The concept of mini-retirement changed my life. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that piña colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
Safe to say not everybody has the skill to pursue investing. But it's always easy to follow the advice of someone who knows how to i.e a financial advisor. You could anywhere between 10--40k with the right ones. Online businesses are a good bet too if you are savvy.
My CFA ’Melissa Terri Swayne’ , 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.
Diversification is the secret to optimal performance. This is why I have my interests set on market sectors based on performance and projected growth, such as the EV sector, renewable energy, Tech, and Health. Keep investing regularly and you'll be blown away how much it can change in a few short years. Here's to $1 million and to FIRE
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
Some individuals minimize the importance of counsel until they make regrettable mistakes. A few summers ago, following a protracted divorce, I needed a significant push to keep my firm afloat. I looked for licensed advisors and found someone with the highest qualifications. She has contributed to my reserve increasing from $275k to $850k despite inflation.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Finding financial advisors like Kenna Muriel Hesseling, who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
Based on personal experience working with a financial manager, I currently have ($2million) in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
this is huge! mind if I look up the consultant that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
It's good you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this Sonya looks the part but i'd do my due diligence. I set up a call, thanks.
For the first 5 years my two daughters began their first real job since graduating college I match dollar for dollar that went into their Roth IRA. This gave them a great head start. Both put 25% by themselves into their 401k's. Thank God both of girls are born savers!
I’m 7 years into saving for retirement. Mostly was saving around 10% and just ramped up to about 20% last year and am sitting at 77k. With 32 years left to save I feel like I’m on a good track. It is doable folks.
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@@ConradsViveiroses That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the names of the advisors who has been assisting you in navigating these financial challenges?
1) Clearly identify your values. 2) Enjoy your life while living below your means and avoiding debt. 3) Invest the difference in an all market index (VTSAX or VTI). The earlier and more you invest while staying the course by NEVER selling before your drawdown phase gets you out early for good behavior. This is a recording.
I put 30% in investments/retirement. Mostly because I don't know what I want to spend it on. Also, not going to pay off my house until maybe retirement with my mortgage rate being 1.7%.
I’m torn: getting rid of a mortgage early is great, but you almost have to “make up” for throwing more at the house than retirement accounts. But again, you have the ability to invest heavily with no mortgage so it all can work lol
I seen a view videos that if you pay house off and put that extra money into retirement even though its a shorter time you still have 99 percent the same amount of money as if you dont pay house and invest more now and pay off house latter it really doesnt make a difference in retirement accounts its about piece of mind of the house being paid off @@jacobpierce6153
Would you let someone put a 7.5% management fee on your investments? 10% average market returns - 2.5% mortgage rate is a monstrous 7.5% opportunity cost on the money going to pay off the mortgage early @@jacobpierce6153
My portfolio for the past 30 years has always been self managed and I own 3 shares of Berkshire Hathaway Class A stock (BRK:A) which I bought in at about $17,000 during the mid 90s, I'm currently liquidating some of these positions to incoporate new Gen. Stocks, but am I better off re-investing into Gold as it seems stocks are a little too unstable right now.
DCAing amongst various assets is a good strategy and can help reduce the impact of market volatility and thus a good strategy if you are looking to compound . However it is important to consider financial advisory when investing .
I agree. Exactly why I now work with one. A lot of folks downplay the role of advisors until being burnt by their emotions, no offense. I remember some years back, during the covid-outbreak, I needed a good boost to stay afloat, hence researched for advisors and thankfully came across one with grit. As of today, my cash reserve has yielded from $350k to nearly $1m
i'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
"Laurelyn Gross Pohlmeier," a well-known authority in this field. I would recommend looking into her credentials more because she has a great deal of expertise and is a great resource for anybody looking for advice on how to navigate the financial market.
15% is a healthy amount. If you're comfortable with having your mortgage (at a historically low interest rate) then throwing more money towards investments might be a good way to go.
Lets say your salary is 1. In retirement after inflation and medical bills you will need about 4. In order to generate an income of 4 you will need to have assets of about 100. If you calculate how much you need to invest every year starting at age 25 or 30 to get to 100 you need about 0.15. While Dave usually bases things on psychology this one is just math.
And this is why I don't believe that 15% works at all ages. I started saving/investing in my pension only when I was early 40s. The math changes then. I now put in 40% in my 50s and the numbers will reach between 100 and 200 in your equation. Because it's over a shorter period of time it's harder to predict/expect growth.
15% for some can be 500$ or 5000$ You would not want only to invest 15% on 1000$ because after some time this money is little for what you need Later Travel or Buy Nice things.
That 15% guidance has been around for a long time in financial circles. In the final twenty years before retirement, each year when I got a raise, I would increase my contribution amount by the same percentage. For example, if I got a 3% raise, I upped my contribution rate from 15% to 18%. Works out well as you never miss the extra $$.
Are you saying that if you made $100000 and you got a $3000 raises, you went from contributing $15000 to 18540? Or you would go from $15000 to $18000? If you contributed an extra 3% a year, your disposable income will decrease each year.
Good idea. So right now at 29 I'm putting 15% and plan on retiring sound 55. If I do that with my cost of living raise which is about 3% yearly about how much do you think I could have at that time of retirement? Right now it's projected about $2.4 mil. Not including a pension and just what I save on the side.
@@Moriningland For 2023, 401(k) contribution limits for individuals are $22,500, or $30,000 if you're 50 or older. Yes, it's 30% of my income with a 3% match. The job is part-time so I am never going to get to $22,500. When I get my dream job, of course, it won't be 30% anymore because my income is so high I'm still going do up to 22,500 though.
I recommend investing 85% of your net household income in good growth stock mutual funds. If you can't afford a mortgage (15-year fix-rated, of course) after doing so, I recommend you live on the streets. In this way, you will be able to live and give like no one else in 10-20 years.
One thing Dave not mention here is it is okay to go 6 percent if you make 25k a year and also maxing out your health savings account your exceeding the 15 percent when those two are put together that is 12.6 percent for HSA and 6 percent = 18.6 percent contribution. Even at 30k if somehow made more that is 10 percent + 6 = 16 percent putting over the 15 percent.
I have a mortgage at 2.25% that takes up 14% of my net income. It stupid for me to pay my house off early with those rates. I will have hundreds of thousands of more dollars by maxing out investments now than later.
I paid off my mortgage 2 years ago (age 33). I’m saving 15% towards retirement and enjoying the rest. No point in being debt free if you’re never going to enjoy the money you have.
@@RyanABC123 it’s interesting that the human condition is such to eliminate risk (debt) when the data is overwhelming clear that investing over the long term provides superior returns. Even when i present numbers that show you could pay your debt many times over you still choose the psychological comfort of having the debt paid instead
My employer mandates an 11% contribution (no more, no less) to a pension and offers optional 401k or 403b accounts. Should I be contributing 4% to the separate 401k or should that number be 15% also?
Great conversation by Mr Ramsey & George about how the Baby Steps & the 15% into retirement are guidelines and not absolutes. What I find funny is where people argue on how inflexible these guidelines are when it really should be up to the individual, and the main argument in these comments & on the show always seems to break down between a security (pay off mortgage & low interest debt first) versus opportunity (max investments & pay off low interest debt slowly). I think people should first figure out what do they need to spend to have the lifestyle they want. Then find out what's left over of their income & determine what to do with that. For a lot of folks it's possible have a comfortable lifestyle now and invest more than 15% so you can have an even better lifestyle later, or be able to retire earlier. The time value of money & compounding interest will always overpower the security mindset of paying off low interest debt, so I'd rather put my extra money into investments and find ways to maximize the purchasing power of the dollars that I do spend.
You are so right but your statement has too much nuance that a person who has finance issues cannot easily follow. Dave provides a one size fits all framework that is easily adopted by all. It a psychological hack not a mathematical one. When I was a kid I learned to bowl. The alley put up guardrails so I could succeed. When I knew enough about the game I didn’t need the guardrails.
I agree. You can always tell who read TTMM vs who just listens to the podcasts. Lol The book certainly tells you to adapt the baby steps, some things are just guidelines, use your common sense, etc. People scoff at stopping retirement contributions while Dave wrote that if paying off your debt will take a long time, continue making the contributions. The other one is "This is geared to families". Well if you don't have a family, can't or choose not to have children, then don't save for a child's college education! People will turn anything into an argument.
@Twana H regardless if it would take a short time to pay off debt you never stop investing and never give up the company match. Idc if its 27% credit card debt 100% match still beats it.
