Ideal Order Of Investing For High Income Earners
HTML-код
- Опубликовано: 25 июн 2024
- ► Download Your FREE PDF 1-Page Companion Guide - Ideal Order Of Investing For High-Income Earners: www.financialtortoise.com/ide...
► Try Playbook - Develop Your Most Tax-Efficient Investment Strategy: www.helloplaybook.com/taekim
Timecodes:
0:00 - Intro
0:04 - Cash
1:04 - 401k Employer Match
1:48 - Employee Stock Purchase Plan
2:54 - FREE PDF 1-Page Companion Guide
3:12 - High-Interest Debt
3:42 - Max Out 401K
4:21 - Max Out HSA
5:42 - Backdoor Roth
6:52 - Mega Backdoor Roth
7:49 - 529 Education Savings Plan
9:05 - Taxable Brokerage Account
10:10 - Real Estate
11:38 - Low-Interest Debt
► Vanguard Backdoor Roth IRA 2022 | Step By Step Guide ( • Vanguard Backdoor Roth... )
------------
FAVORITE TOOLS:
► Mint Mobile - Check Out My Partner Mint Mobile, Affordable Phone Service - trymintmobile.com/financialto...
► SoFi - Checking & High-Yield Savings Account (Terms Apply) - sofi.com/tae (Affiliate Link)
► Shortform - More Than Book Summaries - shortform.com/taekim
LINKS:
► Get My Weekly Newsletters: www.financialtortoise.com/new...
► Favorite Books: www.financialtortoise.com/bes...
DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
![Gunna - back in the a [Official Video]](http://i.ytimg.com/vi/oBrbejOHjLw/mqdefault.jpg)
► Download Your FREE PDF 1-Page Compansion Guide - Ideal Order Of Investing For High Income Earners: www.financialtortoise.com/ideal-order-investing-high-income
Hi Tae Kim, I put down my email address and still haven't received the 1 page pdf file. could you please double check ?
yes, mine went to your guide again and not the 1 page. (I will delete comment, just advising)
Hi Tae, your vids is very inspiring. You mentioned in one of your vids your PLR, wondering where I can find those? Thanks so much.
Seems like the video thumbnail gives you the same information
Question. I receive a bonus in January, I’m wondering if it’s best to max out my 401k with said bonus? @taekimfinancialtortoise
Investing in alternative income streams that are independent of the government should be the top priority for everyone right now. especially given the global economic crisis we are currently experiencing. Stocks, gold, silver, and virtual currencies are still attractive investments at the moment.
This seems like the worst period. Even the markets are very unpredictable. started investing recently when the market prices were a bit high ,today i am more than 60% down
I thought about investing in the financial market, I heard that people make millions if they know the tricks of the trade, but I lack good knowledge and a strategy to outperform the market and generate good yields. I have $160,000 but it's hard to bite the bullet and do it.
How can I reach this advisers of yours? because I'm seeking for a more effective investment approach on my savings?
I won't pretend to know everything, though. Her name is Marisa breton Dollard but I won't say anything more. Most likely, you can find her basic information online; you are welcome to do further study.
Thanks, I just googled her and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
I already have over $2 million in my retirement account and now I want to build an aggressive portfolio. I plan to invest $400,000 in stocks but I'm unsure of the best strategies to pursue.
It is advisable to consult with an expert before making any investment decisions. The stock market is highly volatile, so it's important to proceed with caution.
As a contractor, my job leaves me little time to thoroughly analyze my investments or evaluate stocks myself. Therefore, for the past seven years, I've entrusted a fiduciary to actively manage and adjust my portfolio to align with current market conditions. This approach has helped me navigate the ups and downs, knowing when to buy and sell. Perhaps you should consider a similar strategy.
Could you recommend your advis0r? I'll be happy to use some help.
*Jennifer Leigh Hickman* is the licensed advisor I use. Just search the name on thge web. You’d find necessary details to work with to set up an appointment.
