Afford Anything

Tag: asset allocation

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#350: Ask Paula: How Much Should We Spend on a Wedding?

Anonymous and her husband have set themselves on the path of saving for retirement. But an old mistake haunts them: a financial planner convinced them to buy a mix of whole and term life insurance, which costs them $700 per month. Do they need whole life insurance, and where else can they save their money?

Mike has $60,000 in cash earning one percent interest. He has plans to buy a home and get married in three to five years. Where else can he put his cash to earn a little more? Is the stock market too risky for such a short time horizon?

Anonymous and her future husband are wondering: what’s a realistic amount to spend on a wedding?

My friend and former financial planner Joe Saul-Sehy joins me to answer these questions on today’s episode. Enjoy!

Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode. 

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#348: Ask Paula: How Should We Invest to Retire By Our Mid-40’s?

Julia and her husband, both 27, want to retire by their early to mid-40s. Is there a point at which they should stop contributing to tax advantaged accounts and only contribute to taxable accounts?

Ana and her family like their home, but it needs to be bigger. A cash-out refi didn’t give them enough funds for their dream renovation. Should they put their money into the market in the hopes that it will grow large enough to fund a future renovation? Or should they move into a bigger house, rent out their house, and fix it up years down the road?

Anonymous from MA is flummoxed by HSA-compatible health plans. His copay and deductible are awful, and even bronze plans seem better. Are HSA plans overrated, or does the math work out?

Aja’s mom is 75 and has to take required minimum distributions from her IRA. She doesn’t need the money. Where should she put it?

Nick has a seasonal business. Can a sweep account help stabilize him?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these questions on today’s show. Enjoy!

Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.

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By Paula Pant

#332: Ask Paula: What’s the Point of Financial Independence if I’m Not Going to Retire?

Ginger’s financial independence (FI) number is $2 million, but she doesn’t want to fully retire early. Once she hits ‘coast’ FI, she wants to 1) buy her time back with outsourcing, 2) take a mini-retirement, and 3) buy a vacation home. Does it make sense for her to divert retirement contributions to these goals, or should she aim to save $2M?

Wilson plans to have a two percent withdrawal rate in retirement. Given this low rate, should he go all-in on stocks? Or should he split up his retirement funds and invest one half conservatively and the other half aggressively?

Jennifer has a low-stress doggie-daycare, but she needs a bigger space to scale up. How the heck can she find a property to suit her needs in Austin, TX?

My friend and former financial planner Joe Saul-Sehy joins me to answer another round of listener questions.

(If you have questions on business, money, trade-offs, financial independence strategies, travel, or investing, leave them here and we’ll answer them in a future episode.)

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By Paula Pant

#306: Ask Paula & Joe – How to Shift From Financial Independence to a Mini-Retirement?

Jake and his wife want to retire in five years, at which point they’ll have 14 years before they can access their 401k funds. To help bridge that gap, Jake wants to know: what should their asset allocation look like for their taxable brokerage account?

This year, Kim’s employer enrolled all employees into a “fully funded indemnity program combined with a nationwide direct primary care membership.” What the heck is this program, and how might it impact Kim’s finances?

Burnt Out in Boston is switching their focus from financial independence to taking a mini-retirement. How can they financially and mentally prepare for this leap?

Matthew is torn: should he and his wife – both 26 – max out their Roth IRAs and then save up for a rental property, or simply save cash for the rental and worry about their Roth later?

Finally, Deva and her husband are fed up with their messy tenants. They’re kind and responsible, but they’ve left the yard a mess. They have a clause in the lease that addresses this, so beyond that, what can they do?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these questions on today’s show. Enjoy!

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By Paula Pant

#297: Ask Paula – Should I Househack or Pay Off My Student Loans?

George is torn between paying down his student loan debt (which he deferred) or buying a househack. Which is better for his long-term goal of reaching financial independence?

Hanan wants to figure out if a backdoor Roth IRA conversion will work for her. She also wants to investigate whether a Vanguard Institutional 500 Index Trust and a Vanguard Institutional Total Bond Market Index Trust are ideal. Are trusts different from index funds or mutual funds and if so, how?

June and her husband netted $400,000 from the sale of some golden parachute ISOs. They want to help their children pay for college and are trying to figure out how to strategically use this money. Should they pay off their home, buy rentals, fund 529s, or Roth their 401ks?

