Financial Thread

NickTheGreat

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As a young pup, I decided to start early with investing. I'm debating whether I want to up my 401k contribution even though it's fairly high already.

My financial guy says that you should max out your 401k. The tax benefits alone make it a good investment.

Easier said than done, but his point was do that rather than sink money into a CD or something.
 

Bestaluckcy

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The way I figure is that I'll work my way up and each car "cycle" I'll be able to afford a nicer one.

That is the way we did it. We started out with a $1500 vehicle and borrowed a portion of it. The next vehicle was $2500 etc. Always paid the early loans off then saved to go towards the next vehicle. We have owned used as well as new vehicles. We drive too many miles, so try to always buy the most miles for the buck. Sometimes dealer incentives will make a new vehicle a better value than used. Other times low mile used is our choice. We save ahead and do not have to borrow any more. It can be done. Transportation costs have risen over the years. I first figured 5 cents per mile purchased. The last new vehicle was 18 cents, our used pickup was 14 cents.
 

NickTheGreat

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What would you guys think of changing my 401k contribution every few months or so to a high percentage and then lowering it back to normal? I'm able to change mine whenever I want which may be typical, I'm not sure. The max is 99%, but obviously I don't see myself doing that.

I think thats okay. Not all employers allow that change willy-nilly.
 
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NATEizKING

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My financial guy says that you should max out your 401k. The tax benefits alone make it a good investment.

Easier said than done, but his point was do that rather than sink money into a CD or something.

Once I pay off my student loans, I'm thinking of maxing it for 5 years then lowering back down to around 10%, get a good chunk in there to start compounding early and hope it allows me to retire sooner. Not sure how that will work out with kids though.
 

VikesFan22

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I think I saw someone mention it, but what's better in your opinion? Pre-tax 401k contributions or Roth 401k contributions? I suppose both would be an acceptable answer too.

I just looked up the max I can contribute in a year. I'm not even close to on pace for that even though I said my contribution percentage is fairly high. I guess when I say that I mean compared to my employer's match.
 

NickTheGreat

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Once I pay off my student loans, I'm thinking of maxing it for 5 years then lowering back down to around 10%, get a good chunk in there to start compounding early and hope it allows me to retire sooner. Not sure how that will work out with kids though.

It's easier said than done, but a good goal. Just by talking about saving for retirement, you're better off than 50% of this country . . . :rolleyes:

But that's a whole other thread :wink:
 

dmclone

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I think I saw someone mention it, but what's better in your opinion? Pre-tax 401k contributions or Roth 401k contributions? I suppose both would be an acceptable answer too.

I like to have a mix. Since no one knows what tax rates will be in the future, by having a mix you can pull out money at different times for tax advantages.

Like others have said:

Put the amount in your 401k up to employer match
Put the next $5,500 in a roth IRA-This is assuming your income is low enough. If it's not you can do it other ways.
Put the next in your 401k

Then consider that money untouchable unless it's life/death. Do not borrow from it. If you think you need to borrow from it for a down payment on a house, you don't.

In my case my employer matches 75% up to 8%. So if I put in 8% they put in 6%. This 6% is free money so doing 8% is a no-brainer. Although my employer also allows that 8% to go into a Roth 401k instead. I've decided to just do the first 8% pre-tax and everything else post-tax(roth IRA and roth 401k)
 
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cycloneworld

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I think something that is often ignored are mid-term investments. We hear tons about retirement and short term investments but we don't often hear much about the 10-20 year investments. I've gone to putting a majority of my savings (outside of a healthy emergency fund) into real estate and buying rental properties. It's a great 7, 10, 15, 20, or longer investment. You can get out any time (with no penalties) and if you buy right, it is about as risk free as you can ask for.
 

CycloneGB

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I never have much in the bank account anyway, and wouldn't all but $50 of any bank account or credit card be covered by the company or the FDIC?

That was my thinking of the way around it. Linking up the bill paying account and not the major savings accounts that way if they ever did get in they would only have access to the smaller accounts, I can take care of figuring out the savings account.

