Discussion School me in saving for retirement

Jul 6, 2011
14,980
26
126
#1
I have the basis of it down.

Currently have 6% going into my ROTH 401k (company match of up to 6% after 1 year, thus me already setting it up at 6%)

Putting money into an HSA (with goals of investing that money). One question I do have about the HSA is can I invest some of the money and have some set aside for when I need to use it?

Going to be purchasing ETFs in the near future, once I move out and get settled. Planning on opening another savings account (with a high interest rate).

Any other tips, tricks, or general knowledge? I know a lot of y'all are older folks who have gone through this, and I'm a mere youngin with not much knowledge. I have been reading "The Next Door Millionaire" to gather some additional insight into having a financially secure future.
 

Herr Kutz

Platinum Member
Jun 14, 2009
2,420
65
106
#3
Max out 401k company matching, Max out HSA contribution, Max out IRA contribution, Max out 401k contribution

100% stock market
 

Zeze

Diamond Member
Mar 4, 2011
9,903
50
126
#4
Any other tips, tricks, or general knowledge? I know a lot of y'all are older folks who have gone through this, and I'm a mere youngin with not much knowledge. I have been reading "The Next Door Millionaire" to gather some additional insight into having a financially secure future.
That book is flawed or redundant as hell once you just get the point. Yeah yeah, don't buy flashy cars above your means, duh. I bought the book too when I was in my 20s... Just follow /r/financialindependence

https://www.reddit.com/r/financialindependence/comments/6tmti5
 

Ken g6

Programming Moderator, Elite Member
Moderator
Dec 11, 1999
14,443
416
55
#5
Going to be purchasing ETFs in the near future, once I move out and get settled. Planning on opening another savings account (with a high interest rate).
If you're asking what mix of ETFs, one approach is to let Betterment decide for you. (I think there's some others, like Personal Capital, with similar services.) Betterment also has a savings-like high interest account, but it's in bonds, so it can lose money. On the other hand, that also means it is insured by SIPC, unlike whatever Robin Hood was trying to pull.
 
Jul 13, 2005
25,773
590
126
#6
okay here goes short version.......purchase a box springs and a mattress,,,,,,,\
lift mattress and put between mattress and box springs
 
Jul 6, 2011
14,980
26
126
#7
how the hell do i embed images in this stupid ass forum that's been redesigned 92347 times?


Okay, these are helpful.

I'm pretty set on the first few steps, just need to create a budget (which the book suggested).

Also the book is pretty redundant, but my main take away that not everyone who is rich show it, and those that do show it, may not be rich at all.
Max out 401k company matching, Max out HSA contribution, Max out IRA contribution, Max out 401k contribution

100% stock market
I want to slow roll into maxing my contributions, so I'll increase it each year/whenever I feel comfortable, but that's the end goal.
If you're asking what mix of ETFs, one approach is to let Betterment decide for you. (I think there's some others, like Personal Capital, with similar services.) Betterment also has a savings-like high interest account, but it's in bonds, so it can lose money. On the other hand, that also means it is insured by SIPC, unlike whatever Robin Hood was trying to pull.
I've heard of Betterment but the ETF area is where I'd need to do more research.
 
Feb 13, 2003
25,387
82
106
#8
I've been thinking about this too. I should see a personal finance advisor person but I keep putting it off because I'm a genius.

I do the 401(k) with company match, though it's only 6% (they match the first 1% but only 0.5% up to the next 5%), so a total of 3.5% matched by company.

Otherwise that's about it I guess. I have a student loan but it's almost paid off; less than a thousand dollars on it remains I believe.

I think the next best thing would be to go for a Roth IRA.
 
Jul 12, 2006
95,244
3,083
136
#9
Max out 401k company matching, Max out HSA contribution, Max out IRA contribution, Max out 401k contribution

100% stock market
basically this.

and bet the rest on black.
 
Apr 3, 2001
47,364
435
126
#10
Putting money into an HSA (with goals of investing that money). One question I do have about the HSA is can I invest some of the money and have some set aside for when I need to use it?
Don't think I saw this one answered yet, but the short version is yes.
 

spacejamz

Diamond Member
Mar 31, 2003
9,794
169
126
#11
Don't think I saw this one answered yet, but the short version is yes.
Do all HSA's have an investment option? or do you have to pick one that offers this?

Wonder how many use a different HSA bank than the one offered by their comany...
 
Jul 12, 2006
95,244
3,083
136
#12
Do all HSA's have an investment option? or do you have to pick one that offers this?

