Can we kick-off and keep afloat a thread about personal finance for non-dummies? I would love to be able to discuss intermediate-beginner issues like basic tax optimization, best services for moderate-net-worth individuals etc.
For starters, who do you bank with and why? I have been with TD for a while, but their service and products are very subpar. Recently they even stopped giving out dog cookies, so enough is enough.
Delete
Pretty sure everyone on this site does all of this already :)
Here is the issue. I, as well as a fair number of others here, are in an "intermediate" net worth bucket (say from 2 to 7 million in net worth). On one hand, very basic financial advice (things like the above) does not cut it anymore, as our issues are more complex. On the other hand, we don't yet fall into a category were we can get real access to personalized financial services. Also, you can't really trust anyone because everyone kinda wants to rip you off (e.g. my ML financial advisor keeps pushing long-dated structured notes - really, you retarded f*ck?). So we end up figuring out a lot of things on our own, at our own expense.
Do you think you can hit 10M+?
Delete
Sounds like you identified a market gap... Why not start a business around this target market?
For a person out of college - how would you recommend balancing 401K contributions and paying off student loans? My thought would be that I should contribute up the matching limit and then put the rest of the money that I could contribute to 401K into loan principal pay off instead. For reference, I have around $30K in student loans.
Depends on the interest rates of the loans. If under 5% then the rational move is to pay the monthly base, take advantage of the student loan interest deduction, and contribute the extra money to your 401(k) to take advantage of compounding gains and a long-term return >5%.
On the other hand, I totally understand the mental weight of having debt, and the "irrational" move of paying it off early can simply be worth it due to mental peace of mind.
It's generally advised to at least put as much money into your 401k as you can while getting additional employer contributions. For example, if your employer matches 100% up to 3% then 50% up to 6%, you generally want to contribute 6%, because you're getting a tremendous rate of return right off the bat.
Could be wrong, but I'm pretty sure there's no limit on contributions to a 529 as long as it doesn't exceed the maximum account balances that states allow to be in the plan to begin with. The exception is contributions from others that go over $15k in a single year which trigger the gift tax, but you can also put in $75k once and not contribute for 5 years.
Correct, the limits are set by the respective states. If you are married each spouse could throw in the $75,000 in one shot. The number is also per recipient, so if you had three kids and wanted to contribute the max, each spouse could give $15,000 to each 529 plan. Then you would have three kids with $30,000 in their 529 plans and you have effectively transferred $90,000 out of your estate/assets.
Corollary to #3:
If you make over the limits, make non-deductible contributions to a traditional IRA and backdoor to a Roth every year...given that there's a bunch of finance-oriented types on here, this might be relevant.
$.02, just for clarification a 529 is 15k limit/year to avoid gift tax but you can fund up to five years first in advance (75K up front and don't do anything for 5 years). Also this is a per child basis. Note, each parent can do this so everything is doubled if each parent contributes (30k and 150k).
Have you set up a donor advised fund yet? Did you fund it with the lowest basis positions you have? This is usually way more tax efficient than writing a check to charity and much easier than trying to gift stock directly.
What about wills/rev trusts/ life insurance? Do you have disability insurance?
***I am afraid to say anything given you said that everything was really obvious that another poster said. Most of which are thing that people don’t do already.
I do have a DAF, though we just recently were discussing with a friend that having a foundation is more effective once you have over 500k in total donations. Plus, i have DAF that are joint with my ex (another complication) and we’ve yet to discuss how we gonna handle advising.
Everything said above is true, I am hoping to get more advanced chatter here, but it never hurts to look at the basics either
What exactly are you looking for? Most of this stuff isn’t really that complicated.
Stuff like:
—max out retirement accounts —get disability and life insurance in case shit hits the fan — make your charitable donations most efficient by giving away low basis stock instead of cash — save as much as you can
That’s all been covered above.
Are you looking for advice on when to set up a GRAT to minimize estate taxes? Personally, I wouldn’t do that unless your net worth was much higher (or was likely to become that way because you were selling a company you owned).
You need to help us help you, because it’s not clear exactly what you’re hoping to get out of this.
I bank with US Bank. Switched from my home town's bank to US Bank in college because I wanted a national bank which will have branches wherever I go. So far, they've been great. I've also used my work's credit union for the low rates.
