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/biz/ - Business & Finance

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297383 No.297383 [Reply] [Original]

daily reminder

>> No.297393

>>297383
provide UK version please

>> No.297394
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297394

>tfw unearned income can't be put towards an IRA

>> No.297403

>no roth 401k

>> No.297407

I see more people doing the "debt snowball" as opposed to the highest interest first because it frees up money faster.

>> No.297418

>>297393
401k - SIPP
IRA - ISA
m8

>> No.297424

>>297407

Snowball is absurd. Going highest rate first is mathematically superior.

>> No.297425

>>297394
put it in a money market first, then transfer.

>> No.297430

>>297425
Better yet, just put it all in a money market. My money market is literally the same as my roth ira in terms of diversification

>> No.297485
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297485

bump

>> No.297510

Bump with documentary on professional athletes who go from millionaire to bankrupt.
https://www.youtube.com/watch?v=okFEZCgE5ag

>> No.297588

>>297383
Shouldn't debt be higher? Seems pretty risky to build up an emergency fund when you have debt ticking away like that.

>> No.297596

>>297430
with no tax benefits

>> No.297599

>>297588
Financial emergencies can come in the form of a job loss, significant medical expenses, home or auto repairs or something you’ve never dreamed of. The last thing you want to do is be forced to rely on credit cards or a loan which could simply compound the problem.

>> No.297615

>>297418
thanks bruh

>> No.297681

what if you make too much to have a roth ira

>> No.297682

>>297681
Traditional IRA.

>> No.297685

I'm having trouble understanding the IRA section.

I understand that, between either one or both, to only contribute up to $5,500. Is this all one should ever invest into it or is this a monthly/yearly contribution?

Thanks.

>> No.297688

>>297685

It's a yearly limit. Contributing more than that will be penalized.

>> No.297771
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297771

>>297599
I completely understand the nature of an emergency fund. But existing debt is a real issue that is steadily gaining via interest.

Wouldn't dealing with problems that have materialized (current debt and its growth, etc.) be much more prudent than dealing with things that could potentially happen?

Also, what vehicles do you keep your emergency fund in? Or do you just let it sit in a savings account?

>> No.297778

>>297485
a must read. i got a copy last christmas. *tips banana*

>> No.297789

You cannot get out of debt without some sort of rainy day fund. Shit does and will happen in life.

Even bare bones financial advisers like Dave Ramsey tell people to have a minimum of $1,000 before you start paying down debt. Depending on how large the debt is, 3-6 months of an emergency fund is completely reasonable, especially if you have an unstable job. If you're going to be paying down debt over 5+ years, the larger the emergency fund needs to be.

>> No.297993

>>297771

It's a real issue, but it's also a known issue. It's important to have reserve funds.

As for where to keep it, keep at least a minimum in a savings account. You can put more in CDs if you want.

>> No.298028

just sell off some of your stocks if you need emergency money. sitting on half year living money seems excessive.

>> No.298054

>>297588
It should, at least second. Especially when you consider that interest on debt is higher than interest on savings.

>> No.298055

>>298028
>Sell your stocks

>> No.298074

>>298028
>sell your stocks
No, bad. Keep in mind that living expenses don't really scale with net worth. It becomes a small fraction over time.

>>298054
401k matching is free money. You always want to max it out.

>> No.298103

>>298055
>emergency situation

>> No.298114

so you would rather have 10k sitting in your savings account instead of 3k and 7k in a solid stock. if shit happens you sell and withdrawal when settled. whats the big deal?

>> No.298121

>>298028

Just started investing in the market... enjoying it a lot. Should I take all of my money out of the bank except enough to get by paycheck to paycheck and cover expected bills/expenses?

I want to take an aggressive approach, because why the f--- not? YOLO, right?

>> No.298131

>>298121
i have 1-2 months income as a buffer in my savings account so i dont have to worry about my bills autopaying or if i have a rare large purchase (1-2k). if my income stopped or i needed lots of money for something serious i would just tap into my stocks.

>> No.298133

>>298121
So many things wrong with your post. What are you actually investing in?

>> No.298178

>>298133

Well, here's what I have:

~$4500 in an experimental trading account
~$30,000 Vanguard ETFs
~$10,000 in retirement accounts (CDs, haven't gotten around to investing them yet)
~$20,000 in the bank ($5,000 checking, $15,000 savings)

What do?