I am an active duty service member and I have been investing for a few years. I have reached a point where I could benefit from financial advice to improve my $160k portfolio which seems to be stagnant and maximize return on my investment.
You didn't provide detailed information about your portfolio makeup. However, I recommend seeking guidance from a financial advisor for a well-informed portfolio restructuring.
Your advisor seems competent. Could you share how I can reach out to them? I've recently sold some property and i am interested in investing in stocks.
I invest 60% of my basic wage, comes to around 40% of my full income. I do this because the tax benefits far outway using the money to pay off my mortgage 2 years quicker (3 years instead of 5). I think Dave's point is doing that is a risk. But to my eyes not having as much in retirement is also a risk. If I didn't do it this way I'd lose out on around $100k. I am still paying off my house 10 years early though.
I did 5% for over 30 years. At 55 i have 500k. Borrowed against it to get my down payment for two homes. Wish i could've afforded to do more. Im semi retired at this point.
Debt is fine especially if the interest rate is much lower than with the market will return. Keep in mind you don’t pay taxes on debt, you pay taxes on income
The interest rate on most debt is almost never lower than the market return over time. Mortgages are usually an exception, but why carry debt at all if you don't have to? It's true you don't pay taxes on debt--you pay creditors instead, and it's not cheap. Debt is never fine unless it's a short-term situation, and if one follows Dave's principles, a crisis requiring going into debt will almost never arise.
@@jodylarson4697 I have a 2.25% mortgage rate. Inflation is 7.9%. heck, TIPS or iBonds pay way more than the mortgage costs. You'd be stupid to pay that down.
I think 15% is a good rule of thumb but really I wish people didnt take rules of thumb as hard numbers. I look at what number of $ I need to retire at the age i want to retire and I let that dictate the percentage I save. I do think capping it at 15% for most people while you have a mortgage is a good but you still have to think about it in terms of how that let's you achieve your end goal. Not simply to assume you save 15% so you are good. Plan it all out.
I am 30 yo, i did the math and with compound interest, investing 300 a month i could retire at 65yo with around a million. I live from renting, not own a place. I save around 1k a month. Should I throw the whole 1k a month to stocks, save it comoletely for my downpayment or 300 for stocks and the rest for downpayment???
You should follow the baby steps, make sure you have all those things taken care of before you jump into owning a house. Get your $1000 emergency fund. Get rid of your debt. Get set up so you are investing 15% for retirement. Get 3-6 months of living expenses set aside. If you still have money to set aside for the down payment, put that money in a high yield saving account, so you get a guaranteed return that is higher than the measly 0.5 - 1.0% a regular savings account gets. Stocks have been on a meteoric rise, and are likely to have a downturn, soon. That is fine for retirement investing, you dollar-cost across the rise and fall of the market. But for your down payment money, you want a sure bet place to hold your money and give you a decent return as it accumulates until it is large enough to be used.
Because he wants to keep everyone working until their 60s, paying off your mortgage is not always correct depending on so many things. Save as much as you can and live within your means.
I’m 27. I know absolutely nothing about investing and planning for retirement. Trying to research now. I make 90-100k a year. Just started a new job with a 401k with a 4% match. Does the 15% recommended include the match? Also I have about 100k in savings and no debt so is there a better way I should be investing?
Interesting. I’m 26, know a lot about finance and retirement, make about $101-110k per year, and just started a new job with a 401k with a 5% match. I also have about $101k in savings with negative debt (people owe me money).
The employer match is not counted as part of your 15%. Savings accounts typically do not keep pace with inflation, so you actually lose buying power as it sits there. At the very least, get that money into a high yield savings account. Following Dave's plan, you should have 3-6 months of living expenses in cash. The rest should be invested and working for you. If you are stuck on something really safe, you could buy CDs or Treasury Notes. But if you are willing accept some risk, you can invest in the stock market. If you want to buy mutual funds, you can open a Roth IRA account with Vanguard. They have funds that mimic different indices used to measure the stock market, and their management fees are really low. As a couple examples, Vanguard has funds that mimic the S&P500 and another that mimics the index for the entire US stock market. A different way to go would be to open a Roth IRA at a brokerage account like ETrade or ScottTrade. You can by equivalents to those mutual funds, called ETFs. Stock symbol VOO is the same as the S&P500 and VOO is the same as the Total Stock Market fund. All this is for the cash you have at hand. Going forward with your employer, you can meet your 15% goal with just your 401k. 15% of $100k is $15k, and the contribution limit for a 401k is $23k. The employer match does not count toward that limit. The annual IRA limit is currently $7k, so if you go that route, you still need to put $8k somewhere else. An IRA gives you more control over what goes into it, but the 401k will allow you to contribute a lot more. So, put some of that cash aside so it is there if something bad happens, but get the bulk of it working for you, and get that retirement fund rolling.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Donnafrank-k6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
It depends if you are on 4 or 6th step. If you are on 4th then only 15% total. I’m order to give you wiggle room to pay off house. After house is paid off that’s when you can max out both
15% of your gross income is your target. You put the money wherever you need to to get there. For most people, the 401k is enough. In 2024 you can contribute $23k into your 401k per year ($30k if you are over 50). That exceeds the 15% mark for lots of people. If you still have money left over, then you have to use an IRA. Or, if you are not happy with your 401k plans, contribute enough to at least get the company match and put the bulk of your contribution in an IRA. But the yearly limit for IRAs is $7000 ($7500 if you are over 50). But the nice thing about IRAs is that you have total control over how the money is invested. So there are pros and cons either way you go.
You max out retirement once your house is paid for and you are completely out of debt, so you do more at some point but he’s basically just telling her to allocate the money to paying off her house first then after that maxing her retirement
She's doing less than 15 if she's not including rental income. I don't personally think it matters but I don't see why Dave wouldn't include it in the calc...
Dave I'm the author of EIGHT DAYS IN AN INNER CITY SCHOOL please talk about the out of control OCCUPATIONAL LICENSING for k-12 teachers that's why we have teacher shortages
Why would I pay off my mortgage early when my interest rate is 2.25% and my S&P 500 index ETFs produce 10%? I could pay my house and car off right now but never will because my interest rates aren’t anywhere near the returns I can get via ETFs and mutual funds. If need be I can always sell some shares to cover my mortgage. The bulk of my shares are over ten years old and the odds of the stock market crashing at the exact moment I need the money are slim to none. Sure most self made millionaires don’t do this but if they did, they’d be far richer. Live below your means but use leverage.
@Terrence. We are finally at a point of potential market downturn so you can’t use the same analogy any longer. Dave is wrong and so are you. Or you are both right. Why invest heavily now when market is expected to go down? The key is balance or doing a combo of both. Dave is more wrong from his baby steps saying to pay off mortgage first after the 15% set aside. I think it’s a combo of both. I don’t see any issues carrying a mortgage loan into early retirement. Might was well let the Roth IRA build up while also paying a little extra in principal if possible. Interest rates are on the rise too so it makes the low fixed rate loans look great.
Because things happen. You can get sick, lose your job. And then you have a mortgage payment with no way to pay it. It's called "Financial Peace". It's just like Dave's advice to pay off the lowest amount of your debt first, instead of the highest interest rate. It's psychology, not logic. It's human nature.
Dave, thoughts on saving for a child's retirement? I have savings, and i wish to open a pension account for my chid when they are born, and deposit a one off sum of, say 10,000 from day one, to take full advantage of the power of time and compounding. locked away until retirement for them. so even if lets say, hypothetically. to worst would come about, and nothing was ever saved for retirement later. then that 10,000 with 65 years of compounding, would still be a sizable chunk toward retirement. ideally, once they come of age, working age that is, they would then just add to it. like they would with a normal pension. but only this time, they would be far ahead of the game. a head start if you will
I think you guys are oriented to families. Talking about mortgages and kids college. We will see a significant percentage of single people in their 40’s and 50’s. Why a single person would buy an empty house or save for a nephew’s college? Any advices for mature single people ? Again we are living in a today society where building new families is getting harder and harder
Having a paid for house is a good principle even if you are single or married it’s one of the greatest assets you can own. And he teaches if you don’t have kids that you skip baby step 5 (fund kids college) and move on to 6 and 7 which is pay off the house early and build wealth and give. It’s a lot easier to build wealth when you don’t have any house payments or any debt payments of any kind
Even if you are single buying a property to live in (can be an appartment) is usually a good idea. Of course there are some exceptions, such as people who need to move a lot, but for most people it would be good. And Dave says you don't need to save for college if you don't have kids.
