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. I hope Im able to understand your article and use the information well. By then my income should be higher and hopefully Ill be able to maintain my annual expenses <15k. Case Study #2: Joe -- off to a fast start! First, $10,000 is only the minimum if you are looking at an Admiral Shares version of a fund, like VTSAX. I live and work in Switzerland, but plan on returning to the US when I retire. They told me I could get loans or get scholarships to make up the difference. Set up a regular taxable account for him in his name. As you say, there is so much conflicting information out there, I have often wondered how those who chose to embrace my ideas come to do so. With a Roth, you have to pay tax on the money before you make the contribution. Its greatly appreciated from a true newbie like me. Check out my post Stocks Part X: What if Vanguard gets Nuked for more on this. Financial geeks like me are the aberration. Love the blog, agree with everything. "In the dark, bewildering, trap-infested jungle of misinformation and opaque riddles that is the world of investment, JL Collins is the fatherly wizard on the side of the path, offering a simple map, warm words of encouragement and the tools to forge your way through with confidence. And, of course, you have to pay that anytime you spent that Roth money. A purely random selection should have done better. You gave me a lot to think about. Yep, Jessica is definately who she is and I am very pleased by that. Malachi linked me this. RE can be a very powerful wealth building tool, Provided you. Im in the process of getting rid of my credit card debt (1 card down, 1 to go!) Myanmar Addendum 3: When the time comes and you want to know more about this investing stuff, here you go: Stock Series. If we keep our eyes open, our children will amaze us. I have a Brokerage Roth IRA account already set-up with them which has been invested in one of their target date funds. The concept of living just off the ~2% dividend is mostly a mental exercise. 4b)Put the rest in a taxable account in VTSAX. It's self-cleansing, so when companies fail or go out of business, new and more profitable companies go public and take their place. In March 2016 I learned about indexing and decided to put $50k into VTSAX. Im also thinking of making this conversation of ours into a Case Study blog post like these: https://jlcollinsnh.com/category/case-studies/. But it takes a bit of extra effort. What would the simple path look like if one were to want to include them in their holdings? You dont have to go to 100% if you like the future prospects of Australia. Not a bad base from which to move forward. Im glad you found your way here and hope it helps! I truly want to be financially free. Yep! Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills. I have a 1-year old nephew and Id love to start an investment account for him. Yes, think about all your VTSAX accounts broadly and together. But fortunately, my European readers do. Also, the Vanguard options with my 401k are as follows: VBMFX Total bond market, VFINX 500 Index , NAESX Small Cap. I think that's a great idea as a money lesson for your children. and thanks for the kind words. Im 24, single, finished college 1.5 years ago and have been working at my first real job making ~$30k/year. Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills. Again, many, many thanks. Health insurance expenses also concern me. Then watch it move to $2,000 and upwardsonce I had a balance of $10,000, each successive $1,000 milestone would pass more quicklythan the last. My personal allocation these days is 50% stock, 25% bonds and 25% REITS. You werent raised to be a slave. Any chance you caught this comment? Still, I really feel like I can do this with a little guidance, which you are providing. resides with her family in the Chicago area. Historically, we saved somewhere between 12-30% and in the past 18 months we have been saving 30%+. feels good, doesnt it?! Thats not the jlcollinsnh way! And on your new job and fine savings/investing start. At the end of the year if they have done this each month, another $1200 will be added. At 44 currently, when I think about VTSAX dividends and getting to financial freedom, should I be thinking broadly across both my VTSAX holdings (my Rollover IRA plus my after-tax personal account)? My coworker shared your blog with me last month and Im grateful he did. Bought my car cash. Finally, spreading your blog-message like wild fire among family/friends/co-workers; and still counting down the days until i can get my hands on some copies of your book. Think this is too extreme? Sometimes writing this feels like talking to myself so it is great to hear someone is reading it and finding value. The less obvious reason is the less you learn to live on the less youll need to be financially independent. Buy/sell cost through my bank 0.11% And this is assuming I have a 6 month emergency fund put away in a savings account. (Now there is even a book that agrees with me on this: Great read if, like me, you are into this kind of thing). The last is what is important here. Hi Jim, your site and insights have been so valuable to me, thank you. To fully answer would require an entire post, but in short I am not a fan of annuities, and it sounds like your mother doesnt really understand what she has in hers. Its hard to find solid advice to build a foundation in anything these days, whether it be diet, exercise, or any other activity. but 50% of what we have is still in VTSAX. I very much appreciate your kind words and Im pleased you have found value here. Good luck! Is there a reason that I should switch my ETF to the Investor share mutual fund? Debt, whether good or bad, represents an amount that you owe to someone else. Stocks -- Part VII: Can everyone really retire a millionaire? Ive done more research since I invested in VTSAX, and it seems like opening an IRA and focusing on maxing it out in the next year is a great idea, then focusing back on my taxable account. While I do pretty well with the big picture stuff, for me, its a trip to the dollar store where I easily lose control. Is it okay since