I have some insurance policies through NW Mutual as well.
Bank with Chase for checking, I'm in the NY metro so it's convenient. I use an online savings account since my business requires a large bit of liquidity, the interest while small 1.6% is still substantial due to the deposit size.
I use an insurance broker for personal insurance concerns, buy whatever is cheapest for the coverage I need. For business, I called around to 8 or 10 agents in my area and found one that offers products I'm happy with.
I used to use Scottrade for purchasing securities online, recently switched to TDAmeritrade. I mainly invest and forget about it.
I don't invest as part of a group, nor do I look to. Partners are trouble. I try to keep things simple and unassuming in my life.
What online bank do you use? Assume this is a high yield savings account- is there a catch at all?
My online savings account is with Discover. No issues over my 6 months or so having it opened. Barclays, Capitalone and Goldman also have some, the rates are all within .05 generally. Honestly just pick and choose. I had received a targeted promotion for Discover, free money; I’ll take it.
PS. I usually keep 150-200k in cash in my savings account so that's an interesting question
No issues transferring back and fourth, always try to initiate from the account that is “pushing” the funds to the other. It reduces the time frame by a business day. You can transfer for free which can take 3-4business days or wire from your online savings to your conventional bank account for a nominal fee, funds arrive in half the time.
Curious to hear any of your thoughts on gold. Do any of you keep a substantial amount of money in it or any other commodity as a safe store of wealth? Why or why not?
Nope. I like investments that pay me whether it be monthly or yearly. Multi-family real estate is a triple play if you know what you’re doing: you get debt pay down, cash flow, and appreciation.
And depreciation write-off
What percentage of net worth should be in cash?
My $1.0MM net worth is tied up in illiquid assets (house, 401-K).
I have two kids (3,5) and put $350/mo into each of their 529s. Combined I have about $45,000 in the kids 529.
For the last 5 years I have maxed my 401-K; however, this year I had to do a ton of work to my house so I didn't contribute (my Banks puts in 10% no matter what, I also receive stock awards as part of a Sr Mgmt Retention Program - can't touch until I am no longer employed by the Bank). Between the stock awards and 401-K, I have about $650,000 in there which I didn't think is too bad for a guy in his mid 30s. Just sucks that I can't touch any of it (outside of a 401-K loan which is max $50,000).
It is hard to save up any discretionary funds when you have a stay-at-home wife, 2 kids that you are saving money for college, nice house that you have to keep up, nice cars, etc. I live in California so it seems like nothing is cheap.
My question for guys who are in their 30s or early 40s - how much do you have in the 401-Ks? What is your target (for both age at retirement and how much do you want to retire with in the 401-k)?
Maxing out your 401k is typically the ideal, California especially is an expensive place to raise children (SF, LA, Silicon Valley etc.) but the way to look at retirement/do I have enough is to take a look at your current expenses, living, vacation etc, and determine how much your lifestyle costs you. Then you say Ok my lifestyle currently costs 80k/year (whatever the number is) but after retirement some costs disappear (children's tuition, swim lessons, mortgage etc.) and some come out (second home in europe, travel plans). Naturally there's no super easy way to analyze all this, most is going to be hypothetical as well, but then you model your investments and contributions based on how much they will make from now till you retire, (S&P 500 returns 7% assumption etc depending on your portfolio) and you can see will I have enough to last me from 60-91 when I die.
PM me if you have any questions, that last part is essentially the base of what a financial advisor does.
I am reading through this thread and I am unaware of a lot of this. Can anyone give some literature that I can read on personal finance that has helped you guys? I am 24, a first-generation immigrant who attended college here. Aspiring to get into IB, but I will need to get my MBA before that, so my income isn't as high as some of you here. But I put in 20% in my 401k with the company matching 5%, max out Roth IRA. Have a brokerage acc with some money invested in stocks. But that's about it. Can someone here give some tips for someone like me, who's just starting out, how else can I start saving so that I am well off in the future?
I'm not an expert and being eligible for Roth and planning to get an MBA are different than my scenario, but I think your best bet for prioritized savings might be: - 401k to earn company match (no more) - 529 plan for mba - If there's anything left (doubtful), then Roth IRA
If you know you are going to get your MBA, instead of a Roth IRA I would just max the pre-tax 401(k) and then in your MBA years when you have no income roll your pre-tax 401(k) to a post-tax at a very small tax %....