Buy a condo or small home. Skip the college savings. Same rules. If you don’t buy a house for some reason (moving a lot or housing is included in your job) you skip to baby step 7.
Absolutely gagging listening to Dave tell someone to prioritize paying off their mortgage before maxing their retirement account. Committing financial manslaughter
It’s circumstantial, having a home is a way to fight inflation since the home goes up in value and if you have a locked low interest rate. I always say find a nice between the paying off mortgage and investing.
@@beastfromtheeast9318 inflation will make it easier to pay the mortgage off in the future, so inflation considerations should cause you to delay paying it off.
While I agree with the factual disagreement with his advice, I don’t understand the aggressive emotional reaction. Why invoke a visceral disgust? Isn’t that dramatically overdoing it?
I wanna start a discussion about OASDI and how can I opt out. I just got baffled this morning to see that I pay more taxes together than I take home. I mean I pay 55% taxes on my paycheck and my take home is around 45%. I need help here !! Dave..
@@gsquared2394 I left California last year for the same reason !! 13% State tax but man OASDI.. that paying for some lazy losers claiming to be freaking disabled .. I wanna get rid of that disability man
Still put in 15% so you have the flexibility to leave your job if you’re over it. Otherwise you may grow to hate it but you’re stuck putting in your years being miserable every day.
How much do you think a pension will pay out? I work for a private company around the 5/6 billion dollar net worth but not sure what my pension will look like at 55
15% is the bare absolute minimum! People who think it's better to pay down a low interest mortgage and not invest are people who want to work until they're 65! I invest $110K annually, not a penny goes towards my 2.25% mortgage. It's absolutely idiotic to think you'll be better off. 🤷😂. It's never based on math, because that would blow up the baby steps! And the case studies are most likely from people making $50K or less. And you said it - time. You're telling an older woman to pay down a rental and waste needed time. 🤷🤷
"[P]ay down a low interest mortgage and not invest . . . ." It's not absolute. You can accomplish both without sacrificing the other. Point remains, you have more to invest (and better security) when you get rid of a payment.
Yeah..you're right..it's NOT based on math. It's a BEHAVIORAL DEAL. If we all were doing proper math..NONE of us would be in debt. duh. You all keep using the math argument..and you're not wrong, but it's not a math problem. Debt ....= risk. Plain and simple. Dave and plenty of others who have explained this and LIVED this have already explained the Baby Steps work every time for valid reasons.
@@MikeThePike316 , Inflation grew 5.9% last year abd so far 7.9% this year and all the while my low monthly mortgage stayed the same. If you have a paid off house, but a small amount invested, it's not security. I know people who had a paid off house, but we're forced to sell it because they couldn't afford the taxes and property insurance. It grew at a faster pace than their income did. They put all their money to pay it down so they could be "free" and in the end they lost it anyway. Listening to Dave I should invest ~$42K annually and dump the remaining ~$65K each year in to my loan. I have a $360K loan at 2.25%. It would take 6 years to pay it off. In those 6 years, I could have invested $360K in the market in addition to the $252K...$612K that could have been working for me. After 6 years I add my monthly mortgage payment to what I was investing, a whopping $1495 a month. 6 years later I am now investing ~$127K annually, but during those 6 years if I stick to my $110K annually, or $9166 a month, I'd have accumulated $900K. It's not a one size fits all plan, and sadly, he didn't follow his plan as he grew his business and got rich. He is a businessman who has a plan that fits most Americans who can't manage their own debt and will do something that will have them worse off in the long run because it "feels good". 🤷
How can I put 15% to retirement when already putting 11% in unless I get mad sales and Matt overtime they take half of my money every week mostly and health insurance over 380 a week not to mention the other garbage😮
I am trying to buy myself a home, shelter for today is more important than retirement imho. But my employer offers a 401k match at a certain precent. I am only contributing enough to be able to earn the match, which is 8%. I am only contributing because I don't want to miss the opportunity for the match. If there was no match, i would not be contributing at this time, because my living quarters is my first priority
15% is irrelevant. Save what you need to in order to fulfill a comfortable retirement. Pay off debt in order to reduce risk and maximize cash flow when you need to in alignment with your goals. Do your own due diligence with your personal situation.
Assuming you're investing in a solely in a 401K then invest the remaining in a Roth IRA, if your income allows it. If not $7K in a traditional IRA. If Roth or traditional IRA is included in your contribution then if your married max out your spouse's 401k or IRA, even if they don't work they're eligible for a spousal IRA or Roth IRA. If you're unmarried or you have maxed out theirs retirement then I believe Dave recommends investing in a taxable brokerage with a growth fund or index fund like S&P 500. If unsure you should probably meet with a financial advisor.
investing requires good experience and knowledge to carry out a good and successful trade, I have lost a lot trying to trade all by myself May I ask which investments are good?......
I think HSA contributions should be included in the calc. After a certain age your HSA acts like a 401(k). And being able to pay for medical bills is part of retirement.
Triple tax advantaged if you use it for medical expenses. Seems medical expenses are a substantial component of many people’s retirement costs, and the HSA can cover that tax free. If used this way, it’s better than a 401(k) because you never pay taxes on the principal or growth.
What a bizarre set of arbitrary rules. If you want to keep working till your 65, then stay at 15%. If you want to retire 20 years earlier, you need to do more.
What if I started at about 25 with about 7% and plan on bumping up soon to 15% until like 55? Projected to be around 2.4 Mil at that time but hopefully market does way better than 10% on the return over time
@@aaront936 yeah that number looks a lot smaller. I’m gonna stop stressing about it. Someone told me if I add the cost of living amount every year to my 401K contribution I’d have around 4.6 mil so I might consider doing that
15% is not enough especially if you don’t want to work for 40-50 years or the rest of your life. 15% is not a large amount it’s the bare minimum if you don’t want to live in a box in retirement. Don’t get me wrong I have sympathy for people who can’t save more than that however if you can you absolutely should be saving a minimum of 25%
Maybe Dave's thinking is if you follow his steps, by retirement you'll have a paid-for home or have sold said paid-for home and used the proceeds to buy a new home (box or not), thereby not requiring as much money to live on since mortgages take up a significant portion of a lot of people's income.
@@MrsThollo I save 75% and will retire at 35. I don’t follow Dave’s steps because I don’t want to work 40 years. I want the freedom to make my own choices. Dave’s advice is ok for someone who is just beginning. But 15% is still not enough.
@@justinc8293 not when wages don't increase. If mortgage stays the same, cost of living increases, and wage doesn't increase, it puts significant strain on the plan
@@jamesklinkhammer7539 I'm not saying that inflation is a good thing, all I'm saying is simply that inflation is good on those who own commodities and property, as not only should the value of your property increase, but secondarily it IS easier to pay down your mortgage.
@@justinc8293 I don't think easier is right word without context. Because you're locked into the contract of your mortgage at whatever its terms are, its a fixed cost that is not going haywire with the rest of the cost of living with inflation. maybe you should instead say you're getting more for your dollar paying down your mortgage?
I've been putting 6% in my 401k at my job for over 20 years, never borrowed from it like most people do and after all that time I have BARLEY 200k in it....smh
You may feel like you're behind, and you are from how much you could have, but you'd be surprised at how well you're doing compared to the rest of the country. Most people have little to nothing saved for retirement, little to nothing saved for emergencies, and up to debt to their eyeballs. Crank up the 401k contributions and watch it grow.
What is it invested in? A lot of 401k plans are very conservative. Take a look see if they have a regular s&p 500 fund and opt for that if you got a good amount of time left to retire.
Was it going into a money market fund or something? High fees? Some awful 401ks have like 1.4% expense ratios. Better off with an IRA account in that case, unless they match.
Because Dave doesn't understand compound interest and treats all debts like high interest credit cards. Even though mortgages were sub 3% for the last 2 years.
A Business Analyst in an IT company makes 100K after a few years of work. A Project Manager can get over 100K pretty quickly. Get into management and it goes up from there. Developer, Database Administrator easily make that kind of money. The medical field pays pretty well. Tradespeople in certain markets are starting to make that kind of money and there are jobs all over the place, because everyone has bought into the "You have to go to college" mantra.
That's not how compounding interest works, you need time. Investing 16% over 20 years versus investing 8% over 40 years, the shorter 20 years would yield 40% less than the 40 years.
