So much is going on in the financial world! Inflation rose 5.4% year-over-year in July, AMC will start accepting bitcoin, and Robinhood had a delayed IPO pop. What questions do you have about the latest financial news or about personal finance in general?
As a reminder, three participants in the Q&A will be chosen at random to receive a matte black Money Guy tumbler!
Thanks so much to everyone that has submitted a question so far! I did not expect such an overwhelming response, so we will definitely have to do this again soon. I am still going through and answering questions, but I may not get to everyone. As long as you have left a top-level comment, though, you will have a chance at a tumbler even if I don't respond. Also, please feel free to respond and interact with each other and answer other questions. Thanks again for participating in our inaugural Q&A!
Congrats to our tumbler winners, Neil, Kirsten, and Melanie! Please email daniel@aboundwealth.com and we'll get those tumblers sent out.
Thank you so much to everyone who participated! I really enjoyed answering questions and interacting with you all. I'm sure we'll do more of these in the future, so there will be other chances to ask questions and win a tumbler. We'll also be answering questions and giving away tumblers this Tuesday 8/17 at 10 AM CT on our YouTube channel (and biweekly every other Tuesday). Thanks again for joining us and being a subscriber!
I'd like to see a "Reverse FOO". That is, a recommended sequence of withdrawals in retirement assuming money is different buckets, like after-tax, tax-deferred, Roth, etc. Any guidance on that? Of course, every person's circumstances are different, but looking for general info.
HEY EVERYONE! The discussions below are very much like the FOO Course FB page. Consider joining the course (it covers a lot of life's financial basics) and get active on that FB page.
I am doing my Roth IRA, Roth 401k, and my HSA. I am comfortable with these items because I know that my age multiplier will see amazing growth by the time I withdrawal (in my 30’s now) and it will be tax free.
However, I have some extra cash I could put into a brokerage account for investment, but am gun shy because I simply don’t understand how taxes on investments work. I worry about building taxable wealth without understanding and so have not done anything with my cash.
Is there a primer for understanding investment tax liabilities and how best to strategize those brokerage accounts? Basic buy, hold, sell in a few decades sort of investing, not day trading or loss harvesting, or anything fancy.
Great job Daniel! Such a wide variety of needs people have evidenced by breadth of questions. Thanks for sharing. RMD at age 80 shows the depth of thinking by your listeners.
Hi Daniel! Thanks for doing this! Can you explain more about what Abound Wealth does? My husband and I follow The Money Guy Show and are on step 7 of the FOO. Brian and Bo sometimes talk about the complexity that occurs when you reach a certain level of wealth and I always wondered what some examples are of that complexity that Abound Wealth can help with. Thanks so much!
I am 39 years old, and I maxed out my 401k and ROTH IRA contributions every year since graduating from college 17 years ago. As such, I have $1.2M in those accounts as a 39 year old and am starting to think about a goal of early retirement. Since I need to build a bridge account to last me to 59.5, at what point should one consider paring back 401k contributions if they’ve done so throughout their 20s and 30s and how much should one pare back (to get the company match only? Or to put myself in the lowest possible marginal tax bracket?)?
I'm curious how much of your financial advising becomes couples counseling. What advice do you have for couples (married or not married) to help prevent fights over money? Does your advice change if your talking to a younger couple vs an older couple?
My husband and I have pensions through our employers that will be equal to approximately 40% of our pre retirement income. Should we be more aggressively invested in stocks since we already will have the stable income portion covered? Thanks for your advice!
Any tips for a soon-to-be first-time parent? We've done some of the basics like life insurance, working on a will as well. 529 plan is in the works and we're working on maxing our HSA. What am I missing?
ROTH CONV: What should be the deciding factors when considering Roth Conversions? I was sure it was Marginal Tax Rate, but recently saw a video proposing that Effective Tax Rate should be the consideration. Can you also comment on Tax Brackets, Time, and the 5 Year Rule ?
We are 15 years from retirement and have an HSA maxed out with an end value projected to be around $150k. With healthcare costs continuing to rise what is a good bogey to budget for the annual costs of healthcare in retirement years?