>> No.298180

>>298178

Oh, and approximately ~$30,000 in student loan debt at avg interest rate of 6%

>> No.298202

Anybody? I know you guys say to pay off loans first but I really don't want to it. I think I can beat the interest rates by investing that money in the market.

I'm thinking of setting up a second account with a new broker now that I have a month under my belt and fund it with $10,000.00 out of my savings? And maybe convert the current account to a long-term growth account?

>> No.298206

>>298178
>CDs
Terrible investment at current interest rate. 2.25% for 5 years? gtfo

>> No.298216

>>297394

If you have friend/ family that owns a business get a part time job through them, pay under the table for your own income and put it in IRA... I did that last year.

>> No.298219

>>297588
debt should be second if you have high interest debt, this is a generalized template, I agree with you though.

>> No.298222

>>298206

Crap. Did I goof on that? I was just trying to get it set up before the deadline and the banker told me we could go back and invest it later? I don't have to leave it there for 5 years now, do I?

>> No.298445

>>298206
putting all your money in the lamest most boring safe stock ever would do WAY better.

>>298180
>having money invested with 30k debt
lols

>> No.298454

Why are IRAs more important than 401ks?

>> No.298474

>>298222

You pay a penalty for taking it out early.

Never do a 5 year CD. It's just wasting money

>> No.298631

>>297407
>>297424
The value of the snowball is that it eliminates payments, and frees up more and more funds which can be used to repay debt.

Say you have $1k monthly debt payments, split between 3 loans with $200, $300, and $500 monthly payments. By paying down the $200 payment first, you can eliminate that payment, and put the left over $200 towards the next payment. Once the $300 payment is gone, you can pay $1k per month on the $500 payment.

Though it is best to balance both apporaches.

>> No.298646

>>298631
It's just psychological. It's better to make minimum payments and all debts and then put everything else towards the highest interest debt.

>> No.298651

>>298646

You're correct only if the highest interest payment is so high that the interest alone is a big problem.

If that highest interest rate debt is small, you just take it out when it comes up on the snowball because it's more efficient to just go at it from smallest to largest

>> No.298655

>>298651
The interest is the problem. That's why you don't want debts to start with.

Unless I've missed something, the math says you should go high interest to low interest, not low balance to high balance.

>> No.298671

>>297383
Fuck your taxation system. Why make it that convoluted?

>> No.298679

>>298114

Because you have to wait for the funds to settle to make bail

>> No.299525

>>297383

lol @ wageslaves

Man's Plan:

>make product
>development time to sales: 1 years max
>product has market value to sell 10 million copies
>product sells 1 million copies
>millionaire status achieved
>product continues to sell
>multi-millionaire status achieved

Deluxe WageSlave Plan:

>Take it up the ass for 40 years
>Boom, maybe a million, almost, close enough

>> No.299535

>>299525

Something like 8 out of 10 small businesses fail in under 2 years. Good luck anon.

>> No.299563

>>299535
Most small businesses are jobs in disguise created out of the "do what you love" mantra.

When you know what to look for, i.e. a scalable, leverageable business that fulfills a need/want and can eventually divorce itself from your time, your chances of success are higher.

> then why isnt every one a multi millionaire

But most people don't bother to try and would prefer being a wage slave for 40, 60 years, and the rest join retarded MLM schemes or "do what they love".

>> No.299577

>>299525

Looks like another kid finished rich dad poor dad

>> No.299631

>>299563
>>299525\
So I assume you're a self-made millionaire already?

>> No.300132

bumpo

>> No.300497

>>297383
Up to $17,500 per year in 401k? Why go to the limit, and not invest in better things? 401k isn't exactly all that beneficial.

>> No.300503

>>298180
>>298178
Take 30k and pay off your damn loans.

>> No.301250

>>300497
With 50 or 100% employer contribution it is free money

>> No.301641

>>297383
WAIT ONE FUCKING SECOND.
why the FUCK would i do a 5.5k traditional ira or roth IRA instead of the TAX DEDUCTIBLE 17,500$ PER YEAR i can with a god tier 401k?

>> No.301711

CANADIAN VERSION PLEASEEEEEEEE

>> No.301719

>>301641

You can do both, you idiot. Contribute $5.5k to a Roth IRA, then $17.5k to a Roth 401(k), then roll the latter into the former.

