The whole house of cards only works if the youth "buys in" It's not a ponzi scheme, but if people stop buying in, it collapses... so kind of a ponzi of value.
You demonstrate insight beyond your years, AND you're able to communicate the essence of the lesson in a clear, every day manner. This video might be the MOST important one you've ever done. Most folks understand they have to live beneath their means, but I think that's when things get foggier and some hope that rate of return will carry the day, and their marginal net savings will magically grow to millions. Well, if you've been doing this for two or three decades already, and caught the last ten years of 15% market growth, then maybe. But otherwise, it's pretty much up to you. Waiting for the market to guarantee your comfortable retirement is playing with fire... Develop good money habits, save your way there, and hope the market cuts your timeline significantly. Just don't bank on it.
This was a great video. The savings rate vs rate of return chart is my favorite. I started investing a little late at 27. Started with 6% and bumped it every time I got a raise. If I had a chart like this to use I definitely would’ve started at 10% and bumped it every time I got a raise. It would be helpful for all young investors to have a chart like this to refer to when they start investing!
Hi Erin, love your advice😊 It always makes me feel good watching your videos and listening to your smart advice, especially this morning because the stock market has been performing soo terrible most of last week and today and has been making my 401K drop significantly😔 But your videos reassure me that days like these are temporary. So thank you all you do! Have a blessed week😊
If you look at the return history of the S&P; it has returned about 10%. Plan on getting 8% in your planing and wait. Mr. Compounding will do the rest.
Agree with this analysis of this video completely. It does suck when the rates of return are so bad that even though 27% of my income is going into my 401k, the balance is still down 10 % this year 😅 Side note - I turn 30 this week and because of the recent market downturn am only going to be at 215k. I guess I cant stop all of my contributions just yet! (Not that I would, but I was almost perfectly your example from the video!)
Thanks ETM, love how your videos are always so relevant. I appreciate all of the numbers your showed us today. I feel these numbers are what we all need so we can decide what we want our financial outcome to be. It has so much to do with delayed gratification. Time in the market and rate of return are both powerful, time in the market is King in my book.
Another awesome video in the collection Erin! I really appreciate that table showing the difference between savings rate vs rate of return and their impact towards reaching our goals. Also enjoyed the point that the shorter our time horizon the greater the emphasis on rate of return, which also implies having a strong nest egg at that juncture. I'm almost to my mid 40s and maxing out everything to ensure I reach $1mil in my retirement savings by 53 (thankfully my employer has an amazing 401k match). Having a ten to twelve year runway with a million dollar portfolio will definitely help me to breathe easier heading to retirement.
This was good for someone in your position. It all changes after you retire and have to live on the money you have saved. Then you have to look at ROI vs. stability of your investment. We have been looking at my investment profile and my wife's risk levels are being stretched. I don't believe in the traditional equities vs. bonds. Bonds are no longer the stable alternative as far as I am concerned. I have always had a higher risk acceptance level than my wife. I suspect that we will compromise to some degree. Inflation protected bonds have a high level of our interest right now. Probably should have researched them but I have only learned about them recently(thank you). Have a good week.
I think a lot of people are finding that their risk tolerance is being tested right now. I'm sure you and your wife will find a happy medium :-) As always, thanks so much for watching and sharing your thoughts Bryan!! have a great week!!
If you are younger, all stocks is probably fine. When you reach 55 or 60, you need to protect a portion against down markets like we are seeing now. A few months ago, I moved 25% into a money market type account. Losses are smaller and I am glad I did. Set up to rebalance every 3 months to sell what is doing the best and buy what is under performing when it is down.
Great video thank you! We're mid 40s and saving 50% so we can catch up as best we can. I'm hoping it'll at least help somewhat even if we can't keep this rate up.
It may be tough to have a high savings rate if you just came out of college, have higher loans, lower pay, etc. But in your 30s, when your pay is likely higher and your debt likely lower, you've got to up the savings rate accordingly. You are still at the mercy of the return rate, but without good savings rate, you get no mercy. The ups and downs of the return rate could be significant too. For instance, if the next decade's return rates are -10% (right now), -8%, -6%, -4%, -2%, 0, +2%, +4%, +6%, +8%, +10%, and you invest $10k a year, you will end up with $143k. But if the next decade is the reverse: +10%, +8%, +6%, +4%, +2%, 0, -2%, -4%, -6%, -8%, -10%, you will only end up with $89k. Even though they are symmetrical, a first-down-then-up market gives you more money than first-up-then-down. If the next decade is a lost decade like Erin said in her other video, it's not all bad if you are a young investor. I had a "lost decade" (2000s) too in my early years of investment, and I reaped big returns in the later years.
