How much should I be putting away?
- Thread starter ppragman
- Start date
Der_Meister
Well-Known Member
I would say as much as you can afford.
ppragman
FLIPY FLAPS!
Seems reasonable. I'll shortly be eligible for the company 401k, should I invest in that and get the matching, or is the common wisdom to do something different?
z987k
Well-Known Member
Get as much of the match as you can. That's free extra money.
I figure the least you should do is the maximum match on the 401k and the maximum allowable untaxed into an IRA.
typhoonpilot
Well-Known Member
Agree with the 401K match. It's free money so you can't really go wrong there. IRAs on the other hand ??
The best thing you can do is look outside of the mainstream investing world. Rich people are not the ones who are investing in 401Ks and IRAs.
The idea that you can save via 401K and IRAs is all a big con game from Wall Street. The same super elite who stole our pensions and destroyed the middle class lifestyle. They want you to believe that you can save via these vehicles and have a comfortble retirement while they use your money to further enrich themselves. They give you the illusion of making money while they rob you blind.
You see, once you're locked into these vehicles you have to pay huge penalties to get your money out before retirement. If all your savings are in there it makes it quite difficult to invest in actual investments that have a chance of something better than a 8% annual average return.
Really good investment opportunities only come around once in a blue moon. Basically once every 10-15 years. Sometimes those can be stocks, if you are brave and really know a company and it's potential. More often that not, it's other investments. Property, both residential and commercial, or other types of businesses that generate revenue.
You need to have cash available to pounce on these opportunities when they arise. Realisitically at age 24 you'll need to save for a decade more to put away cash outside of the mainstream 401K and IRA to be able to hit one of these. You'll recognize it when you see it if you pay attention to markets.
I had a $325,000 capital gain in 2009 from one of those opportunities. It was a townhouse development that went up for sale in 2007 in Abu Dhabi. The prices were ridiculously cheap for the UAE. There was already an under supply of housing in Abu Dhabi and rents were going through the roof ( $50,000/year for a 1 bedroom apartment ). I picked up an off plan 3 bedroom townhouse for $300,000. Sold it for $625,000 less than 2 years later. I needed a little over $100,000 in cash over that 2 years to make the periodic payments.
So that's what I mean when you need to have cash available to make these kinds of investments.
Very important rules to follow though:
1) Never invest in something that sounds too good to be true. I've seen so many pilots get scammed by these deals that come along from con artists. It truly is amazing how gullible pilots are when it comes to investing.
2) Always keep your money in your name. Any investing you do should be in your accounts controlled by you. Don't give your money to someone else to control. 99% of the time, if you do, you will lose your money.
3) Don't over extend and get into too much debt to handle.
4) Don't be greedy. Take your profits and run. You'll know the time is right when everyone around you is touting the money that can be made in ( take your pick ) High tech stocks in 2000, property in 2006, tulips in the 1600s.
5) Keep your first wife.
Typhoonpilot
The best thing you can do is look outside of the mainstream investing world. Rich people are not the ones who are investing in 401Ks and IRAs.
The idea that you can save via 401K and IRAs is all a big con game from Wall Street. The same super elite who stole our pensions and destroyed the middle class lifestyle. They want you to believe that you can save via these vehicles and have a comfortble retirement while they use your money to further enrich themselves. They give you the illusion of making money while they rob you blind.
You see, once you're locked into these vehicles you have to pay huge penalties to get your money out before retirement. If all your savings are in there it makes it quite difficult to invest in actual investments that have a chance of something better than a 8% annual average return.
Really good investment opportunities only come around once in a blue moon. Basically once every 10-15 years. Sometimes those can be stocks, if you are brave and really know a company and it's potential. More often that not, it's other investments. Property, both residential and commercial, or other types of businesses that generate revenue.
You need to have cash available to pounce on these opportunities when they arise. Realisitically at age 24 you'll need to save for a decade more to put away cash outside of the mainstream 401K and IRA to be able to hit one of these. You'll recognize it when you see it if you pay attention to markets.
I had a $325,000 capital gain in 2009 from one of those opportunities. It was a townhouse development that went up for sale in 2007 in Abu Dhabi. The prices were ridiculously cheap for the UAE. There was already an under supply of housing in Abu Dhabi and rents were going through the roof ( $50,000/year for a 1 bedroom apartment ). I picked up an off plan 3 bedroom townhouse for $300,000. Sold it for $625,000 less than 2 years later. I needed a little over $100,000 in cash over that 2 years to make the periodic payments.
