As a 50 year old who started late, I'm so mad at myself. My wife and I have lost out on multiple years of retirement. Any young people in here reading this, do not wait. Find a way to make it happen - invest early in life!!!
It’s never too late to start! I tell every 20 year old I meet and have schooled my own child- save, invest and don’t go spending a lot of money on cars while you’re young! You’ll regret those payments soon enough I didn’t start till I was 45 because I was a single mom and had to build my career- now I have a big shovel so to speak and invest over 35k a year in a owner K. I’m targeted for 3 mil which is my goal when I’m 70! Anything over that I’ll be ecstatic. So it can happen late in life and for us single ladies who had to figure it all out on our own :-)
It’s important for the 25 years and younger people like me to understand the difference between saving and investing. I feel like people think having their rainy day fund is all they need. But that rainy day fund won’t grow, you need to invest on top of that and allow those dividends to grow and compound. I work for a bank and I talk to a lot of Gen z who are clueless.
I’m 21 right now and I’m currently saving approximately 600 dollars a month working/ going to school my question is should I fund a Roth and save the rest to keep contributing to emergency fund/cash? I also still live with my parents. Which is why I’m afforded the opportunity to save so much at a young age.
You still want an emergency plan, even living with your parents. Maybe that isn't 12 months of expenses(which would be minimal in that situation), but it's a good habit to have some cash on hand. At that age and in that situation, $1k might be plenty. I can't say for sure on this limited knowledge, but also keep in mind that you won't be 17 next year and eventually that safety net of living at home is likely to diminish/disappear. Invest aggressively, but never neglect the short term emergency plan.
TLDR at the bottom Step 1 is covering deductibles. That means having money on hand for the highest insurance deductibles. At 21 in parents home, they may still be covering health? And definitely home. Then save to at least cover car insurance deductible. Step 2 is employer match. If your employer offers a match into 401k then do the max if possible. You may skip this step if you aren’t far enough into your career that they even offer a 401k plan. Step 3 is high interest debt. Ideally you’d have none, but this world aint perfect. Any interest over 6% is high. Pay however you want, personally I prefer highest to lowest interest. Anything under 5% can be paid on a plan honestly. Step 4 is emergency reserves. Your expenses may still be low or nothing, so maybe 3-6 months living expenses seems pointless but it isn’t and you should save at least $1000 for EMERGENCIES ONLY. Though more is better. I’ll stop at step 5, Roth and HSA contributions. Primarily ROTH IRA, everything else completed you want to max this ish out. But only if you’re set up everywhere else. Doesn’t make sense to put the full $600 here then have no cash on hand if your car breaks down or needs new tires Or absolutely need to quit your job but have nothing to fall back on TLDR: If you have enough money saved up to cover deductibles and emergencies, paid off debt, match your employer, put $550 a month in ROTH IRA to max it out.
A lot of people don't think they will live to 70. (So why save?) I saw what that did to my parents - and ME. My father had to leave the workforce before 55 and lived to 70...My mother lived to 77. A financial nightmare many, many times for each of us.
I know! My husband and I disagree on this! My father in law passed away at 54, so one side of the family believes that 70 is so far away. My parents on the other hand are close to 70 and in good health (praise the lord). I think is better to be prepared than not to.
thankfully i have good genes but also my bp is super high so theres taht. im 54 parents in their mid 80s and most my fam live beyond 70 unless they burned their bodies like my alchoholic uncles. take care of your bodies and they take care of you
Start investing as early as possible is the key to compound interest. Whether you're 12, 18, 21, 31, 41, 51, or 61, start TODAY! Wake up to millionaire status one day.
17 years old is there anything I should be getting ready for currently drop shipping and trying out a few eccomerce jobs what should I be doing currently.
Excellent tips! Thanks! I have a question though: everyone gets excited when we're talking about 10% returns... but seriously, where and how can we get 10% returns year after year, especially in 2023? 5% in a GIC, sure, but what generates 10% without too much risks?
You’re making it overly complicated for no reason. Over the last 100 years, the stock market has grown on average by 10% annually. All you need to do is invest in any index fund that tracks the S&P500. It’s not rocket science.
29:40 Tell him that the alternative isn't the American dream, its the American nightmare. Don't willingly put yourself in a position where you have to work to death.
Hi! I’m new to the Money Guy Show. Can someone tell me if the FOO course includes the Know your number and Net worth tools or do you have to purchase all of them separately? Thanks!!