I just think a place like Mint's server that is specifically for holding account numbers and passwords would be a prime target for hackers. Sure they have great security and might be fine.. but I'd rather not bet everything I have with it.
 

VikesFan22

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I like to have a mix. Since no one knows what tax rates will be in the future, by having a mix you can pull out money at different times for tax advantages.

Like others have said:

Put the amount in your 401k up to employer match
Put the next $5,500 in a roth IRA-This is assuming your income is low enough. If it's not you can do it other ways.
Put the next in your 401k

Then consider that money untouchable unless it's life/death. Do not borrow from it. If you think you need to borrow from it for a down payment on a house, you don't.

In my case my employer matches 75% up to 8%. So if I put in 8% they put in 6%. This 6% is free money so doing 8% is a no-brainer. Although my employer also allows that 8% to go into a Roth 401k instead. I've decided to just do the first 8% pre-tax and everything else post-tax(roth IRA and roth 401k)
Okay. I'm well above my employer's match and I've maxed out my Roth IRA contribution. Right now I'm only contributing to my Pre-Tax 401k and just wondered if I should do the roth 401k as well. These are things I can talk to my advisor about, but I like hearing other people's thoughts.
 

CycloneGB

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Okay. I'm well above my employer's match and I've maxed out my Roth IRA contribution. Right now I'm only contributing to my Pre-Tax 401k and just wondered if I should do the roth 401k as well. These are things I can talk to my advisor about, but I like hearing other people's thoughts.

I think most would agree, the more you can put away the better. If you feel like you can comfortably put some money into the Roth 401(k) then you will be that much better off. The only way putting "too much" away for retirement can hurt you, is when you don't have enough that you have access to in an emergency situation or something similar that requires a chunk of change. I.E. I don't have anywhere near a down payment for a house because I stuck every extra dollar into my 401(k) IRA etc.
 

Trice

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Any have a recommended Financial Planner or Advisor in the Ankeny or Urbandale area that they would recommend?

What are they fee structures like for such services?

Any information is appreciated.

I'm a DIYer for the most part so I don't have a specific recommendation. But - and this is probably going to anger some people - I would be very wary of engaging a financial professional. Anyone can call himself a financial advisor and go earn whatever credentials are necessary. But the vast majority of advisors are commission based and working for a bank, insurance company, or "wealth management" firm. Which means that their advice is inherently biased toward whatever products they are selling.

That isn't to say that they're all dishonest or incompetent or anything like that. Most are probably fine. But they have no legal obligation to put your best interests first. For example, I have an advisor who has repeatedly offered me advice about a certain financial product that is 180 degrees opposite of what experts advise. I know this because I've researched it intensively and asked numerous other neutral financial professionals. That product, coincidentally, is among the more profitable products from the advisor's and financial firm's standpoint.

You can find fee-only advisors who accept only an hourly rate for their services and do not sell products. If and when I need help, that's where I'm going.
 
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DeereClone

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I think I saw someone mention it, but what's better in your opinion? Pre-tax 401k contributions or Roth 401k contributions? I suppose both would be an acceptable answer too.

I just looked up the max I can contribute in a year. I'm not even close to on pace for that even though I said my contribution percentage is fairly high. I guess when I say that I mean compared to my employer's match.

I would do the Roth and get the tax-free savings. Your employer's contribution has to be Pre-tax so you are still diversified this way.

You are young, that tax-free growth will be awesome for you, do the Roth.
 
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DeereClone

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I think something that is often ignored are mid-term investments. We hear tons about retirement and short term investments but we don't often hear much about the 10-20 year investments. I've gone to putting a majority of my savings (outside of a healthy emergency fund) into real estate and buying rental properties. It's a great 7, 10, 15, 20, or longer investment. You can get out any time (with no penalties) and if you buy right, it is about as risk free as you can ask for.

This is a good reminder here. We all want to save money for an intermediate type of purchase, but struggle to find a good vehicle to do it in.