If you're starting from scratch, do a basic search for how to get started in personal finance.
For specific recommendations, try a personal finance guru such as Dave Ramsey or Susie Orman.
Thanks. I've just gotten a book written by them. Hope that can help me set off on the right track.
Would also recommend these
In addition to maxing 401k, and IRA, consider contributing to a HSA if you're eligible. You need to have a high deductible health care plan, but this allows you triple tax exempt savings for future health-related purposes.
When you say max our 401(k), do you mean the IRS allowed maximum 18.5k? Or do you mean what the employer match? If 18.5k, do you max that with your contribution alone or the combination of your contribution plus the employer contribution?
While I think OPs situation is a bit unique, there are a couple of basic things that finance professionals who are making 200K+ and have a 1-10MM net worth should be doing that are not necessarily intuitive.
If you are comped in stock in any material way, sell it as soon as it vests and maybe think about hedging it. Your company going to hell and you losing your job are generally going to be pretty correlated. Ask anyone who worked at Bear or Lehman about this one. Diversify yourself.
Don't try to beat the market trading your own account. You don't have the time or the energy, set an asset allocation strategy using low cost ETFs and forget it. Let the computer do this one for you.
Get a FA/accountant, sadly you are going to have a hard time getting a good one @ this level of wealth, but you can sell them on the future. You are going to be making good $$ for a long time and the AUM that you have with them will grow. You don't need these people for investments/basic tax stuff but your life will get more complicated (kids/marriage, buying a house, carry in your fund) and you will need advice at some point. Having a relationship early will help.
For checking account I highly recommend Schwab. ATM fees reimbursed, even internationally. No additional fees for withdrawing money internationally.
Also, great customer service that is based in the USA. They are the best bank that I have dealt with and I've had accounts with Chase, PNC, small local bank, TD, BMO Harris, Capital One, etc.
For savings, I do use Ally for the higher interest and have not had a problem there.
Dad was in the military so I got in with navy federal credit union. Been with them for 10 years and never any issues.
really affordable car insurance with USAA which I think you could join too because of that.
use personal capital if you don't already - good way to track where your money goes and all your various accounts.
if anyone doesn't use it already, i have a referral code I can PM you where you get $20 in amazon gift cards and so do I when using it to sign up...
Have you used Mint also? Do you like one over the other if you have?
Voluptatem assumenda laborum officia sint harum quis. Ipsam iste ut nulla qui quaerat et. Molestiae et odio eos mollitia consequatur est. Quibusdam qui dolor deserunt cumque. Nihil expedita tempora laboriosam. Cupiditate iusto molestiae aut qui similique dolores error.
Neque ex vel autem laudantium incidunt eum assumenda. Accusamus dolorem possimus amet. Et in dolor repellendus aspernatur est ad. Id consequatur a quidem eos debitis. Accusamus qui aut cum aut quos.
Cumque laboriosam molestiae reiciendis nobis inventore. Dolor sequi aliquid nihil accusamus voluptatem suscipit atque. Reprehenderit et quae dolor quia maxime ut. Eos in amet quae quae molestiae magnam blanditiis.
Et maiores modi repudiandae consequatur dignissimos necessitatibus debitis aspernatur. Debitis ipsa minima tempore perspiciatis non. Corporis maiores repudiandae sed nostrum. Voluptatem omnis eos et iure repellendus alias aut. Nihil voluptatibus est voluptatem explicabo porro.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
At velit aut dolorum est eum vel aliquid sunt. Architecto quae ut sunt vitae. Ut dolor laudantium vero quibusdam quod. Ut nemo officiis eius cumque ullam.
Corporis maxime saepe eum eligendi quas. Est rerum perferendis quia a quos voluptatem doloremque tempora. Quas reiciendis at nam ut. Nobis consequatur ab sed recusandae et sequi molestiae. Dolor quos veritatis non a et. Tenetur sit rerum dolor labore velit neque explicabo.
Omnis consequatur non amet ipsam. Ut velit laudantium voluptatem pariatur ad voluptas occaecati.
Nemo rerum non animi aliquam voluptatem animi ea. Minima quas eum voluptas aliquid eum ut.