its almost like I am with an index fund? I think Im retired for good this time (and loving it), but who knows. My guess is just engaging your kids in the conversation will go a long way. Isnt there a limit to how much we can contribute to a Roth IRA? Thanks for taking the time to let me know! I wish I could have read this and really understood it back when it was written in 2011. Unfortunately for us, I wasted decades and lots of money trying to beat the market picking individual stocks. Filmmaker Laura Fairrie and the author's daughter, Rory Green, on Lady Boss, which chronicles Jackie Collins's remarkable riseand . Dont let it happen. They were entirely in debt and didnt have a clue themselves. We could potentially save up to 2000 a month. Decades from now the feds could look at all the $$$ in Roths and eliminate the income tax. Give this a read before you meet with those advisors: https://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/, Before you hire one, give the entire stock series a read: https://jlcollinsnh.com/stock-series/. Welcome CV. I also regularly invest in tax sheltered accounts along with an employer matched pension plan. UN-earned income. Austria I discuss this in some depth here: https://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/. Case Study #8: Ron's mother - she's doin' all right! @n8dawg, Jim addressed your question in earlier comments in this thread. . Do me a favor? After reading your posts I am very keen on opening a Vanguard account. I dont believe Ive inflicted my civilization is a mistake/we should all be hunter/gatherers theory on you as yet. After college, I have two options: joining the wonderful world of work or going to law school. As I say to my own daughter, your futures so bright it hurt my eyes to look at it. And, those years correspond to when their peers have little money as well. Stocks -- Part 1: There's a major market crash coming!!!! If you are in the wealth building phase and you have determined you can ride out the gut wrenching drops that will surely come along the way without panic and without selling, just keep adding to VTSAX when you can and as much as you can. I had given your advice to my kids though 12 years ago who are now in their late 20s. Lo can't save you. A quick question if you have time is I am a Canadian and wondering if Vanguard would still be recommended for me and if they have VTSAX for us (sorry if this is a stupid question). In 2011, he wrote a series of letters to his daughter about money and investing; what had worked and what had kicked him in the ass. You might be mocked. Hope she picked a strong insurance company in the right state. As long as you stay tough and dont panic and sell during the drops sure to come over the next 40 years, this fund is really all you need until you retire. Being a geezer does have some advantages. Now you need to continue on and read the Stock Series here. Thats a long time and those are things youll have a long lead time on. Just found this and very happy I did. In that sense, you did a great job not introducing chaos into your daughters life and derailing her from her natural place of peace. Wonderful that you and your father have this interest in common. I value your experience and insight. Requirements: They work 40 hrs/wk or volunteer if work is unavailable. I very much appreciate you pointing this out. The chart is taken from my pal Darrows (Can I Retire Yet?) Your questions on IRAs and 401Ks are covered here: Youve read the whole blog?? 1. My employer offers a 401k with pai. Good stuff and I only disagree with him when he claims you can expect 12% annually from the stock market and safely withdraw 8% per year. Just a few years ago, I was part of the other 50% that didn't invest anything at all. I think your thinking, and your four steps, are spot on including 1 and 4A. He cant handle much. And so, I got Jessica. We could live on that alone if need be. . But the truth is the truth. and you are right, weve all been sold a bill of goods regarding money. Or not. Really terrific article. Congratulations on graduation with no debt. Assuming I like being a landlord, I could easily see myself Semi-Retiring from my regular job with 4-10 rentals before fully retiring. Per your recommendations, Im working on setting up a plan for getting back my personal loan, and pulling out of edward jones. We did this for our daughter and it worked out fine. Some states provide some limited protection. Right now I am trying to choose between the following: The fund covers more than 90% of the global investable market capitalisation. Thanks, Jim, for such a prompt response. 2nd fully fund the Roth. Thanks for stopping in and leaving some comments! I will use it as a guide for both of my teenage children on this important topic! Columbia Is my age and low expenses why you suggest a VTSMX account for my 15k versus a less riskier fund? Many, many thanks for your advice and your quick reply. Wolfgang mentions that he has known me for years. Youre inspiring more folks like me than you can imagine. http://money.usnews.com/money/blogs/on-retirement/2010/12/16/3-risks-of-purchasing-a-fixed-annuity I pay the taxes $3k/year out of pocket. THANK YOU!! And you have exactly the same ultra-low expense ratio of .06%. So Im hesitating if you can help with some advice. The chart in your addendum showing the % set aside and the number of years it would take to retireis that based off a certain income? Mali In it they share this cool calculator Historic Stock Market Returns and, figuring [Continue Reading], Yikes. If they do this, $100 will be placed in their account. I graduated school and landed my first job a year ago. Niger I was just wondering because Ive heard that as we grow older, or nearer retirement we should move out of stocks into more conservative allocations and it makes me wonder if you have or will do so anytime soon. No house (renting) Being single and with your savings/investment discipline this is your best option. finance freelance writer. What are you thoughts, or your thoughts on how to choose? You can always withdraw your Roth contributions penalty and tax free. 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