What a share!! it was easy to find your adviser. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
Tae Kim. doesn't disappoint. It was stupid of me to sell $76,000 worth of NVDA stocks without reinvesting. I might turn to cash soon if I don't. Any particulars? (Buying bonds or CDs is not for me).
It’s important to consult with a financial advisor before making any investment decisions.
You're right, I and a few Neighbors in Bel Air Area work with such advisor who prefers we DCA instead of a lump sum purchase, Following this, my portfolio grew 40% in the last quarter.
I've been getting suggestions to use one, but where and how to find one has been challenging, Can i reach out to the one you use?
Melissa Jean Talingdan is a hot topic among financial elitist in The US. She's gained some reputation for her works during Covid. All the info. you need to set up an appointment is on her web page.
Thank you. I just checked her out on the web browser, She seems really proficient. I'll follow up with an email. Thanks for the lead.
Concluded 2023 with a 20% decline in the S&P 500, long-term investors find a promising entry into 2024. Noteworthy ETFs include: $VOO for S&P 500, $VTI for total US market, $QQQ for tech growth, and $SCHD for growth with dividends. Calculating my annual dividends, I'm thankful for $167k-attributing it to discipline and focus.
Although the stock market is continuing rallying, there is a risk of reversals in the key indexes, sectors, and top stocks in particular. I advise you to consult a broker or financial counselor for advice.
I agree just reached my goal of $500k monthly trade earnings. Setting realistic goals is an essential part of trading
Smart, If i wanted to do the same with my retirement funds too, how do i get started trading?
This recommendation is coming at the right time because i am literally grasping for straws atm! I verified her online and scheduled a phone call with her.
While i admire long term investors, I really don't know what to expect. For instance, if i invest 500k what would my portfolio look like in 2030?
Well, in my opinion, If you invested it right now (during the market’s downturn) you’d be buying at a low price which is highly recommended by my fa and based on past performances in the market in 2030 with the right coach you should have four and a half million in your portfolio sitting pretty.
Impressive, how do i get to your fa? It seems they play an important role in these
'Dianne sarah olson' She's the best in the game
if you don't mind i just looked her up and she seems very successful and from the look of things you're also doing well for yourself, this is the trajectory i want my life to take so i reached out to her through her web. Thanks for the tip
i want to invest
My advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless.
The key to big returns is not big moving stocks. It's managing risk in relationship to reward. Having the correct size on and turning your edge as many times as necessary to reach your goal. That holds true from long term investing to day trading.
If you do decide to make new purchases, have an exit strategy ready. Consider taking partial profits quickly to lock in some gains. I've been in regular contact with a financial analyst since covid. Investing in popular stocks is now quite straightforward; the issue is determining when to buy and sell. My advisor makes investment and exit decisions for my account, which has risen to more than $500K in less than a year.
please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
When ‘Rachel Sarah Parrish’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
It's a common misconception that when a stock you buy skyrockets, the smart thing to do is sell it (or at least sell some of it) to lock in your profits. But the context matters. If the stock has increased sharply because the business is performing exceptionally well, it could still be a bargain. I'm still looking for companies to make additions to my $350K portfolio, to boost performance. Here for ideas...
I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Viviana Marisa Coelho is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
When I started investing last year, I avoided significant mistakes. I've focused on investing modest sums in stable businesses for the long term. If stocks perform well, I hold onto them; otherwise, I reinvest losses into profits. Recently, I made $9.5k from a $4k investment in NVIDIA.
Exactly, a good number of people discredit the effectiveness of financial advisor, but over the past 10years, I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but i'm financially secure and that's fine by me.
Due to my demanding job, I lack the time to thoroughly assess my investments and analyze individual stocks. Consequently, for the past seven years, I have enlisted the services of a fiduciary who actively manages my portfolio to adapt to the current market conditions. This strategy has allowed me to navigate the financial landscape successfully, making informed decisions on when to buy and sell. So yes i think every investor should consider a similar approach.