So that's what I mean when you need to have cash available to make these kinds of investments.
Very important rules to follow though:
1) Never invest in something that sounds too good to be true. I've seen so many pilots get scammed by these deals that come along from con artists. It truly is amazing how gullible pilots are when it comes to investing.
2) Always keep your money in your name. Any investing you do should be in your accounts controlled by you. Don't give your money to someone else to control. 99% of the time, if you do, you will lose your money.
3) Don't over extend and get into too much debt to handle.
4) Don't be greedy. Take your profits and run. You'll know the time is right when everyone around you is touting the money that can be made in ( take your pick ) High tech stocks in 2000, property in 2006, tulips in the 1600s.
5) Keep your first wife.
Typhoonpilot
typhoonpilot I don't inherently disagree from the basis of your arguments but I do have some questions. You "rules" are very good for those that need a blueprint to follow.
What do you define retirement as?
Under rule number two, Where did you get that 99% figure? I agree keep your money in your name but I'm curious to the 99% figure.
What do you define retirement as?
Under rule number two, Where did you get that 99% figure? I agree keep your money in your name but I'm curious to the 99% figure.
rframe
pǝʇɹǝʌuı
Assuming you have a few grand in savings now to cover daily issues that pop up (you'd be amazed how many people do not)... then,
1. make sure you have life insurance to take care of your family in case you dont come home tomorrow or 10 years from now - enough to pay off house, send your wife to school if needed, help your kids with school, and provide a nice buffer fund to help them with other issues that will come up in normal life
2. pay down any consumer debt
3. build up a 6 month cash reserve, keep this pretty liquid, at least a couple months worth in a money market you can write a check from tomorrow if needed, the rest in a low risk fund if you want
4. max out any employer matched options like matched 401k, it's free money, dont leave it on the table
5. save as much as you can and find long term investment that fits your personality - this is where you can get personalized but unless you really have an interest in learning about markets and being very hands on (which most people will underperform if they chose to do and are being honest about it), you can find some solid index funds as a no-brainer way to start and read up on other funds if you like... find a reputable planner/mentor, despite what many do-it-yourself gurus proclaim, a good planner can help you from making stupid decisions, but get someone trusted by other people who are doing well financially dont just pick someone off the internet or phone book
* Alternatively, skip #5 until your house is paid off by just shoving every spare dollar at your mortgage. If you want to be a bit more hands on and are not attracted to playing markets, I'd also encourage you to look at long term real estate investing (not the flipping crap like you see on TV), as even seemingly unexciting options can really add up over time and you're developing not only equitable worth but also a steady source of passive income.
1. make sure you have life insurance to take care of your family in case you dont come home tomorrow or 10 years from now - enough to pay off house, send your wife to school if needed, help your kids with school, and provide a nice buffer fund to help them with other issues that will come up in normal life
2. pay down any consumer debt
3. build up a 6 month cash reserve, keep this pretty liquid, at least a couple months worth in a money market you can write a check from tomorrow if needed, the rest in a low risk fund if you want
4. max out any employer matched options like matched 401k, it's free money, dont leave it on the table
5. save as much as you can and find long term investment that fits your personality - this is where you can get personalized but unless you really have an interest in learning about markets and being very hands on (which most people will underperform if they chose to do and are being honest about it), you can find some solid index funds as a no-brainer way to start and read up on other funds if you like... find a reputable planner/mentor, despite what many do-it-yourself gurus proclaim, a good planner can help you from making stupid decisions, but get someone trusted by other people who are doing well financially dont just pick someone off the internet or phone book
* Alternatively, skip #5 until your house is paid off by just shoving every spare dollar at your mortgage. If you want to be a bit more hands on and are not attracted to playing markets, I'd also encourage you to look at long term real estate investing (not the flipping crap like you see on TV), as even seemingly unexciting options can really add up over time and you're developing not only equitable worth but also a steady source of passive income.
typhoonpilot
Well-Known Member
As with all statistics, I made it up on the fly.
Realistically I have seen and read about too many people taken to the cleaners when they entrusted their money to somebody else to "invest" for them.
