As a hedge fund manager, I endorse this view. Good job Ramit. You've helped me neutralize my more inane frugal impulses, like only getting the bottle of tea that's the absolute cheapest instead of the one I would actually like which costs literally no more than 50 cents more. I'm glad others are benefiting from sophisticated investing advice that's compatible with the most efficient method for Americans to gain wealth over their lives. Best wishes.
Hi Ramit, OMG this is exactly what I needed to see right now. I can’t thank you enough for all that you have done for this community. You change lives for the better! Greetings from Europe
Ha, I was literally paying off my high-interest credit card as you said to. I only found your channel a few weeks ago, but have already turned my finances around. I started an emergency fund, and already have just under 1 month's worth of rent in it. I just transferred my credit card balance to a new card that offers 0% interest for 18 months. This'll save me a couple thousand in interest next year as I aggressively pay the balance off.
Don't simply retire from something; have something to retire to. Start saving, keep saving, and stick to investments. Everyone should have BTC in their portfolio
He’s right on! I invested every year, 401K and IRA. After fully funding these options, I always felt comfortable spending the rest of my income on travel, etc. I retired 10 years ago, thanks to 401K and IRA. Now I’m 65 and can take a big trip every year and feel secure with finances. Ramit’s advice is spot on!
HYSA. if it's an emergency, you need to be able to access those money quickly + you need to be sure the market has not gone down right when you need them
I believe an HSA has tax advantages like a traditional IRA when used for retirement, not healthcare expenses. You get a tax break when you put the money in but then you have to pay income tax when you take it out. Also, if you need to take money out before 65, you have to pay a penalty. With a Roth IRA, you can take your contributions out without paying any penalty no matter what your age. Let me know if I'm wrong about the HSA withdrawals.
Not everyone has access to HSA or the resources to front their yearly healthcare costs while still investing. You might be telling someone to invest their HSA money in the case they have a really high deductible and every penny they contribute goes to their yearly health spending. In that case the PPO might be a better option and they won't even have access to an HSA. Opening a Roth is definitely the next best step as it has some valuable tax advantages and most people have access. I would say definitely contribute to an HSA if you have additional reserves after a Roth contribution or match your employer contribution. But I'd still do Roth first.
@@markgordon6717you are absolutely right. However, since I can’t pass underwriting for a long term care policy, I’m saving my HSA for when I need long term care after I retire.
Minor point: we can't use the Roth Ira so after maxing out the HSA and 401K we invest in a traditional IRA with no initial tax benefit because at least it can grow tax free. I'm sure there's other shenanigans we can do but boy it seems like a lot of work at that point.
You can do a back door Roth IRA if you’re over the income limits. Your traditional IRA does not grow tax free. If you’re over the income limit for an initial tax benefit on the traditional IRA, you’re better off contributing to a brokerage account and can access your money at any time.
What if you don't want to wait until 60 to retire? My wife and I are 38 and plan to retire at 50. Most of the rungs aren't accesible until after 59 1/2. Personally we've been investing in Index Funds, hoping to have about 1 million invested by 50. We wouldn't live in the US though, too expensive.
Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
Wall Street pitched so-called quality stocks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stocks have underperformed the S&P500 this year, My $200k portfolio is down by approximately 20 %, any recommendations to scale up my returns on investment
When I bought your first book, maybe a year ago, I was dumbfounded that nobody talks about this stuff and I wish I had read that book right out of high school.
If for example, I pick a target fund date for 2060, then 2060 comes around and I don’t want to retire yet. Are there any changes that will happen to that target fund?
The 2060 target date fund you'd be invested in would be acting as if you're retired. So it'll be heavier on bonds and fixed income. It should still have a decent amount of stocks, though, and all in all will probably not be that different from, say, the 2055 fund or the 2065 fund. Overall, if all your retirement money is in a 2060 target date fund and you decide to continue working another 5 or 10 years, that really isn't a big deal. In fact, I'd say it's better to continue to plan as if you're retiring in 2060 even if you start to think you might go to 2070, because you never know if you'll be taken out of the workforce sooner than you wanted due to injury or illness.
Just as a simple example. Let's say the current 2060 fund is currently at a 90/10 split of stocks (90%) and bonds (10%). The glide path of the 2060 fund will slowly decline to 80/20, 70/30, and then eventually to a 60/40 split as you get closer to 2060. The 4% rule Ramit talks about is based on a 60/40 stock and bond portfolio split. If you wanted to extend your retirement to 2065 or to 2070 and increase your stock split, aka more risk than you'd purchase those specific funds. The 2060 TDF will stay at the conservative 60/40 split throughout your 30-year retirement.