How can I reach this advisers of yours? because I'm seeking for a more effective investment approach on my savings?
Just research the name Angela Lynn Shilling. You’d find necessary details to work with a correspondence to set up an appointment.
I just checked her out and I have sent her an email. I hope she gets back to me soon.
What I don’t understand is, on one hand we are told the stock market will crash and yet on the other we are told ways of investing in the stock market. Oxymoron or paradox? I'm considering investing over 150k, but I'm uncertain about risk mitigation strategies.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
If you do decide to make new purchases, have an exit strategy ready. Consider taking partial profits quickly to lock in some gains. I've been in regular contact with a financial analyst since covid. Investing in popular stocks is now quite straightforward; the issue is determining when to buy and sell. My advisor makes investment and exit decisions for my account, which has risen to more than $500K in less than a year.
please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
When ‘Carol Vivian Constable’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
I admire your dedication to educating your audience. We all aim for financial stability and a better life. Achieving this is possible through wise investments, frugal living, and careful budgeting. I'm grateful that I learned the importance of working hard for financial freedom at a young age.
In my opinion, making a smart investment is not only a technique for earning passive income, but also a profitable way of saving for future expenses. People who fail to make the proper judgments early in life often come to regret it later in life. Nonetheless, investing alone can be difficult and risky. As a result, I recommend obtaining an expert’s assistance. The challenge is not just watching videos and reading investing books; it is about implementing information effectively.
I’m a contractor, and my job doesn’t permit me the time to properly analyze my holdings/evaluate stocks myself, so I’ve had a fiduciary actively restructuring my portfolio for the past 7 years now to match the present market condition and that’s how I’ve been able to stay afloat, knowing when to buy and sell…maybe you should do the same.
Could you kindly elaborate on the advisor's background and qualifications?
The advisor that guides me is Sonya lee Mitchell, most likely the internet is where to find her basic info, just search her name, She's established.
Thank you for the information. I conducted my own research and your advisor appears to be highly skilled and knowledgeable. I've sent her an email and arranged a phone call. Her expertise is impressive, and I'm eagerly anticipating our conversation.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my inherited portfolio of about $2.5m. I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.
My partner’s been considering going the same route, could you share more info please on the advisor that guides you?
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Wow, these posts look super real to me
Honestly, this concerns me and has left me uneasy. Especially this potential depression, no more a recession. I'm unsure about my $130K account strategy, considering the uncertainty of this whole recession mostly.
If you lack knowledge about market investing tactics, get advice from a financial counselor.
@@MickyGlover I could really use the expertise of this advsors.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks
piss it away at a nearby casino.
Great content Tae, this is a crucial topic that needs to be addressed, buying and getting in has never been an issue, however exit points and selection and picking of stocks got me more in the red, I’m open to more positive and smarter methods;
Wells lot of persons continually take the market for a casino or perhaps think themselves in Las Vegas, its no gamble at least not in the real sense, the need for careful analysis, constant dedication brings about positivity on the market.
Facts, you’re got a major point, I recently reached $850k in returns from a $178K startup, this proceeds didn’t come my way till I had a certified fin adviser oversee my portfolio operations, without doubt I can say for a fact nothing beats experience and professionalism.
Maam I’d really appreciate you more info on your FA. Getting one is also a difficult task.
Very well dear, I’d say Lina Dineikiene, she’s top notch. Do your own DD.
I’d just put her name to google. Found her bio page, Thank you so much for this ma’am
As a high income earner of proud $7.25 an hour, I find this video very useful
Plenty of places offering more than 7.25; oldest son-23 making 3x that as a carpentry apprentice. I make 7x and wife makes 20x; that's why I am watching...
Yo dude get out of that job. Work your way up, if you are watching this video you are trying to invest in yourself. Put a plan in action
Actually, it can be. Even Walmart offers ESPP to $7.25 wage earners and a 401k. An emergency fund is essential. Don’t acquire high interest interest debt.