TP
Bob Ridpath
Pit Bull love
Having nothing especially positive to contribute, I will do so anyway.
You absolutely don't want to end up on the skinny end of life with nothing. It may seem a long way off when you're twenty or thirty (less so at forty) but you will wake up in this strange land one day more quickly than you can imagine. Options are far more limited at sixty than they once were when you were younger
I would echo several of the excellent thoughts noted above. Limit or pay down debt - now, not later. Balance the "toys" in life with the absolute need to save and plan for the future. Recognize that some discipline early on will mean a LOT as the years fly by. Enjoy each day of your life as it passes but recognize that no one else ... no one ... will take care of your future with the same care that you invest in it.
Someone has to be the negative example, I suppose, of what missed opportunity and an early lack of discipline can mean. You don't want that job, though.
Trust me.
You absolutely don't want to end up on the skinny end of life with nothing. It may seem a long way off when you're twenty or thirty (less so at forty) but you will wake up in this strange land one day more quickly than you can imagine. Options are far more limited at sixty than they once were when you were younger
I would echo several of the excellent thoughts noted above. Limit or pay down debt - now, not later. Balance the "toys" in life with the absolute need to save and plan for the future. Recognize that some discipline early on will mean a LOT as the years fly by. Enjoy each day of your life as it passes but recognize that no one else ... no one ... will take care of your future with the same care that you invest in it.
Someone has to be the negative example, I suppose, of what missed opportunity and an early lack of discipline can mean. You don't want that job, though.
Trust me.
hook_dupin
Well-Known Member
I recommend all the young guys read The Millionaires Next Door by Dave Ramsey. I don't agree with everything Ramsey has to say, but it gets the message across well. Here's the message:
-Live below your means
-Pay off high-interest debt
-Build up an emergency savings
-Make investing be the first "bill" you pay
Each of those four bullets could span multiple books worth of material
-Live below your means
-Pay off high-interest debt
-Build up an emergency savings
-Make investing be the first "bill" you pay
Each of those four bullets could span multiple books worth of material
rframe
pǝʇɹǝʌuı
by Thomas J. Stanley
Dave has a ton of great stuff, but he didn't write that book. I also recommend that book though.
Houston
Well-Known Member
Douglas wrote exactly what I was thinking. My personal recommendation is to first invest in the things that can't be taken away from you. Number one on that list is education.
At your age, I would definitely put money into a Roth IRA rather than a "traditional" IRA. Not being able to deduct the investment on your taxes today may seem painful, but four decades from now you'll be glad you did it.
hook_dupin
Well-Known Member
drunkenbeagle
Gang Member
Every penny you can afford. Max out 401k until match, then Roth IRAs.
Thats great your planning young! Not many seem to. You have to look at the whole picture before you just start throwing money in. You need to know your budget, ie, what you bring in what goes out a month. Remember retirement 401k's are taking out pre-tax so you are lowering your tax bracket (I know first, second, third year pay jokes) Roth IRA's are post tax dollars. I would recommend building a budget for your monthly living, include money to savings. Build a emergency fund! There are many thoughts on this, at the end of the day you have to do what you feel comfortable with.
CoffeeIcePapers
Well-Hung Member
I put 10% into an IRA and 10-20% into a liquid savings account, depending on my expenses. I have done well on my IRAs, but as typhoon said, I needed the cash to time the investments properly.
If you are using a 401k PLEASE make sure you aren't getting fleeced with admin fees. They can add up quickly. If I were you, I would contribute the maximum they will match and select the lowest fee account and not contribute anymore. You can afford to go with low risk, low fee products, because you are already getting a great return by their match.
If you are using a 401k PLEASE make sure you aren't getting fleeced with admin fees. They can add up quickly. If I were you, I would contribute the maximum they will match and select the lowest fee account and not contribute anymore. You can afford to go with low risk, low fee products, because you are already getting a great return by their match.
drunkenbeagle
Gang Member
Most of the taxes you are paying in a low income bracket is SS and Medicare, you still pay these even for pre-tax 401k contributions. And you pay on all of it when you retire.
Roth IRA is an awesome deal, as you will never pay taxes on any of the gains. If you are young, poorly paid, and saving and likely to make a lot later - great deal.
Roth 401k's are great too if you are starting out.
Similar threads