Wonder how many use a different HSA bank than the one offered by their comany...
Aren't all HSA's just an investment account? The difference is usually among the options that the bank or employer offer for investment, right? I also didn't know if you could partition money between investment and cash, like a money market account or something. I thought it was all just 100% invested into the funds that you pick, with zero withdrawal penalty and taxes when spent on (paying yourself back for) medical costs? So, there really isn't a reason to set any aside from interest-bearing funds, right?
 
Apr 3, 2001
47,364
435
126
#13
Aren't all HSA's just an investment account? The difference is usually among the options that the bank or employer offer for investment, right? I also didn't know if you could partition money between investment and cash, like a money market account or something. I thought it was all just 100% invested into the funds that you pick, with zero withdrawal penalty and taxes when spent on (paying yourself back for) medical costs? So, there really isn't a reason to set any aside from interest-bearing funds, right?
The HSAs I've had only allowed the portion of the account over $1,000 to be invested, and it was something you had to actively elect to do (and you had options in where to put the invested amounts).
 

allisolm

Elite Member
Administrator
Jan 2, 2001
22,792
200
136
#14
Max out 401k company matching, Max out HSA contribution, Max out IRA contribution, Max out 401k contribution
And, in addition, every time you get a raise, put half of it into savings/investments of some kind.
 
Sep 13, 2001
47,563
419
126
#15
I've been thinking about this too. I should see a personal finance advisor person but I keep putting it off because I'm a genius.

I do the 401(k) with company match, though it's only 6% (they match the first 1% but only 0.5% up to the next 5%), so a total of 3.5% matched by company.

Otherwise that's about it I guess. I have a student loan but it's almost paid off; less than a thousand dollars on it remains I believe.

I think the next best thing would be to go for a Roth IRA.
I need to look into how to do the backdoor roth IRA stuff because I stopped putting money into my Roth years ago when my wife and I started making more than you are allowed to make when contributing to a Roth. The quick research I did I never really figured out how to do the backdoor roth IRA stuff.
 

olds

Elite Member
Mar 3, 2000
49,254
73
106
#16
Max out 401k company matching, Max out HSA contribution, Max out IRA contribution, Max out 401k contribution

100% stock market
This except for maybe the 100% stock market part. But it depends on what level of risk you are comfortable with.
 
Jul 6, 2011
14,980
26
126
#17
The HSAs I've had only allowed the portion of the account over $1,000 to be invested, and it was something you had to actively elect to do (and you had options in where to put the invested amounts).
Yeah this seems to be the general case.

But when you invest the HSA, isn't it in ETFs (or whatever)? Wouldn't you have to sell shares in order to pay yourself back when you use it/using your HSA debit card (if you have one, I personally do).

Looks like you can do BOTH a company sponsored 401k AND a IRA (Roth/Trad). Looks like I best open up a IRA somewhere.

@nakedfrog do you know if you can still use the HSA as an HSA (make surgery payments, or whatever) while it's being actively invested?
 
Jul 12, 2006
95,244
3,083
136
#18
Yeah this seems to be the general case.

But when you invest the HSA, isn't it in ETFs (or whatever)? Wouldn't you have to sell shares in order to pay yourself back when you use it/using your HSA debit card (if you have one, I personally do).

Looks like you can do BOTH a company sponsored 401k AND a IRA (Roth/Trad). Looks like I best open up a IRA somewhere.

@nakedfrog do you know if you can still use the HSA as an HSA (make surgery payments, or whatever) while it's being actively invested?
weird, making you portion your money like that in an HSA makes me less jealous that I've never had access to one. Yes, paying yourself back with it, you would have to sell shares, if holding shares is what you are doing with your money. It seems to me like any kind of investment account holding shares in index funds or ETFs or whatever.

Well, the purpose of the HSA is to be able to pay yourself whenever you need to--the reason savvy investors like them so much is because you don't have to--in fact, there is no limit to when you need to pay yourself back (for now, anyway). The idea is to keep money in there as long as you possibly can, to keep growing and growing because it's such a win-win with zero taxes in and zero taxes out on the investment. But of course, that's not really what they are for. The assumption is that people actually seek medical treatment of some sort on an annual basis, or at least purchase band-aids or Rubbing Alcohol or whatever, and desire to reimburse themselves for it. so yes--if you can't use the funds while you are still actively investing in them, then you need another HSA (reminding yourself that you hope to be in a position where you can put that off for years--just keep all your receipts)
 
Apr 3, 2001
47,364
435
126
#19
Yeah this seems to be the general case.