If you make $7.25 an hr, don’t invest in a 529, plan for them to live at home and pay as they go. They should be able graduate in 4 yrs. Yr1 - free using CLEP online courses. Yr 2 - community college, work $5k + $2k parent tax credit =$7k, tuition $7k. Work full time for 15 months earn $18.5k, keep $16k. Yr 3 - tuition $11k -$2 parent tax credit - $9k savings=$0. Yr4 - work summer $5k + $7k savings=$0 debt. Ready to go. Your contribution is only the $2k federal tax credit and they live at home free.
Amazon delivery is $20 hr. Easy hrs, flexible. Go do it!
@@alexlee8617someone’s gotta do it. Sad that our solution in 2023 is “don’t do it, let someone else do it”. Nobody should earn 7.25 anywhere, period.
Recently bought some recommended stocks and now they are just penny stocks. There seems to be more negative portfolios in the last 3rd half of 2023 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?
Just ''buy the dip'' man. In the long term it will payoff. High interest rates usually mean lower stock prices, however investors should be cautious of the bull run, its best you connect with a well-qualified adviser to meet your growth goals and avoid blunder
The truth is that this is really not as difficult as many people presume it to be. It requires a certain level of diligence, no doubt, which is something ordinary investors lack, and so a financial advisor often comes in very handy. My friend just pulled in more than $84k last month alone from his investment with his advisor. That is how people are able to make such huge profits in the market
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
ANGELA LYNN SCHILLING' is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
I usually watch most RUclips videos on 1.25-1.75x speed, but I can't with your videos. This is a GREAT THING!
As a starter learning more about stocks, I’m putting 6% earnings into my individual account with an intelligent investor and I’m cashing up some blue chip stocks at a cheaper price.
I enjoy challenging my investing mindset with the thoughts of others superior to mine, our thinking is definitely similar.
I’ve been considering putting a little more into investment but the options to invest are not great. Any opinions?
I understand the market experience isn’t for everyone, that’s why personally, margaret ann myatt oversees my portfolio decisions.
assist me, how do I go about it the right way. I’d love to use similar terms as yours.
Contrary to popular belief, given how frequently the market changes, this is the ideal time for investors to take some actions.
I love the pace that you speak and don't waste a single moment. Good content. Please keep making more such videos.
This is quite possibly the most concise video on order of investing I've seen. Well done!
It's even more concise if you screenshot the thumbnail and then don't watch it
I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Victoria Taylor
Wow. I'm a bit perplexed seeing her been mentioned here also Didn’t know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has be super.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states.
Really you people know her? I was even thinking that I'm the only one she has helped walk through the fears and falls of trading.
I'm new at this, please how can I reach her?......
SHE'S MOSTLY ON TELEGRAMS, USING THE USERNAME
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $560K for sometime now, my major challenge is not knowing the best entry and exit strategie;s ... I would greatly appreciate any suggestions.
Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances
@@merlinfitz Monica Shawn Marti is a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
Recently started to brush up my financial acumen. Will be a high earner soon after graduating residency and I can say without a doubt your videos are the best for financial education on RUclips after watching 100s. Very clear and to the point. Thank you very much and continue to make amazing content !!!
My ESPP is truly one of my favorite things I have ever had access too. A built in savings plan with automatic 33% returns. Sell when it's inflated and invest into an index, unbeatable. ESPP also helped me save for a down payment on my first house.
I love the content and the pace of content. So many other content creators, keep repeating themselves and speak so slowly. Great job.
I love how clear and concise your videos are.
I was just thinking about this topic and your video came up on feed. Excellent summary of this topic, thanks for making it.