Mario is curious to know: is his two-fund portfolio at a 90/10 split is a good asset allocation for his Roth IRA?

Vivian is worried about bridging the gap between when she retires and when she claims Social Security. Will her plan of doing a Roth conversion ladder work out the way she hopes?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these five questions. Enjoy!

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By Paula Pant

#258: Ask Paula – Can I Quit My Job Before I’m Financially Independent?

“Burned Out in Boston” wants to reach financial independence.

But she’s not sure she can stick it out in Boston much longer.

She and her husband want to move to an area that doesn’t have many job prospects, and they want to make this leap soon, ideally before they reach FI. How do they know when it’s the right time to jump ship to their dream location?

Ingrid and her husband own two rentals. They’re torn between paying one of their rentals off or buying more properties. Which is the better route to take?

Pat is torn: should she convert her garage into an accessory dwelling unit, or use funds to buy an out-of-state rental property?

Chelsea wants to know: what should you do if your newly purchased home is an instant money pit?

Julia wants to know how to approach investing in sector-specific index funds, like utility ETFs. Should they be a small or large portion of your portfolio?

I answer these five questions in today’s episode. Enjoy!

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By Paula Pant

#252: Ask Paula – Will the Stimulus Cause Massive Inflation?

The government issued a $2 trillion stimulus. How will that affect the economy? Could we endure massive inflation or hyperinflation?

Bradley kicks off today’s Ask Paula episode with this timely question. What inflation rate will we see in 2020, and how can we prepare? How should we hedge against hyperinflation?

Anonymous Retiree (whom we call Sequencing Sally) is 64 and retired last year. She lives off of monthly withdrawals from a Vanguard portfolio. Given the bear market, should she leave her portfolio alone and spend from an emergency fund?

Additionally, her target allocation is off-kilter. Should she rebalance now or later?

Jay wants to reach financial independence in five years, but she’s in a job that will pay her $270,000 student loan balance if she stays there for another 17 years. Should she stay, or quit and face the balance?

Jan has $500,000 in a managed fund with a three percent annual fee. He wants to move his funds into his Vanguard personal brokerage account, without incurring a ton of taxes from the sales of his holdings. How can he accomplish this?

My friend and former financial planner Joe Saul-Sehy and I answer these questions in today’s episode. Enjoy!

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By Paula Pant

#247: Ask Paula – Is the Stock Market Going to Crash in 2020? How Should I Invest in a Bear Market?

Caroline wants to buy her first home in Denver, CO. How can she calculate how much mortgage she can comfortably afford?

Anne plans to retire later this year on rental income (woohoo!). She’s saved up a hefty emergency fund for her properties, and she wants to know 1) if she should invest a portion of this in index funds, and 2) whether she should rebalance her portfolio to account for this huge cash allocation.

Anonymous Nurse has over $100,000 in debt, not including their mortgage. They want to invest in rental properties, but with so much debt, they’re thinking of selling their home or renting it out. Which option is best given their interest in real estate?

Joy wants to know if she should put $50,000 towards her primary residence mortgage, or use it as a downpayment on her first rental property. What are the pros and cons of each option?

Anonymous owns a cash-flow positive condo…on leased land. The land will revert back to the owners in 32 years. When is the best time to sell this property?

I answer these five questions in today’s episode. Enjoy!

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By Paula Pant

#241: Ask Paula – Should I Raid My Retirement Savings to Pay for School?

Anton wants to accelerate his flight training so he can get hired within two to three months, rather than two to three years. He has to raid his retirement savings to achieve this. Should he?

Linda and her husband have their eyes on early retirement, but they aren’t sure what their post-retirement lifestyle will cost. How can they budget for unknown expenses that include travel?

Joseph contributes 15 percent of his income to both a Roth 457b and Roth IRA. He wants to retire before age 59.5. Given his early retirement goal, should he focus solely on his Roth 457b?

Henry wants to know how rebalancing and dollar cost averaging interact with each other. Should he rebalance his all-equities portfolio? If so, what approach should he take?

Joe maxes out his 401k and IRA each year. He can make after-tax 401k contributions, or fund his Vanguard taxable brokerage account. Which should he prioritize?

As usual, my friend and former financial advisor, Joe Saul-Sehy, joins me on the show to answer these five listener questions. Enjoy!

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Afford Anything