I am struggling because I am hoping to buy farmland in the next 3-5 years. I am not sure where to put this money. I have just been saving up cash because I was leery of putting it in the stock market with the Dow at 17,000+. So is this dip a good buying opportunity for me? Are there other investment vehicles out there that I should be looking at? I hate the idea of cash just eroding in value in my bank account, but I don't think I trust the market at these levels either.
 

Trice

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What would you guys think of changing my 401k contribution every few months or so to a high percentage and then lowering it back to normal? I'm able to change mine whenever I want which may be typical, I'm not sure. The max is 99%, but obviously I don't see myself doing that.

I'm not clear on the reasoning behind this strategy. Rather than going to (for example) 16% for six months then 8% for six months, why not just set it at 12% all the time and leave it alone? Then you don't ever get tempted to time the market, you never have to submit new paperwork, and can just go on with your life and forget it?
 

cowgirl836

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I think I saw someone mention it, but what's better in your opinion? Pre-tax 401k contributions or Roth 401k contributions? I suppose both would be an acceptable answer too.

I just looked up the max I can contribute in a year. I'm not even close to on pace for that even though I said my contribution percentage is fairly high. I guess when I say that I mean compared to my employer's match.


We have ours split now, based on what we read and advice we got from an advisor. Like DM said, we don't know what taxes will be in the future. I know for me, the company match can only go toward pre-tax. I thought that was the way that was some kind of law, but it sounds like DM's is able to go to his Roth. So because of that, my actual contribution goes toward the Roth.
 

dmclone

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My employer holds free workshops based on your age that gives you advice. After taking that you can then talk to a financial adviser for free. I didn't really learn a lot of new things about my retirement but it did make me feel like I was going in the right direction. He did bring up a couple of topics that I didn't consider and one was to have an umbrella policy added.
 

VikesFan22

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I'm not clear on the reasoning behind this strategy. Rather than going to (for example) 16% for six months then 8% for six months, why not just set it at 12% all the time and leave it alone? Then you don't ever get tempted to time the market, you never have to submit new paperwork, and can just go on with your life and forget it?
I understand what you're saying, but it's not really what I meant because like you said, I'd just pick a middle ground. I'm saying I could do 15% regularly and then do a month of 50% and then lower it back to 15% for an extended period of time. It's probably stupid which is why I asked.
 

cowgirl836

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I'm a DIYer for the most part so I don't have a specific recommendation. But - and this is probably going to anger some people - I would be very wary of engaging a financial professional. Anyone can call himself a financial advisor and go earn whatever credentials are necessary. But the vast majority of advisors are commission based and working for a bank, insurance company, or "wealth management" firm. Which means that their advice is inherently biased toward whatever products they are selling.

That isn't to say that they're all dishonest or incompetent or anything like that. Most are probably fine. But they have no legal obligation to put your best interests first. For example, I have an advisor who has repeatedly offered me advice about a certain financial product that is 180 degrees opposite of what experts advise. I know this because I've researched it intensively and asked numerous other neutral financial professionals. That product, coincidentally, is among the more profitable products from the advisor's and financial firm's standpoint.

You can find fee-only advisors who accept only an hourly rate for their services and do not sell products. If and when I need help, that's where I'm going.


this is something we ran into as well. We went because it was a free consult and a coworker likes them quite a bit. I don't think anything they did was straight up dishonest (and it was good to hear that house/other stuff we are just fine) but the funds they came back recommending that we do were not what I had already kinda researched out. All very much the higher expense funds and tried talking about how that doesn't really mean too much as long as fund A outperforms fund B by more than the expense fee. That's true, but most research right now says the best indicator of performance is how low the expense fee is. So we did not go with their recommendations. Though their advice about opening a Roth IRA to allow more control over our money was good.
 
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VikesFan22

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We have ours split now, based on what we read and advice we got from an advisor. Like DM said, we don't know what taxes will be in the future. I know for me, the company match can only go toward pre-tax. I thought that was the way that was some kind of law, but it sounds like DM's is able to go to his Roth. So because of that, my actual contribution goes toward the Roth.
After hearing from you guys, I'll probably split mine as well. I just need to decide what percentage I want both to be.
 

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