This is awesome, took me years to figure out all these moving parts, great comprehensive list sir, much appreciated
Thank you for this. Love that you provide an actual structure
Great video as always. One word of caution regarding HSAs. Be careful to check your eligibility beyond just having an HDHP - especially if your spouse has their own Healthcare plan. If you are covered by a spouses’ non-HDHP plan in any capacity, regardless of your own HDHP plan, you lose eligibility. Common mistake is when a spouse has an FSA plan. Most FSAs cover spouses by default, even when no dependents are listed unlike like other policies, so invalidate your own HSA eligibility while that spouse’s FSA plan is active.
Important tip, thank you!
This was very nice and straight to the point. The taxable brokerage account stage is the rate limiting phase here and where a lot of people (like myself) lose a lot of their hard earned funds. Don't rush into this stage blindly, you must either be very informed on how to properly go about this or get the services of a professional. Made a couple of thousands last year this way after finding out the hard way. Goodluck!
true that. tried this once and saw it wasn't as easy as I had thought it would be. You mentioned using
pros, what are the steps for getting one? like a really good one...I wont mind using one right now.
Can't say for sure, but you should start by looking out for those from reputable firms and good track records. You should also make sure the person is licensed. Personally, I use Marie, Kelly Matwick. You could also check her out
lmao, the system is designed in such a way you always learn this the hard way
Hi, hildredscali1754 I know this pretty lady. Used to share an office block with her
What's hard about a taxable brokerage account? You can stuff the same retirement, long term ETFs in there for the long haul.
Live your videos Tae! Very insightful and simple to follow.
eliminating high interest debt usually will take precedence over investment depending how high the interest rate. People dont realize the compounding effect can work in reverse. Great video.
The math is extremely simple. Which one is a higher %? If it's debt, pay that off first.
I couldn't agree more. What's the point of creating a cash safety fund when you already have a bunch of debt on which you're paying interest? Until you have that debt paid off, makes more sense to me to put all cash towards that goal. If something comes up and you need to spend more money than you have (computer breaks, whatever), unfortunately you just put it back on the credit card. You won't be any worse off than you were the month before, and you will have saved a little in the interest you would have paid in the meantime.
I would guess most high income earners don’t have lot of high interest debt so for them a cash safety fund makes sense first. Low income earners should attack high interest debt as fast as they can because it’s probably crippling them.
@@aaronleboutillier Don't need a safety fund at all if you're high income. Keep a little in money market to balance your portfolio and just take it out of there if you need to, or slap it on the credit card and pay it off after your next paycheck.
Best channel on Financial Advice on the Internet hands down! No BS, love it!
Needed this. Thanks brotha 🎄🙏
Love this video. It lists all the common sense, unglamorous investment ideas that actually work. I have done all of these and have been very thankful I dis. Compounding and tax minimization are wonderful things
Great video, Tae! Your delivery encouraged me to subscribe. My wife and I are doing two of the ten suggestions, but we will implement them in the upcoming year. Keep up the great work, and we look forward to learning more.
What % do you consider "high interest"? I have some 7% and 5%.
Excellent video!
Please do one explaining the Mega Backdoor IRA 😀
You explain concepts extremely well, so this will be very valuable to us
I’m considering whether to retain $3 million in single-family rentals, we have $900,000 left on mortgages. What is the possibility of maintaining $70,000 annual income by selling and investing in stocks and bonds?
Real estate, while a solid investment, demands effort and lacks liquidity compared to stocks and bonds. Long-term market trends should guide decisions.
Sell and invest option viable, but crucial to consult a trustworthy financial planner for income projections aligned with your goals.
7:49 monica 7:53 mary 8:03 Strigle
Real estate isn’t as liquid as cash or cash-equivalents, or even stocks and bonds. I rather the latter. Just as you’re experiencing, real estate can be a lot of work.
Improve your other assets by exploring trustworthy money market funds or mutual funds for your emergency savings. Compare the rates on your mortgage and spend any surplus funds smartly.