They are all separate. However, FOO includes a net worth template, but it does not have the same functionality as the net worth tool - welcome to the show and happy to have you here 👍
When talking about saving and auto purchases (20/3/8) why are the percentages based on Gross (pre-tax) income and not net (post tax)? I'm saving 20% net, which comes out to ~14% gross.
I believe they do it because it's the style that us commonly used for home advice as well and most people know what they earn before taxes and other deductions off the top of their head.
Clearly saving 25% is better than 10/15/20%, but why target 25% instead of 30/35/etc? Is it trying to put a decently attainable goal? If you stop assuming social security benefits (a somewhat recent change to retirement goals) I can see a reason for increasing above 15%.
Some of their content explains that based on their assumptions about when, where and how people save, expected rates of return over the life of an investor, and the expected tax burden in retirement that 25% savings corresponds to income replacement that results in a similar lifestyle in retirement for a good swath of the audience.
At 25%+ saved for retirement, you are already a budgeting and saving mutant, so you can live on way less than you make and thrive when you stop working for an income.
If you’re starting retirement savings younger than 30, you can do less than that rate, and if you’re starting later, you’ll need a higher savings rate.
I have a lot of dental stuff going on and I hear you! I've saved and invested a lot of money! How do I do med bills in my case #1 My dental #2 a mom will not care of her unsaved future but gets a dog....Btw mom is crucial!
Check out M1 to compare to brokerage accout. I used to use a brokerage account. But now use M1 for my dollars after Roth and HSA. Keep up the good work!
The car's interest rate is below the risk free rate so they should not over pay the loan. They should invest whatever they would use to pay for it in short duration treasury bills or a money market account
In regards to the reversion to the mean. What do you think about the amount of dollars that have been added to the money supply? Do you think that maybe this is a new factor when looking at housing? There is a relatively capped supply of housing (stock to flow), when dollars are printed in rapid succession and so loosely, hard assets increase against weak money. I agree there will be SOME reversion to the mean. HOWEVER, I don’t think it will be nearly as much as people are thinking. I know the “this time is different” phrase always looks dumb in retrospect. But I must ask… is this time truly different? At least a little bit. Not acknowledging our loose monetary policy to me personally, is a pretty wild stance to take.
I know im splitting hairs, but I still don't get why everybody calls it compound interest. This is capital gains. Is it just easier to explain as interest?
Bonds used to be better and more prevalent. Stocks used to pay much bigger dividends. "Compound interest" is an easy, older way to say compound interest, plus capital gains, and reinvested dividends.
It's just making math a lot easier + easier to market it, so people will invest money. Plus you can retrospectivly calculate asset increase as it would be compound interest (for example growth from 100$ to 210$ in 10 years can be achieved by doing it 8% yearly). I guess assumption "it's compound interest" is dangerous mostly in last +/- 5 years before retirment, but if you have 25+ years, then it's makes things a lot easier to explain and visualise as a concept.
You mean that college kids might have a beer every once in a while? Wow, my mind is blown. I know you are very new. They say very often that they rounded and assume retiring a year late, lol.
@@erikg666 Im really just messing with you. all good brother. You never know who you are interacting with on here and some times the humor gets lost in the pixels. I hope your wealth building journey continues.
As a 50 year old who started late, I'm so mad at myself. My wife and I have lost out on multiple years of retirement. Any young people in here reading this, do not wait. Find a way to make it happen - invest early in life!!!
Same here
Me too. ASAP.
😊00😊00v
Me too
Thank you for the advice!! I’m in my younger 20’s about to start a full time job, and I will definitely use that advice!
Just wanted say that Daniel does a wonderful job!
It’s never too late to start! I tell every 20 year old I meet and have schooled my own child- save, invest and don’t go spending a lot of money on cars while you’re young! You’ll regret those payments soon enough
I didn’t start till I was 45 because I was a single mom and had to build my career- now I have a big shovel so to speak and invest over 35k a year in a owner K. I’m targeted for 3 mil which is my goal when I’m 70! Anything over that I’ll be ecstatic. So it can happen late in life and for us single ladies who had to figure it all out on our own :-)
It’s important for the 25 years and younger people like me to understand the difference between saving and investing. I feel like people think having their rainy day fund is all they need. But that rainy day fund won’t grow, you need to invest on top of that and allow those dividends to grow and compound. I work for a bank and I talk to a lot of Gen z who are clueless.