Hi, I'm French and live in Europe. I'd like to follow your advice and start investing. Should I invest my Euros in the types of accounts/funds you mentioned and use the same services recommended for U.S. citizens? Are there any differences or pitfalls I should be aware of as a European investor?
I'm curious if you'd consider a HELOC with Prime+.5 high interest? It will be at 8% after yesterdays fed rate cut. I'm contributing 3% to my 401k to get the match and was planning to aggressively pay off the HELOC but wondering if a balanced approach might be better to focus on getting my investments to 10% and savings to 10% then pay off the HELOC with anything left over?
I’d pay down the 8% HELOC first, personally. Your investments will _probably_ get more than 8%, but your HELOC will _definitely_ cost 8%. Given the uncertainty around market returns for the next decade, the fact that interest rates could potentially go up at some point, I’d take the guaranteed “return” of paying down the HELOC
@ramitsethi I appreciate the honesty. I've tried to do more research but can't seem to find in depth pros and cons of it all. But I do see how it does fill the salesman's pocket for sure.
haha damn you guys have it good. Our inflation rate in South Africa is currently 11.25%. I mean I do invest quite a lot but I'm basically just keeping up with inflation.
Ramit, Would you put an entire 401k from a previous employer into one target date fund at vanguard? Or should it be split into different things? Balance is 500k…
Target Date funds are split into different things. US stocks/outside the US stocks/bonds. Pick the one that matches your risk tolerance (ignore the date in the name of the fund), and let it rip.
I’d see no problems with putting into a target date fund, just make sure it’s a low-cost, passively managed version. Most brokerages have an active management and a passive management version, they perform pretty much the same, but one is much cheaper
An S&P 500 fund will likely be better in returns but won't rebalance for you, which is important as you get older. The average person doesn't think about this until they see their retirement funds drop 15% and then some of them freak out and sell everything, as happens every time we have a recession
target date founds are hard to get in latin america, Im creating my own portfolio with 70% Sp500 10% bonos and 20% internationls market. As the years comes by, I will change the %.
Why on earth would you fund a 401k above the match before funding an HSA? Ramit even says the HSA is triple tax advantaged. Switch those rungs around and I’m onboard with the ladder at least. The investments segment can be debated but not bad for generic advice.
If you have a high deductible plan that includes it, then go ahead. Not everyone has that or they have health issues where having a high deductible plan would cost them the money that they would otherwise be investing.
The 401k gives you an initial tax benefit. Funds in an HSA can only be used for qualified health expenses. Maxing out a 401k should definitely be a priority for those in higher tax brackets. People in high tax brackets will still max out their HSA anyways, so it doesn’t really matter what order you do things when you’re reaching the top of the ladder.
Excellent advice with perfect explanation in simple terms and illustrating investing with a live example, perfection! Nailed it Ramit! I wish I knew about you years ago I would have avoided costly mistakes with a financial advisor. Now we have a guy we pay an hourly rate who has been fantastic for all sorts of reasons for our specific situation (mainly tax efficiency) but I can’t emphasize enough Ramit’s suggestion to NOT pay the ridiculous amount charged by financial advisors. This video just explained how unnecessary it is!
I’m confused, you have a diagram up that says “target date funds = easy”, and “index funds = hard”. Wasn’t investing into indexes like the S&P 500 your schtick? I ask because I’ve been a subscriber since you started and this was the original advice. No I’m not trying to call you out, genuinely wondering. Stay gangster Ramit✌️🕶️
Well it could be advanced compared to the target date funds because you'll have to find ways to make it more conservative over time yourself. Target date funds rebalance themselves. Just a guess.
He is giving advice to people who don’t want to manage it. When you get older you won’t be 100% in equities. He uses the S&P as an easy example to show how much growth you can get.
My first credit card was a Kohls charge because it is illegal to not have one in Wisconsin. In my defense, I use it maybe once a year and have never paid interest on it Ayyyyyy shoutout Milwaukee!
The secret is income…all these gurus make their fortune by teaching. Of course all their investments have real effect since they can live if 5% of their guru business. That’s the real trick. No guru is yet to get rich like they preach 40 years. All the gurus are already rich, so they didn’t follow their advice of getting rich until 50 years.