Great video with some excellent suggestions and points made! For ESPP, it’s a great opportunity but I recommend to research outside of the plan documentation before jumping in. As an employee of a company with dividend stock, note when the purchase date and the dividend date are to just be aware of the impact of the potential post-dividend share price drop. Also consider the stock’s alignment with your asset allocation strategy if you hold. My company is ex-US so rebalancing upon both stock bonus vesting and ESPP purchase is necessary to stick to my desired US/ex-US and single-stock/index portfolio proportions.
I've been waiting for this video from your channel!
I didn’t realize I now qualify for a mega backdoor roth & can finally get even more money into the market in a tax protected Roth. thanks!
I appreciate the emphasis on finding what works for you. So much financial advice is prescriptive and "go do this now!" in nature. This type of approach is informational and reasonable. Work with you financial advisor and take stock of what matters to you. Thanks!
Great video, nice to find a concise and informative personal finance video that doesn’t try and sell you on anything
Merry Christmas Tae. Thank you for giving us the gift of financial education!
Thank you, Tae. I like all of your videos, but this one is one of my recent favorites 😊
Thank you for the backdoor Roth IRA information. This is the first year I have this good problem to have.
Had literally never heard of the mega backdoor Roth before today - very informative stuff.
I went from making $30k a year to $145k a year and although I already knew some stuff that were mentioned here, I was able to learn a few new ones such as the triple tax benefit an HSA account has (I didn't know about this). Really good video Tae! Thank you
Don't gamble with your health to save money if you have a choice. I know young people think they're invincible, but they're not. Sure, you save a couple hundred bucks on insurance each year, and you basically get a second IRA. But you if you suddenly get a chronic illness or injured, you're on the hook for many thousands of dollars.
And it becomes completely out of the question once you have kids. If any of them has an allergy, you're going to be shelling out up to a thousand bucks per Epipen.
I needed this.....FINALLY a video for those of us who do not qualify for a ROTH. Thank you! 🎉
There is Roth/back door Roth. The only limitation you have is injecting money into a Roth actively. But anyone can have a Roth.
I will say... Our HSA is a fantastic benefit. We have had one for like 5 years now, i got it as soon as it was sn option for me. Wow, it is epic.
Great tip on HSA! I’ll def max this out too ! I already max out my 401k
What a great informational video! Thank you!
“Passing on to our children the value of hard work and ingenuity”. What a novel concept. Right on!
I always here this referenced by people who spoil there kids lol
I'd move up HSA contributions before full 401K precisely because of the triple tax benefit. In addition, if you are on the cusp of max FICA wage, HSA contribution will reduce that, so you'll pay less FICA, without much downside to you SS. That's an instant boost. Another thing before full 401K will be limited scope FSA, as long as you spend it all.
I couldn't agree more. An HSA behaves exactly like a 401k except with an additional tax bonus if it is used on qualified expenses. There is no scenario where a 401k dollar is cheaper to buy (after the match) or more valuable to spend than an HSA one.
It just depends how much your employer matches. You could make an argument for either, the HSA isn't giving you free returns from the jump.
What if you end up not having a medical problem?
@@australianpanda2713if you don't have significant medical expenses, then an HSA behaves exactly like a traditional 401k when you are older than 60 (except it doesn't have required minimum distributions like a 401k does which makes it even better). I think that most people expect to spend down their HSA in retirement though since you can't continue to contribute to it at that point.
@@australianpanda2713 HSA can be used to pay Medicare Part B & D premiums, which could be substantial. Otherwise, use HSA as a regular IRA.
Great video! Thanks so much - that adds helpful structure to our financial journey.
Good video! I second your list. Very well explained.
I'm 42 with $300k in my 401k and a stock and crypto portfolio worth a combined $850k. I started investing just 2 years ago after working for 15years and having just short of 70k in savings. I'm still with the same company but my decision to invest has made the difference for me and my family. Investing is your best friend. The sooner you start, the better off you are.
You could retire now If you moved to a
cheaper country. Good job.
It’s scary how this is the life of an average American. Years of working and very little or nothing to show for it.
Living from paycheck to paycheck is no way to live, Was stuck in the rat race for a long time, been there, and investing will always be better.
