Optimal order of investing- where to start and what to do next?

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Mat Sorensen - Wealth Lawyer & Entrepreneur

Күн бұрын

Пікірлер: 68

@MatSorensen 3 ай бұрын

Ask Mat: matsorensen.com/ask-mat/

@otrebla8944 3 ай бұрын

Why tap into your retirement for emergency purposes? That money is for your retirement. You will miss out on growth.

@workinprogress02 3 ай бұрын

Thank you for taking the time to share your financial insights. I appreciate your effort in educating others. However, I’d like to offer a few points of caution: 1. It’s generally not advisable to keep emergency funds in a Roth account. 2. The Mega Backdoor Roth should typically come after maxing out your 401(k), as you even indicated with the $23,000 contribution in your example. 3. It’s wise to prioritize retirement savings, potentially including maxing out your 401(k), before contributing to a 529 plan. 4. Contributions to a child’s 401(k) must come from their earned income, though you can certainly gift them the amount as an incentive. 5. Renting out a former primary residence isn’t always a great strategy, especially when transitioning from a period of low interest rates to today’s higher rates. Again, I appreciate your contributions to the financial community and hope these points are helpful

@CarmelaBuisson 3 ай бұрын

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

@CarmelaBuisson 3 ай бұрын

@JasonStathamOffical That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well

@CarmelaBuisson 3 ай бұрын

@JasonStathamOffical I will give this a look, thanks a bunch for sharing.

@Step6srl 2 ай бұрын

It’s like the bots aren’t even trying anymore 😂

@jorgel1887 Ай бұрын

Retire somewhere else. Life outside the US is way cheaper

@rdarr40 3 ай бұрын

It is my understanding that to open an HSA account you must have a high-deductible health plan.

@searchingfortruth619 2 ай бұрын

Correct

@raghavendrasunku9233 3 ай бұрын

There is a very big problem using Roth IRA as emergency fund. When you invest that money, it comes with risk. Like COVID steep fall in markets, in those situation you have pull out your investments with huge losses. I would keep 3 months expenses into high yield savings account and sleep peacefully and never interfere with my retirement account, unless it is too bad situation.

@Bakanpoloco 3 ай бұрын

Love this! I put my "emergency fund" in SGOV rather than a MMS. Just as liquid, almost as secure as a savings, and currently 5%

@searchingfortruth619 2 ай бұрын

I keep it simple with HY savings

@Bakanpoloco 2 ай бұрын

@@searchingfortruth619 your return will be less than 1% but to each their own

@Yugiboii 3 ай бұрын

I personally would not take my contribution out of my roth ira to use as emergency... the whole point of investing is to keep the dollars in the investments so it can grow and earn you more interest... taking it out will hurt you in compounding growth since now you have less dollars working for you. I like to keep it simple and leave savings separate from investments but thats just me

@daveanderson7716 2 ай бұрын

I understand what he's saying. For you, this is a personal preference

@Yugiboii 2 ай бұрын

@@daveanderson7716 I literally said “I personally…” and “but that’s just me” in my comment 😂😂😂 your reply was irrelevant 🤣🤣

@eddiemalvin 2 ай бұрын

I agree. In addition, you may be forced to sell an investment when the market is down.

@KentBrono Ай бұрын

I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings

@Erikkurilla01 Ай бұрын

Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.

@MablePauls Ай бұрын

Both have their perks but you can also save for retirement outside of a retirement plan, such as an individual investment account or employing the services of a retirement planner/financial Advisor.

@PajinakStanovska Ай бұрын

How can one find a verifiable financial planner? I would not mind looking up the professional that helped you

@MablePauls Ай бұрын

My CFA Julianne Iwersen Niemann, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

@PajinakStanovska Ай бұрын

Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds.

@PS5820-wv7kk 3 ай бұрын

Thanks for this video, great content!

@MatSorensen 3 ай бұрын

Thank You for watching.

@miguelrivera7712 3 ай бұрын

Man I feel you. I am scaling Amazon right now and every time I have increase my inventory purchases I have a side of my mind that is concerned about the risk I am getting into. I am from Puerto Rico and here things are hard and nobody has it easy. Cannot not imagine going through your roadblocks. Thank you for sharing! Success on your new endeavors!

@maccamracecar 2 ай бұрын

Good advice for normal people. If retiring early, I would do it differently focusing more on the traditional 401(k) and HSA before the ROTH IRA. Even with the penalty, the traditional 401(k) grows faster so you can retire earlier.

