FINANCIAL PLANNER EXPLAINS: Optimal Order of Investing for Retirement

Рет қаралды 46,386

Күн бұрын

Пікірлер: 74

@roberttaylor662 Жыл бұрын

Your videos are so uplifting. I am 57 living down in Miami. Found your channel while searching about retirement - whenever that is. is the sweetest. Your videos put a smile on my face. Choosing a Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I had $3M million saved, and I won't be taxed on my withdrawals

@Bobhenry-c7z Жыл бұрын

Currently, my primary worry is how to increase revenue during periods of quantitative easing. I cannot afford to witness my savings dwindle away.

@patheticprepper4496 5 ай бұрын

I an 57... u are on the wrong channel also

@EatLeadPal Жыл бұрын

I did my investments a little different. Emergency fund with a years worth of money; Max out ROTH 401k; and putting extra money into a ROTH IRA and a brokerage account. The only debt I have is my house with 3% rate. Excellent video that I will share with my adult children. Thank you.

@markkowatch7998 Жыл бұрын

GREAT video. This should be required viewing for all adults who think about their future.

@stevemlejnek7073 Жыл бұрын

Only the gains in the Roth account are illiquid until 59.5 without penalty.

@larryrobx 8 ай бұрын

A small point, but an important one.

@eddieloujones2673 Жыл бұрын

There are more variables that need to be considered. A paid off house in retirement means less income needs to be drawn. This is important of you are on Obamacare or want to avoid Irmaa or other income related penalties. Roth money is also valuable to help keep reportable income low. So these are ok rules of thumb I think individual situations need to be assessed before you accept any standard rules as gospel. Unfortunately a lot is based on reportable income, so the lower you can keep your reportable income the better you will likely be. I know Eric is aware if this as I learn a ton from this channel. It's one of my favorites and I appreciate these guys a ton.

@larryrobx 8 ай бұрын

For sure, Eric knows all this and more, Eddie. He's just trying to keep it as simple as possible in this video. His tiered investment pyramid presented here is the best life cycle model I've ever seen. But, you are absolutely correct, keeping reportable income down in retirement deserves to be an add'l rule-of-thumb factored into this excellent model somehow. The tax code grants so many different preferences to lower ordinary income in retirement. You effectively pay "owner's equivalent rent" annually with pre-tax $'s when you own your house. And, as you observe, Obamacare (rate subsidies) and Medicare (IRMAA penalties) cost less if you can keep reported income down. Ditto for SSA benefit taxability. And, on and on ...

@brainchilddesigner 2 ай бұрын

Your explanation between a traditional IRA and a Roth IRA is the best I found. New paragraph you should make a clip of just that part for people

@cjkrolak Жыл бұрын

I think home ownership should be added to the triangle, could be squeezed in next to ROTH since it behaves similarly to a ROTH from a tax perspective.

@nobeliefisok9174 Жыл бұрын

HSA at my company also has a $250 seed money contribution from my company plus they match the first $500 contributed. It also is fully investable into anything at Fidelity. There are no pre-selected funds with high fees. Wow! HSA is such a great place to invest first (along with 401k match)

@brainp471 9 ай бұрын

Maxing out a traditional 401k can help reduce taxes on all other contributions since it lowers your AGI

@themillionairescode Жыл бұрын

Thank you for sharing this valuable content!

@era-FP Жыл бұрын

Great content. Thank you. Good that I have discovered your channel

@jfay137 Жыл бұрын

Excellent video. Thanks for breaking this down!

@syovar1 8 ай бұрын

Question on 401ks. If you have ROTH and Traditional matching on the same job, do you take both? If you have 2 jobs and both have matching options, do you take them all?

@jaycox1836 10 ай бұрын

Do you have recommendations on where to put your emergency fund such that it has sufficient liquidity, principal protection, perhaps inflation resistance, but is not a "leaky bucket" that has interest taxed at my full marginal rate? Thinking about how my high yield savings accounts are outpacing inflation... until I pay the taxes on the interest... thank you for the excellent videos BTW!

@markbernhardt6281 Жыл бұрын

I would love to see a video for people retiring around 55, does it make sense to use the 72t form and what do do with the money you pull out? Brokerage account? Roth?

@TheBeagle1956 Жыл бұрын

There’s a great feeling of security paying off a mortgage. I’ve never regretted paying ours off in 2010. I don’t care if I could have made more in the stock market. There’s nothing like owning your own home.

@joekuhnlovesretirement Жыл бұрын

For Roth Liquidity…. Can’t you remove the principal at anytime without penalty? Interest or growth has restrictions.

@hm51008 Жыл бұрын

Yep, you are correct. Otherwise, I found this to be another excellent video from this YT channel.

