Wish I had been using them but didnt get a job in the field I graduated so Im a bit rusty. Honestly, it scares the crap out me to put even some of my 15K into investments but if I am ever going to be financially free I NEED to just do it. Help me get my FU Money! Its greatly appreciated from a true newbie like me. i know nothing about finances and investing and after reading this I want to learn about managing finances, investing, stock markets, index funds and finally achieve the goal of financial independence that you are talking about.Like you suggested Ill start with your stock series as my starting point in this journey. I hear Latvia is a beautiful place and it is one I hope to visit someday. By investing in a diversified range of index funds, I feel more confident about my overall strategy to build wealth and can save time and energy by not worrying too much about the stock market. Stocks -- Part VIII: The 401K, 403b, TSP, IRA & Roth Buckets. Glad to hear things have worked out so well. Why not just invest in the individual stocks that VTSAX owns? As you say in your post, you are looking at a 40 year investment time horizon. Thank you. I bank with USAA. Author and financial blogger JL Collins brings his refreshingly unique and approachable take on investing to Google.The author of "The Simple Path to Wealth:. Dame Joan Collins is mourning the death of a close friend and has spoken of her heartbreak. How I learned to stop worrying about the Fiscal Cliff and you can too. Well heres an example of opportunity cost. I stumbled upon your blog during a 6 month futile search to buy a house (which Ive since abandoned due to your suggestion), but it gave me a perfect fake reason to withdraw the funds in entirety from EJ- hey, I need the money for downpayment of a house. I am very interested in hearing from those who have taken the theoretical SWR and put it into practice. Tanzania How did you arrive at 8-12%? Ive been quickly going through your blog and I love what you have to share! We are looking for strategies for good growth in this money (since birth to leaving our house could represent a lot of investment growth time if they were putting this money away during their adult or working lives). Even if you started with a lump sum of $381,600 ( $72k X 5.3 years ) it would only grow to around $600k, which means theyd be trying to get by on $24k per year? Having just read the simple pathhow could a 401 k fit into this plan? Mexico Im a good saver and Im trying to figure out the financial world to make my money work for me, mostly by reading your stock series. In "The Simple Path to Wealth," Collins highlights the importance of what he calls "F-you money," which he describes as enough money to be completely free of the demands of others. for those of you worried about them. Fighting giraffes, surreal landscapes, dancing with unicorns and restoring a Vanagon, How to be a stock market guru and get on MSNBC, See you next year.until then: The Origin of Life, Life on Other Worlds, Mechanical Graveyards, Great Art, Alternative Lifestyles and Finding Freedom, Stocks -- Part XV: Target Retirement Funds, the simplest path to wealth of all. Nothing will destroy your wealth faster than letting someone else have access to it. The advantage of asset allocation and rebalancing is that over time it has the effect of buying low and selling high without having to predict the market. The short answer is it is always a good time to buy VTSAX as basically you are buying the US economy: https://jlcollinsnh.com/2013/05/22/stocks-part-xviii-investing-in-a-raging-bull/. Dave Ramsey has a good book out that might help in your situation: Total Money Makeover. Mentor. As you make your way further thru the blog the answer to your question will become clear in some detail. Regarding bullet #8 and financial freedom with dividends from VTSAX, I have a few questions for you if you dont mind. Time Machine and the future returns for stocks, Kibanda: Mr. Anti-house buys his dream house. and Dr. Burkina Faso Its not entirely free there is often a fee for transferring the money to a current account normally around 3.79% for offers lasting that long but over 3.4 years thats just over 1.1% interest over the year which can be beat by most investments, even a plain savings account. Im an undergrad student from Malachi linked me this. Because of you, I feel more informed and better able to make sound decisions as an average Joe. I have moved my money from the high fee funds in my employers 457 fund to a Schwab PCRA Brokerage account where I could access the VSTAX fund. Think this is too extreme? COVID-19: The unvarnished truth from Doc G. Mr. Bear, Podcasts, a good book and why I should be in 100% stocks, A Guided Meditation for When the Stock Market Is Dropping, 7 Days in Heaven: or Why Slowing Down Will Get You There Sooner, Stocks -- Part XXXV: Investing for Seven Generations, Chautauqua 2019 - UK & Portugal - Tickets Now Available, Car Talk: An update on Steve and looking at Leafs. We also promise other support such as cell phone on family plan through this time, car insurance starting at 18 through age 22 (if at all), room and board at home as long as they are good roomates and wish to do so. I also have about $14k in a Chase Bank brokerage which havent been doing well at all for the last 5 years. Im a financial