I’m currently retired, and considering the current rollercoaster nature of the stock market, I decided to stay on the sideline for awhile, now I’m worried with the numerous bank failures as of late, am I better off reinvesting my savings in the stock market or do I wait?
there are numerous intriguing stocks across various industries that might catch your attention, but it's not always advisable to act on every prediction. Therefore, I suggest that you work alongside a financial advisor who can help you determine the best times to buy or sell the shares or ETFs that you are interested in.
I have been in constant communication with a financial analyst ever since my company was founded. The difficulty in investing in trending stocks in today's volatile market is figuring out when to buy or sell, which may sound simple but can be really difficult. Having seen a $900k gain in my portfolio in just a year, I have given my adviser full control over choosing when to enter and quit the market.
Colleen Rose Mccaffery, my financial advisor, is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field.
Colleges love having tuition paying members, whether by loan or cash. The loan agency love victims they call customers. They’re obviously not looking out for your welfare, but it has nothing to do with hate. I don’t understand your motivation for hyperbole.
Their is no financial benefit of paying off your mortgage early, it is simply a mental and emotional benefits as you would much better at investing the surplus amount that you might be using to overpay on your mortgage.
Quite a few people who lost their homes in the past couple of years would disagree. I won't even go into the other unforeseen events that occur that make people think differently.
@@wordsalad01yes but u've lost the time, presumably years that you could've just invested the overpay amount and you would've given that money time to compound over many more years compared to investing the entire mortgage payment after paying off the mortgage in which case u will have less years for that money to compound.
@@MrsThollo people only lose their homes if they are not making the required payments on their homes. I wasn't talking about this. I'm talking about people choosing to pay their mortgage faster and more agreesively than necessary. In which case it's much more beneficial financially to pay your mortgage over the 25-30 years term and invest the amount you would overpay in an index fund.
I didn't invest anything in 401ks or IRSs. I made a fast fortune. I went into Art dealing with Hunter Biden. We sell $ 500,000 original Hunter Biden Art pieces to anonymous buyers. We have made a fortune by giving buyers access to " The Big Guy".
Lol how many people going to get up rich. Stats show not many. Dave just gives a guideline for everyday folks to have a chance. MOST these people would never been rich anyway. What Dave has done the most has given them a plan to a stress free life without worry of whether or not they can pay the bills or eat food this week.
DO NOT REPLY TO THE COMMENTS ABOUT FINANCIAL ADVISORS. I hate seeing this on every finance video. It's just a scam to get you to send money to some fraudster.
You realize a stock split does not change the value of the stock at all right? Example I own 1 stock of company X and it market share is 1000 and it splits a 1-10 split I now own 10 shares at 100 a piece. The value is the same total of 1000 dollars
As Dave was saying in the video, 15% is not a magic number. If you want to do 20% that is up to you or 25% or higher. Everyone has a different size budget.
Start at 10% and get to 20%. You are better off investing than paying off your mortgage. According to Dave you get 12% returns and real estate has been appreciating 6% a year since 2009.
Why do people want to be rich? Why not help people out along the way.We have zero debt .house and everything and are saving the 15% but help others out .Don’t want to be a millionaire .
The point is having a nest egg to retire on, and create an inheritance for future generations. You'll be a burden to society if you run out of money during retirement.
Some people think of generational wealth. Some people believe the more they have, the more they can help. Some people do multiple things with their money simultaneously (e.g. save, invest, donate, pay off debt).
@@seanjean9677 yes we have two adult kids who will only get a little of our nest egg.They have to go out and kill something and drag it home .We help them out along the way.why give them money they will blow
Having 1 million dollar does not make you rich. It means you can afford to eat and put a roof over your head forever without having to work. You can’t afford a fancy car, watch, cloths electronics with a million and keep that million. 1 million is 40k a year indefinitely. 40k is $3300 bucks a month not exactly balking out.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a CFA, even though I was skeptical at first, and I beat the market by more than 9%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an analyst.
NICOLE DESIREE SIMON is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
The concept of mini-retirement changed my life. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that piña colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
Safe to say not everybody has the skill to pursue investing. But it's always easy to follow the advice of someone who knows how to i.e a financial advisor. You could anywhere between 10--40k with the right ones. Online businesses are a good bet too if you are savvy.
Your advisor must be really good. How I can get in touch? My retirement portfolio's decline is a concern, and I could use some guidance.
My CFA ’Melissa Terri Swayne’ , 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.
Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds.
Diversification is the secret to optimal performance. This is why I have my interests set on market sectors based on performance and projected growth, such as the EV sector, renewable energy, Tech, and Health. Keep investing regularly and you'll be blown away how much it can change in a few short years. Here's to $1 million and to FIRE
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
Some individuals minimize the importance of counsel until they make regrettable mistakes. A few summers ago, following a protracted divorce, I needed a significant push to keep my firm afloat. I looked for licensed advisors and found someone with the highest qualifications. She has contributed to my reserve increasing from $275k to $850k despite inflation.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Finding financial advisors like Kenna Muriel Hesseling, who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
as most investing-related questions, the answer is, it depends.. my best suggestion is to consider advisory management
Based on personal experience working with a financial manager, I currently have ($2million) in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
this is huge! mind if I look up the consultant that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
Don't be hesitant to contact Sonya Lee Mitchell and follow her directions.
It's good you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this Sonya looks the part but i'd do my due diligence. I set up a call, thanks.
I wish young people would be taught the power of compounding returns in school. It would change their life.
It is taught, it's part of 9th grade is most schools all across the globe. But then we forget after it as soon as exams are over.
I wish schools would teach that too but that would make too much sense! 🤪🤪
For the first 5 years my two daughters began their first real job since graduating college I match dollar for dollar that went into their Roth IRA. This gave them a great head start. Both put 25% by themselves into their 401k's. Thank God both of girls are born savers!
I’m 7 years into saving for retirement. Mostly was saving around 10% and just ramped up to about 20% last year and am sitting at 77k. With 32 years left to save I feel like I’m on a good track. It is doable folks.
How old are you now?
@@musicpro7278 X = 65 - 32; plus/minus 2 to 3 years.
That’s how much mine has lost since January 😢… I’ve got 25 years left to save.
Consistency and compound interest are your friend here. Stick with it!
Wait, is everyone planning on working till 65? Why? What kind of life is that
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@@ConradsViveiroses That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the names of the advisors who has been assisting you in navigating these financial challenges?
CATHERINE DIANE PELICAN
LOOK HER UP ONLINE
1) Clearly identify your values. 2) Enjoy your life while living below your means and avoiding debt. 3) Invest the difference in an all market index (VTSAX or VTI). The earlier and more you invest while staying the course by NEVER selling before your drawdown phase gets you out early for good behavior. This is a recording.
I put 30% in investments/retirement. Mostly because I don't know what I want to spend it on. Also, not going to pay off my house until maybe retirement with my mortgage rate being 1.7%.
I’m torn: getting rid of a mortgage early is great, but you almost have to “make up” for throwing more at the house than retirement accounts. But again, you have the ability to invest heavily with no mortgage so it all can work lol
I seen a view videos that if you pay house off and put that extra money into retirement even though its a shorter time you still have 99 percent the same amount of money as if you dont pay house and invest more now and pay off house latter it really doesnt make a difference in retirement accounts its about piece of mind of the house being paid off @@jacobpierce6153
Would you let someone put a 7.5% management fee on your investments? 10% average market returns - 2.5% mortgage rate is a monstrous 7.5% opportunity cost on the money going to pay off the mortgage early @@jacobpierce6153
Just paid off my mortgage…going up to 20%-25%
Congratulations! 58K to go over here!
Way to go! 👏
Congrats! I have 66k to go!
Love it!
I’ve got 23k left to pay. Can’t wait to be free of it.
My portfolio for the past 30 years has always been self managed and I own 3 shares of Berkshire Hathaway Class A stock (BRK:A) which I bought in at about $17,000 during the mid 90s, I'm currently liquidating some of these positions to incoporate new Gen. Stocks, but am I better off re-investing into Gold as it seems stocks are a little too unstable right now.
DCAing amongst various assets is a good strategy and can help reduce the impact of market volatility and thus a good strategy if you are looking to compound . However it is important to consider financial advisory when investing .