Hi Daniel, should I be investing in several different target retirement funds? Example lets say I plan to retire in 2050. Should I invest all in 2050 target retirement fund or should I spread it out with 2050, 2060, 2070 target retirement funds? Thanks!
I love the FTE touch on these articles. Wondering, your opinion on where should I keep my 3-5 year “cash” expenses? If it sits in my savings account, I might buy something stupid. I have seen some Fidelity options, but concerned about inflation and taxes. I’m 40y/o, stable govt paycheck and debt free. Thanks. Joe
Our average age is 30. We make a little over 100k gross. We are maxing our IRAs, and my HSA. We contribute to our 401ks and a brokerage account. Which brings us to about 27% savings. We have about 20k in student loans. The interest rates range from 3.15% to 4.25%. They are in forbearance until Jan, and are in deferment until May 2023. Our current plan is to save the cash until Jan for a house payment. After the forbearance ends, should we just pay the interest and continue to save for the house? Should we just focus on paying off the debt, maybe reduce our savings to help pay it faster? We're looking forward for the family part of our journey but we are also looking forward to being debt free (minus the future mortgage). Thoughts?
Thanks a ton for the show. It really has inspired us and we have made a huge improvement to our finances because of your show.
I'm having a hard time understanding why I need money in an after tax brokerage account. With our options for HSA, Roth, Solo 401k with "company contributions", and after tax mega backdoor Roth conversions, my wife and I are able to put away close to $100k in tax advantaged retirement accounts. We have been saving 30-35% for last few years and at 45 debt free including house with enough in retirement now we could coast and be fine. Is there really a reason to do after tax brokerage accounts? I could retire before 55 if I really wanted to, but of course it would be easier to stick it out to 55 so I wouldn't need to due 72t or have had money in brokerage account to bridge. I know 72t can be a hassle, but I'd hate to give up the tax advantaged options if I still have some left on the table.
Retirement Calculators. Are they any good at predicting what you might actually need/ want in retirement? I live in a HCOL and am in a decently high earning profession, as is my husband. Retirement calculators are all based on being able to have a certain % of your income each year after you retire and include the idea that your income will increase over time as a function of the calculators. Most calculators suggest you will need somewhere around 70% of your pre-retirement income. I can’t tell if that still is accurate for higher earners who don’t live above their means and are very thoughtful with their money and purchases (in order to avoid golden handcuffs). During our working years we will have a mortgage and it will be expensive (HCOL area) but that would be paid off before we retire. What is a good benchmark % as a function of pre-retirement income for higher earners, is 70% still accurate?
How do you manage couples income? My wife makes a lot more money than I do and I’m ok with separate account. Fortunately we have the same end goal with finances as far as savings for retirement per 403b and 457. One is a expender more than the other. Please advise
You guys give a lot of guidance about retirement for folks who don't have a pension, but what about those of us who do? How much should we be saving? I'm 52 and will retire with 30 years of service, but I know my pension won't be enough. What's a reasonable amount that we should have saved to supplement our pension?
For mid-term savings goals like vehicles and down payments, do you recommend investing this money to help save up faster? When is it wise to invest it vs keep cash on hand?
How much does the actual service that someone uses matter? I currently have 2500 in a Roth IRA with Betterment, but I've seen a lot of people talk about how vanguard or schwab would be better. Will the choice of brokerage actually make that much of an impact in the long run? If so, is it better to switch now or wait until I have more saved up? Thank you!
My kids are mowing some lawns this summer and may make up to $600 each. They are interested in starting a Roth IRA. I have found articles online stating you can used lawn mowing and babysitting as earned income to contribute to a Roth. In the recent money guy article it said you have to file a tax return in order to pay FICA taxes to contribute to a Roth. It looks like lawn mowing is considered a household employee so there are no FICA taxes due. Is it possible have the kids contribute a Roth IRA using their lawn mowing money without filling a tax return for them?
First of all congratulations on your first newsletter! With the extension on student loan forbearance until January what should folks do with those funds for student loan payments?