nerd (shown by me posting on this blog) but its funny to see the similarity between you and my dad. The Investor Shares version is exactly the same fund, but with slightly higher expense ratio and a 3k initial investment. Single, no debt, no kids. A Roth IRA is NOT tax deductable in the year the contribution is made and again your kids income must be below certain limits to open one. I have some money in Edwards Jones mutual funds. It could happen according to Kondratieff wave for example. Fourth, that saving is your emergency fund. Shes very conscientious and has shown an ability to save her money for things she really wants, while having enough left over for charitable donations and a little savings. Kenya Same place my hair did I guess). Hello, good to hear from you via email, and enjoyed your blog as I have 3 boys growing up and we are in the process of doing the same thing. You mention you might move out/get married in the next five years. Thank you very much in advance. Specifically, I guess Im confused about two things: 1) will the tax benefits of a 401k plan overcome a companys poor matching and options, and 2) How big of a hit are the taxes in a taxable account. -529 plans for their education (one in Vanguard, another to be rolled into Vanguard, and grandparents have a plan for each in North Dakota state plans) However, I was grateful that a man named JL Collins took the time to write this book and explain how readers could build wealth with a simple, easy-to-understand formula. Per your recommendations, Im working on setting up a plan for getting back my personal loan, and pulling out of edward jones. Unfortunately, it has taken me 39 years to find it. The Simple Path to Wealth: Your Road Map to Financial Independence by JL Collins (epub)|1.0 MB The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by JL Collins This book grew out of a series of letters to my daughter concerning various thingsmostly about money and investingshe was not yet quite ready to hear. I did abit more research and see that the Vanguard Life Strategy comes a close second to the Vanguard VTSAX and is available in the UK. My paranoid, cynical, conspiracy theory mind firmly believes that someday the government is going to either tax Roths, or even try to take them into a government run fund like social security. The more money she gave them and the longer she waits to receive her monthly checks, the larger they will be. After I pay off my debt I want to build savings. Today, in our compliant world, those with many of those same skills are outcast and given the label ADD attention deficit DISORDER! Warren Buffett, the greatest investor of my age, said When others are fearful be greedy. In "The Simple Path to Wealth," Collins urges readers to be careful about accruing debt and recommends a simple formula to help prioritize paying it off. Dont bother. Thank you so much and I will definitely be coming back to your site every day . I appreciate all of your work and I am confident my family will benefit from your wisdom for generations to come. 6:10-10:03 J.L.'s sudden rise to fame. My employer offers a 401k with pai. Another is that, since we do live in this complex, technical world you had best learn about money. I started out my journey with a low income and debt, unlike the stories I hear from others who were building wealth while earning six figures by age 23 and had no debt. Everyones sitch is different, for sure. Your original post came in while I was traveling this summer and somehow I missed it catching up when I got back. It definitely drew us closer, and I think hes slowly realizing that Im in the process of becoming a good stewart of my own money. Cheers! But it will also give you the roughest, most heart stopping ride. you have a great blog; http://beyonddave.com/2011/06/teach-your-children-well/#comments. Do everything else right except this and you still may end up with nothing ! Nice blog just signed up on the mailing list. Glad you are enjoying it around here. Go Roth. Thanks so much for this. Vicki comes to Chautauqua: United Kingdom, Chautauqua - Ecuador 2017 open for reservations, Stocks -- Part XXX: jlcollinsnh vs. Vanguard, Reviews of The Simple Path to Wealth; gone for summer. 25K at edward jones (hoping to pull the plug on the manager soon) Good plan. How much you like those will determine the allocation. Actually a bit sooner. I suspect after tax dollars, given if you were in a high tax bracket it would be difficult to get to 50% savings rate on a gross basis as taxes would eat up almost 50% of your gross income. Rwanda. Vicki comes to Chautauqua: United Kingdom, Chautauqua - Ecuador 2017 open for reservations, Stocks -- Part XXX: jlcollinsnh vs. Vanguard, Reviews of The Simple Path to Wealth; gone for summer. As I grow; as I watch my daughter and son grow; as I remember the few, calmly stated facts my father has expressed to me, and by my mother, in her way; as I listen to my wife; and as I read your most excellent blog: you have explained mastery of money sure is important if only to make sure we leave someone behind, someone made in our own image, to continue the good things we strive for thats what its finally all about, right? Unfortunately for us, I wasted decades and lots of money trying to beat the market picking individual stocks. Think decades. Mostly