Does my employer match count against my 401k contribution limits? Should I invest in a Traditional or Roth TSP? Should I invest more aggressively in stocks right now, or should I hold cash and bonds until the next downturn? Should I get a mortgage or keep renting until I can buy a home in cash? Do you think index investing will dramatically change in the coming decades?
Former financial planner Joe Saul-Sehy and I answer these five questions in today’s episode.
Sydni asks:
I’m trying to maximize my retirement savings this year. I’d like to max out my 401k to the maximum contribution limits of $18,500.
I also have an employer Safe Harbor contribution that equals three percent of my salary. Does this count towards the $18,500 limit?
Audrea asks:
My husband is in the military. He has a Roth TSP. Can we withdraw the principal without penalty at any time?
I recently started a civilian job with the option to contribute to a TSP as well. Should I choose the Traditional or Roth TSP, since my husband already has a Roth?
Finally, where can we find a military-friendly financial guide or coach?
Nick asks:
I’m 29 and living the FIRE teachings to the best of my ability. Here’s the good, the bad, and the ugly of my financial picture.
Here’s the good:
- I’m frugal.
- I live on 20 percent of my income.
- I’m maxing out my Roth 401k.
- I’m maxing out my backdoor Roth IRA.
- I’m maxing out my HSA.
- I’m investing even more into a taxable brokerage account at Vanguard.
Here’s the bad:
Before I found the FIRE movement, I was following Tony Robbins’ book, Money: Master the Game.
Based on what I read, I opted for a conservative allocation within my investments. I’m nearly 60 percent in bonds, which seems like a lot for a 29-year-old that plans to buy and hold.
After I found the FIRE movement, I became a little more aggressive in other accounts, and now have an allocation of 80 percent stocks and 20 percent bonds, with shorts in gold.
Here’s the ugly:
I’m worried about becoming more aggressive in my 401k because the market may have a correction, which is upsetting since I’ve been holding out for years already. I’m putting a few thousand dollars each month into a high-interest savings account at about 1.9 percent. My reason is that I want liquid cash to invest at a moment’s notice when the market turns. I will also distribute money more aggressively from bonds, shorts in gold, to stocks.
Should I become more aggressive in my 401k investing? If so, should I do it gradually or all at once? What allocation would you recommend between stocks, bonds, and international stocks?
I’m also planning to get married next summer. My fiance makes a lower income than I do. Is there anything we can do to become more tax efficient?
Lisa asks:
I’d like to buy my first home. Should I get a mortgage, or should I rent while I save enough to purchase the home in cash?
I’ve saved $6,000 in the past four months, and the only debt I have is a $20,000 car note. My monthly payments are $460.
My salary is $72,000 a year, and I’m living with family until July 2019. I’m 24 and my goal is to reach financial independence by age 30. What path should I take when branching out on my own?
Camron asks:
Do you think index investing will continue to work the way it has for the past 20-30 years?
There are several factors that might impact the way that index investing works in the future, such as:
- Trading optimization.
- Fewer companies getting traded on the public markets (as more companies stay private)
- The huge surge of index investing in popularity
Are those reasons why John Bogle is predicting a 4 percent annualized return over the next decade, compared to the 10 percent that we’ve seen until recently?
If that is the case, where do you see other opportunity?
We answer these five questions in today’s episode. Enjoy!
Resources Mentioned:
- ObliviousInvestor.com
- Thrift Savings Plan – IRS
- USAA
- PenFed
- Navy Federal Credit Union
- MilitaryDollar.com
- The-Military-Guide.com
- RichonMoney.com
- FieryMillennials.com
- FIRE Drill Podcast
- TheMilitaryWallet.com
- EllieKay.com and BethanyBayless.org
- Their podcast: TheMoneyMillhouse.com
- Why Dollar-Cost Averaging Stinks – Afford Anything blog post
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