Is there a rule of thumb to determine when it's financially okay to outsource household tasks such as lawn care, laundry services, or house cleaning? It feels wrong to outsource some of those tasks, because we can do them ourselves; however, I'm wondering if there's a way we can think about it that will help assess if the money to outsource is worth it. Thank you!
My wife and i took Brian's advice from an older episode and laid out what we wanted to do in terms of experiences in 0-5 and 5-10 years. For the longer time frame, 5-10 years is it recommended to put that money aside in a brokerage account and let it grow? As those trips in the 5-10 year time frame are the more expensive ones!
For additional info: we are about to turn 30, we save 50% of my income, own our home (2.75% 30yr fixed), and have only low interest student loan debt
I am in my late 20s and have about $110k in savings, no debt. I'm being a bit aggressive with savings/investing as I want to take advantage of compound interest and buy a duplex in a few years. I don't want to be a miser (lol) though- any tips on balancing savings and investing with "fun money"?
I'm 53. Trying to maximize contributions to Roth IRA accounts. I maxed my Roth IRA $7,000 for 2021. Had after tax contributions from years past in my employer's 401k plan. So last week I moved the after tax to the Roth IRA (the gains which are 2x the after-tax contributions, went to a traditional IRA, so I don't have to pay taxes this year).
I want to continue putting more after tax money in Roth accounts. I'm told that I can also create an LLC, pay myself up to $50K, and open a solo 401k and put more after-tax money, as long as I have a schedule C activity. Then I can roll that solo 401k after tax money, and put it in another Roth IRA. Is this shady or valid in the eyes of the IRS?
I'm curious about ESG funds offered by the likes of Vanguard and Fidelity, which allow someone to support companies that align with their moral values. Can these types of funds fit into a healthy retirement plan? Should I worry about having too much of my portfolio tied up in these funds?
FTE Daniel, what are your thoughts on having a "in case of death" packet for Spouse or Family? I am building mine now, but unsure on who should have "access or knowledge" that it exist, and where. Worried due to all the info it will have listed out. Is there a certain way I should go about this?
How do you feel about “Robo investment” accounts ( examples bring wealthfront or betterment)? Seems like a good opportunity to use tax loss harvesting on a small scale. Never heard you guys talk about it, am I missing something?
Everyone talks about how equities will give about 10% rate of return due to historical trends and past performance. However, bonds have averaged a similar yield, and they’re abysmal for the foreseeable future. Do you think there’s any correlation between equities - and CDs, mortgage interest rates, bonds, etc. ?
We’re following the FOO and started contributing to a 529 for our two girls (4 & 6 years old) last year. We’d like to get our oldest in a few classes like music lessons, horseback riding, gymnastics, etc. however we’d have to cut into the 529 budget in order to do so. What are your thoughts on lifestyle choices affecting our investment strategy and delaying potential growth?
First off, congrats! You guys are killing it and it's fun to watch along. If I could invest in your subscriber count, I wouldn't have to save another penny for retirement! Seriously Q though. With inflation rising and interest rates so low, is there any better place to store house down payment dollars to be used in the < 3 years than a "high interest" savings account?
Possibly outside your typical wheelhouse, but where should I go about seeking advice on life insurance, wills, etc. if I’m an American living abroad who moves frequently?
Loved the article on saving for children, but what's your advice on instilling a mentality of saving into our children? Recommended approaches, books, etc?
Back to basics FOO question, but if I work somewhere with a pension, already fund an IRA, am I correct in assuming my only other option is a taxable? Anything I might be missing? Thanks!
With many people talking about crypto these days, what are your feelings about it? Is it better utilized truly as a currency or as a small portion of ones investment strategy going forward? I often hear Brian and Bo talk about the stock market being similar to walking up a mountain with a yo-yo, is crypto, specifically Bitcoin, viewed in the same manner, or is it too early to tell? Thanks!
Thanks so much to everyone that has submitted a question so far! I did not expect such an overwhelming response, so we will definitely have to do this again soon. I am still going through and answering questions, but I may not get to everyone. As long as you have left a top-level comment, though, you will have a chance at a tumbler even if I don't respond. Also, please feel free to respond and interact with each other and answer other questions. Thanks again for participating in our inaugural Q&A!