![Blox Fruits Dragon Rework Update [Full Stream]](http://i.ytimg.com/vi/EqDAp8udhm0/mqdefault.jpg)
As a hedge fund manager, I endorse this view. Good job Ramit. You've helped me neutralize my more inane frugal impulses, like only getting the bottle of tea that's the absolute cheapest instead of the one I would actually like which costs literally no more than 50 cents more. I'm glad others are benefiting from sophisticated investing advice that's compatible with the most efficient method for Americans to gain wealth over their lives. Best wishes.
This is great advice for w2 employees.
what is a "bottle" of tea?
The most practical vid by Ramit on building wealth. Thanks!!
I’m a dentist and tell my patients to floss and invest. They probably don’t do either.
Hi Ramit, OMG this is exactly what I needed to see right now. I can’t thank you enough for all that you have done for this community. You change lives for the better! Greetings from Europe
Glad it was helpful!
This is probably one of your best vids for many. Thanks.
Ha, I was literally paying off my high-interest credit card as you said to. I only found your channel a few weeks ago, but have already turned my finances around. I started an emergency fund, and already have just under 1 month's worth of rent in it. I just transferred my credit card balance to a new card that offers 0% interest for 18 months. This'll save me a couple thousand in interest next year as I aggressively pay the balance off.
Don't simply retire from something; have something to retire to. Start saving, keep saving, and stick to investments. Everyone should have BTC in their portfolio
Pumpkin Spice Lattes have been my best investment ;)
Started a year ago 🎉 this shit is dope
He’s right on! I invested every year, 401K and IRA. After fully funding these options, I always felt comfortable spending the rest of my income on travel, etc. I retired 10 years ago, thanks to 401K and IRA. Now I’m 65 and can take a big trip every year and feel secure with finances. Ramit’s advice is spot on!
For Ramit or anyone watching, where would you put 10k emergency fund? High interest savings, brokerage account?? Any advice is welcome!
HYSA. if it's an emergency, you need to be able to access those money quickly + you need to be sure the market has not gone down right when you need them
Hysa, money market mutual fund, super short Treasury ETF, all are fine.
Hysa
HYSA, easier to take out when you have an emergency
Emergency Fund (EF):
3 months checking
3 months High Yielding Savings Account
6 months Vanguard Short Term Bond Fund
Ramit you’re the fucking GOAT of personal finance. Changed my life and generations of my family will benefit because of you, thank you 🙏 God bless.
Thank you for watching!!
I loved your book and your advice ! Thank you for your work
Why not fully fund HSA after 401k match? TRIPLE tax advantage seems like next best option.
If you have access to it, I agree, but a lot of people don’t have access to an HSA, so Roth IRA is the next clear choice.
I believe an HSA has tax advantages like a traditional IRA when used for retirement, not healthcare expenses. You get a tax break when you put the money in but then you have to pay income tax when you take it out. Also, if you need to take money out before 65, you have to pay a penalty. With a Roth IRA, you can take your contributions out without paying any penalty no matter what your age. Let me know if I'm wrong about the HSA withdrawals.
Not everyone has access to HSA or the resources to front their yearly healthcare costs while still investing. You might be telling someone to invest their HSA money in the case they have a really high deductible and every penny they contribute goes to their yearly health spending. In that case the PPO might be a better option and they won't even have access to an HSA.
Opening a Roth is definitely the next best step as it has some valuable tax advantages and most people have access.
I would say definitely contribute to an HSA if you have additional reserves after a Roth contribution or match your employer contribution. But I'd still do Roth first.
@@markgordon6717you are absolutely right.
However, since I can’t pass underwriting for a long term care policy, I’m saving my HSA for when I need long term care after I retire.
Minor point: we can't use the Roth Ira so after maxing out the HSA and 401K we invest in a traditional IRA with no initial tax benefit because at least it can grow tax free. I'm sure there's other shenanigans we can do but boy it seems like a lot of work at that point.
You can do a back door Roth IRA if you’re over the income limits. Your traditional IRA does not grow tax free. If you’re over the income limit for an initial tax benefit on the traditional IRA, you’re better off contributing to a brokerage account and can access your money at any time.
What if you don't want to wait until 60 to retire? My wife and I are 38 and plan to retire at 50. Most of the rungs aren't accesible until after 59 1/2. Personally we've been investing in Index Funds, hoping to have about 1 million invested by 50. We wouldn't live in the US though, too expensive.
