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Old 09-30-2008, 05:53 PM   #1
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Default Investing Advice and future planning

This whole financial crisis deal has got me deciding to grow up and think about my future. The fact that I now have an 8 week old is also playing a big part in the "coming-to-age responsibility", I guess you could call it.

I'm 26 years old as is my wife, We own our own house and have an 8 week old. I have a pretty secure (Knock on wood) job with 2 associates degrees in electronics and computers and my wife is a school teacher with her masters.

Anyhow, I don't know much about investing and retirement plans, but do contribute what I can to my 401K, which presently is matched by my company. Well, 2 more years before I get a 100% match. My question to those out there that know this stuff, how about a little advice? I don't have tons of free money to do a lot of aggressive investing nor do I know if this is the time to do so. I don't need to be a millionaire, I just want to be comfortable in the future and be able to maintain a lifestyle for my wife and kids. Do you recommend a financial adviser or are they just looking after their bank accounts and what yours can do for theirs? I know my Grandfather has done well through his, but are there trustworthy ones still out there?


What kind of options do you all suggest? Where should my money be going at this point in my life? How much do I put where?

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Old 09-30-2008, 06:26 PM   #2
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Originally Posted by IrregularPulse View Post
I don't need to be a millionaire, I just want to be comfortable in the future and be able to maintain a lifestyle for my wife and kids.
Then you need to be a millionaire...

If you make $50k/yr now. At retirement (35yrs), you will need to make earn $197,304.45/yr to live the same as you do on $50K today.

Assuming your retirement money is in Bank CD's earning 5%, you need $3,946,089.00 in the bank to pay out $197k/yr. Better get started today.

For financial advice; Only you truly have your best interest at heart. Hence, I recommend DIY investing. If you're a total beginner, I woudl suggest you start by reading The complete Idiots Guide to Getting Rich
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Old 09-30-2008, 06:27 PM   #3
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Well the rule of thumb I was always told by people older than me is you do the maximum you can afford above what gets you max match from the company you work for.

IE company matches 3% up to 6% Invest bare minimum of 6%.

Most people say then as much as you can afford on top of that.

I do 10% and my company matches 3% for the 6% I put in additional 4% is just gravy on top.

Also if your young they say go as aggressive as you can you have a lot longer time investing so you don’t have to worry as much about being conservative.

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Old 09-30-2008, 06:32 PM   #4
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If you do go to a financial adviser, find one that you pay a flat fee and not a percentage of your nest egg. Some will take 1% (or more) of what you invest through them each year (including any gains). Stick with one you pay a couple hundred bucks just for some advice and then do your own investing.

I personally wouldn't pay a financial adviser, I invest mostly in index funds with low overhead. They're not doing very well now, but they'll go up over time, and I don't plan on taking any of the money our for 30 years anyways.

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Old 09-30-2008, 06:34 PM   #5
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If you make $50k/yr now. At retirement (35yrs), you will need to make earn $197,304.45/yr to live the same as you do on $50K today.

You shouldn't need the same level of income to maintain your present lifestyle at retirement since you will no longer have to maintain your current level of retirement fund contributions and hopefully your house will be payed off.
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Old 09-30-2008, 08:27 PM   #6
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Couple of tips:

1. Invest as much as possible in your 401K ... certainly up to at least the matching percentage.

2. Look into either a 529 or a state-sponsored college education savings program. This will reduce your taxable income on both a state and federal level (though affects state income tax more)

3. Open a Roth IRA. Look for no load, no- or low-maintenance fee IRA. Often you'll need a minimum investment amt. but many companies will wave that if you schedule a direct withdraw every month.

4. Pay more on your house. Every bit more above your monthly payment typically goes directly towards the principal (check on this first) and will save you a ton of money over the length of the mortgage.

Really, most of this stuff isn't rocket surgery. It really boils down to make more, save more, spend less.

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Old 09-30-2008, 08:33 PM   #7
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Look into retirement savings options through your wife. As a teacher (working for the state I assume?), she likely has access to some tax sheltered retirement vehicles that you do not.

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Old 09-30-2008, 08:35 PM   #8
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Take it or leave it and plenty will say I'm mad in the current climate.
Look at real estate as soon as you can.

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Old 09-30-2008, 08:38 PM   #9
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Quote:
Originally Posted by pldoolittle View Post
Then you need to be a millionaire...

If you make $50k/yr now. At retirement (35yrs), you will need to make earn $197,304.45/yr to live the same as you do on $50K today.

Assuming your retirement money is in Bank CD's earning 5%, you need $3,946,089.00 in the bank to pay out $197k/yr. Better get started today.

For financial advice; Only you truly have your best interest at heart. Hence, I recommend DIY investing. If you're a total beginner, I woudl suggest you start by reading The complete Idiots Guide to Getting Rich
Ok, I'm an idiot, I admit it. How did you figure that he would need $197k per year to live off of if he's making $50k per year now?
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Old 09-30-2008, 08:41 PM   #10
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One thing our financial advisor tells us is if you are young you need to have divercified funds spread out all over the place. Not sure how great his advice is.. im doin like -6% YTD in my 401k account.

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