Congrats to our tumbler winners, Neil, Kirsten, and Melanie! Please email daniel@aboundwealth.com and we'll get those tumblers sent out.
Thank you so much to everyone who participated! I really enjoyed answering questions and interacting with you all. I'm sure we'll do more of these in the future, so there will be other chances to ask questions and win a tumbler. We'll also be answering questions and giving away tumblers this Tuesday 8/17 at 10 AM CT on our YouTube channel (and biweekly every other Tuesday). Thanks again for joining us and being a subscriber!
I'd like to see a "Reverse FOO". That is, a recommended sequence of withdrawals in retirement assuming money is different buckets, like after-tax, tax-deferred, Roth, etc. Any guidance on that? Of course, every person's circumstances are different, but looking for general info.
HEY EVERYONE! The discussions below are very much like the FOO Course FB page. Consider joining the course (it covers a lot of life's financial basics) and get active on that FB page.
What's your top 3 personal finance books that you highly recommend?
I am doing my Roth IRA, Roth 401k, and my HSA. I am comfortable with these items because I know that my age multiplier will see amazing growth by the time I withdrawal (in my 30’s now) and it will be tax free.
However, I have some extra cash I could put into a brokerage account for investment, but am gun shy because I simply don’t understand how taxes on investments work. I worry about building taxable wealth without understanding and so have not done anything with my cash.
Is there a primer for understanding investment tax liabilities and how best to strategize those brokerage accounts? Basic buy, hold, sell in a few decades sort of investing, not day trading or loss harvesting, or anything fancy.
Thanks!
Great job Daniel! Such a wide variety of needs people have evidenced by breadth of questions. Thanks for sharing. RMD at age 80 shows the depth of thinking by your listeners.
Congrats on this by the way! Have you thought of starting a discord for MGS?
Hi Daniel! Thanks for doing this! Can you explain more about what Abound Wealth does? My husband and I follow The Money Guy Show and are on step 7 of the FOO. Brian and Bo sometimes talk about the complexity that occurs when you reach a certain level of wealth and I always wondered what some examples are of that complexity that Abound Wealth can help with. Thanks so much!
I am 39 years old, and I maxed out my 401k and ROTH IRA contributions every year since graduating from college 17 years ago. As such, I have $1.2M in those accounts as a 39 year old and am starting to think about a goal of early retirement. Since I need to build a bridge account to last me to 59.5, at what point should one consider paring back 401k contributions if they’ve done so throughout their 20s and 30s and how much should one pare back (to get the company match only? Or to put myself in the lowest possible marginal tax bracket?)?
Good morning yall! It's awesome to already see some familiar names from the youtube chat!
Yall have answered my big life questions time and time again so i'm just here to watch and enjoy yalls company!
The money guy family gives me all the motivation I need!
I'm curious how much of your financial advising becomes couples counseling. What advice do you have for couples (married or not married) to help prevent fights over money? Does your advice change if your talking to a younger couple vs an older couple?
My husband and I have pensions through our employers that will be equal to approximately 40% of our pre retirement income. Should we be more aggressively invested in stocks since we already will have the stable income portion covered? Thanks for your advice!
Who's better at golf, Brian Or Bo? whos better at ping pong, Brian or Bo?
Any tips for a soon-to-be first-time parent? We've done some of the basics like life insurance, working on a will as well. 529 plan is in the works and we're working on maxing our HSA. What am I missing?
ROTH CONV: What should be the deciding factors when considering Roth Conversions? I was sure it was Marginal Tax Rate, but recently saw a video proposing that Effective Tax Rate should be the consideration. Can you also comment on Tax Brackets, Time, and the 5 Year Rule ?
We are 15 years from retirement and have an HSA maxed out with an end value projected to be around $150k. With healthcare costs continuing to rise what is a good bogey to budget for the annual costs of healthcare in retirement years?
Hi Daniel, should I be investing in several different target retirement funds? Example lets say I plan to retire in 2050. Should I invest all in 2050 target retirement fund or should I spread it out with 2050, 2060, 2070 target retirement funds? Thanks!