I agree. Exactly why I now work with one. A lot of folks downplay the role of advisors until being burnt by their emotions, no offense. I remember some years back, during the covid-outbreak, I needed a good boost to stay afloat, hence researched for advisors and thankfully came across one with grit. As of today, my cash reserve has yielded from $350k to nearly $1m
i'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
"Laurelyn Gross Pohlmeier," a well-known authority in this field. I would recommend looking into her credentials more because she has a great deal of expertise and is a great resource for anybody looking for advice on how to navigate the financial market.
Thanks for sharing, I just looked her up and I would say she really has an impressive background in lnvesting. I have sent out a message.
15% is a healthy amount. If you're comfortable with having your mortgage (at a historically low interest rate) then throwing more money towards investments might be a good way to go.
Lets say your salary is 1. In retirement after inflation and medical bills you will need about 4. In order to generate an income of 4 you will need to have assets of about 100.
If you calculate how much you need to invest every year starting at age 25 or 30 to get to 100 you need about 0.15.
While Dave usually bases things on psychology this one is just math.
And this is why I don't believe that 15% works at all ages. I started saving/investing in my pension only when I was early 40s. The math changes then. I now put in 40% in my 50s and the numbers will reach between 100 and 200 in your equation. Because it's over a shorter period of time it's harder to predict/expect growth.
15% for some can be 500$ or 5000$ You would not want only to invest 15% on 1000$ because after some time this money is little for what you need Later Travel or Buy Nice things.
@@gonnahavemesomefun The Less you Use the More of the Compound will happen and help you Later.
That 15% guidance has been around for a long time in financial circles. In the final twenty years before retirement, each year when I got a raise, I would increase my contribution amount by the same percentage. For example, if I got a 3% raise, I upped my contribution rate from 15% to 18%. Works out well as you never miss the extra $$.
Exactly. Increase the investment not the lifestyle.
Me too.
Are you saying that if you made $100000 and you got a $3000 raises, you went from contributing $15000 to 18540? Or you would go from $15000 to $18000? If you contributed an extra 3% a year, your disposable income will decrease each year.
15% inflation goes brrr
Good idea. So right now at 29 I'm putting 15% and plan on retiring sound 55. If I do that with my cost of living raise which is about 3% yearly about how much do you think I could have at that time of retirement? Right now it's projected about $2.4 mil. Not including a pension and just what I save on the side.
Once your debt free 100% and then you put the maximum percentage you feel amazing. My company lets us do 30% 401K and of course thats what I am doing.
30% match?
@@TartarianTopG no 3% match. But I can only give 30% of my check.
Doesn’t the 401k max at 19500 though? Is that 30% of your income? Nice job
By the way
@@Moriningland For 2023, 401(k) contribution limits for individuals are $22,500, or $30,000 if you're 50 or older. Yes, it's 30% of my income with a 3% match. The job is part-time so I am never going to get to $22,500. When I get my dream job, of course, it won't be 30% anymore because my income is so high I'm still going do up to 22,500 though.
Thanks for the great advice! God bless Dave and George!!!
I recommend investing 85% of your net household income in good growth stock mutual funds. If you can't afford a mortgage (15-year fix-rated, of course) after doing so, I recommend you live on the streets. In this way, you will be able to live and give like no one else in 10-20 years.
One thing Dave not mention here is it is okay to go 6 percent if you make 25k a year and also maxing out your health savings account your exceeding the 15 percent when those two are put together that is 12.6 percent for HSA and 6 percent = 18.6 percent contribution. Even at 30k if somehow made more that is 10 percent + 6 = 16 percent putting over the 15 percent.
I have a mortgage at 2.25% that takes up 14% of my net income. It stupid for me to pay my house off early with those rates. I will have hundreds of thousands of more dollars by maxing out investments now than later.
So I guess you’re ok with paying double for your house…that’s sounds really smart…smh
I paid off my mortgage 2 years ago (age 33). I’m saving 15% towards retirement and enjoying the rest. No point in being debt free if you’re never going to enjoy the money you have.
Hypothetically at 65 would you rather have 3 million in retirement and 200k left on your mortgage or 1 million and have it paid.
@@lettuceboy2382 1 million and have it paid.
@@RyanABC123 it’s interesting that the human condition is such to eliminate risk (debt) when the data is overwhelming clear that investing over the long term provides superior returns. Even when i present numbers that show you could pay your debt many times over you still choose the psychological comfort of having the debt paid instead
@@lettuceboy2382 lol
@@lettuceboy2382 Don't forget having zero debt from ages 33-65 lol. This is a huge plus for freedom and mobility.
My employer mandates an 11% contribution (no more, no less) to a pension and offers optional 401k or 403b accounts. Should I be contributing 4% to the separate 401k or should that number be 15% also?
Great conversation by Mr Ramsey & George about how the Baby Steps & the 15% into retirement are guidelines and not absolutes. What I find funny is where people argue on how inflexible these guidelines are when it really should be up to the individual, and the main argument in these comments & on the show always seems to break down between a security (pay off mortgage & low interest debt first) versus opportunity (max investments & pay off low interest debt slowly). I think people should first figure out what do they need to spend to have the lifestyle they want. Then find out what's left over of their income & determine what to do with that. For a lot of folks it's possible have a comfortable lifestyle now and invest more than 15% so you can have an even better lifestyle later, or be able to retire earlier. The time value of money & compounding interest will always overpower the security mindset of paying off low interest debt, so I'd rather put my extra money into investments and find ways to maximize the purchasing power of the dollars that I do spend.
You are so right but your statement has too much nuance that a person who has finance issues cannot easily follow. Dave provides a one size fits all framework that is easily adopted by all. It a psychological hack not a mathematical one. When I was a kid I learned to bowl. The alley put up guardrails so I could succeed. When I knew enough about the game I didn’t need the guardrails.
I agree. You can always tell who read TTMM vs who just listens to the podcasts. Lol The book certainly tells you to adapt the baby steps, some things are just guidelines, use your common sense, etc. People scoff at stopping retirement contributions while Dave wrote that if paying off your debt will take a long time, continue making the contributions. The other one is "This is geared to families". Well if you don't have a family, can't or choose not to have children, then don't save for a child's college education! People will turn anything into an argument.
@Twana H regardless if it would take a short time to pay off debt you never stop investing and never give up the company match. Idc if its 27% credit card debt 100% match still beats it.
"The time value of money & compounding interest will always" - Always? lol. SP500 return from 2000-2010 was negative.
@@Cwilly13ify it was actually just under 10 percent which was better than the prevailing fixed mortgage rate of the same time period
once your house is paid off add your house payment to the investing and you should have no issues retiring well
Can someone break down the 15% investment please. Is it 15% per check? Per month help thank you
I am an active duty service member and I have been investing for a few years. I have reached a point where I could benefit from financial advice to improve my $160k portfolio which seems to be stagnant and maximize return on my investment.
You didn't provide detailed information about your portfolio makeup. However, I recommend seeking guidance from a financial advisor for a well-informed portfolio restructuring.
Your advisor seems competent. Could you share how I can reach out to them? I've recently sold some property and i am interested in investing in stocks.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
Scammers in this thread.
I invest 60% of my basic wage, comes to around 40% of my full income. I do this because the tax benefits far outway using the money to pay off my mortgage 2 years quicker (3 years instead of 5). I think Dave's point is doing that is a risk. But to my eyes not having as much in retirement is also a risk. If I didn't do it this way I'd lose out on around $100k. I am still paying off my house 10 years early though.
I did 5% for over 30 years. At 55 i have 500k. Borrowed against it to get my down payment for two homes. Wish i could've afforded to do more. Im semi retired at this point.
Debt is fine especially if the interest rate is much lower than with the market will return. Keep in mind you don’t pay taxes on debt, you pay taxes on income
💯
The interest rate on most debt is almost never lower than the market return over time. Mortgages are usually an exception, but why carry debt at all if you don't have to?
It's true you don't pay taxes on debt--you pay creditors instead, and it's not cheap. Debt is never fine unless it's a short-term situation, and if one follows Dave's principles, a crisis requiring going into debt will almost never arise.
@@jodylarson4697 I have a 2.25% mortgage rate. Inflation is 7.9%. heck, TIPS or iBonds pay way more than the mortgage costs. You'd be stupid to pay that down.
If your income gets reduced from taxes and debt payments how is that a win?
@@thedopplereffect00 I have Ibonds and no mortgage! Win win!
I think 15% is a good rule of thumb but really I wish people didnt take rules of thumb as hard numbers. I look at what number of $ I need to retire at the age i want to retire and I let that dictate the percentage I save. I do think capping it at 15% for most people while you have a mortgage is a good but you still have to think about it in terms of how that let's you achieve your end goal. Not simply to assume you save 15% so you are good. Plan it all out.