The importance of investing can never be overestimated.
I got laid off my job and started investing in February, invested 34k in the market and my portfolio is currently worth slightly over 97k. That's more than I make in a year from my job. I’m glad I didn’t shy away from investing
That ESPP advice is great, thank you!
Some details that Tae left out, probably to reduce the length of the video:
1. For the Backdoor Roth, income tax is paid on the *GROWTH* of the After-Tax funds contributed, as well as all Pre-Tax funds converted. The After-Tax funds are not taxed, because they have already been taxed. The less growth, the less tax, so there is an incentive to make the conversion earlier rather than later. Regardless of how you commingle or do not commingle Pre-Tax funds and After-Tax Funds (e.g., different accounts), types of funds converted are allocated by percentage of each type of fund in ALL IRA accounts. If you have $20,000 in Pre-Tax IRA money, and add $5000 of After-Tax money, the ENTIRE $25,000 would have to be converted for all of the $5000 in After-Tax to be converted. You would pay tax on $20,000, and have $25,000 in Roth IRA funds. I would ordinarily suggest making IRA contributions before maxing the 401(k) contributions, but if you will be regularly making Backdoor Roth contributions, you'll probably want to Zero-out your IRAs so that the only funds to convert each year are After-Tax funds. Again, it behooves you to convert with as little growth (and Pre-Tax funds) as practicable.
2. For the Mega Backdoor Roth, the earnings attributed to "Post-1986 After-Tax contributions" (i.e., the kind being made nowadays) must be withdrawn with the After-Tax funds being converted. ("Pre-1987 After-Tax contributions" can be withdrawn without their earnings.) You can either pay tax on the earnings to make them Roth funds, but you should also be able to bifurcate the two fund "sources" and direct After-Tax to a Roth IRA (no tax) and its earnings to a Traditional IRA (no tax.)
3. When you hit retirement age, you're still probably going to want to have some funds in Pre-Tax, either in a 401(k) or a Traditional IRA, so that you can enjoy these benefits:
a. You will likely be able to arrange your withdrawals so that you can have a few years in which you can withdraw a lot of tax-deferred money that you paid 22% or higher tax on at a tax rate of 12% or lower. (Financial planners call this "tax rate arbitrage.")
b. If you make charitable contributions, once you reach Age 70 1/2, you can have a Traditional IRA (convert 401(k) funds to IRA funds if necessary) from which you can make Qualified Charitable Distributions, aka "QCDs." QCDs count against your RMDs (when you reach RMD age), but are not counted in your income, so your taxable withdrawal is lower. You also get the benefit of making your charitable contributions with Pre-Tax money, which is like getting a discount on your charitable giving.
Great video. I love the content!
Great video! This is precisely why only 33% of my income hits my bank account. With 401k, after tax 401k, ESPP, and HSA, the remainder covers my monthly expenses with a little left to save for vacations.
Thank you for the easy to follow information.
Wow this is insanely well-produced and high-quality (and free!) content. Thanks for sharing!
And this approach works for everyone even at $20/month. It’s the behavior not the numbers that make it work.❤
I have been looking for this exact information presented in this exact format for 7 years! Thank you!
From one Tae Kim to another, keep up the great work! Merry 🎄 Christmas
Great video! Nicely organized as well.
@16 i made $7 an hour.
Now i work 4 days a week and $2000 a week on average.
Step 1 Desire to earn respect.
Step 2 Hard Work is Happy Work.
You saved us so much money. Big fans of your channel. Thanks for everything you do.
"passing on to our children the values of hard work and ingenuity" I love this perspective. I feel the same way. I sometimes feel that my children should be 100% responsible for their education because in the pursuit of funding it they will learn many valuable lessons. College is more for certification than it is for learning.
The final rule - have kids, ignore all previous rules. Feed kids all money and hope for the best.
Excellent summary. Very succinct and ticked all my boxes! 👍🏼
Great video. Thanks Tae!