I love the FTE touch on these articles. Wondering, your opinion on where should I keep my 3-5 year “cash” expenses? If it sits in my savings account, I might buy something stupid. I have seen some Fidelity options, but concerned about inflation and taxes. I’m 40y/o, stable govt paycheck and debt free. Thanks. Joe
How to be patient while just needing to give your army of dollar bills time to grow?
Our average age is 30. We make a little over 100k gross. We are maxing our IRAs, and my HSA. We contribute to our 401ks and a brokerage account. Which brings us to about 27% savings. We have about 20k in student loans. The interest rates range from 3.15% to 4.25%. They are in forbearance until Jan, and are in deferment until May 2023. Our current plan is to save the cash until Jan for a house payment. After the forbearance ends, should we just pay the interest and continue to save for the house? Should we just focus on paying off the debt, maybe reduce our savings to help pay it faster? We're looking forward for the family part of our journey but we are also looking forward to being debt free (minus the future mortgage). Thoughts?
Thanks a ton for the show. It really has inspired us and we have made a huge improvement to our finances because of your show.
Do you think the threshold for seeking planner advice is a certain dollar amount, or a certain level of complexity, or…?
I'm having a hard time understanding why I need money in an after tax brokerage account. With our options for HSA, Roth, Solo 401k with "company contributions", and after tax mega backdoor Roth conversions, my wife and I are able to put away close to $100k in tax advantaged retirement accounts. We have been saving 30-35% for last few years and at 45 debt free including house with enough in retirement now we could coast and be fine. Is there really a reason to do after tax brokerage accounts? I could retire before 55 if I really wanted to, but of course it would be easier to stick it out to 55 so I wouldn't need to due 72t or have had money in brokerage account to bridge. I know 72t can be a hassle, but I'd hate to give up the tax advantaged options if I still have some left on the table.
In light of inflation, what would be your current rec for mid-term saving with an uncertain timeframe, perhaps I-bonds?
Retirement Calculators. Are they any good at predicting what you might actually need/ want in retirement? I live in a HCOL and am in a decently high earning profession, as is my husband. Retirement calculators are all based on being able to have a certain % of your income each year after you retire and include the idea that your income will increase over time as a function of the calculators. Most calculators suggest you will need somewhere around 70% of your pre-retirement income. I can’t tell if that still is accurate for higher earners who don’t live above their means and are very thoughtful with their money and purchases (in order to avoid golden handcuffs). During our working years we will have a mortgage and it will be expensive (HCOL area) but that would be paid off before we retire. What is a good benchmark % as a function of pre-retirement income for higher earners, is 70% still accurate?
How do you manage couples income? My wife makes a lot more money than I do and I’m ok with separate account. Fortunately we have the same end goal with finances as far as savings for retirement per 403b and 457. One is a expender more than the other. Please advise
You guys give a lot of guidance about retirement for folks who don't have a pension, but what about those of us who do? How much should we be saving? I'm 52 and will retire with 30 years of service, but I know my pension won't be enough. What's a reasonable amount that we should have saved to supplement our pension?
For mid-term savings goals like vehicles and down payments, do you recommend investing this money to help save up faster? When is it wise to invest it vs keep cash on hand?
How much does the actual service that someone uses matter? I currently have 2500 in a Roth IRA with Betterment, but I've seen a lot of people talk about how vanguard or schwab would be better. Will the choice of brokerage actually make that much of an impact in the long run? If so, is it better to switch now or wait until I have more saved up? Thank you!
My kids are mowing some lawns this summer and may make up to $600 each. They are interested in starting a Roth IRA. I have found articles online stating you can used lawn mowing and babysitting as earned income to contribute to a Roth. In the recent money guy article it said you have to file a tax return in order to pay FICA taxes to contribute to a Roth. It looks like lawn mowing is considered a household employee so there are no FICA taxes due. Is it possible have the kids contribute a Roth IRA using their lawn mowing money without filling a tax return for them?
First of all congratulations on your first newsletter! With the extension on student loan forbearance until January what should folks do with those funds for student loan payments?