If my job matches 3%, should I be doing 12% plus the 3% match or 15% of my own?
Do I count my pension contributions towards the 15% mark I pay 7% pension
Great advice. Appreciate the knowledge drop! 🙏
If you have extra and it doesn't cramp your style, throw more toward savings.
I'd like to know what she's freelancing so I can get in on some of that!
Holy mackerel!
Does 15% of household income include just what I put in or does it include employer’s 401K match?
I am 30 yo, i did the math and with compound interest, investing 300 a month i could retire at 65yo with around a million. I live from renting, not own a place. I save around 1k a month. Should I throw the whole 1k a month to stocks, save it comoletely for my downpayment or 300 for stocks and the rest for downpayment???
You should follow the baby steps, make sure you have all those things taken care of before you jump into owning a house. Get your $1000 emergency fund. Get rid of your debt. Get set up so you are investing 15% for retirement. Get 3-6 months of living expenses set aside. If you still have money to set aside for the down payment, put that money in a high yield saving account, so you get a guaranteed return that is higher than the measly 0.5 - 1.0% a regular savings account gets. Stocks have been on a meteoric rise, and are likely to have a downturn, soon. That is fine for retirement investing, you dollar-cost across the rise and fall of the market. But for your down payment money, you want a sure bet place to hold your money and give you a decent return as it accumulates until it is large enough to be used.
i usually put 60-75% of my income towards my investments every month.
Because he wants to keep everyone working until their 60s, paying off your mortgage is not always correct depending on so many things. Save as much as you can and live within your means.
I’m 27. I know absolutely nothing about investing and planning for retirement. Trying to research now. I make 90-100k a year. Just started a new job with a 401k with a 4% match. Does the 15% recommended include the match? Also I have about 100k in savings and no debt so is there a better way I should be investing?
Interesting. I’m 26, know a lot about finance and retirement, make about $101-110k per year, and just started a new job with a 401k with a 5% match. I also have about $101k in savings with negative debt (people owe me money).
@@grahamcarmichael6567 that’s great! My employer just increased the 401k match to 5% as well.
@@Camj27 cool! Mine actually just increased mine to 6%.
The employer match is not counted as part of your 15%.
Savings accounts typically do not keep pace with inflation, so you actually lose buying power as it sits there. At the very least, get that money into a high yield savings account. Following Dave's plan, you should have 3-6 months of living expenses in cash. The rest should be invested and working for you. If you are stuck on something really safe, you could buy CDs or Treasury Notes. But if you are willing accept some risk, you can invest in the stock market. If you want to buy mutual funds, you can open a Roth IRA account with Vanguard. They have funds that mimic different indices used to measure the stock market, and their management fees are really low. As a couple examples, Vanguard has funds that mimic the S&P500 and another that mimics the index for the entire US stock market.
A different way to go would be to open a Roth IRA at a brokerage account like ETrade or ScottTrade. You can by equivalents to those mutual funds, called ETFs. Stock symbol VOO is the same as the S&P500 and VOO is the same as the Total Stock Market fund. All this is for the cash you have at hand.
Going forward with your employer, you can meet your 15% goal with just your 401k. 15% of $100k is $15k, and the contribution limit for a 401k is $23k. The employer match does not count toward that limit. The annual IRA limit is currently $7k, so if you go that route, you still need to put $8k somewhere else. An IRA gives you more control over what goes into it, but the 401k will allow you to contribute a lot more.
So, put some of that cash aside so it is there if something bad happens, but get the bulk of it working for you, and get that retirement fund rolling.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Donnafrank-k6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@BrandonIvan-c6e Oh please I’d love that. Thanks!.
@@Donnafrank-k6e Clementina Abate Russo is her name.
Lookup with her name on the webpage.
If you have a Roth IRA and a 401k do you put 15% in each or 15% in total (7.5 and 7.5)
Max them out and let the cheapest mortgages in history ride to amortization.
It depends if you are on 4 or 6th step. If you are on 4th then only 15% total. I’m order to give you wiggle room to pay off house. After house is paid off that’s when you can max out both
15% of your gross income is your target. You put the money wherever you need to to get there. For most people, the 401k is enough. In 2024 you can contribute $23k into your 401k per year ($30k if you are over 50). That exceeds the 15% mark for lots of people. If you still have money left over, then you have to use an IRA. Or, if you are not happy with your 401k plans, contribute enough to at least get the company match and put the bulk of your contribution in an IRA. But the yearly limit for IRAs is $7000 ($7500 if you are over 50). But the nice thing about IRAs is that you have total control over how the money is invested. So there are pros and cons either way you go.
I don’t understand the wisdom behind paying your mortgage off, assuming it’s 3-4% interest rate. You can get a much higher return in the market.
I don’t own a house and do 35% and I’m not interested in owning a house unless I can pay cash for it.
I'm at 25% right now. 36 years old
10% pension contibution ($7826)
7% 457 Plan ($5200)
8% Roth ($6k)
Don't hear the 457 plan much, I have that too.
How long have you had it? Is it performing well?
Man your salaries in America are wildly advanced to the UK, an average citizen could not dream of investing these numbers.
I purchased Lockheed stock last week. It's gone up 21% since then. Time to sell. Blood money is still money.
That's a $400 stock. Not much profit to make from it. I only invest In stocks from $10-$60
Why exclude the rental income?
So what if you do more than 15.
He doesn't want you to over contribute and have no money for paying off the house. It's about wiggle room. Once the house is paid then you put more.
You max out retirement once your house is paid for and you are completely out of debt, so you do more at some point but he’s basically just telling her to allocate the money to paying off her house first then after that maxing her retirement
@@ClaxtonBay123 Rental is still income.
She's doing less than 15 if she's not including rental income. I don't personally think it matters but I don't see why Dave wouldn't include it in the calc...
@@robloxvids2233 That's what I don't get. Why exclude 1 income source?
Dave I'm the author of EIGHT DAYS IN AN INNER CITY SCHOOL please talk about the out of control OCCUPATIONAL LICENSING for k-12 teachers that's why we have teacher shortages
Why would I pay off my mortgage early when my interest rate is 2.25% and my S&P 500 index ETFs produce 10%? I could pay my house and car off right now but never will because my interest rates aren’t anywhere near the returns I can get via ETFs and mutual funds. If need be I can always sell some shares to cover my mortgage. The bulk of my shares are over ten years old and the odds of the stock market crashing at the exact moment I need the money are slim to none. Sure most self made millionaires don’t do this but if they did, they’d be far richer. Live below your means but use leverage.
You wouldn't these guys are financially illiterate 🙄
@Terrence. We are finally at a point of potential market downturn so you can’t use the same analogy any longer.
Dave is wrong and so are you. Or you are both right.
Why invest heavily now when market is expected to go down?
The key is balance or doing a combo of both.
Dave is more wrong from his baby steps saying to pay off mortgage first after the 15% set aside.
I think it’s a combo of both. I don’t see any issues carrying a mortgage loan into early retirement.
Might was well let the Roth IRA build up while also paying a little extra in principal if possible.
Interest rates are on the rise too so it makes the low fixed rate loans look great.
Why would you pay off a 2.87% mortgage early instead of invest in stocks that average ~10%
You shouldn't these people are financially illiterate.
Where are you getting 10% now if I stock up on good stock and work to paying of the mortgage it’s win win
Because things happen. You can get sick, lose your job. And then you have a mortgage payment with no way to pay it. It's called "Financial Peace". It's just like Dave's advice to pay off the lowest amount of your debt first, instead of the highest interest rate. It's psychology, not logic. It's human nature.
Dave, thoughts on saving for a child's retirement?
I have savings, and i wish to open a pension account for my chid when they are born, and deposit a one off sum of, say 10,000 from day one, to take full advantage of the power of time and compounding. locked away until retirement for them. so even if lets say, hypothetically. to worst would come about, and nothing was ever saved for retirement later. then that 10,000 with 65 years of compounding, would still be a sizable chunk toward retirement.
ideally, once they come of age, working age that is, they would then just add to it. like they would with a normal pension. but only this time, they would be far ahead of the game. a head start if you will
Is it 15% of your gross or net?
