millions to essentially dupe otherwise smart people.
If you value your money and you see an etf or mutual fund as nothing more than a commodity, you’d move to something basic like vanguard, fidelity or a even blackrock etf like ITOT, at fidelity.
The drag of .5-.6 more in fees over decades is enormous.
If you put in 250k in an Edward Jones total market mutual fund and averaged 6.5% after fees for 25 years only contributing $100 per month you’d have roughly $1,760,260 at retirement.
If you purchased the same type of fund at Fido or vanguard and averaged 7% after fees for 25 years and contributing the same $100 per month you’d have 2,020,009.
So if you don’t think you want an extra $260,000 for doing nothing more than watching your fees, that’s for you to decide.


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Who has $250k to start a retirement account at 20-30 years old? That seems quite unrealistic. Run you numbers using 23 years averaging $7423 per year investment and let me know the number. Then I'll post what my AF have done since 1996 with a total $170,737 invested

Sorry, it did feel like an attack. We're doing better than the majority of most with a 1.25M target easily obtainable in 3 years. I didn't start an AF account until I was 35.

I pay no fees to EJ, nothing, zilch. Their only compensation is from the ER on American funds. I'm going to examine everything after 1 year and see if no fees is true.
I have only been with EJ for 9 months now. We had 6 different accounts and my CPA recommended this FA.

We have enough in AF that the front load is 2% and close to being 1.5%

When I first got started, I knew nothing and wanted some advice. Going with a local FA and doing some background checking, American Funds looked good. (at the time, 1996, Vanguard was a baby firm)

After my initial FA quit, then the guy who took over our account retired, I took the FA off my American Funds account, this was around 2008/9. Silly uneducated me thought that money would go back into the account, but I found out quickly it didn't. At least I wasn't paying a FA for doing nothing anymore...

I checked out Vanguard, and with my knowledge now, I could comfortably be my own FA, and it looks like I could save a couple thou a year. But after checking lifetime fund performance (%) on VG funds with low, less than .1% ER, the average was around 7%. All my AF have been much more, 10.44, 12.26, 13.79 and 10.55% over their lifetime. To get a VG fund that equaled that the ER ratio were over .3%. So on average I could lower my ER about .25% and not have to pay any front load.

How old are you?

[shroom]

your math is way off dude, 67-25 does not equal 20 or 30 years old

[ncskier]

Who has $250k to start a retirement account at 20-30 years old? That seems quite unrealistic. Run you numbers using 23 years averaging $7423 per year investment and let me know the number. Then I'll post what my AF have done since 1996 with a total $170,737 invested

Sorry, it did feel like an attack. We're doing better than the majority of most with a 1.25M target easily obtainable in 3 years. I didn't start an AF account until I was 35.

I pay no fees to EJ, nothing, zilch. Their only compensation is from the ER on American funds. I'm going to examine everything after 1 year and see if no fees is true.
I have only been with EJ for 9 months now. We had 6 different accounts and my CPA recommended this FA.

We have enough in AF that the front load is 2% and close to being 1.5%

When I first got started, I knew nothing and wanted some advice. Going with a local FA and doing some background checking, American Funds looked good. (at the time, 1996, Vanguard was a baby firm)

After my initial FA quit, then the guy who took over our account retired, I took the FA off my American Funds account, this was around 2008/9. Silly uneducated me thought that money would go back into the account, but I found out quickly it didn't. At least I wasn't paying a FA for doing nothing anymore...

I checked out Vanguard, and with my knowledge now, I could comfortably be my own FA, and it looks like I could save a couple thou a year. But after checking lifetime fund performance (%) on VG funds with low, less than .1% ER, the average was around 7%. All my AF have been much more, 10.44, 12.26, 13.79 and 10.55% over their lifetime. To get a VG fund that equaled that the ER ratio were over .3%. So on average I could lower my ER about .25% and not have to pay any front load.

How old are you?

I’m late 40’s.
And yes lots of 30-32 year olds have 401k balances that are around 240k .
If you max your 401k get your employer match and compounding will get you to 200-250 in 8-9 years. I am Vp at private company and see what many youngsters in our office save and they are doing well. Not
To mention 401k profit sharing we dole out, many young folks at our office are saving 25-30k per year pre tax with their contributions, employer match and profit
sharing. These are young IT graduates and cpa types.
Besides if not 30 many 40 years do and when they roll over 401ks to ira’s is when fees really add up.
And for the love of god, nobody should be paying front load fees. I am not a licensed financial planner, but 1.5-2% is rapacious.


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[Benny Profane]

I like the optimism and parts of the ACA but the realism is US healthcare is fucked until the profiteering is removed.

And a mindset that more half of the members of congress who hold the purse strings that any sort of universal health care system that ALL the rest of the developed world affords it's citizens is "socialism".

[Danno]

And for the love of god, nobody should be paying front load fees. I am not a licensed financial planner, but 1.5-2% is rapacious.

This is indisputable, I would think.

[VTeton]

My wife's accountant had us take a meeting with their in house AF 401k people. We chose Employee Fiduciary for the 401k plan. Much cheaper for small plans.

[k2skier112]

your math is way off dude, 67-25 does not equal 20 or 30 years old

I have no idea where you got those numbers. I was estimating that someone starting to save for retirement would be between 20 and 30. And that person wouldn't have $250k to invest in 98% of 20 to 30 year olds

[k2skier112]

I’m late 40’s.
And yes lots of 30-32 year olds have 401k balances that are around 240k .
If you max your 401k get your employer match and compounding will get you to 200-250 in 8-9 years. I am Vp at private company and see what many youngsters in our office save and they are doing well. Not
To mention 401k profit sharing we dole out, many young folks at our office are saving 25-30k per year pre tax with their contributions, employer match and profit
sharing. These are young IT graduates and cpa types.
Besides if not 30 many 40 years do and when they roll over 401ks to ira’s is when fees really add up.
And for the love of god, nobody should be paying front load fees. I am not a licensed financial planner, but 1.5-2% is rapacious.


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You said to start out with a deposit (balance) of 250k. WTF? You moved goal posts... Again, that's 100% unrealistic for 98% of all 20-30 year olds. No shit you're not a financial planner, you're so full of biased bullshit. Probably a T**** supporter. If you think 1.5% is being raped. You ARE retarded. How many Confederate flags you got in your pickup?

[cravenmorhead]

You said to start out with a deposit (balance) of 250k. WTF? You moved goal posts... Again, that's 100% unrealistic for 98% of all 20-30 year olds. No shit you're not a financial planner, you're so full of biased bullshit. Probably a T**** supporter. If you think 1.5% is being raped. You ARE retarded. How many Confederate flags you got in your pickup?

Awfully snippy for someone ardently defending paying someone else 1.5% of their money every year.

[skaredshtles]

<snip> If you think 1.5% is being raped.

But seriously, man... NOBODY pays front-end loads any more. You're getting the shaft, on the loads *and* on the expense ratios.

[Mudfoot]

John Oliver on retirement planning.

https://www.youtube.com/watch?v=gvZSpET11ZY

[El Chupacabra]

My understanding is that front and back end loads date to when you needed a broker to buy or sell, like 1970s and earlier. That model is outdated.

Companies like American Funds argue that loads and higher ERs are justified because they actively manage their funds, and claim to achieve better profits than passive index funds. However, the vast majority of actively managed funds fail to outperform the market (such as a S&P 500 fund), and to add to the losses, still charge loads and higher ER.

K2 skier, none of this is a personal attack on you. If you are satisfied with American Funds, after researching this appropriately, then stick with them. The fact that nobody else here thinks American Funds is a wise choice should at least get you to do the research.