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Message
What would you do if you were me?
Posted on 5/26/15 at 1:56 pm
Posted on 5/26/15 at 1:56 pm
Background of my financial situation:
22 years old
$75,000 annual salary
9% employer match 401k
$20,000 in bank (I've been working for a year)
No debt (paid off car/school)
I live below my means and I usually save 35-50% of my income after all expenses (rent/utilities/gas/food/ect)
The 9% match is fantastic, no doubt, but I'd like to diversify a bit and get ahead of the game while I'm young. Just reading this board and talking to my family it seems like a Roth IRA is the best way to go, which I was recommended to do through Vanguard. It feels wrong to have $20,000 just sitting in the bank earning practically nothing so I'd like to put 35-50% of that in an additional savings/retirement fund.
What would you do if you were in my shoes? I'd like to get an idea of what's out there and funds to invest in.
22 years old
$75,000 annual salary
9% employer match 401k
$20,000 in bank (I've been working for a year)
No debt (paid off car/school)
I live below my means and I usually save 35-50% of my income after all expenses (rent/utilities/gas/food/ect)
The 9% match is fantastic, no doubt, but I'd like to diversify a bit and get ahead of the game while I'm young. Just reading this board and talking to my family it seems like a Roth IRA is the best way to go, which I was recommended to do through Vanguard. It feels wrong to have $20,000 just sitting in the bank earning practically nothing so I'd like to put 35-50% of that in an additional savings/retirement fund.
What would you do if you were in my shoes? I'd like to get an idea of what's out there and funds to invest in.
21
Posted on 5/26/15 at 1:59 pm to Aubs10
quote:
Aubs10
I was close to your situation 8 years ago, making about 55k...so you are a little better off.
Do you plan on buying a house at any point in the near future? 9% is pretty good match, you don't want to save yourself poor...cash is awesome.
Posted on 5/26/15 at 2:05 pm to Aubs10
FML
Posted on 5/26/15 at 2:06 pm to Aubs10
Switch places with me.
Posted on 5/26/15 at 2:10 pm to Aubs10
Just here to say congrats on your situation. My advice more than anything is to stay the course and don't accumulate debt in any way, shape, or form in the very least.
Posted on 5/26/15 at 2:12 pm to Aubs10
quote:
What would you do if you were in my shoes?
I would create a thread that's really a subtle brag.
Posted on 5/26/15 at 2:13 pm to Aubs10
quote:
Background of my financial situation:
22 years old
$75,000 annual salary
9% employer match 401k
$20,000 in bank (I've been working for a year)
No debt (paid off car/school)
I live below my means and I usually save 35-50% of my income after all expenses (rent/utilities/gas/food/ect)
The 9% match is fantastic, no doubt, but I'd like to diversify a bit and get ahead of the game while I'm young. Just reading this board and talking to my family it seems like a Roth IRA is the best way to go, which I was recommended to do through Vanguard. It feels wrong to have $20,000 just sitting in the bank earning practically nothing so I'd like to put 35-50% of that in an additional savings/retirement fund.
What would you do if you were in my shoes? I'd like to get an idea of what's out there and funds to invest in.
if you really like the idea of a roth see if you can split your 401K contributions into some combination of traditional 401K and roth 401K...you wont get the tax benefit of traditional but you'll get some money into a tax free account...
Posted on 5/26/15 at 2:14 pm to Aubs10
Honestly, I wouldn't change a thing. At your age and income level, and with that generous an employer match on the 401k, you're already ahead of the game and doing better than 99% of your 22 year old peers.
Taking $5k from that $20k and opening a ROTH wouldn't hurt you. Then you can just start throwing some money in it every month, say $500.
It's a good idea to keep 3-6 months of your salary in some sort of liquid account you can easily access if you were to lose your job for some reason. So I wouldn't take all of that out.
Taking $5k from that $20k and opening a ROTH wouldn't hurt you. Then you can just start throwing some money in it every month, say $500.
It's a good idea to keep 3-6 months of your salary in some sort of liquid account you can easily access if you were to lose your job for some reason. So I wouldn't take all of that out.
Posted on 5/26/15 at 2:18 pm to Aubs10
quote:What interest rate are you getting on your savings account?
It feels wrong to have $20,000 just sitting in the bank earning practically nothing
Posted on 5/26/15 at 2:18 pm to Aubs10
quote:
$20,000 in bank (I've been working for a year)
Our "emergency fund" is about twice that (wife, 2 kids, that's 6-8 months living expenses). Last year, we qualified for a Roth, so I maxed out a Roth for her and 1 for me from this fund. We qualified again this year, so another $11,000 went into our retirement. We have replaced some of this money in our savings account, but the way I see it, if I have about $10,000 in cash and the rest in a Roth, then I have the opportunity to make that money work for me and make a decent return, but I can pull my contributions out in case of emergency and I won't face any penalties.