at different times, but not always. One assumption I have: The pre-frontal lobe of the brain is not fully developed until 25. Ireland Without understanding the thinking behind investing in VTSAX and/or VBTLX (or anything else) you very likely wont be able to stay the course and the markets first drop will have you fleeing for the exits. Perhaps 40+ years from now you might want to add a Vanguards Total Bond Index Fundto smooth out the ride. "Everybody makes money when the market is rising. My question is, I want to semi-retire in about 20 years. I'm not a financial advisor or an investing expert. So do you think my wife and I should open up a regular investment account, a personal Roth IRA, or just continue to put as much as possible in my 401k roth? Financial Independence Case Study: How to Reach FI in Your 30s, Social Security: How Secure and When to Take It, Case Study #I: Putting the Simple Path to Wealth into Action, Rent vs Owning Your Home: Opportunity Cost and Running Some Numbers, When Your Country Becomes a Global Outcast, Fun with numbers: Historic Stock Market Returns, Lets talk about whats up with Bonds, and what ever else youd like to ask me. During his career,. The VTS ETF seems like the most similar option to what you have in the USA however its shortfall is that dividends arent able to be reinvested, which means I will lose 37% of each year to the tax man At least that is how I understand the situation anyway! 10 years of investing, all things being equal, will take you exactly as far whether you are 20 or 60. Courtesy Rory Green We are often asked what it was like growing up as the daughters of Jackie Collins. Then it is his. You dont want to run with this crowd. Access your favorite topics in a personalized feed while you're on the go. Or is the TSP better option? Oops. This is a decades long plan. We discuss with father and daughter duos JL and Jessica Collins, and Doug Nordman and Carol Pittner. For the past couple years I have been saving ~%70, maxing my tax advantaged accounts, and putting as much as possible into VTSAX. I have $17k in a taxable account with Vanguard, fully invested in VTSAX. Sell! But before you do anything, I strongly encourage you to read thru the entire Stock Series. The details will vary country to country, but the principles still apply. It is my pursuit to figure out how to get greater numbers of people on this seemingly rarest of paths. JL Collins. Im not trying to be intrusive, but I am trying to achieve FI within the next 4-5 years (Im 37 now and have a spouse and 2 kids). Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills. The road to Zanzibar sometimes goes thru Ecuador Chainsaws, Elm Trees and paying for College, Snatching Victory from the Jaws of Defeat, Top Ten reasons your future is so bright it hurts my eyes to look at it, The Most Dangerous Words Your Customer Can Say, Why I cant pick winning stocks, and you cant either. But whether it will make you wealthy rests on if you stay the course do when it plunges and everybody is in a panic, and it will. One is that this whole civilization thing has been a huge mistake and wed all be better off as hunter/gatherers. In looking around the internet, not exhaustively mind you, but poking around, it looks like a few places such as: https://www3.troweprice.com/rws/rps/public/assets/ffs/VTSAX.pdf, http://news.morningstar.com/articlenet/article.aspx?id=566429. Stocks -- Part XIII: The 4% rule, withdrawal rates and how much can I spend anyway? Create an account in your name, earmarked for him. Ideally, we are passing on fiscal lessons that will make them mature enough at those ages to take control of those accounts, but that remains to be seen. https://jlcollinsnh.com/2013/11/25/death-taxes-estate-plans-probate-and-prob8/. France Regarding point 3. Also looks like I can roll it over to a 401k plan, because I left my former employers years ago and can no longer contribute to it. I mentioned my plan to invest in index funds in the near future to my mom recently. Am I missing something? Filed Under: Money, Stock Investing Series, Cat food. .thanks for the very kind words. Right now as Im working it makes sense to just let interest roll back into more growth but when I am at 25x income saved, Im probably ready to live off that interest. If your tax bracket is 15% or lower the cap gain rate is 0. Her retirement plan is under the Texas Retirement System with currently 18 years of service. 10% of my income goes into a Public Employee Retirement Account (PERS) and my employer matches 15%. Consignment Shops: Best business model ever? Gemma Strong Online Digital News Director London. A free trip to Hawaii! Youre a SAINT, thanks for helping us all! How have we not had the civilization is the source of all our problems discussion? I was clueless up until the age of 28. Glad you found your way here, and glad you are reading the comments, too. So you might want to think carefully about your personal preferences. Use monthly dollar amounts with year end bonuses for sticking through the year. Hondurus Youll still have ~15k to invest each year and that Id put in a regular VTSMX account. That is the highest praise of all. the problem is definately not her! My wife and I hold some other stuff in our portfolio (Mmmm, another post idea!) 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