You can invest more in a taxable account
25:38 I’m pretty sure he said “take it out and shoot it behind the barn” but he cropped it out 🤣. Too funny.
Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
Wall Street pitched so-called quality stocks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stocks have underperformed the S&P500 this year, My $200k portfolio is down by approximately 20 %, any recommendations to scale up my returns on investment
Great video ❤
Had to watch, you give powerful advice to win
When using the 4 percent rule in retirement, what should you be invested in? A target date fund? Fixed income? Or 100% stocks?
When I bought your first book, maybe a year ago, I was dumbfounded that nobody talks about this stuff and I wish I had read that book right out of high school.
If for example, I pick a target fund date for 2060, then 2060 comes around and I don’t want to retire yet. Are there any changes that will happen to that target fund?
The 2060 target date fund you'd be invested in would be acting as if you're retired. So it'll be heavier on bonds and fixed income. It should still have a decent amount of stocks, though, and all in all will probably not be that different from, say, the 2055 fund or the 2065 fund.
Overall, if all your retirement money is in a 2060 target date fund and you decide to continue working another 5 or 10 years, that really isn't a big deal. In fact, I'd say it's better to continue to plan as if you're retiring in 2060 even if you start to think you might go to 2070, because you never know if you'll be taken out of the workforce sooner than you wanted due to injury or illness.
@ so basically the 2060 date fund will continue to grow even if I retire 5 years later?
Just making sure that it will not plateau iykwim…
Just as a simple example. Let's say the current 2060 fund is currently at a 90/10 split of stocks (90%) and bonds (10%). The glide path of the 2060 fund will slowly decline to 80/20, 70/30, and then eventually to a 60/40 split as you get closer to 2060. The 4% rule Ramit talks about is based on a 60/40 stock and bond portfolio split. If you wanted to extend your retirement to 2065 or to 2070 and increase your stock split, aka more risk than you'd purchase those specific funds. The 2060 TDF will stay at the conservative 60/40 split throughout your 30-year retirement.
I started investing last year and I pause just to check my investment. All these are facts !
Just be aware it’s not always like this year. There are some down years so just be ready to buy and hold!
Hi, I'm French and live in Europe.
I'd like to follow your advice and start investing. Should I invest my Euros in the types of accounts/funds you mentioned and use the same services recommended for U.S. citizens?
Are there any differences or pitfalls I should be aware of as a European investor?
I'm curious if you'd consider a HELOC with Prime+.5 high interest? It will be at 8% after yesterdays fed rate cut. I'm contributing 3% to my 401k to get the match and was planning to aggressively pay off the HELOC but wondering if a balanced approach might be better to focus on getting my investments to 10% and savings to 10% then pay off the HELOC with anything left over?
I’d pay down the 8% HELOC first, personally. Your investments will _probably_ get more than 8%, but your HELOC will _definitely_ cost 8%. Given the uncertainty around market returns for the next decade, the fact that interest rates could potentially go up at some point, I’d take the guaranteed “return” of paying down the HELOC
Would you put these videos on Spotify?
Why, should I?
First one to like and comment.
I value your content and great advice.
Can you talk about Whole Life policies, please and thank you!
They're useless and only serve to fill the salesman's pockets
@ramitsethi I appreciate the honesty. I've tried to do more research but can't seem to find in depth pros and cons of it all. But I do see how it does fill the salesman's pocket for sure.
Uncle Ramit stop yelling at us 😂
Ramit, is there any point to contributing monthly to a total market fund and a sp 500 fund in the same Roth IRA account?
What do you recommend if you have access to a Roth 401(k)? I’m guessing to match out the 401k after paying off debt, correct? Then, open a Roth IRA?
haha damn you guys have it good. Our inflation rate in South Africa is currently 11.25%. I mean I do invest quite a lot but I'm basically just keeping up with inflation.
The guy who says people don’t live paycheck to paycheck says that all Americans do is spend all their money lol
That is correct. If you spend $$$ on an SUV and travel, you are not living paycheck to paycheck
@ I was just busting balls like you do on your show haha
Ramit, Would you put an entire 401k from a previous employer into one target date fund at vanguard? Or should it be split into different things? Balance is 500k…
Target Date funds are split into different things. US stocks/outside the US stocks/bonds. Pick the one that matches your risk tolerance (ignore the date in the name of the fund), and let it rip.