But when you invest the HSA, isn't it in ETFs (or whatever)? Wouldn't you have to sell shares in order to pay yourself back when you use it/using your HSA debit card (if you have one, I personally do).

Looks like you can do BOTH a company sponsored 401k AND a IRA (Roth/Trad). Looks like I best open up a IRA somewhere.

@nakedfrog do you know if you can still use the HSA as an HSA (make surgery payments, or whatever) while it's being actively invested?
I'm pretty sure I did, and that it did some auto-thing to maintain the $1,000 part, didn't pay much attention to the specifics.
 
Jul 6, 2011
14,980
26
126
#20
I'm pretty sure I did, and that it did some auto-thing to maintain the $1,000 part, didn't pay much attention to the specifics.
mm okay, once I hit 1k (so about a year), I'll be able to see
 

Zeze

Diamond Member
Mar 4, 2011
9,903
50
126
#21
An my old job paid so well. They auto put in ADDITIONAL 8% of your salary to your 401k whether you opted in or not.

AND they matched another 6% of your contribution, immediately vested.

Effectively it meant your salary was 8% more than what you were paid
 
Jul 6, 2011
14,980
26
126
#23
An my old job paid so well. They auto put in ADDITIONAL 8% of your salary to your 401k whether you opted in or not.

AND they matched another 6% of your contribution, immediately vested.

Effectively it meant your salary was 8% more than what you were paid
what the fuck.

I only get up to 6% match, immediately vested, after 1 year. :(
I tend to roll my eyes at simplistic charts like this but… this one is pretty good.
Yeah, it's really good.
 

Exterous

Super Moderator
Super Moderator
Jun 20, 2006
17,892
290
126
#24
One of the things that will determine where your investments should go after getting the max company max is good the plan options are at your company. You may have access to institutional funds with crazy low Expense Ratios and no fund minimums, you may only have access to funds with 12-1b fees and high Expense ratios or fall somewhere in between. If you are in the first group then continuing to invest through your employer's plan can be a much better idea than if you are in the second group.

Now why should you care about Expense Ratios? (ERs) Well funds with low ERs are Index Funds and Index Funds are awesome. Index funds mimic the performance of the market and the market has an incredibly long history of going up. Low ERs are in the 0.01-0.25% range

*In walks fancy dressed "Financial Expert"*

"But I can do better!" he says. "With actively managed mutual funds I can outperform the market! Remember that correction in December. With index funds you have to eat that. I can beat that!"

Haha sure money guy. That's why you're dealing with us small fry's instead of working with Buffet or living on one of your 15 yachts. Every year 70-90% of mutual funds under perform the comparable index funds. To make matters worse they are often loaded with 12-1b fees, sales fees and high ERs (0.75-2%!)* So you are paying the guy for the pleasure of getting worse performance! Not only that but there have been a lot of lawsuits over "Financial Expert" compensation methods. Basically a lot of people earn incentive or commissions to push you into certain funds that probably don't align with your best interests. Beware the Financial Expert. He has no fiduciary duty to act in your best interests.

*The newest scam I have seen is that a lot of these funds are putting temporary "Fee waivers" in place - artificially lowering their ERs. They may have an ER of 0.25% but only after their 1% "Fee waiver" that expires in 5 months unless they choose to renew it. Read the fine print!

But which index or index tracking ETFs to buy? Well that depends on your risk tolerance. And here its really important to actually know your risk tolerance. This isn't a macho challenge about "I can stomach 100% stocks" - this is about knowing what will cause you stress and what will cause you to make bad financial decisions. Being 75/25 stocks/bonds is better than going 100% stocks and selling during a down turn. In December there were lots of threads on investment forums about people who thought they could tolerate a high stock percentage but then sold when things got tough. Don't be that guy. Pick an asset allocation you can live with.

So how to choose an asset allocation? Well there are lots of thoughts on that. Tons.

You can find a hefty chunk of that tons of information over at Bogleheads. Here is a link to some of the recommended portfolios:
https://www.bogleheads.org/wiki/Lazy_portfolios
And forums if you want to go down the rabbit hole (And they do provide lots of helpful, situation specific info if you ask):
https://www.bogleheads.org/forum/index.php

But a very rough outline is:
100% stocks till 30
75-90% stocks till 40
60-80% stocks till 50
50-65% stocks after 50

The other % should be in bonds

For the stock portion 20-40% should be in international stocks

You'll find tons of discussions about this because the answers depend on goals, risk tolerance, thoughts and impressions about the future etc etc but that should be a good starting place


That book is flawed or redundant as hell once you just get the point. Yeah yeah, don't buy flashy cars above your means, duh. I bought the book too when I was in my 20s... Just follow /r/financialindependence
Sure but a lot of people haven't gotten the point yet. I'll admit I've read it a couple of times because it helps to reset my internal financial placement after the constant bombardment of advertisement and coworkers\friends who are Under Accumulators of Wealth.
 