@MyWillbot 3 ай бұрын

I like the taxable brokerage for the fact that it should be 0% tax on long term cap gains if we only take out a specific amount of gains. Our budget needs could keep us in the 0% tax bracket as long as that rule exists.

@judahbenj5246 2 ай бұрын

Most of Dave Ramsey's clientelle are people who are in debt and perhaps have no financial knowledge like you do now sir, thats why it is very effective to them the snowball method. It is hard to calculate the way you do it when you are drowning in debt, in short, the issue why they are in that position is "mindset" that needs to be tackled first before proceeding to a much advance money management and investing like what you are now explaining. thanks and God bless!

@almorrow9345 3 ай бұрын

IMO, I would flip the Coverdell and 529; though most states have pre-established 'porfolio's' based upon risk tolerance; an investor is not a. locked into only their state for a 529, and b. some states offer broad based index funds so that an investor can determine and create their own portfolio. For example, my children's 529 is with the State of Nevada which offer's 15 Vanguard (near proxy) Index funds.

@JeffAlpha1 3 ай бұрын

Great Video! My company offers a 401k but no match. Is there any advantage of contributing to a 401k without a match or would that money be better suited in another investment?

@zachholloway33 3 ай бұрын

I also wonder about this. I can put money in my 401k with no match, and lower my taxable income. Or I can throw it in a Roth IRA and get taxed and let earnings grow tax free, which is better?

@johnkirk6203 2 ай бұрын

@@zachholloway33 Answering for both you and OP as well in this reply. You can and should do both if you have the means. I would prioritize the Roth IRA first , but after you max that you can contribute to a Roth 401k even without a match and receive the same tax benefits. I would also place the HSA as a higher priority than both (slight disagreement from the video) because it is triple tax advantaged and you will likely need a lot of money for medical expenses in old age anyway. tldr; HSA--->Roth IRA--->Roth 401k

@mattchew4161 3 ай бұрын

Im debating whether i want to pay off my debt or contribute to my 401k. I have about 10k in CC debt i want to get rid of first

@MissBellaMe 2 ай бұрын

pay off the debt. you can always get a low interest credit card and live off that (RESPONSIBLY!!!) and invest in you 401(k).

@stevedaddio781 3 ай бұрын

@matsorenson If you were upgrading your house at a 4% mortgage, wouldn't the cash flow be the same as your higher interest with a 6% loan on a higher mortgage? Wouldn't they wash?

@elizabethblazina7022 3 ай бұрын

Matt what would you advise for those that are trying to attain financial independence before 59.5 and will need to use their investments to live off of. Roths and traditional both have tax penalties no?

@kevinrojas-nunez625 3 ай бұрын

1. Find your retirement number (how much do I need to survive having basically no income) 2. What does this income look like on a yearly basis. 3. Take a look at your current tax rate, (nobody know what they will be in the future, but today's taxes are a relatively good indicator) 4. Check what the amounts will be, (use an online investment calculator) subtract taxes once for today (that's roth) and once for the final amount (that 401k) then see which is bigger. Generally speaking roths will be better but check your numbers and do your own math. Personally maxing out the Roth is my strategy and the 401k match just adds a booster to income, keeping how much I need from 401k down to minimize taxes is my strategy for my current income, and my future income but figure yours out.

@davewhite756 3 ай бұрын

Fund a taxable account to live on until 59.5 if you don't male it you can pull out Roth contributions. You can also fill out a paper saying you're retired and avoid the penalties, but if you earn any income after then you have to pay those penalties

@tescanl 2 ай бұрын

What about student loans at 6.55%? When should I pay those off?

@TimZornes15 2 ай бұрын

Is there a reason to do the Roth IRA before the HSA? The HSA with triple tax benefits seems like a better tool. Especially if already contributing to a 401k, so retirement is already covered. Why not max out medical?

@RG-1045 3 ай бұрын

Example:so if I make my contribution to Roth 401(k), my company will match will go into the Roth 401(k)??

@otrebla8944 3 ай бұрын

Not necessarily. It depends on what your company offers. My company matches in a traditional even though I have their roth 401k.

@will1122 3 ай бұрын

The Secure Act 2.0 that passed the end of 2023 allows the company to contribute to your Roth 401k but at the time I haven’t heard of any 401k providers actually offering that option yet. They’re probably still working out the tax implications for themselves and the employers.