@torchy187 Жыл бұрын

Joe makes an appearance 😊

@pensacola321 Жыл бұрын

David is smart, Joe. Compared to your buddy Josh with the politics, Conspiracies and bad advice...

@joekuhnlovesretirement Жыл бұрын

@@pensacola321 I take the position I can learn from everyone. I wise enough to use a filter. I love David for factual information on retirement. This is the first error he made in the 50 videos I have watched.

@joekuhnlovesretirement Жыл бұрын

@@torchy187 I learn from the best of them; David is top notch.

@lioncrud9096 Жыл бұрын

is student loan considered high interest debt? i have an interest rate of about 7% on mine.

@kevinwoodrobotics 9 ай бұрын

If you invest in money market at 5% and you’re in a high income bracket, that’s almost the same as your 3.5% interest rate. Also risk is another thing difficult to put into the equation

@jefflloyd394 Жыл бұрын

Always good, thanks Eric

@biankabrodeur01 Жыл бұрын

As an investing enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $745K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?

@Kep19901 Жыл бұрын

On that last chart. If I invest in Small Cap stocks, there's a 90% chance I receive a 12% return? 12:40 And does expected volatility = standard deviation? Sorry, im a little confused.

@reneesoli5345 Жыл бұрын

My mortgage was 4% I paid it off to have peace of mind incase the stock market crashed. It hasn't (crashed) but we have lost a lot of $$$. With all the ups and downs in the stock market we earn around 4%. The days of earning double digits have beengone since the '90's.

@SafeguardWealthManagement Жыл бұрын

It sounds like if you're only earning 4% in the market, you're underperforming quite a bit. Over the past decade, a 60/40 has averaged 8.5% per year, the broad stock market has averaged about 12.5%. Right now you can earn over 4% on a money market. Just food for thought. By the way, I don't have an issue with valuing peace of mind over upside/money.

@greenlantern1986 10 ай бұрын

4%? That sucks, should look into reallocating into something better. S&P has never been higher!

@serialmigrant Жыл бұрын

Can we simulations for other low interest debts. I have a canadian residential mortgage that acts like usa commercial mortgages. Im now at 2% locked in, but in 14 mo it will jump to whatever the rates will be. They are currently 6%. Intuitively, I think I should prepare to crush this mortgage in 14 mo...

@cjkrolak Жыл бұрын

where would you put whole life / VUL on this triangle? In the green next to maxing out 401K?

@mitchbandalan9450 Жыл бұрын

Great video. I just completed level 2 and planning what approach to take for level 3. I am in the 22% tax rate (as per last years taxes) so I am leaning to contributing to a Roth 401k. I noticed your invest up to the match in the traditional 401K. Lets say in start of 2024, I am able to contribute up to 30K into a 401k. Does it make sense to just invest up to the match and the rest into the Roth 401K given my current tax rate? I max my HSA and my only debt is my mortgage at 3.25%.

@joerozario4406 Жыл бұрын

I am in somewhat similar situation. I am investing full 30K (for 50+) in Roth 401K and my company match & profit sharing goes only to traditional 401K (I have no control over this, the company's portion must go to traditional 401K).

@mitchbandalan9450 Жыл бұрын

@@joerozario4406 that’s what I was thinking. Thanks for the personal experience. Very helpful.

@stephnejele2483 5 ай бұрын

Unfortunately everyone skips the reality that lower tax bracket ppl can increase tax credits like EITC, Day Care, and Saver's Credit by contributing to Trad 401k/IRA.

@rapfreak7797 Жыл бұрын

Should it be 3-6 months of bills instead of 3-6 months of earnings? If you have an emergency are you trying to pay your bills and keep up your savings goals?

@markbernhardt6281 Жыл бұрын

I have 4 years of expenses, does that mean I can retire early? Haha

@rapfreak7797 Жыл бұрын

@@markbernhardt6281 that’s a lot of money sitting on the sidelines if you’re not in, or approaching, retirement. Many would also argue that’s too much to hold in cash in retirement.

@jdgolf499 Жыл бұрын

@@rapfreak7797 4 years in cash and very conservative bonds is not too much if in retirement. You don't want to have to withdraw from the market in a down market. 4 years ALMOST guarentees you won't have to.

@SafeguardWealthManagement Жыл бұрын

Fair question and adjustment. I think if you mapped 3-6 months of savings for the average person vs. 3-6 months income, they would have 90% overlap, however.

@rapfreak7797 Жыл бұрын

@@SafeguardWealthManagement LOL, unfortunately that is very fair. I save around 35% and could throttle a decent amount more of spending if in dire financial straits.