You should do a video defining who qualifies as a High Income Earner on net…
Can look at locale, DTI, marital status, course of income etc… Might be helpful for goal setting, evaluating current priorities etc.
I’d love to hear your thoughts on MBCBPs (Market Based Cash Balance Plans).
It’s being sold as an alternative to traditional pensions because it’s technically a defined benefit plan, but it’s funded like a defined contribution plan.
Also, would love if you cover the Solo 401k.
Really appreciate your content. It’s actionable instead of an upsell paywall of some sort, which is valuable but let me know how I can do this! Saw you on bigger pockets money. Immediate subscribe.
I’m in my mid 30s and finally woke up and starting over. Can’t wait to learn more from you!
Reading books on investing is impressive! It's great to see such dedication to financial education. The real key to getting rich is applying what you've learned consistently and making smart, informed decisions. Keep up the great work!
Reading and learning are crucial first steps, but the true transformation happens when you start applying that knowledge consistently. It's all about making smart, informed decisions and sticking to a solid financial plan. Keep it up, and you'll see great results!
Covid changed my attitude. Had about a months worth of expenses saved up when it hit and I was legitimately worried about my job lasting. Almost 4 years later I have 3 x years of savings tucked away. I know I don’t need that much but the reassurance makes me sleep better at night. All on my mortgage offset account
For the Roth IRA, if you are only slightly above the max income, you can still contribute, but at a reduced amount.
You can wait until you file your taxes to see how much you can contribute for the previous year; you are allowed to contribute to a Roth for the previous year if it's before April 14th, I think.
Merry Christmas!!! 🎉
Damn, dude, a lot of useful information. Thanks!
You're the first person I've seen that agrees with the strategy my wife an dI use.
Merry Christmas! I noticed you didn’t have government bonds to this mix. It’s a good alternative to CDs especially for those in high income tax states where many high income earners reside. Tbill also has benefit of realizing gains only when you sell or upon maturity
Because I paid off my mortgage by ignoring financial advisers, I was able to then pay off all other debt. Now I just do cash>Roth>CMA. All that money that would be going towards interest is now going towards my investments instead.
Thanks for sharing!
Thanks for reminding me to up my 401k contribution in case I get randomly laid off this year (normally I'd spread it across the year for DCA)
This was so helpful thanks!
really insightful playbook! caution though as no 2 people's situations are the same and with different priorities & circumstances there's actually a very low likelihood that all "high earners" should follow this workflow
This was very helpful, direct, and with just the right amount of insight into the decision-making process, much appreciated. An additional note that may be of use: some HSA’s offer mutual fund options in addition to the traditional savings account. One can mix and match as needed. Some companies will even fund a portion of your HSA.
I would say this is more a guideline. I have grad school loans at 3% that i don’t pay off as my money goes into a higher interest fund. Comes out more positive.
Thank you!
Great info 👍 👌
I do HSA first because that is money I will NEVER pay taxes on. Even with a 401k I’ll have to pay taxes eventually. With HSA I immediately gain ~34% because of the tax benefit.
Complete agree with your point on 529! This is the way! Work hard, get the degree if it will help you do what you want to do. Don't just go to college because that's what society tells you to do. I got my degree after I figured out what I wanted to do as an adult.
Absolutely! College degrees, UNLESS you need them for what you want to do, are one of the biggest scams, and leaves millions in debt with school loans
FYI In Canada HSA has a limit of 2 years with 1 year of rollover so the HSA idea works if you use the money expiring in 1 year.
Got to admit, Finch's involvement in 4RA made me a regular. Can't miss out on his match insights! 💡
Interesting video, nicely done.
This applies if you intend to retire in the US.
If you’re on a visa and/or likely to retire abroad, you may be taxed at a higher rate, or your local tax authority may want to tax you again in case of roth ira.
level! 🎉🏆 never had so much fun and excitement during the IPL season before. can’t wait for more!