@BenFranklin1776 3 ай бұрын

@@will1122Also, the act only "allows" that option. There is no requirement a company must offer it. Most smaller companies likely arent even attempting to parse all the implications and edge cases. Traditional match works just fine for them. My employer is larger and I dont think they are really considering adding this.

@djee02 3 ай бұрын

I like your math based approach vs the more behavioral Dave Ramsey method. Maybe it depends on personality, but keeping a big emergency fund, paying low interest mortgage early or stopping 401k match to focus on debt are huge mistakes imo. Opportunity cost is real and peace of mind is more expensive than people think.

@diankahot5894 29 күн бұрын

Is 1.5% match worse it ?

@BenFranklin1776 3 ай бұрын

The 529 contribution section was a bit misleading. There is technically no $18k limit on annual contributions. That is simply the gift tax exclusion limit. However, if these arent regular contributions, you can sort-of forward-date pieces up to five years ahead (so up to $90k = $18k * 5). Also, you failed to mention that most states with income tax typically offer a deduction for a small piece ($2500 seems to be a common benchmark). Also, you spent some much time explaining the backdoor Roth but made more mention of the income limit to contribute to a Coverdell. Also, in the same way you described the changes to Roth matching in 2023 and custodial roth IRA, it is worth also mentioning the potential for unused 529 to become a Roth IRA and what limitations are on that.

@kenfrank2730 3 ай бұрын

I'm 69 and in good health. I retired 8 months ago, and my pension pays me $7400 per month after taxes are taken out. I have no debt and can save $4k a month after expenses. How should I invest the money?

@logicalmisery3737 2 ай бұрын

Roth IRA then standard taxable brokerage account. But also consider not focusing so much on saving, retirement is what you saved for.

@investedwithwb7594 3 ай бұрын

Poor advice suggesting to not fully fund emergency savings in a HY account or MM account. Roth IRA contributions can be accessed anytime but it’s not advised. You want your emergency savings to be easily accessible without any hassle.

@samuelramsey5995 Ай бұрын

As he stated, you would have one month pay easily assessable. The rest would be in a Roth. It’s up too you to decide. You would have to be mindful of the time and effort it may take get money out of your roth

@masonstephens7326 3 ай бұрын

Would you happen to know how much you’d need to max out each of these accounts in a year? To set a benchmark😏

@MatSorensen 3 ай бұрын

You can add up to $7,000 a year into your Roth IRA. $8,000 if you are 50 and over for 2024

@NicoleAniston-o 2 ай бұрын

I’m 34, have $200,000 in savings, and want to invest for safe growth over the next 5 years to buy a home. What should I invest in?

@AmberHeardo 2 ай бұрын

In today’s volatile market, diversify your assets with safe investments like HYSA, REITs, index funds, growth ETFs, and bonds. However, Before making any investment decisions, consider consulting with a financial advisor to tailor a plan to your specific needs and risk tolerance.

@Rmystery2895 22 күн бұрын

The psychological strategy is a big deal. Dont discount it !

@Rmystery2895 22 күн бұрын

Omg.. I’m watching your video. You said I could pull out my Roth IRA money penalty free. Then you gave an example of 5 years * $7000.. but said I could pull out 30,000 tax free ? I’m no rocket scientist but I’m thinking that would be $35,000. I cringe at your customer base.. sorry. This is simple math

@KeanuReevesf 2 ай бұрын

I’m 34, have $200,000 in savings, and want to invest for safe growth over the next 5 years to buy a home. What should I invest in?

@AmberHeardo 2 ай бұрын

@NicoleAniston-o 2 ай бұрын

Financial advisors can be expensive, but they’re crucial for success in the financial market, especially if you’re on a deadline. I was laid off during the 2022 tech cuts, but I used my savings to invest in the stock market with the help of a financial advisor. After doing some research, I managed to grow my portfolio to over a million dollars in just two years, thanks to my high risk tolerance.

@AdamLevine759 2 ай бұрын

I’m glad I found this conversation. My risk tolerance is high, and I want to take advantage of the upcoming market run. Can you direct me to your advisor?

@NicoleAniston-o 2 ай бұрын

Melissa Elise Robinson is the licensed advisor I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.

@AdamLevine759 2 ай бұрын

Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.