If you had 120,000 in the bank. - Page 4 - TigerDroppings.com

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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
7001 posts

re: If you had 120,000 in the bank.


You maxing out both you and the wife's 401K every year?





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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


Nope. Just started a new job but need to get on that...





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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
7001 posts

re: If you had 120,000 in the bank.


Then I'd max out 401K for both you and your wife (I think it's $16000 or so max this year). Do all you can to get as much money as possible into places where they can grow tax free. Use some of the 120K to live on, while you divert significant funds from you and the wife's paycheck into the 401K.


This post was edited on 6/4 at 4:04 pm


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TheCaterpillar
LSU Fan
Nashville from BR via Oxford
Member since Jan 2004
34192 posts

re: If you had 120,000 in the bank.


yeah definitely max out the 401k first IMO.

Every financial person ever tells me to do that and max the Roth ASAP.






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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


16000 a year?





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RickAstley
LSU Fan
Reno, Nevada
Member since May 2011
1550 posts

re: If you had 120,000 in the bank.


Max is $17,500

LINK
quote:

The Maximum 401K Contribution in 2013
The 2013 401K maximum contribution is $17,500! That makes two straight years of increases after three years of no increases from the IRS.



This post was edited on 6/4 at 4:15 pm


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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


My employer won't match until I hit the 6 month mark. Should I be waiting until that?





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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
7001 posts

re: If you had 120,000 in the bank.


So you and your wife could have $35000 invested from you pretax income (and growing tax free) yearly. Use some of the 120K to pay for living expenses (since your paycheck would shrink) if necessary.





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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


Does it make sense to do that at my current tax rate though considering I will be making more as I get older?

Shouldn't I just take the money and invest it myself in the same things and take the tax hit now?






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RickAstley
LSU Fan
Reno, Nevada
Member since May 2011
1550 posts

re: If you had 120,000 in the bank.


In your situation, there isn't any reason to wait. My employer matches up to 3% of my salary only if I contribute 6%. I contributed 6% until I received a raise and I contribute 10% now. I would like to increase that more, yet I am at the point now if I go any further I won't be able to do some activities I already had preplanned for the summer and fall.





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rlanders23
Member since Oct 2011
44 posts

re: If you had 120,000 in the bank.


Not necessarily true. With many employers, you don't have to invest equal amounts throughout the year, meaning you can front-load, or in your case, back-load your 401k. Basically, instead of contributing 17,500/24 or 26(based on how often you get paid)per month, you'd simply invest twice that amount after the 6 month mark. Make sense?





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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120328 posts

re: If you had 120,000 in the bank.


quote:

f this is for long term investment, I'd put 1/4 of it into an S&P 500 index fund every other month until it is all invested. And I'd reinvest the dividends.


I'm trying to follow your logic

You would have him invest 25% of the 120k or 30k every other month?

Why not just throw it all in up front?






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tiger perry
LSU Fan
Lafayette, LA
Member since Dec 2009
16364 posts
 Online 

re: If you had 120,000 in the bank.


Just invested 10,000 dollars in an S&P 500 index fund thanks to this thread





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lynxcat
Rutgers Fan
Member since Jan 2008
14178 posts

re: If you had 120,000 in the bank.


quote:

I'm trying to follow your logic

You would have him invest 25% of the 120k or 30k every other month?

Why not just throw it all in up front?


quote:

Dollar cost averaging (DCA) is an investment strategy that may be used with any currency. It takes the form of investing equal monetary amounts regularly and periodically over specific time periods (such as $100 monthly for 10 months) in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.[1]


LINK



This post was edited on 6/5 at 12:51 pm


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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


What if the shares go up during that time...





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BestBanker
New Orleans Saints Fan
stuck in a moment
Member since Nov 2011
2830 posts
 Online 

re: If you had 120,000 in the bank.


Find a partner with commercial real estate background. Consider using a 50%+ figure for down payment and create a mortgage on a 25 yr amortization. With rents, depreciation, and deductions, your ror should be considerable. Office leases or long term tenants. Try to keep out of residential for the headache factor. Keep residual cash liquid for unexpecteds, then 1-3 yrs out, look to lock up some money. Mortgage interest rates are low and are expected to climb this year (is what I am expecting).





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TheDiesel
LSU Fan
Houston via Baton Rouge
Member since Feb 2010
2397 posts

re: If you had 120,000 in the bank.


It is a long term strategy that is mainly used for index funds.





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Dead Mike
LSU Fan
Cell Block 4
Member since Mar 2010
1737 posts

re: If you had 120,000 in the bank.


Would you suggest he DCA that lump sum, lynx?





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matthew25
Ole Miss Fan
Member since Jun 2012
3289 posts

re: If you had 120,000 in the bank.


Expect to hold it for a very long time. I bought Vanguard S&P 500 in 1997 and watched it go up, then down in 2008-09. It is back up, thank goodness.





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Drew Orleans
LSU Fan
Member since Mar 2010
18391 posts

re: If you had 120,000 in the bank.


Might be doing something like that with my father.





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