- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Advice for 25 y/o - IRA, Life Insurance, Emergency Fund, etc.
Posted on 1/8/15 at 5:53 pm
Posted on 1/8/15 at 5:53 pm
My apologies if this would be better suited as several threads, but I'm looking for some assurance on a few upcoming decisions. I've read the Money Talk Guide and acknowledge most of these topics have been covered. So if your advice is to check an old thread, point taken, but I'd greatly appreciate some personalized advice as well.
Background
I'm 25 and single with no signs of settling down soon. 3.5 years of a steady job in professional services with high ceiling, but I'm unsatisfied and see one or more of the following happening:
1. Slight deviation from current career path (<1 yr)
2. Complete career change/salary decrease (<2 years)
3. MBA at a decent school (Start Fall '16, '17, or '18)
Personal Finance
Roth 401(k) with ML
- $30k value
- Contributing 15%
- 97% equities, 3% fixed income
Emergency Fund
- Maintain about $18,000 between Chase Checking and Savings accounts
Brokerage Account
- Originally my college fund but LSU was cheap (:
- $38k value
- Shares from 3 stocks, all performing well at the moment
Life Insurance/Long Term Disability (employer's plan)
-Term Life Insurance: up to $50,000
-LTD: up to 60% of compensation
My Plan
1. Open Roth IRA and max out for '14 and beyond
2. Move emergency fund to higher yielding accounts / decrease amount in Checking/Savings
3. Hold off on buying additional insurance
Questions for Money Talkers
1. Should I open the Roth IRA? How should it differ from my 401(k), which is 1/4 Vanguard index funds? I don't plan on actively managing it myself, so what are good options?
2. I feel like I have too much money hanging around in my emergency fund not earning interest. Given that I can withdraw contributions to my 401(k) penalty free, what should I do with my existing "emergency fund"? Put some in MM and the rest in another higher yielding account?
3. At what time should I consider my own term or whole life insurance plan? Should I consider supplemental disability insurance?
I think I'm in a good spot overall and have my head in the right place looking ahead. I certainly acknowledge how fortunate I am to be in a good financial shape at my age, but any advice that you all can provide would be greatly appreciated.
I also fully expect minimal replies and this to fall off the 1st page so no harsh feelings if you think I'm asking for too much.
Background
I'm 25 and single with no signs of settling down soon. 3.5 years of a steady job in professional services with high ceiling, but I'm unsatisfied and see one or more of the following happening:
1. Slight deviation from current career path (<1 yr)
2. Complete career change/salary decrease (<2 years)
3. MBA at a decent school (Start Fall '16, '17, or '18)
Personal Finance
Roth 401(k) with ML
- $30k value
- Contributing 15%
- 97% equities, 3% fixed income
Emergency Fund
- Maintain about $18,000 between Chase Checking and Savings accounts
Brokerage Account
- Originally my college fund but LSU was cheap (:
- $38k value
- Shares from 3 stocks, all performing well at the moment
Life Insurance/Long Term Disability (employer's plan)
-Term Life Insurance: up to $50,000
-LTD: up to 60% of compensation
My Plan
1. Open Roth IRA and max out for '14 and beyond
2. Move emergency fund to higher yielding accounts / decrease amount in Checking/Savings
3. Hold off on buying additional insurance
Questions for Money Talkers
1. Should I open the Roth IRA? How should it differ from my 401(k), which is 1/4 Vanguard index funds? I don't plan on actively managing it myself, so what are good options?
2. I feel like I have too much money hanging around in my emergency fund not earning interest. Given that I can withdraw contributions to my 401(k) penalty free, what should I do with my existing "emergency fund"? Put some in MM and the rest in another higher yielding account?
3. At what time should I consider my own term or whole life insurance plan? Should I consider supplemental disability insurance?
I think I'm in a good spot overall and have my head in the right place looking ahead. I certainly acknowledge how fortunate I am to be in a good financial shape at my age, but any advice that you all can provide would be greatly appreciated.
I also fully expect minimal replies and this to fall off the 1st page so no harsh feelings if you think I'm asking for too much.
7
Posted on 1/8/15 at 6:32 pm to Tigerbait46
Sounds like your killing it. Congrats.
1. Never a bad idea to max out a Roth IRA. I assume your income still allows you to contribute. I wouldn't invest more than 20%of my total income in retirement this early. There's much life to live
2. Don't worry about your e-fund not earning interest. It's an emergency fund. You don't want any risk on it, and you want it to be always available for...emergencies. Roth IRA is considered by some to be an emergency fund cause you can withdraw contributions penalty free, but it's exposed to the market and is at more risk, and you don't want to unplug investments in times of emergency. Leave this find in a savings or money market at most.