>> No.301725

>>301719
>implying them taxing roth contributions isn't masssively more likely than "MUH POSSIBLY HIGHER TAX RATES AT RETIREMENT"

>> No.301731

>>301641
The Roth at least builds you a tax free fund. Assuming you are making less now than you expect to make later (ie, young and low paid) roth is the better long term investment. Leftovers still go into 401k. Pay taxes now, not later.

As for the traditional IRA, maybe it has to do with accessibility penalties? Is it easier to get at IRA money than 401k money?

>> No.301738

>>301731
That's pretty fucking stupid. Retirement isn't meant to be working for decades to be pulling 100,000$+/year out

guess what? If you're lucky enough to be looking at that

RETIRE
FUCKING
EARLIER
THATS
THE
POINT
OF
RETIREMENT.

there is no reason to use a roth unless you're a born multi-millionare trust child

>> No.301753

>>301725

Wait. You think it's more likely that the US will take the unprecedented step of taxing retirement accounts BEFORE they raise marginal rates at all?

That's, uh, an interesting hypothesis.

>>301738
>there is no reason to use a roth

Several reasons. Roth IRA's require no minimum distributions at all, so you aren't forced to sell off your assets as you age, they're protected from bankruptcy like regular IRA's, and they allow you to make effectively higher contributions to retirement accounts (contribution*(1+top tax rate) as opposed to just contribution for regular IRA's). The protection from rising rates is just a bonus.

>> No.301759

>>301753
>>Wait. You think it's more likely that the US will take the unprecedented step of taxing retirement accounts BEFORE they raise marginal rates at all?
>That's, uh, an interesting hypothesis.

Gee, one is massively used (and by many people's opinions, 'ab'used) by the extremely rich and powerful, and the other affects hundreds of millions of people

I wonder which one the Democratic Party (they'd be the ones to do it) will go after..?

>> No.301766

>>301759
>one is massively used (and by many people's opinions, 'ab'used) by the extremely rich and powerful

Really the only "extremely rich" person who uses IRA's as a store of wealth is Romney. Pretty much every other rich person on the planet has figured out that irrevocable trusts are a better deal for them, and I could totally see increased tax scrutiny of trust assets in the cards as a future tax policy. But the average IRA only has like $85k in it, which is hardly a level where I'd consider it a tool of the extremely rich and powerful.

>> No.301774

>>301766
That's where you're going wrong, and perhaps i should have been more precise

the *ACTUALLY* Extremely Rich of course control everything and are immune from any fiscal, taxation or policy changes

but the "Extremely Rich" below them (not extremely and arguably not even rich by comparison) are the targets and the scapegoats.

The actual powerful and rich use trusts and other vehicles you don't even know

the fall guy uses a roth.

guess what's going to be crucified upon a cross of fiat.

>> No.301776

>>300497
A traditional 401k reduces your taxable income and all gains are deferred. If you rebalance in a taxable account you will owe on the gains.

Roth 401ks are great if you can afford it because if you roll it into your Roth IRA then you still have the benefit of being able to withdraw the principal without penalty.

>> No.301780

>>301774
>guess what's going to be crucified upon a cross of fiat.

Are goldbugs actually stealing William Jennings Brian quotes now? Top fucking lel.

>> No.301782

>>301780
>useage of the word "fiat" = goldbug
again, i have to reiterate my love for this epic fucking meme

>> No.301790

>>301725

Your argument makes no sense. Roth contributions have already been taxed, so to tax them upon withdrawal would be double taxation. The chance of that happening is less than zero percent.

Even if they did tax withdrawals, which is unlikely, you would still avoid ongoing annual taxation of cap gains and dividends, allowing your account to grow faster.

And even if they just said "fuck it" and turned all roths into standard taxable accounts, with gains taxed annually, you'd still be no worse off than if you had stashed your cash in a brokerage account.

In no universe does your advice make sense.

>> No.301794

>>301790
>so to tax them upon withdrawal would be double taxation. The chance of that happening is less than zero percent.

ehehehe how cute it's like you think that will

1. stop anyone

and even more precious

2. that fuck tons of double taxation don't already exist (b-b-b-ut muh semantic differences!!! income and sales tax aren't double taxation !! :D)

you got taxed in your 20s

and you'll be taxed in your 70s

deal with it buddy boy

>> No.301798

>>301794
Of course you will be taxed, just not on the withdrawals from a Roth. There would be all kinds of lawsuits and it would be career suicide for any congressman that votes to tax all Roths.