@baileyembry6057 Жыл бұрын

Awesome video

@MichaelCarrPilot 6 ай бұрын

First I’ve seen someone recommend 3-6 months of INCOME and not needed expenses per month times however many months you want.

@ryanfitzsimons7388 Жыл бұрын

at 10:30 you say Roth IRA is bad advice for someone in the 35% tax bracket but at 35% aren't they making too much earned income to be able to deduct their IRA contributions anyways? Im in the 24% bracket so I pay tax on my IRA contributions (since I can't deduct based off my AGI) and then do a Roth IRA conversion. I hope I'm doing that correctly. I do understand how this could be bad advice in a 401K

@joerozario4406 Жыл бұрын

For someone in the 35% tax bracket, if the goal is to leave some portion of the assets to heirs, doesn't it still make sense to contribute to Roth 401K if there is already sizable portion in traditional 401K?

@SafeguardWealthManagement Жыл бұрын

Potentially. If they are going to be in the 35% bracket for the rest of their life, then yes. But if they will have a point in their life when they are in lower tax brackets, they will have opportunities to convert that 401k to Roth later at lower rates

@Davefederer Жыл бұрын

You don’t talk LIRP, any reasons/videos about why?

@SafeguardWealthManagement Жыл бұрын

I personally haven't seen a LIRP strategy I'd be comfortable recommending.

@Ann-tf2cu Жыл бұрын

Left out risk.,,, job loss with a paid off house is a lot less stressful

@SafeguardWealthManagement Жыл бұрын

Not necessarily. A more realistic comparison would be, job loss with paid off house vs. job loss with larger investment/saving portfolio.. If you have the ability to pay down your house faster than required, there is an opportunity cost. You paid off a low-interest rate loan vs. saving into a higher interest rate account.

@boydleehalterman Жыл бұрын

Eric, another excellent video

@theduke7616 5 ай бұрын

I disagree with the order. First should be investing up to the match. If you get 100% match, you ALWAYS TAKE IT. It's 100% return. It's free money. Giving up 100% match to avoid 20% credit card interest doesn't make sense. 100% is greater than 20%. I would also adjust the order so that you pay off all high interest debt before saving for an emergency fund. Think about it. The point of the emergency fund is to avoid having credit card debt. Why sit on cash (aka "emergency fund") if you already have credit card debt? It makes no sense. Pay off the credit card first and then work towards an emergency fund. In the meantime, you may not even have an emergency. If you do, maybe you can find a way to swing it or use low interest debt. If worst comes to worst, you can pay for your emergency with a credit card at THAT time. You'll at least save all of the interest incurred between now and then. There's no benefit to prioritize sitting on cash when you could use it to pay off high interest debt.

@MaryOlson7 Жыл бұрын

I watch several KZbin videos on how to trade in the stock market but haven't made any head start because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands

@joesawyer931 Жыл бұрын

Such wise advice. Shared this with our son. Thanks Eric for making it so easy to understand.

@pensacola321 Жыл бұрын

A mortgage payoff always has the age old question of piece of mind or possible growth . Another "smart" presentation..

@mikehenkes Жыл бұрын

All Debt is Bad unless you have at least 2-3 year Emergency Fund. That -3% mortgage is worthless if you get laid off or injured and you cannot pay the payment. While I do agreed that most people should not prepay "low" interest debt, a 3-6 month emergency fund ran out very quickly in 2008-2011!

@randolphh8005 Жыл бұрын

Somewhat agree, but we were always a 2 paycheck family, so could weather a job loss. “ALWAYS” is almost always incorrect, lol

@SafeguardWealthManagement Жыл бұрын

Yes, "All" and "Always" are rarely going to lead toward the best advice. The 'what if this terrible thing happens' is always a reason brought up in the debt argument. And I 100% agree risk should be a major focus here, but if you have the opportunity to pay down debt more quickly, it means you have the ability to save. Instead of paying down a 2% loan, you are saving into a savings/investment portfolio at 3%+. At current levels, where you can earn double your loan rate in a safe-as-can-be account, I have difficulty understanding the 'what if this terrible thing happens' approach.

@DarinLickfeldt Жыл бұрын

I'm surprised you didn't mention the advantages of Cash Value building, permanent life insurance. Some of us earn too much to do a Roth or get tax deduction on traditional IRAs, and delaying tax bills until later ignores the likelihood that income taxes are likely to increase significantly in future years as our govt needs to pay off its enormous debts. Permanent life insurance offers guaranteed returns albeit at lower rates plus death benefits for beneficiaries plus long term care riders if needed and tax free distribution later.

@paulbrinkman952 Жыл бұрын

Spot on! Investing in yourself, investing in your career, is so underrated. Properly leveraged, it lubricates all other savings and investment strategies.