3. Life insurance benefits are paid to others, not you...obviously. Do you have anybody somewhat dependent on you? If not, wait til you marry or if you wanna get in on rates while you are young and healthy. Never a bad idea to get an independent term coverage now just in case your health changes. Get 10 times your salary.
Sure, ramp up disability coverage. Never hurts.
Be debt free, save for retirement, NEVER go into debt again unless it's a reasonable house mortgage. I would save a lot of money for big future purchases like a house or making sure you don't have to borrow for more school. You are really freaking young, so keep it up and remember that debt is stupid, and buying things with cash is awesome.
1. Never a bad idea to max out a Roth IRA. I assume your income still allows you to contribute. I wouldn't invest more than 20%of my total income in retirement this early. There's much life to live
2. Don't worry about your e-fund not earning interest. It's an emergency fund. You don't want any risk on it, and you want it to be always available for...emergencies. Roth IRA is considered by some to be an emergency fund cause you can withdraw contributions penalty free, but it's exposed to the market and is at more risk, and you don't want to unplug investments in times of emergency. Leave this find in a savings or money market at most.
3. Life insurance benefits are paid to others, not you...obviously. Do you have anybody somewhat dependent on you? If not, wait til you marry or if you wanna get in on rates while you are young and healthy. Never a bad idea to get an independent term coverage now just in case your health changes. Get 10 times your salary.
Sure, ramp up disability coverage. Never hurts.
Be debt free, save for retirement, NEVER go into debt again unless it's a reasonable house mortgage. I would save a lot of money for big future purchases like a house or making sure you don't have to borrow for more school. You are really freaking young, so keep it up and remember that debt is stupid, and buying things with cash is awesome.
Posted on 1/8/15 at 8:38 pm to Tigerbait46
I'm also 25 and now I'm embarrassed.... I need a better job.
This post was edited on 1/8/15 at 8:41 pm
Posted on 1/8/15 at 9:11 pm to Tigerbait46
Diversify your brokerage acct.
Posted on 1/9/15 at 9:53 am to Tigerbait46
Curious - the brokerage account... I'm guessing this is somethings your parents gave to you?
Clearly you are doing well financially. To answer your questions:
1) You could open a Roth IRA. What percentage of your 401K is in the Roth vs in traditional (i.e. the amounts your employer put in are all traditional). I assume you are under the Roth IRA income limits.
2) An Emergency Fund is just that - for emergencies. If you were to view your Roth as an emergency fund, that would be one thing... but you seem to view, correctly, your Roth as for retirement. You can maybe look at some online accounts that might offer a bit more interest, and pop a chunk in there. Just make sure you can get to it in a day or two. Leave a few thousand held locally.
3) It wouldn't hurt to pick up some real cheap term, just in case a strange thing happens where you lose your job at the same time you get unhealthy at the same time you get married. Rare? Yes. But coverage for you is dirt cheap. It has to be term only. Don't fool around with whole right now.
You didn't ask... but what about your job? You say you are unsatisfied, why do you think this is? Usually with people your age and especially in professional services, one of two things are going on.
A) You are still stuck doing the crap grunt work, and as you get older, it will be higher-level work, that you will enjoy. In this case, stick it out, and ask your boss for more high-level projects.
B) You hate your chosen field, and you don't think you will ever be happy in it... even if you grow into a higher role and even if you change employers. In this case, you are young enough, single enough, and secure enough to go back to school to learn something else.
Clearly you are doing well financially. To answer your questions:
1) You could open a Roth IRA. What percentage of your 401K is in the Roth vs in traditional (i.e. the amounts your employer put in are all traditional). I assume you are under the Roth IRA income limits.
2) An Emergency Fund is just that - for emergencies. If you were to view your Roth as an emergency fund, that would be one thing... but you seem to view, correctly, your Roth as for retirement. You can maybe look at some online accounts that might offer a bit more interest, and pop a chunk in there. Just make sure you can get to it in a day or two. Leave a few thousand held locally.
3) It wouldn't hurt to pick up some real cheap term, just in case a strange thing happens where you lose your job at the same time you get unhealthy at the same time you get married. Rare? Yes. But coverage for you is dirt cheap. It has to be term only. Don't fool around with whole right now.
You didn't ask... but what about your job? You say you are unsatisfied, why do you think this is? Usually with people your age and especially in professional services, one of two things are going on.
A) You are still stuck doing the crap grunt work, and as you get older, it will be higher-level work, that you will enjoy. In this case, stick it out, and ask your boss for more high-level projects.