>> No.301804

>>301798
>lawsuits

Just like all those lawsuits and "freemen apone the lands" went oh so well for tax protesters ;^)

yup you sure have power against The State.

>> No.301808

>>301753

Roths also run out of money at a way lower rate once you are retired

>> No.301837

>>297383
Can anyone give me an idea of the Australian equivalent of this image?

We have a limited form of tax sheltering in Superannuation (15% rather than whatever band your income tax would be at, in my case around 30 or 35%), but the issue is you can't access it until you're 65 or 70. I intend to be fully financially independent long before then, so is it a waste to put money in super?

>> No.301972

>>301794

There will never be a second income tax imposed on post tax Roth IRA withdrawals. Won't happen. But you believe what you want and act accordingly.

I'm guessing you own lots of gold, and probably some of those freeze dried meals they advertise on the Glenn Beck show.

>> No.302062

>>301738
Did you actually do the math? I really depends on when you want to retire, how much you make now, and how much you expect to make later in your career. In situations for most younger, low paid people, who expect to grow into their career and work until they are at least 40 or so, investing in a Roth will LITERALLY let you retire EARLIER. Tax free growth is a huge perk that pays off in the medium/long term.

So if you expect to retire at 30 and you are already making 100k+ with no room for growth, yeah, go ahead with the normal 401k 100%. It's basic math for return on investment and there is a crossover point somewhere for you.

>> No.302064

>>301776

Roth 401k master race. Big limit, Roth benefits, company matching!

>> No.302085

>>302064
My company's match is in a separate non-Roth account. I don't think they allow matches in a Roth account.

>> No.302133

>>301837
Super is the Aussie (better) equivalent to a Roth 401k. I recommend you take advantage of it - at least to get 'free money' from the Government from super co-payment matching (I think it's at least $1000 this year)

You can't withdraw your super early unless you get paralysed in a car accident or something. However, you shouldn't really want to: Super isn't taxed (awesome in greedy Jew-taxing Australia). Put different money aside for your pre-65 years.

If you have a reasonably sized super account you can also apply to operate your own Self Managed Super Fund - > which is basically you deciding how to invest your saved tax-free super money.

It's pretty great, and how the rich people exploit the system. The number of people I've seen use their super savings to buy an "investment property" that turns out to be their house...is too many.

>> No.302134

>>302085
You are correct. Company match is always pretax. Unless its not qualified, but that's only if you are highly compensated

>> No.302138

>>302133
>The number of people I've seen use their super savings to buy an "investment property" that turns out to be their house...is too many.

This is legal? In the US we have the "self-dealing" prohibition which absolutely forbids use of IRA investment assets for personal purposes. Like, if you buy an apartment complex, neither you nor any linear antecedents/descendants can EVER live there, even if you pay full rent. That's a shocking loophole in the law.

>> No.302196

>>302133

you can apply for a smsf at any time. i started mine with only $1200 in it. its not possible to buy an investment property to live in yourself, however if its a group of apartments you could live in one and rent it to yourself.

you can also buy a property and run your business through it and charge the business rent so your saving tax each year since super is taxed at 15%.

>> No.302217

>>302138
It's not legal, but there are countless ways to get around the rules.

The most common thing people do (and is legal for some reason, probably some rich lobby group forcing this rule through years ago) is buy 'hobby farms.' Which are considered investments, if they produce at least $1 (just have a couple chickens on the property). Most rich peiple use their SMSF to buy a hobby farm, and use it as a holiday property for a month every year.

Other ways to exploit SMSF: investing in a managed fund, that is actually managed by a company & trust that you control. I see this a lot.

Source: work in tax. Aus tax laws are heavily skewed in favour of the wealthy, and no-one EVER talks about it.

>> No.304299

Rump

>> No.304565

Asdf

>> No.304573
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304573

if the company I work for has expensive expense ratios (0.7-1.3% expense ratios EVEN FOR INSTITUTIONAL FUNDS!), should I still max out my 401k or dump some money into a vanguard fund (personal brokerage account)?

>> No.304579

>>301794

i wish /pol/ would leave

>> No.304580

>>304573

If they match, get the match. If they don't match, there's no point in tying your money up until you're 65. Put it in your personal brokerage account.