Jul 6, 2011
14,980
26
126
#25
One of the things that will determine where your investments should go after getting the max company max is good the plan options are at your company. You may have access to institutional funds with crazy low Expense Ratios and no fund minimums, you may only have access to funds with 12-1b fees and high Expense ratios or fall somewhere in between. If you are in the first group then continuing to invest through your employer's plan can be a much better idea than if you are in the second group.

Now why should you care about Expense Ratios? (ERs) Well funds with low ERs are Index Funds and Index Funds are awesome. Index funds mimic the performance of the market and the market has an incredibly long history of going up. Low ERs are in the 0.01-0.25% range

*In walks fancy dressed "Financial Expert"*

"But I can do better!" he says. "With actively managed mutual funds I can outperform the market! Remember that correction in December. With index funds you have to eat that. I can beat that!"

Haha sure money guy. That's why you're dealing with us small fry's instead of working with Buffet or living on one of your 15 yachts. Every year 70-90% of mutual funds under perform the comparable index funds. To make matters worse they are often loaded with 12-1b fees, sales fees and high ERs (0.75-2%!)* So you are paying the guy for the pleasure of getting worse performance! Not only that but there have been a lot of lawsuits over "Financial Expert" compensation methods. Basically a lot of people earn incentive or commissions to push you into certain funds that probably don't align with your best interests. Beware the Financial Expert. He has no fiduciary duty to act in your best interests.

*The newest scam I have seen is that a lot of these funds are putting temporary "Fee waivers" in place - artificially lowering their ERs. They may have an ER of 0.25% but only after their 1% "Fee waiver" that expires in 5 months unless they choose to renew it. Read the fine print!

But which index or index tracking ETFs to buy? Well that depends on your risk tolerance. And here its really important to actually know your risk tolerance. This isn't a macho challenge about "I can stomach 100% stocks" - this is about knowing what will cause you stress and what will cause you to make bad financial decisions. Being 75/25 stocks/bonds is better than going 100% stocks and selling during a down turn. In December there were lots of threads on investment forums about people who thought they could tolerate a high stock percentage but then sold when things got tough. Don't be that guy. Pick an asset allocation you can live with.

So how to choose an asset allocation? Well there are lots of thoughts on that. Tons.

You can find a hefty chunk of that tons of information over at Bogleheads. Here is a link to some of the recommended portfolios:
https://www.bogleheads.org/wiki/Lazy_portfolios
And forums if you want to go down the rabbit hole (And they do provide lots of helpful, situation specific info if you ask):
https://www.bogleheads.org/forum/index.php

But a very rough outline is:
100% stocks till 30
75-90% stocks till 40
60-80% stocks till 50
50-65% stocks after 50

The other % should be in bonds

For the stock portion 20-40% should be in international stocks

You'll find tons of discussions about this because the answers depend on goals, risk tolerance, thoughts and impressions about the future etc etc but that should be a good starting place

Sure but a lot of people haven't gotten the point yet. I'll admit I've read it a couple of times because it helps to reset my internal financial placement after the constant bombardment of advertisement and coworkers\friends who are Under Accumulators of Wealth.
This is good advice, thank you.

I also understand that if I work at a company with stock options, to take it. Sadly, we are a private company (with a huge backing), with no intention of going public and my field (medical analysis and education) isn't really populated with many high profile stock options (just google Healthstream, lmao).

My dad said, while I'm young, to invest in ETFs with 100% stocks since I can take that risk, and as I get older, I should slowly end up at a 70/30 split (stocks/bonds).

Currently my 401k is 100% going towards VIIIX

Thanks to my major, I had to take accounting and econ, so I have an okay understanding of ERs and stuff like that, I'd probably end up going about purchasing ETFs through Vanguard (I guess their ads are working, also friend recommendations).

In terms of HODLing, any funds I'll need to access in the short term (ie: I have a goal of purchasing a 15k car in 3 year, saving $400 a month, as well as a -r i n g-/wedding/whatever the fuck comes with that shit, in the same time span, saving another $400 a month) I'll keep it in a "high" interest rate savings account (I'm thinking Ally).

The boglehead wiki is a great resource.
 

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