B) You hate your chosen field, and you don't think you will ever be happy in it... even if you grow into a higher role and even if you change employers. In this case, you are young enough, single enough, and secure enough to go back to school to learn something else.
Posted on 1/9/15 at 10:00 am to LSUFanHouston
Convert it all over to hookers and blow. Their symbol is HKRBL. They have a frick the future attitude. Their long term gains are minimal, but their short term gains are phenomenal.
Posted on 1/9/15 at 10:00 am to Tigerbait46
Take a 2wk vacation and spend some of your money....have a little fun..
Posted on 1/9/15 at 10:51 am to Tigerbait46
Reduce your 401k to max out your Roth IRA. Much more flexibility in an IRA and likely lower fees. Keep putting in enough to get your full employer match, if you have one.
If you want an MBA, consider an executive MBA at a good school. It sucks working and going to school, but at least you won't go into debt to do it. If you have a specific idea of what it is you want to do in the business field, there are more specified advanced degrees besides just an MBA that could potentially be more valuable to you.
If you want an MBA, consider an executive MBA at a good school. It sucks working and going to school, but at least you won't go into debt to do it. If you have a specific idea of what it is you want to do in the business field, there are more specified advanced degrees besides just an MBA that could potentially be more valuable to you.
Posted on 1/9/15 at 11:21 am to LSUFanHouston
quote:
Curious - the brokerage account... I'm guessing this is somethings your parents gave to you?
Yes, I'm really fortunate that my parents set this up when I was young and it worked out even better that it wasn't all needed to cover tuition at LSU.
quote:
What percentage of your 401K is in the Roth vs in traditional (i.e. the amounts your employer put in are all traditional)
15% Roth, ~2.5% employer contributed (not positive on this but it's not much)
quote:
You didn't ask... but what about your job? You say you are unsatisfied, why do you think this is? Usually with people your age and especially in professional services, one of two things are going on.
A) You are still stuck doing the crap grunt work, and as you get older, it will be higher-level work, that you will enjoy. In this case, stick it out, and ask your boss for more high-level projects.
B) You hate your chosen field, and you don't think you will ever be happy in it... even if you grow into a higher role and even if you change employers. In this case, you are young enough, single enough, and secure enough to go back to school to learn something else.
It's mix of both. I'm 2 years from Manager and understand the grunt work is almost over, but at the end of the day, I'd regret it if I never tried something different. I'm in the process of transferring into a different service line that seems more interesting to me and I believe delivers greater value to clients, but it's not something I'm totally sold on. It may just be a temporary band-aid. Perhaps I still have a bit of an idealistic outlook on work and the naivety hasn't worn off, but I don't see myself being satisfied unless I'm doing something at least somewhat impactful. My issue is I've always been incredibly risk averse and have taken the path of least resistance to be in a well paid and steady job. A big part of me wants to shake things up, step outside my comfort zone, and challenge myself with the pursuit of a different career path.
Posted on 1/9/15 at 11:23 am to swanny297
quote:
Take a 2wk vacation and spend some of your money....have a little fun.
definitely not an issue. I've traveled abroad each of the last few years and make sure to use every bit of my PTO.Posted on 1/9/15 at 11:46 am to Tigerbait46
You work in B4?
Posted on 1/9/15 at 1:17 pm to Louie T
quote:
You work in B4?
Yes.
Posted on 1/9/15 at 4:24 pm to Tigerbait46
Tell me which service line you're looking to switch into and I'll let you know if you should just start the MBA.
I did Audit for 2.5 years, been in Consulting arm for last year and the jobs I'm qualified for aren't exactly what I'm looking for. I may not be looking hard enough.
I did Audit for 2.5 years, been in Consulting arm for last year and the jobs I'm qualified for aren't exactly what I'm looking for. I may not be looking hard enough.
Posted on 1/9/15 at 4:40 pm to Tigerbait46
quote:
B4
Well no wonder... get out of there man! Even if you want to stay in accounting... there are lots of other places you can work.
Posted on 1/9/15 at 5:26 pm to Tigerbait46
Your better life decisions perturb me
This post was edited on 1/9/15 at 5:27 pm
Posted on 1/10/15 at 1:39 pm to Larry Gooseman
quote:
Tell me which service line you're looking to switch into and I'll let you know if you should just start the MBA.
It's our healthcare consulting practice.
Posted on 1/10/15 at 4:45 pm to Tigerbait46
I'm not sure you're not my brother... Except I know his name on here 
Posted on 1/10/15 at 8:59 pm to Tigerbait46
That sounds like a good one. But will that help you get the position you want when you're ready to leave.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News