In Regards to Savings, Deposit Your Income Directly into your Wealth Managed Account, While maintaining operational expenses in your Checking Account. As for 401-K, Contribute Only What's Being Matched by your Employer. Remember 401-K goes into an IRA Rollover as Soon as you Separate from the Company or to keep vested in another. Use IRA for QCD's @ 70½ as your RMD minimum or greater to NOT INCREASING Personal Income and Giving a Tax Reduction
The big problem is inflation. If we make below average returns over the next 10 years. After we pay tax, it's possible to make a negative return inflation adjusted. Inflation is just another form of tax on savings.
My wife and I have been contributing over 100k per year since 2019 towards all our investments. Plan is to hit 500k before 40. Our savings rate has consistently been 75% since we paid off our house in July 2021. Next step is to buy 10 rental properties in the next 7 years.
At 67 looking at rare of return but still not tapping into 70% of my Annuities for the interest so rate also matters . I am thinking by Spring I may be able to grab a 1-10 year annuities at 6 % for 700K ? Wish I had you as my Financial Advisor 45 years ago ! I'm scared of the stock market now... ANOTHER GREAT VIDEO....
I feel bad for young people who started investing recently. I hope they stay motivated. Things will turn around! Thanks for the video!
Hopefully they hang in there!
The whole house of cards only works if the youth "buys in"
It's not a ponzi scheme, but if people stop buying in, it collapses... so kind of a ponzi of value.
@@ErinTalksMoney I started this year March. And as the market went down, I kept buying, by doing Dollar cost averaging.
Was just reading about this on the A wealth of Common Sense blog. All absolutely correct
You demonstrate insight beyond your years, AND you're able to communicate the essence of the lesson in a clear, every day manner. This video might be the MOST important one you've ever done.
Most folks understand they have to live beneath their means, but I think that's when things get foggier and some hope that rate of return will carry the day, and their marginal net savings will magically grow to millions. Well, if you've been doing this for two or three decades already, and caught the last ten years of 15% market growth, then maybe. But otherwise, it's pretty much up to you.
Waiting for the market to guarantee your comfortable retirement is playing with fire... Develop good money habits, save your way there, and hope the market cuts your timeline significantly. Just don't bank on it.
This was a great video. The savings rate vs rate of return chart is my favorite. I started investing a little late at 27. Started with 6% and bumped it every time I got a raise. If I had a chart like this to use I definitely would’ve started at 10% and bumped it every time I got a raise. It would be helpful for all young investors to have a chart like this to refer to when they start investing!
Hi Erin, love your advice😊 It always makes me feel good watching your videos and listening to your smart advice, especially this morning because the stock market has been performing soo terrible most of last week and today and has been making my 401K drop significantly😔 But your videos reassure me that days like these are temporary. So thank you all you do! Have a blessed week😊
My savings rate is more important, but I just prefer to capitalize on both!
If you look at the return history of the S&P; it has returned about 10%. Plan on getting 8% in your planing and wait. Mr. Compounding will do the rest.
Good stuff. That is why I love coast fire, invest early and often then you could coast :).
Very true!!
Focus on what you can control. 100% Agree
Agree with this analysis of this video completely. It does suck when the rates of return are so bad that even though 27% of my income is going into my 401k, the balance is still down 10 % this year 😅
Side note - I turn 30 this week and because of the recent market downturn am only going to be at 215k. I guess I cant stop all of my contributions just yet! (Not that I would, but I was almost perfectly your example from the video!)
HAPPY BIRTHDAY!!! I'm going to say that those numbers almost lined up as a birthday gift 😅
Thanks ETM, love how your videos are always so relevant. I appreciate all of the numbers your showed us today. I feel these numbers are what we all need so we can decide what we want our financial outcome to be. It has so much to do with delayed gratification. Time in the market and rate of return are both powerful, time in the market is King in my book.
I appreciate that!
Great presentation! Excellent points regarding saving rates vs. rate of return.
