10 ms·
Start as early as possible in investing (in index funds) and otherwise being financially savvy. It is very beneficial to realise early on that growing your hard
by oumua_don17 1y ago
Start as early as possible in investing (in index funds) and otherwise being financially savvy. It is very beneficial to realise early on that growing your hard earned money and spending it wisely is way more important as it will in the future lead to some unexpected benefits. Freedom of thought and action!
- Terretta 1y agoCall Vanguard: 877-662-7447 An investing prof at Chicago puts this on the whiteboard at the start of semester, saying this is really all most people need to know and this class is unlikely to learn anything in his or any class that will let them, personally, do better.
- lurking_swe 1y agoThat’s good advice for a layman but most high earners can do much better if they care and are motivated. Most are neither though lol. Mostly on the tax side. Some specific examples: - after maxing out your 401k what should you do next? IRA? Mega backdoor roth? Something else? - If you have kids, how to best save for future education expenses? Hint: consider 529 plan. - HSA is technically the best tax advantaged account, most high earners don’t realize it and “waste” the HSA funds to reimburse typical medical bills. HSA has triple tax benefits: contributions are tax-free, growth is tax-free, and withdrawals are also tax-free after age 65 for any reason, not just medical expenses. So basically investing without any tax obligation. You can also withdraw tax free before 65, but for medical expenses only. i could go on…investing is great, but reducing your tax obligation is an even more powerful technique if you want to grow your net worth.
- davidivadavid 1y agoAt that point get someone to do it for you for x% of what they're getting you back and live blissfully unaware of arcane tax code specifics.
- Jtsummers 1y agoAt least the 401k, IRA, and HSA don't require knowing anything particularly arcane. Money goes in, don't touch until 59 1/2 (401k, IRA) or 65 (HSA). 529 plans can get a bit more complicated because you'll want one from your state (if your state has an income tax) and they may offer several, but then it's less about knowing tax code specifics than about what the differences are between their offerings.
- lurking_swe 1y agoright, it’s not that arcane at all. I discovered all this over a couple weekends in my 20s. Started on reddit, then moved on to more official guides and books. I spent maybe 5 weekends in total doing this learning. It’s really not that hard and i don’t understand why more people aren’t interested. Let’s reframe for a minute…if i said a high earner could retire a year earlier, or maybe even a few years earlier just by learning some semi-advanced tax strategies. Should they do so? Yeah. They’d be crazy not to lol.
- recursive 1y agoFor a beginner it's hard to tell which information is trustworthy and which is a sales pitch.
- tylerflick 1y ago529s are also capped based on the recipient, not donor.
- laserlight 1y ago> what they're getting you back Even that is not a simple thing. What’s your benchmark? Is that the right benchmark for you and your goals? Agency has a cost.
- taneq 1y agoIs it really x% of the profits? Most of the investment and financial advising services that I've had pitched to me (although that's not too many, tbh) seem to charge x% of your portfolio, and if their sage advice doesn't create a return greater than x% then sucks to be you.
- mattbrewsbytes 1y agoWhat you have stated is almost the same as call Vanguard, all those options are the same in the sense that they all involve investing, leaving it alone for a long time. Its just the vehicle thats slightly different and tax advantages. I wouldn’t consider those options needing much motivation or research. The key with all of them is investing early and leaving it alone.
- lurking_swe 1y agoIf one is clueless with investing and taxes in general, and they call vanguard, their eyes will glaze over. It would be like me explaining software development to my 85 year old father. I do agree people should call vanguard. But just blindly following steps they give you is unlikely to be productive if you don’t understand why you’re doing those steps. Furthermore, those people who don’t understand _why_ will freak out every time there’s a huge market correction. They get scared - because they don’t understand any of it. I’m also curious, do they offer financial advice for your accounts outside vanguard? Genuinely curious since i’m unsure.
- mattbrewsbytes 1y agoI’ve think the “call” part is a bit from the past, should be a setup account online with Vanguard, put it in VOO or VTSAX or the equivalent low fee market index fund and leave it alone. Replace Vanguard with any other firm but the key is picking low fee ETFs and leaving them alone. Vanguard tends to have a reputation for the lowest fees.
- d_burfoot 1y ago#1 Rule of Investing: you can't beat the market, but you can beat the tax man
- 1241231241 1y agoIs is beating when taxes are setup in a way to incentivize investing ?
- arjvik 1y agoThe HSA thing intrigued me and so I did some digging. It appears that post-65, you still have to pay income tax on non-medical withdrawals from an HSA? That is, besides the tax-free-for-medical-expenses part it reverts to a traditional IRA? One additional trick though is that it looks like you can pay for any HSA-eligible medical expenses (incurred after you created the HSA) out-of-pocket now, and reimburse your bills at any point in the future? Thus you can still earn interest on the cash before withdrawing it at any point in the future (treating it as tax-free liquidity). (I don't fully understand this so these are questions not statements, but hopefully I'm correct!)
- scarface_74 1y agoYes and you can invest your HSA funds just like anything else.