I think you guys are oriented to families. Talking about mortgages and kids college. We will see a significant percentage of single people in their 40’s and 50’s. Why a single person would buy an empty house or save for a nephew’s college? Any advices for mature single people ? Again we are living in a today society where building new families is getting harder and harder
Having a paid for house is a good principle even if you are single or married it’s one of the greatest assets you can own. And he teaches if you don’t have kids that you skip baby step 5 (fund kids college) and move on to 6 and 7 which is pay off the house early and build wealth and give. It’s a lot easier to build wealth when you don’t have any house payments or any debt payments of any kind
Even if you are single buying a property to live in (can be an appartment) is usually a good idea. Of course there are some exceptions, such as people who need to move a lot, but for most people it would be good. And Dave says you don't need to save for college if you don't have kids.
Buy a condo or small home. Skip the college savings. Same rules. If you don’t buy a house for some reason (moving a lot or housing is included in your job) you skip to baby step 7.
If you don't have kids you skip baby step 5.
Are you saying single people don't need a roof over their head? Why would their house be empty?
Absolutely gagging listening to Dave tell someone to prioritize paying off their mortgage before maxing their retirement account. Committing financial manslaughter
Dave will also say not to have debt. For retirement, he says contribute 15% and pay down your mortgage will any extra money.
It’s circumstantial, having a home is a way to fight inflation since the home goes up in value and if you have a locked low interest rate. I always say find a nice between the paying off mortgage and investing.
@Basic Boomer but are you 200 million good like DR??? Not too mention his company will be the gift that keeps on giving for generations.
@@beastfromtheeast9318 inflation will make it easier to pay the mortgage off in the future, so inflation considerations should cause you to delay paying it off.
While I agree with the factual disagreement with his advice, I don’t understand the aggressive emotional reaction. Why invoke a visceral disgust? Isn’t that dramatically overdoing it?
Because if you invest 50%, you won’t have any money left to spend on Ramsey.
Is this 15% per pay check or per month??
Gross income.
I wanna start a discussion about OASDI and how can I opt out. I just got baffled this morning to see that I pay more taxes together than I take home. I mean I pay 55% taxes on my paycheck and my take home is around 45%. I need help here !! Dave..
Leave California
@@gsquared2394 I left California last year for the same reason !! 13% State tax but man OASDI.. that paying for some lazy losers claiming to be freaking disabled .. I wanna get rid of that disability man
Leave California but make sure you don't vote Democrat in whatever state you move to.
If I'll have pension should I still invest 15%? Or is it less?
Still put in 15% so you have the flexibility to leave your job if you’re over it. Otherwise you may grow to hate it but you’re stuck putting in your years being miserable every day.
How much do you think a pension will pay out? I work for a private company around the 5/6 billion dollar net worth but not sure what my pension will look like at 55
15% works for me.
15% is the bare absolute minimum! People who think it's better to pay down a low interest mortgage and not invest are people who want to work until they're 65! I invest $110K annually, not a penny goes towards my 2.25% mortgage. It's absolutely idiotic to think you'll be better off. 🤷😂.
It's never based on math, because that would blow up the baby steps! And the case studies are most likely from people making $50K or less. And you said it - time. You're telling an older woman to pay down a rental and waste needed time. 🤷🤷
"[P]ay down a low interest mortgage and not invest . . . ." It's not absolute. You can accomplish both without sacrificing the other. Point remains, you have more to invest (and better security) when you get rid of a payment.
Yeah..you're right..it's NOT based on math. It's a BEHAVIORAL DEAL. If we all were doing proper math..NONE of us would be in debt. duh.
You all keep using the math argument..and you're not wrong, but it's not a math problem.
Debt ....= risk. Plain and simple. Dave and plenty of others who have explained this and LIVED this have already explained the Baby Steps work every time for valid reasons.
Rob, you love being stolen from. Just remember, that 2.25% is money you will never recover, just another sucker.
@@motoryzen Worked for 30 years, and Dave has made more millionaires than Rob has teeth. He is a debt head. He loves making a banker rich.
@@MikeThePike316 , Inflation grew 5.9% last year abd so far 7.9% this year and all the while my low monthly mortgage stayed the same. If you have a paid off house, but a small amount invested, it's not security. I know people who had a paid off house, but we're forced to sell it because they couldn't afford the taxes and property insurance. It grew at a faster pace than their income did. They put all their money to pay it down so they could be "free" and in the end they lost it anyway.
Listening to Dave I should invest ~$42K annually and dump the remaining ~$65K each year in to my loan. I have a $360K loan at 2.25%. It would take 6 years to pay it off. In those 6 years, I could have invested $360K in the market in addition to the $252K...$612K that could have been working for me. After 6 years I add my monthly mortgage payment to what I was investing, a whopping $1495 a month. 6 years later I am now investing ~$127K annually, but during those 6 years if I stick to my $110K annually, or $9166 a month, I'd have accumulated $900K.
It's not a one size fits all plan, and sadly, he didn't follow his plan as he grew his business and got rich. He is a businessman who has a plan that fits most Americans who can't manage their own debt and will do something that will have them worse off in the long run because it "feels good". 🤷
How can I put 15% to retirement when already putting 11% in unless I get mad sales and Matt overtime they take half of my money every week mostly and health insurance over 380 a week not to mention the other garbage😮
Are you following the Baby Steps?
@@damondiehl5637 how do you follow baby steps when you’re over 50
Does the employer 401k match factor into the 15% goal?
No
I am trying to buy myself a home, shelter for today is more important than retirement imho. But my employer offers a 401k match at a certain precent. I am only contributing enough to be able to earn the match, which is 8%. I am only contributing because I don't want to miss the opportunity for the match. If there was no match, i would not be contributing at this time, because my living quarters is my first priority
20% is better advice.
15% gross or net of your income?
Push for 25% and skip paying down your low interest mortgage.
Gross
36,825 more to go. Paying the mortgage off
15% is irrelevant. Save what you need to in order to fulfill a comfortable retirement. Pay off debt in order to reduce risk and maximize cash flow when you need to in alignment with your goals. Do your own due diligence with your personal situation.
15% but what about when only 12% makes you hit the 23k limit? You have 3% left over.
Assuming you're investing in a solely in a 401K then invest the remaining in a Roth IRA, if your income allows it. If not $7K in a traditional IRA. If Roth or traditional IRA is included in your contribution then if your married max out your spouse's 401k or IRA, even if they don't work they're eligible for a spousal IRA or Roth IRA. If you're unmarried or you have maxed out theirs retirement then I believe Dave recommends investing in a taxable brokerage with a growth fund or index fund like S&P 500. If unsure you should probably meet with a financial advisor.
investing requires good experience and knowledge to carry out a good and successful trade, I have lost a lot trying to trade all by myself May I ask which investments are good?......
I think HSA contributions should be included in the calc. After a certain age your HSA acts like a 401(k). And being able to pay for medical bills is part of retirement.
65
Triple tax advantaged if you use it for medical expenses. Seems medical expenses are a substantial component of many people’s retirement costs, and the HSA can cover that tax free. If used this way, it’s better than a 401(k) because you never pay taxes on the principal or growth.
But then they can't push ads for their Christian group insurance plan
👍🏿 advice
What a bizarre set of arbitrary rules. If you want to keep working till your 65, then stay at 15%. If you want to retire 20 years earlier, you need to do more.
I get why people want to retire before 65 but what are you gonna do for the majority of your time if you're not working.
@@chikipichi5280 if you lack creativity or passion about a hobby or hate traveling, then maybe it's not for you.
@@thedopplereffect00 that requires too much money. I'll burn through retirement 😭😭😭. Imma have to die by 65
I actually think 15% is not enough, nowhere near. It should be at least 25%.
I’m at 14%. Woo-hoo!
15% is fine if you start in your 20s. If you start in your 40s, probably should be much higher
What if I started at about 25 with about 7% and plan on bumping up soon to 15% until like 55? Projected to be around 2.4 Mil at that time but hopefully market does way better than 10% on the return over time
@@tr3slech3s take inflation into account and use 7% as your return. That'll give you your return in roughly today's dollars.
@@aaront936 yeah that number looks a lot smaller. I’m gonna stop stressing about it. Someone told me if I add the cost of living amount every year to my 401K contribution I’d have around 4.6 mil so I might consider doing that
Between myself & my employer I’m at 45%😳
15% is not enough especially if you don’t want to work for 40-50 years or the rest of your life. 15% is not a large amount it’s the bare minimum if you don’t want to live in a box in retirement.