I’m 21 right now and I’m currently saving approximately 600 dollars a month working/ going to school my question is should I fund a Roth and save the rest to keep contributing to emergency fund/cash? I also still live with my parents. Which is why I’m afforded the opportunity to save so much at a young age.
Strong. Great start.
You still want an emergency plan, even living with your parents. Maybe that isn't 12 months of expenses(which would be minimal in that situation), but it's a good habit to have some cash on hand. At that age and in that situation, $1k might be plenty. I can't say for sure on this limited knowledge, but also keep in mind that you won't be 17 next year and eventually that safety net of living at home is likely to diminish/disappear. Invest aggressively, but never neglect the short term emergency plan.
do your best to cash flow school while maxing your roth ira and building emergency fund
TLDR at the bottom
Step 1 is covering deductibles. That means having money on hand for the highest insurance deductibles. At 21 in parents home, they may still be covering health? And definitely home. Then save to at least cover car insurance deductible.
Step 2 is employer match. If your employer offers a match into 401k then do the max if possible. You may skip this step if you aren’t far enough into your career that they even offer a 401k plan.
Step 3 is high interest debt. Ideally you’d have none, but this world aint perfect. Any interest over 6% is high. Pay however you want, personally I prefer highest to lowest interest. Anything under 5% can be paid on a plan honestly.
Step 4 is emergency reserves. Your expenses may still be low or nothing, so maybe 3-6 months living expenses seems pointless but it isn’t and you should save at least $1000 for EMERGENCIES ONLY. Though more is better.
I’ll stop at step 5, Roth and HSA contributions. Primarily ROTH IRA, everything else completed you want to max this ish out. But only if you’re set up everywhere else. Doesn’t make sense to put the full $600 here then have no cash on hand if your car breaks down or needs new tires Or absolutely need to quit your job but have nothing to fall back on
TLDR: If you have enough money saved up to cover deductibles and emergencies, paid off debt, match your employer, put $550 a month in ROTH IRA to max it out.
@@eldogg4life This.
A lot of people don't think they will live to 70. (So why save?) I saw what that did to my parents - and ME. My father had to leave the workforce before 55 and lived to 70...My mother lived to 77. A financial nightmare many, many times for each of us.
I know! My husband and I disagree on this! My father in law passed away at 54, so one side of the family believes that 70 is so far away. My parents on the other hand are close to 70 and in good health (praise the lord). I think is better to be prepared than not to.
Regardless of life expectancy, I think one should save anyway to leave a legacy. Not to judge anyone but for me to do otherwise is selfish.
thankfully i have good genes but also my bp is super high so theres taht. im 54 parents in their mid 80s and most my fam live beyond 70 unless they burned their bodies like my alchoholic uncles. take care of your bodies and they take care of you
@@chemquestsI wholeheartedly agree! I know that I cant take it with me but I have family that I love and want to creat a legacy!
Compound interest really is the closest thing to magic there is when it comes to building wealth.
Brian with the OutKast reference! Love it!
Strong work men. Keep the content coming.
- a potential future client
Thank you for these theoretical case studies they help put small decisions into perspective!
Start investing as early as possible is the key to compound interest. Whether you're 12, 18, 21, 31, 41, 51, or 61, start TODAY! Wake up to millionaire status one day.
17 years old is there anything I should be getting ready for currently drop shipping and trying out a few eccomerce jobs what should I be doing currently.
Excellent tips! Thanks! I have a question though: everyone gets excited when we're talking about 10% returns... but seriously, where and how can we get 10% returns year after year, especially in 2023? 5% in a GIC, sure, but what generates 10% without too much risks?
everyone always talks about compound interest but no one says where your money has to go to get that.
You’re making it overly complicated for no reason. Over the last 100 years, the stock market has grown on average by 10% annually. All you need to do is invest in any index fund that tracks the S&P500. It’s not rocket science.
29:40 Tell him that the alternative isn't the American dream, its the American nightmare. Don't willingly put yourself in a position where you have to work to death.
Hi! I’m new to the Money Guy Show. Can someone tell me if the FOO course includes the Know your number and Net worth tools or do you have to purchase all of them separately? Thanks!!
They are all separate. However, FOO includes a net worth template, but it does not have the same functionality as the net worth tool - welcome to the show and happy to have you here 👍
“What’s the one thing that gets me excited?”
Um, everything?
When talking about saving and auto purchases (20/3/8) why are the percentages based on Gross (pre-tax) income and not net (post tax)? I'm saving 20% net, which comes out to ~14% gross.