- shmerl 1y ago> The HSA thing intrigued me and so I did some digging. It appears that post-65, you still have to pay income tax on non-medical withdrawals from an HSA? That's what I understood too. That claim that you can completely skip taxes looks wrong.
- sokoloff 1y agoYou can completely escape taxes for any amounts that you have receipts for medical expenses incurred after the HSA was opened. You can pay cash for a qualified medical expense in 2025 and take out that amount of money from the HSA decades later.
- koolba 1y agoYou can also use it to pay for Medicare premiums.
- hopelite 1y agoOne thing to note!!!! Make sure to also keep records on the HSA start date and any transfers you may engage in, e.g., after leaving an employer or just changing providers. It is worth having that on record in case 20, 30, 40 years later your claims are rejected because the original opening date was lost in some transfer at some point.
- xhrpost 1y agoLooked into HSA recently at work but legally you need a high deductible health care plan to be eligible. Looking at the options, just nothing looked good compared to my current $0 deductible/$0 co-pay plan. Hard to know for sure but just seemed like I would be paying a lot more out of pocket every year.
- SlightlyLeftPad 1y agoYou have the unicorn health plan it appears
- xhrpost 1y agoActually I miss typed and can't edit but I have co-pays and meant to type $0 co-insurance.
- yieldcrv 1y agoYeah get a high deductible plan as secondary insurance JUST for the HSA Max out contributions to the HSA all medical expenses (except for premiums) since the beginning of the hsa account’s existence are eligible for reimbursement, decades later
- konfusinomicon 1y agoreading this sparked my interest as it is a great idea but from what I've read if you are covered by a non hdhp you can not do this per IRS publication 969. too bad because that would have been one hell of a loophole and I would have considered starting an astronomically high deductible with ultra low premium secondary insurance company to cater to this market
- 1oooqooq 1y agoi tried that hack one year. Cigna just emptied my account on the first try with a provider charging 2 emergency room visits when I was there only for a xray. Cigna refused to lift a finger unless i sued them both. yeah, i wouldn't recommend that.
- jkmcf 1y agoMy millionaire, step-father-in-law, gave this advice to my brother when graduated. I was lucky, my physics department administrator told me the same thing when I was graduating. The 2ND best piece of advice is to rollover your 401k when you move to a new company -> this cost me at least 500k because they effectively stagnate when your company isn't paying the maintenance cost (AIUI).
- slapstick 1y ago> this cost me at least 500k because they effectively stagnate when your company isn't paying the maintenance cost Is this true? My understanding is that the fees come out of the account itself. There's other good reasons to roll over (primarily investment flexibility) but I have not heard of something like this.
- bcyn 1y agoI don't think the point about 401k stagnation is true. At most fee structures and optionality of funds change. How did that cost you 500k exactly?
- monkeyelite 1y agoWhy are we advertising this particular broker?
- nemomarx 1y agovanguards very large and they're a mutual fund, so they have a lower profit motive than most brokers for it. they're basically the standard retirement fund company now
- monkeyelite 1y ago> lower profit motive than most brokers for it This doesn’t make sense.
- gertlex 1y agoWhat I think they're referring to is their sheer size (ratio of customers or $ invested to staff) has meant historically the annual % fees on mutual funds and other investments have been lower than at other institutions. It's... less unique to Vanguard these days, as several of the large providers have equivalent low-cost funds you can invest in; but 15 years ago it was more significant, iirc.
- arjvik 1y agoVanguard is one of the cooler-structured brokerages. Vanguard (the management firm) is owned by the mutual funds themselves, of which you are an investor of. So their shareholder obligation is genuinely towards "clients" of the individual mutual funds. As far as I'm aware, this is the only mutually-owned mutual fund firm. It's definitely got a solid track record and good fees, but these are things I'd feel weird about advertising it on HN for.
- monkeyelite 1y agoI’ve been a customer for 15 years: - they have bad customer service - they have a bad website that hides important information - they don’t have cheaper funds than others - they were latest to the party on commission free trading. It’s just a well-marketed brand.
- scarface_74 1y agoThis is generally not applicable to most people. 1. Invest enough to get the company match in an S&P 500. It probably isn’t Vanguard that your company uses 2. Pay off all of your debt except your house (and maybe your car) 3. Max out your HSA - if you are married it’s - $8550 4. Max out your 401K - again that’s probably not through Vanguard - $23500 5. Step 5 - then call Vanguard and depending on your income just do a Roth up to $8000 (?). (Unless you are over 50 then do catch up contributions as 4.5) If you are under 50, you can do $40,500 tax advantaged and over 50 $48050
- hattmall 1y agoStep 0: Have enough extra money to do all that.
- healsdata 1y agoAnd also Step 4a: Don't need to use the healthcare system.
- scarface_74 1y agoAs much as I hate the American health care system as a senior citizen, there is an out of pocket maximum that you can budget for if you have all of the parts. From what I understand it’s Medicare Part A+B and either Part C or Medigap. Of course private insurance especially for older Americans like Part C and Medigap is Byzantine if you actually need it and some doctors don’t accept Medicaid (low income) and a few don’t even accept Medicare. I don’t know much from either first hand or second hand experience because my mom and dad (83 and 81) are under my mom’s teacher’s retirement insurance and between them (two pensions + social security) medical expenses are more of a nuisance than something that they stress about.