I’d see no problems with putting into a target date fund, just make sure it’s a low-cost, passively managed version. Most brokerages have an active management and a passive management version, they perform pretty much the same, but one is much cheaper
Is there any difference between a robo advisor that lets you set a retirement date and a target date fund?
Is the show coming back for another season? That would be awesome
What about S&P 500 index funds? Wouldn't they be better than a target date index fund?
An S&P 500 fund will likely be better in returns but won't rebalance for you, which is important as you get older. The average person doesn't think about this until they see their retirement funds drop 15% and then some of them freak out and sell everything, as happens every time we have a recession
The premise is right but don’t share the 10% returns of the S&P 500 and then show Dave Swenson’s recommendations that will return about 5-6%
First Comment
Fourth comment! 😎
Only in USA what about in Europe ?
target date founds are hard to get in latin america, Im creating my own portfolio with 70% Sp500 10% bonos and 20% internationls market. As the years comes by, I will change the %.
Why on earth would you fund a 401k above the match before funding an HSA? Ramit even says the HSA is triple tax advantaged. Switch those rungs around and I’m onboard with the ladder at least. The investments segment can be debated but not bad for generic advice.
If you have a high deductible plan that includes it, then go ahead. Not everyone has that or they have health issues where having a high deductible plan would cost them the money that they would otherwise be investing.
The 401k gives you an initial tax benefit. Funds in an HSA can only be used for qualified health expenses. Maxing out a 401k should definitely be a priority for those in higher tax brackets. People in high tax brackets will still max out their HSA anyways, so it doesn’t really matter what order you do things when you’re reaching the top of the ladder.
Excellent advice with perfect explanation in simple terms and illustrating investing with a live example, perfection! Nailed it Ramit! I wish I knew about you years ago I would have avoided costly mistakes with a financial advisor. Now we have a guy we pay an hourly rate who has been fantastic for all sorts of reasons for our specific situation (mainly tax efficiency) but I can’t emphasize enough Ramit’s suggestion to NOT pay the ridiculous amount charged by financial advisors. This video just explained how unnecessary it is!
Why the $583 31:36
I’m confused, you have a diagram up that says “target date funds = easy”, and “index funds = hard”. Wasn’t investing into indexes like the S&P 500 your schtick? I ask because I’ve been a subscriber since you started and this was the original advice. No I’m not trying to call you out, genuinely wondering. Stay gangster Ramit✌️🕶️
I think it was an error Ramit and his team should correct
@holamissmusica Yes I’m in agreement, threw me off considering I’ve been in the S&P for years now🤷♂️
Well it could be advanced compared to the target date funds because you'll have to find ways to make it more conservative over time yourself. Target date funds rebalance themselves. Just a guess.
He is giving advice to people who don’t want to manage it. When you get older you won’t be 100% in equities. He uses the S&P as an easy example to show how much growth you can get.
Advanced not hard
What's the alternative to a Roth IRA when a couple exceeds the income limits for contribution?
My first credit card was a Kohls charge because it is illegal to not have one in Wisconsin. In my defense, I use it maybe once a year and have never paid interest on it
Ayyyyyy shoutout Milwaukee!
So i shouldn't get a sephora credit card4:02
The secret is income…all these gurus make their fortune by teaching. Of course all their investments have real effect since they can live if 5% of their guru business. That’s the real trick. No guru is yet to get rich like they preach 40 years. All the gurus are already rich, so they didn’t follow their advice of getting rich until 50 years.
This isn't a secret. I talk about investing (which I do), negotiating my salary (which I did), and starting a side business (which I did).
Can someone help. If I’m 25, and I max out my hsa, 100% employee match to 7%, and max out my Roth IRA. How much money would I have?
havent seen the video but its good
Yo remit stop recycling these videos, you know losers like me have seen all your videos lol 😂😂🙏jk
Lol. What do you want me to create a video about next?
I have no hope that European stock will outperform anything in the US for the next 30 years.
Millions? How do you know? 😂
Why must I wait years to be rich when you can do it in a month or a year ?
Can you tell us all how to build wealth in one month without using the word "crypto"
Lol.. Ramit.. no one will contact you in 60 years.. you know why...
So, investing $500/month for 40 years could make me a millionaire? 😱
Hi, how to be in contact with you when you’re not on facebook, instagram.