Don’t get me wrong I have sympathy for people who can’t save more than that however if you can you absolutely should be saving a minimum of 25%
Maybe Dave's thinking is if you follow his steps, by retirement you'll have a paid-for home or have sold said paid-for home and used the proceeds to buy a new home (box or not), thereby not requiring as much money to live on since mortgages take up a significant portion of a lot of people's income.
20-25% is a good number and very doable
@@MrsThollo I save 75% and will retire at 35. I don’t follow Dave’s steps because I don’t want to work 40 years. I want the freedom to make my own choices. Dave’s advice is ok for someone who is just beginning. But 15% is still not enough.
I do 10% into bitcoin.
Much harder to do the dave ramsey plan when we have super inflation
Inflation makes it easier to pay off your mortgage though, as your mortgage balance is static.
@@justinc8293 not when wages don't increase. If mortgage stays the same, cost of living increases, and wage doesn't increase, it puts significant strain on the plan
Justin I think your thought patterns don't make sense; basically counter intuitive
@@jamesklinkhammer7539 I'm not saying that inflation is a good thing, all I'm saying is simply that inflation is good on those who own commodities and property, as not only should the value of your property increase, but secondarily it IS easier to pay down your mortgage.
@@justinc8293 I don't think easier is right word without context. Because you're locked into the contract of your mortgage at whatever its terms are, its a fixed cost that is not going haywire with the rest of the cost of living with inflation. maybe you should instead say you're getting more for your dollar paying down your mortgage?
I've been putting 6% in my 401k at my job for over 20 years, never borrowed from it like most people do and after all that time I have BARLEY 200k in it....smh
You may feel like you're behind, and you are from how much you could have, but you'd be surprised at how well you're doing compared to the rest of the country. Most people have little to nothing saved for retirement, little to nothing saved for emergencies, and up to debt to their eyeballs. Crank up the 401k contributions and watch it grow.
What is it invested in? A lot of 401k plans are very conservative. Take a look see if they have a regular s&p 500 fund and opt for that if you got a good amount of time left to retire.
Was it going into a money market fund or something? High fees? Some awful 401ks have like 1.4% expense ratios. Better off with an IRA account in that case, unless they match.
Because Dave doesn't understand compound interest and treats all debts like high interest credit cards. Even though mortgages were sub 3% for the last 2 years.
What do these people do for work making 100k to 300k??
A Business Analyst in an IT company makes 100K after a few years of work. A Project Manager can get over 100K pretty quickly. Get into management and it goes up from there. Developer, Database Administrator easily make that kind of money. The medical field pays pretty well. Tradespeople in certain markets are starting to make that kind of money and there are jobs all over the place, because everyone has bought into the "You have to go to college" mantra.
She has great income and if she opens and funds a Keogh Roth with the max, in 20 years she will be on easy street.
If you just double it, you can cut in half your working career
That's not how compounding interest works, you need time. Investing 16% over 20 years versus investing 8% over 40 years, the shorter 20 years would yield 40% less than the 40 years.
Must be nice to be favored by God financially.
Proably not healthy ..but I panic some if I only saved 15%.
I’m currently retired, and considering the current rollercoaster nature of the stock market, I decided to stay on the sideline for awhile, now I’m worried with the numerous bank failures as of late, am I better off reinvesting my savings in the stock market or do I wait?
there are numerous intriguing stocks across various industries that might catch your attention, but it's not always advisable to act on every prediction. Therefore, I suggest that you work alongside a financial advisor who can help you determine the best times to buy or sell the shares or ETFs that you are interested in.
I have been in constant communication with a financial analyst ever since my company was founded. The difficulty in investing in trending stocks in today's volatile market is figuring out when to buy or sell, which may sound simple but can be really difficult. Having seen a $900k gain in my portfolio in just a year, I have given my adviser full control over choosing when to enter and quit the market.
@@Nernst96 Your experience sounds fascinating. Would you be able to recommend a reliable advisor whom you have consulted with?
Colleen Rose Mccaffery, my financial advisor, is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field.
Thanks, I just googled her and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
Add ten percent of your income to tithing that’s a pretty healthy portion
I think you should be saving and investing 50% of your income.
STOP PAYING FOR COLLEGES THAT HATE YOU!
Colleges love having tuition paying members, whether by loan or cash. The loan agency love victims they call customers. They’re obviously not looking out for your welfare, but it has nothing to do with hate. I don’t understand your motivation for hyperbole.
I'm saving 35%...=$15,000 per month
Stop Capping
Their is no financial benefit of paying off your mortgage early, it is simply a mental and emotional benefits as you would much better at investing the surplus amount that you might be using to overpay on your mortgage.
That might only be true if you have a 0% mortgage
Quite a few people who lost their homes in the past couple of years would disagree. I won't even go into the other unforeseen events that occur that make people think differently.
@@wordsalad01yes but u've lost the time, presumably years that you could've just invested the overpay amount and you would've given that money time to compound over many more years compared to investing the entire mortgage payment after paying off the mortgage in which case u will have less years for that money to compound.
@@justinbledsoe3032 it is still true if u have a 2-3.5% mortgage. Anything higher than that might get risky
@@MrsThollo people only lose their homes if they are not making the required payments on their homes. I wasn't talking about this. I'm talking about people choosing to pay their mortgage faster and more agreesively than necessary. In which case it's much more beneficial financially to pay your mortgage over the 25-30 years term and invest the amount you would overpay in an index fund.
I have a 2.999% mortgage. I don’t really see the point in paying it off early. That’s basically free money.
I didn't invest anything in 401ks or IRSs. I made a fast fortune. I went into Art dealing with Hunter Biden. We sell $ 500,000 original Hunter Biden Art pieces to anonymous buyers. We have made a fortune by giving buyers access to " The Big Guy".
Dave Ramsey’s advise is ok. But you cannot get rich following his advise. At best you can be middle class.
Lol how many people going to get up rich. Stats show not many. Dave just gives a guideline for everyday folks to have a chance. MOST these people would never been rich anyway. What Dave has done the most has given them a plan to a stress free life without worry of whether or not they can pay the bills or eat food this week.
Yeah that’s wrong.
DO NOT REPLY TO THE COMMENTS ABOUT FINANCIAL ADVISORS. I hate seeing this on every finance video. It's just a scam to get you to send money to some fraudster.
So, Mrs Nigerian scammer is a fraud?
After the stock splits, just buy Google and Amazon and hold.
You realize a stock split does not change the value of the stock at all right? Example I own 1 stock of company X and it market share is 1000 and it splits a 1-10 split I now own 10 shares at 100 a piece. The value is the same total of 1000 dollars
Saving money in fiat currencies is boomer advice.
How's that Bitcoin working for you?
@@8G00SE8pretty good. How’s inflation and Dave Ramsey’s advice working out for you?
Actually you need to get close to 20%. Dave isn't right on everything like he believes.
15% is good while you pay off your house. Would rather put that extra 5% at the house to get it paid off quicker
As Dave was saying in the video, 15% is not a magic number. If you want to do 20% that is up to you or 25% or higher. Everyone has a different size budget.
Most people don’t even save 5%. 15% is a huge improvement for the vast majority of people.
Indeed..I contribute exactly 20%
Start at 10% and get to 20%. You are better off investing than paying off your mortgage. According to Dave you get 12% returns and real estate has been appreciating 6% a year since 2009.
Why do people want to be rich? Why not help people out along the way.We have zero debt .house and everything and are saving the 15% but help others out .Don’t want to be a millionaire .
The point is having a nest egg to retire on, and create an inheritance for future generations. You'll be a burden to society if you run out of money during retirement.
Do you have children?
Some people think of generational wealth. Some people believe the more they have, the more they can help. Some people do multiple things with their money simultaneously (e.g. save, invest, donate, pay off debt).
@@seanjean9677 yes we have two adult kids who will only get a little of our nest egg.They have to go out and kill something and drag it home .We help them out along the way.why give them money they will blow
Having 1 million dollar does not make you rich. It means you can afford to eat and put a roof over your head forever without having to work. You can’t afford a fancy car, watch, cloths electronics with a million and keep that million. 1 million is 40k a year indefinitely. 40k is $3300 bucks a month not exactly balking out.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
While the current market offers short-term profit potential, it's crucial to note that executing such a strategy requires expertise and skill.
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a CFA, even though I was skeptical at first, and I beat the market by more than 9%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an analyst.
impressive gains! how can I get your advisor please, if you dont mind me asking? I could really use a help as of now
NICOLE DESIREE SIMON is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.