Is there a rule of thumb to determine when it's financially okay to outsource household tasks such as lawn care, laundry services, or house cleaning? It feels wrong to outsource some of those tasks, because we can do them ourselves; however, I'm wondering if there's a way we can think about it that will help assess if the money to outsource is worth it. Thank you!
My wife and i took Brian's advice from an older episode and laid out what we wanted to do in terms of experiences in 0-5 and 5-10 years. For the longer time frame, 5-10 years is it recommended to put that money aside in a brokerage account and let it grow? As those trips in the 5-10 year time frame are the more expensive ones!
For additional info: we are about to turn 30, we save 50% of my income, own our home (2.75% 30yr fixed), and have only low interest student loan debt
I am in my late 20s and have about $110k in savings, no debt. I'm being a bit aggressive with savings/investing as I want to take advantage of compound interest and buy a duplex in a few years. I don't want to be a miser (lol) though- any tips on balancing savings and investing with "fun money"?
I'm 53. Trying to maximize contributions to Roth IRA accounts. I maxed my Roth IRA $7,000 for 2021. Had after tax contributions from years past in my employer's 401k plan. So last week I moved the after tax to the Roth IRA (the gains which are 2x the after-tax contributions, went to a traditional IRA, so I don't have to pay taxes this year).
I want to continue putting more after tax money in Roth accounts. I'm told that I can also create an LLC, pay myself up to $50K, and open a solo 401k and put more after-tax money, as long as I have a schedule C activity. Then I can roll that solo 401k after tax money, and put it in another Roth IRA. Is this shady or valid in the eyes of the IRS?
I'm curious about ESG funds offered by the likes of Vanguard and Fidelity, which allow someone to support companies that align with their moral values. Can these types of funds fit into a healthy retirement plan? Should I worry about having too much of my portfolio tied up in these funds?
FTE Daniel, what are your thoughts on having a "in case of death" packet for Spouse or Family? I am building mine now, but unsure on who should have "access or knowledge" that it exist, and where. Worried due to all the info it will have listed out. Is there a certain way I should go about this?
Question:
We finished baby step 7 of Dave Ramsey, what next?
How do you feel about “Robo investment” accounts ( examples bring wealthfront or betterment)? Seems like a good opportunity to use tax loss harvesting on a small scale. Never heard you guys talk about it, am I missing something?
Everyone talks about how equities will give about 10% rate of return due to historical trends and past performance. However, bonds have averaged a similar yield, and they’re abysmal for the foreseeable future. Do you think there’s any correlation between equities - and CDs, mortgage interest rates, bonds, etc. ?
We’re following the FOO and started contributing to a 529 for our two girls (4 & 6 years old) last year. We’d like to get our oldest in a few classes like music lessons, horseback riding, gymnastics, etc. however we’d have to cut into the 529 budget in order to do so. What are your thoughts on lifestyle choices affecting our investment strategy and delaying potential growth?
First off, congrats! You guys are killing it and it's fun to watch along. If I could invest in your subscriber count, I wouldn't have to save another penny for retirement! Seriously Q though. With inflation rising and interest rates so low, is there any better place to store house down payment dollars to be used in the < 3 years than a "high interest" savings account?
Will you send me your top three financial books to read?
When does it make sense to do Roth Conversions?
Possibly outside your typical wheelhouse, but where should I go about seeking advice on life insurance, wills, etc. if I’m an American living abroad who moves frequently?
Loved the article on saving for children, but what's your advice on instilling a mentality of saving into our children? Recommended approaches, books, etc?
Whats the threshold for stopping ROTH contributions and switching to pre-tax contributions on a 401k plan?
Back to basics FOO question, but if I work somewhere with a pension, already fund an IRA, am I correct in assuming my only other option is a taxable? Anything I might be missing? Thanks!
How much is too much to hold in cash (in the bank)? I have a sinking fund, emergency fund, and car replacement fund.
With many people talking about crypto these days, what are your feelings about it? Is it better utilized truly as a currency or as a small portion of ones investment strategy going forward? I often hear Brian and Bo talk about the stock market being similar to walking up a mountain with a yo-yo, is crypto, specifically Bitcoin, viewed in the same manner, or is it too early to tell? Thanks!