- healsdata 1y agoMy comment had nothing to do with being a senior citizen. If you're putting the maximum in your HSA each year, you're participating in a high-deductible healthcare plan. > If you got your HSA-qualified HDHP through your employer, your average [premium] looked like $90 per month if you were single and $432 for your family. > Median annual deductible for private industry workers participating in HDHP plans was $2,750. > Average out-of-pocket maximum was $4,422 for single coverage.
- hattmall 1y agoAn important part that could have been beneficial would have been to add, "today". I had a class where the teacher did something similar, but she showed that if you started a ROTH today and contributed only the 4 years you were in college and then stopped forever. You would have nearly the same amount of money as someone who started 1 year after they completed college and invested every year until retirement. Ultimately she was encouraging us to take out student loans and invest it or use any excess scholarship money to max out a ROTH IRA. She even advocated for investing all student loan money and opening credit cards tp actually pay for college, making minimum payments until graduation. Then moving away to a LCOL country and learn the language for 8-9 years while remaining in school taking 1 online class a year and travelling the world on student loans and not to worry about starting a career until 30 and start paying once you are back and start a job.
- karp773 1y agoROTH IRA contributions have to be from earned income, though. The rest of the advice is of the same quality, imho. Beware!
- hattmall 1y agoYeah, that was covered, it was an entrepreneurship class so one of the first things we learned was how to start an LLC and pay ourselves at least enough to get the EIC and to make sure we had enough years to qualify for Medicare. I remember one of the examples was about how Donald Trump licenses his signature and pays himself a royalty everytime he uses it or something similar.
- culopatin 1y agoThe today does matter but just did the math on that and your teacher was whack. The gap is so big I’m going to be imprecise and won’t matter. A Roth allows 7k a year I believe. So 4 years of school, 28k total. Let’s be generous and say you start with 30k at age 18. At 65 you’ll have 700k. I started at 26, my salary has been increasing at 6k a year average. I don’t max it out, but hover around 10-15%, I get a 100% match on up to 7% of my salary. I’m 10x ahead of the 18yo on the same projection and 5x ahead 10 years earlier. Not even going to get into the interest rates and how you’re fucking up your finances tremendously for the rest of your adult life
- dmichulke 1y agoEspecially, if you don't want to invest in a bitcoin ETF https://markets.businessinsider.com/news/etf/bitcoin-etf-vanguard-not-allowed-trading-crypto-brokerage-asset-manager-2024-1?op=1 https://markets.businessinsider.com/news/etf/bitcoin-etf-van...
- emmelaich 1y agoGet a financial advisor that you trust.
- FristPost 1y agoI didn't start investing until I understood it. This is a fantastic course. It covers a lot of ground. If you want to actively invest, this will help you learn the mechanics. But in the end, what you really learn, is that you can't beat the market. https://ocw.mit.edu/courses/15-401-finance-theory-i-fall-2008/ https://ocw.mit.edu/courses/15-401-finance-theory-i-fall-200...
- r0b05 1y agoExcellent resource. The videos link to a YouTube channel with a treasure trove of content in multiple disciplines. Thanks for sharing!
- sitzkrieg 1y agobuy vti and wait. thats it
- itake 1y agoI think that works if you have less than $1m. But if you have more wealth and are older, you need to diversify a bit more.
- sitzkrieg 1y agook then buy a bond etf. its not difficult or complex. only if you talk to someone who makes money in mutual funds
- itake 1y agothis still doesn't account for tax planning. Like your bond allocations should be in an IRA/401(k), not in a taxable brokerage account. Also, which bonds? What about international exposure? What about tax loss harvesting? what about mid-term savings (like buying a house)?
- sitzkrieg 1y ago
- al_borland 1y agoMy mistake was not starting early, because the numbers were small and it didn’t seem worth the time. The habit and systems are important to build, so that when the numbers do get bigger it goes to the right place.
- calvinmorrison 1y agomy mistake was to graduate in 2008 and then start a business right when covid hit.
- bongodongobob 1y agoIn other words, 2008 had no meaningful impact on you then.
- bsimpson 1y agoI also graduated in 2008. Starting my adult life with the markets in freefall made it hard to get in the habit of investing. All through school, people told me "most people don't start investing until their 30s, and end up in a worse than they ought to because the time-value of money compounds a bunch if you add a few more years." I thought I knew better than to be one of those people. Instead, I ended up keeping a lot of savings in cash during years when the interest rates were approximately 0. I've tried to get better at putting money into the markets over the past few years, but my financials look very different than they might have. > In other words, 2008 had no meaningful impact on you then. People who graduated in the late 00s might not have accrued big financial losses, but it had a very meaningful impact on my comfort investing.
- bongodongobob 1y agoI don't follow. The markets were low, great time to invest. Great time to buy a home. 2008 was bad for people who owned homes or were already investing.
- 1y ago
- ropable 1y agoCompounding interest is a powerful force.