Another awesome video in the collection Erin! I really appreciate that table showing the difference between savings rate vs rate of return and their impact towards reaching our goals. Also enjoyed the point that the shorter our time horizon the greater the emphasis on rate of return, which also implies having a strong nest egg at that juncture. I'm almost to my mid 40s and maxing out everything to ensure I reach $1mil in my retirement savings by 53 (thankfully my employer has an amazing 401k match). Having a ten to twelve year runway with a million dollar portfolio will definitely help me to breathe easier heading to retirement.
3:52 That table makes me depressed.😮💨 Letting my foot off the gas is not an option for me.
15 to 20% is what I hear most financial advisors recommend, and to start as early as possible.
This was good for someone in your position. It all changes after you retire and have to live on the money you have saved. Then you have to look at ROI vs. stability of your investment. We have been looking at my investment profile and my wife's risk levels are being stretched. I don't believe in the traditional equities vs. bonds. Bonds are no longer the stable alternative as far as I am concerned. I have always had a higher risk acceptance level than my wife. I suspect that we will compromise to some degree. Inflation protected bonds have a high level of our interest right now. Probably should have researched them but I have only learned about them recently(thank you). Have a good week.
I think a lot of people are finding that their risk tolerance is being tested right now. I'm sure you and your wife will find a happy medium :-) As always, thanks so much for watching and sharing your thoughts Bryan!! have a great week!!
I’m sorry, but I thought that was exactly what she just said.
If you are younger, all stocks is probably fine. When you reach 55 or 60, you need to protect a portion against down markets like we are seeing now. A few months ago, I moved 25% into a money market type account. Losses are smaller and I am glad I did. Set up to rebalance every 3 months to sell what is doing the best and buy what is under performing when it is down.
Great video thank you! We're mid 40s and saving 50% so we can catch up as best we can. I'm hoping it'll at least help somewhat even if we can't keep this rate up.
Love your content!
I appreciate that! :-)
I aim for a 4% between saving and investing. No sure if that is a good amount😂. Your videos are awesome Erin! Thanks for breaking things down for us!
Thanks for watching Nathan!
It may be tough to have a high savings rate if you just came out of college, have higher loans, lower pay, etc. But in your 30s, when your pay is likely higher and your debt likely lower, you've got to up the savings rate accordingly. You are still at the mercy of the return rate, but without good savings rate, you get no mercy. The ups and downs of the return rate could be significant too. For instance, if the next decade's return rates are -10% (right now), -8%, -6%, -4%, -2%, 0, +2%, +4%, +6%, +8%, +10%, and you invest $10k a year, you will end up with $143k. But if the next decade is the reverse: +10%, +8%, +6%, +4%, +2%, 0, -2%, -4%, -6%, -8%, -10%, you will only end up with $89k. Even though they are symmetrical, a first-down-then-up market gives you more money than first-up-then-down. If the next decade is a lost decade like Erin said in her other video, it's not all bad if you are a young investor. I had a "lost decade" (2000s) too in my early years of investment, and I reaped big returns in the later years.
In Regards to Savings, Deposit Your Income Directly into your Wealth Managed Account, While maintaining operational expenses in your Checking Account. As for 401-K, Contribute Only What's Being Matched by your Employer. Remember 401-K goes into an IRA Rollover as Soon as you Separate from the Company or to keep vested in another. Use IRA for QCD's @ 70½ as your RMD minimum or greater to NOT INCREASING Personal Income and Giving a Tax Reduction
Thank you for the presentation. I like the data and numbers.
Whoever does it for 40 years knows it's the right track to reach "financial heaven"
The big problem is inflation. If we make below average returns over the next 10 years. After we pay tax, it's possible to make a negative return inflation adjusted. Inflation is just another form of tax on savings.
My wife and I have been contributing over 100k per year since 2019 towards all our investments. Plan is to hit 500k before 40. Our savings rate has consistently been 75% since we paid off our house in July 2021. Next step is to buy 10 rental properties in the next 7 years.
At 67 looking at rare of return but still not tapping into 70% of my Annuities for the interest so rate also matters . I am thinking by Spring I may be able to grab a 1-10 year annuities at 6 % for 700K ? Wish I had you as my Financial Advisor 45 years ago ! I'm scared of the stock market now... ANOTHER GREAT VIDEO....
I need to tackle my video on annuities!
Thanks for watching and thanks for the kind words Kevin :-)
Increase your savings rate today, and your rate of return over the next 5 years or so will skyrocket! We will get through this mess we are in.
Thanks again