I believe they do it because it's the style that us commonly used for home advice as well and most people know what they earn before taxes and other deductions off the top of their head.
Gross
Great content as always!
When we roll a 529 into retirement, is it treated the same as a Roth IRA (Tax-Free)? Thanks
Anyone know when Brians book is coming out?
He’s working on a book?
Clearly saving 25% is better than 10/15/20%, but why target 25% instead of 30/35/etc? Is it trying to put a decently attainable goal? If you stop assuming social security benefits (a somewhat recent change to retirement goals) I can see a reason for increasing above 15%.
Some of their content explains that based on their assumptions about when, where and how people save, expected rates of return over the life of an investor, and the expected tax burden in retirement that 25% savings corresponds to income replacement that results in a similar lifestyle in retirement for a good swath of the audience.
Be a menace and save 50%
At 25%+ saved for retirement, you are already a budgeting and saving mutant, so you can live on way less than you make and thrive when you stop working for an income.
If you’re starting retirement savings younger than 30, you can do less than that rate, and if you’re starting later, you’ll need a higher savings rate.
i save 70% roughly and am looking to retire atr 25
I have a lot of dental stuff going on and I hear you! I've saved and invested a lot of money! How do I do med bills in my case #1 My dental #2 a mom will not care of her unsaved future but gets a dog....Btw mom is crucial!
Does "Savings" mean the money inside the Savings account in the bank only or does it also include money in Retirement account?...
I’ve heard them say before it includes savings and investments across all accounts
After maxing out Roth IRA, where do I put money? Brokerage account?
look at the foo
If you have a 401K or HSA, max those. Then a brokerage is a good idea according to foo
Check out M1 to compare to brokerage accout. I used to use a brokerage account. But now use M1 for my dollars after Roth and HSA. Keep up the good work!
I want to hire Brian and Bo to be my financial advisors! Do you think they can throw in a coozie?
I bet Bo will be excited
The car's interest rate is below the risk free rate so they should not over pay the loan. They should invest whatever they would use to pay for it in short duration treasury bills or a money market account
50 is not too late. Just have to be invest a lot more and work longer
In regards to the reversion to the mean. What do you think about the amount of dollars that have been added to the money supply?
Do you think that maybe this is a new factor when looking at housing?
There is a relatively capped supply of housing (stock to flow), when dollars are printed in rapid succession and so loosely, hard assets increase against weak money.
I agree there will be SOME reversion to the mean. HOWEVER, I don’t think it will be nearly as much as people are thinking.
I know the “this time is different” phrase always looks dumb in retrospect.
But I must ask… is this time truly different? At least a little bit.
Not acknowledging our loose monetary policy to me personally, is a pretty wild stance to take.
Not a good thumbnail picture for Bo
It's better that way
I know im splitting hairs, but I still don't get why everybody calls it compound interest. This is capital gains. Is it just easier to explain as interest?
Bonds used to be better and more prevalent. Stocks used to pay much bigger dividends. "Compound interest" is an easy, older way to say compound interest, plus capital gains, and reinvested dividends.
It's just making math a lot easier + easier to market it, so people will invest money. Plus you can retrospectivly calculate asset increase as it would be compound interest (for example growth from 100$ to 210$ in 10 years can be achieved by doing it 8% yearly). I guess assumption "it's compound interest" is dangerous mostly in last +/- 5 years before retirment, but if you have 25+ years, then it's makes things a lot easier to explain and visualise as a concept.
If I start at 32 and just double the input numbers for 20 year olds, will I get to the same spot?
Would need to do a bit more. But get at it anything now will help greatly! Dont over analyze just start investing now
😊😊😊😊😊😊😊😊😊
I thought you where going to talk about Compound Interest with this title!
I’m disappointed!
The beer koozie implies alcohol was sold to to someone underage
You mean that college kids might have a beer every once in a while? Wow, my mind is blown. I know you are very new. They say very often that they rounded and assume retiring a year late, lol.
@@sstrongman1667 No, that's not what I mean. You must not know about the wealth multiplier, what a rookie lol
@@erikg666 that’s what I mean about retiring a year later. 20-65 is your 88 wealth multiplier. 21(legal drinking age)-66 is the same multiplier
@@sstrongman1667 I know, it was just a silly observation about the koozie, which on its own implies what I originally said.
@@erikg666 Im really just messing with you. all good brother. You never know who you are interacting with on here and some times the humor gets lost in the pixels. I hope your wealth building journey continues.
A=A0*exp(r*t)