>> No.304582

>>304580
so I max out my Roth IRA
then get the 5% company match already on a roth basis, I'm just wondering if it's worth dumping more money into my 401k that's all

I mean my income is like 39k so it's not like I can really max it out, just bumming out and living with my parents to reduce the living costs/expenses

>> No.304583

>>304580
on that note, should I just try to time the markets and buy more when its cheaper or just continue buying periodic shares of a target retirement fund 2060?

how much should i keep into my bank acct?

>> No.304601

>>304583

Depends on your goals and how you react to your investments. A lot of people are against market timing and stock picking. I say go for it if you are experienced and not emotionally tied to your money. If you can see investments drop 20%+ and not blink an eye, get a little aggressive and do some speculating.

Usually those target funds have pretty big expense ratios and the turnover is high. Also, they are boring.

It really all comes down to your financial goals. I'm looking to retire by the age of 40 (23 ATM), so I'm putting the min into my 401k to get the match and doing some investment R/E and stock picking on the side. If you want to play the safe way and retire at 65 and be secure, do your traditional target fund allocation and be patient.

>> No.304613

>>304582

Again, it all comes down to your financial goals. If you go into a financial advisors office, 95% of them will tell you to put as much money into the 401k as possible. This assumes you want to retire at the age of 65 and be secure. If you want to be more aggressive and not have your money tied up for the long, get the match (free money) and nothing more and invest in other vehicles. Try to become an expert in a specific investment vehicle (Junk bonds, stocks, investment R/E, options) etc., and invest in what you know.

>> No.304620

>>304601
>>304601

yeah Vanguard Target Retirement fund expense ratio is 0.19 or something which is much lower than a typical Target Retirement fund.

I'm 23 also. I mean with my current job I can't invest in stocks without pre-clearance and that's a hassle....I also don't have that much $$$ to make use of stocks.

I do agree that the target retirement funds are boring. I just don't have 30-40k to buy 4 of the admiral shares (lowers expense ratios to 0.10) each priced at 4x to get my custom allocation.

The only other thing I keep thinking about is ETF's but it's not I will touch them that often.

I'm more inclined to think I will probably go the average American route and retire at 65

The other thing I'm not 100% sure is I think if I even exchange funds within Vanguard itself, it generates a 1099B so I may just leave the 3k or whatever in that fund, accumulate 10k then just buy Admiral shares.

>> No.304628

>>304620

You in investment banking? Audit? Corporate Banking? Not being able to invest without pre-clearance would piss me off.

>> No.304634

>>304628
I wish, mutual funds (401 k) firm. How about yourself? I would like to become an investment banker but I feel my window has closed (most IBankers interned during college and were offered full time).

Some of my colleagues are working towards a CFA and hope to have that work/be an open into an analyst position but I'm not sure if that will help versus having connections/experience

>> No.304647

>>304634

I'm in commercial banking (lending to companies between $30 million and $2 billion in sales). I was offered an IB position out of college, but declined due the shitty lifestyle.

CFA is a good option and is really highly respected in the financial industry. Some investment firms basically automatically hire anyone who has the CFA title. However, I think you are right that having connections has more value than a CFA. Most of my friends that got their jobs on Wall Street only go the jobs because of connections. Once the Wall Street people know you are good on the technical side, it all comes down to connections and how well they like you.

>> No.304673

>>298114
>not just having a credit card with a 15K EUR spending limit
Get on my level, plebs

>> No.304675

>>299631
The thing about these retards is that they'd rather TEACH other people on how to become a multi millionaire rather than become a multi millionaire themselves. Same thing with "day traders"

>> No.304679

>>302196
>you can also buy a property and run your business through it and charge the business rent so your saving tax each year since super is taxed at 15%.
Standard tax optimalisation tactic. I own my house privately and my company pays rent for "desk space". You can do this in any building already.

>> No.304732
File: 158 KB, 304x382, 1396321925385.png [View same] [iqdb] [saucenao] [google]
304732

>>304613
>2014
>Buying junk bonds

>> No.304991

>>302133
>tfw earning too much for government cocontribution. I just w-wanted to get government bux

>> No.305221

>>297993
My college professor told me that paying debts should come first than saving money.

>> No.306407

>>305221
Depends on rates. If you have payday loan from Mr Shekelberg you better pay in time.

>> No.307237

Sdfg

>> No.307919

Fghj