I'd go ahead and fund a Roth in addition to your 401K, then start saving to buy a house, if that's in your near future plans. Congrats on being in the spot you are at such a young age.
Posted on 5/26/15 at 2:21 pm to Aubs10
quote:
It feels wrong to have $20,000 just sitting in the bank earning practically nothing so I'd like to put 35-50% of that in an additional savings/retirement fund.
I would look to be more toward the 50% end of the spectrum. Obviously, that would put you over the Roth limit, but not a bad idea to get an additional standard brokerage account going.
quote:
I'd like to get an idea of what's out there and funds to invest in.
Yeah, just pick out a couple ETFS and allocate very aggressively (at least 90% equity if not 100%). Just to warn you, a market "correction" is assumed to be very likely over the next 6-12 months; however, this should really not affect you at all given your time horizon.
Posted on 5/26/15 at 3:42 pm to Aubs10
1. Keep 3-6 months of salary or budgeted expenses (your expenses are probably low so you dont need 100% of 6 months salary) in a liquid account as an emergency fund - in case you lose your job, car blows up, break your leg, etc.
2. Invest in 401k up to the employer match, but no more than the match, and no less.
3. Invest full amount (roughly 5k per year) in Roth IRA.
4. Take out some money for fun every month and keep it in a separate liquid account from your emergency fund. You deserve to have fun too you know
5. Invest everything else in your preferred investment strategy, either mutual funds or regular stocks.
Source: Same situation as you my man
2. Invest in 401k up to the employer match, but no more than the match, and no less.
3. Invest full amount (roughly 5k per year) in Roth IRA.
4. Take out some money for fun every month and keep it in a separate liquid account from your emergency fund. You deserve to have fun too you know
5. Invest everything else in your preferred investment strategy, either mutual funds or regular stocks.
Source: Same situation as you my man
Posted on 5/26/15 at 3:49 pm to Aubs10
Time is on your side my friend. Invest with a vengeance and I promise you won't work past 40 unless you want too.
Posted on 5/26/15 at 5:04 pm to Aubs10
As others have said I'd meet employer match (9%) and max Roth ($5500 per year), other than that I'd keep a emergency fund of about 15k and have fun.
If you want to keep saving so much don't get married
If you want to keep saving so much don't get married
Posted on 5/26/15 at 7:46 pm to Aubs10
Take a trip and enjoy your money
Posted on 5/26/15 at 11:07 pm to Aubs10
quote:
22 years old
$75,000 annual salary
America
Posted on 5/27/15 at 8:48 am to Aubs10
Congrats to the OP! You're in a great position to direct your future.
I think the most important thing at this point is to have all your investment "vehicles" in position. Fund the Roth and open a brokerage account. Once they're open, find a funding level that you're comfortable with and follow through with your plan. Maintain an accurate budget, it will be one of the tools that will give you flexibility to deal with an unexpected event.
You have the income and lifestyle needed for financial success, you just need to get used to the practice of doing the right thing every month/paycheck.
I think the most important thing at this point is to have all your investment "vehicles" in position. Fund the Roth and open a brokerage account. Once they're open, find a funding level that you're comfortable with and follow through with your plan. Maintain an accurate budget, it will be one of the tools that will give you flexibility to deal with an unexpected event.
You have the income and lifestyle needed for financial success, you just need to get used to the practice of doing the right thing every month/paycheck.
Posted on 5/28/15 at 12:15 pm to Aubs10
quote:
Aubs10 - what I would do if I were you
Go see a financial adviser instead of subtlety bragging on an internet message board.
Posted on 5/28/15 at 1:56 pm to Aubs10
At 22 I was in the military and prob had $500 in the bank.
Had lots of sex tho.
Edit: you are doing very good at a early age. Just don't go and let a woman frick it all up for you and you should end up just fine in life.
Had lots of sex tho.
Edit: you are doing very good at a early age. Just don't go and let a woman frick it all up for you and you should end up just fine in life.
This post was edited on 5/28/15 at 2:07 pm
Posted on 5/31/15 at 12:34 pm to Aubs10
I'm in nearly your exact situation. I just turned 23, have $10,000 in bank, and have been working for just over 4 months though. My company only matches 7%, but it probably works out to be about the same total. I've got all mine in a traditional 401k. I get a raise in June and I'll probably bump up my contribution an extra 3% and put that in the Roth option. I probably save closer to 33% as I've been spending a bit on travel lately. I've got everything other than 401k in a savings account right now as I drive a '98 explorer with 190,000 miles, so I will probably have to liquidate some of those savings soon and get a new vehicle.
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