Optimal Order For Investing Your Money
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- เผยแพร่เมื่อ 19 มิ.ย. 2024
- ► There are many options when it comes to investing, but which order should you invest in them? In this video, I'll share with you the optimal order for investing your money.
► Try Playbook - Develop Your Most Tax-Efficient Investment Strategy: www.helloplaybook.com/taekim
Timecodes:
0:00 - Intro
0:49 - Emergency Fund
2:15 - 401K Employer Match
3:32 - High-Interest Debt
4:12 - Roth IRA
5:28 - HSA
6:24 - 529 Education Savings Plan
7:27 - Max 401K
7:58 - Taxable Account
8:46 - Lower Interest Debt
9:39 - Pay Off Mortgage
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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio of $450k dwindle away is such an eye -sore.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 67% profit in 18 months
I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?
Sonya Lee Mitchell is a renowned figure in her line of work. I recommend researching her credentials further.
she actually appears to be well-read and educated. I just did a Google search for her name and found her webpage, I appreciate you sharing
Building wealth from nothing involves consistent saving, disciplined spending, and strategic investments. Begin by creating a budget to track expenses and identify areas for savings. Prioritize paying off high-interest debt and establishing an emergency fund. As you build a foundation, start investing in low-cost options like index funds, and focus on continuous learning and improving your skills for better income opportunities.
Impressive insights! For beginners like me, managing and staying updated can be overwhelming. Are you an experienced investor or do you have a strategic approach for staying informed?
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 name of the advisor who has been assisting you in navigating these financial challenges?
Thank you for the information. I conducted my own research and your advisor appears to be highly skilled and knowledgeable. I've sent her an email and arranged a phone call. Her expertise is impressive, and I'm eagerly anticipating our conversation.
Lisa Angelique Abel was arrested for public masturbation at a pumpkin patch in 2016. Don’t trust her.
With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly-which means more red ink for portfolios this quarter. How can I profit from the current volatile market, l'm still at a crossroads deciding if to liquidate my $400k bond/stock portfolio.
That’s right, Markt slumps are one of the worst times to withdraw your moneey from the maket. hence i advise getting the guidance of an expert to make this downturn count.
Couldn’t agree more , I've been in constant touch with a fiinancial-analyst since covid . These days, it's really easy to buy into trending stock's, but the task is determining when to buy or sell. My advisorr decides entry and exit commands on my portfoliio, I've accrued over $550k from an initially stagnant reserve of $150K
That’s impressive! I need guidance so i can salvage my port_folio due to the massive dips and come up with better strategies. How can i reach this advsor?
Just research the name Angela Lynn Shilling. You’d find necessary details to work with a correspondence to set up an appointment.
I just checked her out and I have sent her an email. I hope she gets back to me soon.
Successful investing is hard work because it means disciplining your mind to do the opposite of human nature. Buying during a panic, selling during euphoria, and holding on when you are bored and just craving a little action. Investing is 5% intellect and 95% temperament.
@@user-hz8fm3dg6x You are right! I’ve diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
I just found your page with this video- I consider myself a high income earner so I'm curious to know how people split their pay, how much and in what order does it go into savings, spendings and investments, I earn around $120,000 per annum but nothing in my IRA to show for it.
In my opinion, IRA is a valuable strategy for retirement planning, providing growth and tax advantages. While the market is promising, expert guidance is essential for portfolio management.
@@Higuannn I learnt this when I got disabled from an accident, I had to reach out to a financial planner who devised a plan for me to live off dividends from my investments. Other than Disability Cheque, I earn enough from home and live comfortably with her help.
I learnt this when I got disabled from an accident, I had to reach out to a financial planner who devised a plan for me to live off dividends from my investments. Other than Disability Cheque, I earn enough from home and live comfortably with her help.
@@Higuannn Hi, can you recommend a trusted fellow i can reach out to? I think that is the right thing to do.
@@hullbruce Glad to have stumbled on this comment, Please who is the consultant that assist you and if you don't mind, how do I get in touch with them?
Dividends are what got me into investing in the stock market. The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. Have over $600K in my portfolio as I bought a lot of dividend stocks before, I'm buying more now, and I will buy more when it drops further
As a new investor it's always great to hear from a person who has gone through all the difficult times and come ahead of it. It's unnerving to see your portfolio go from green to red but as mentioned if you have invested in quality names just have to keep adding to them and stay the course
I see any market condition as an opportunity. So far I've made north of $260k in raw profits from just Q3 of 2022 under the guidance of my Financial-Advisor "Deborah Jean Dykstra ". Am I selling? Absolutely not. I have purchased growth stocks too a little at a time over the past few weeks. I am going to sit back and observe how this all plays out.
@@BenjaminMcLeod815 Please can you leave the info of your investment analyst here? I need such luck lol
@@BenjaminMcLeod815 Out of curiosity, I Looked up Deborah and her webpage popped up immediately, interesting stuff so far, written her.
@@BenjaminMcLeod815 >< i found Deborah on the web
As an investing enthusiast, I often wonder how top level investors are able to become millionaires off investing. I do have about $70k amount of capital to start up but I have no idea what strategies and direction I need to approach to help me make decent returns
Invest if you actually want to be wealthy. However, you should get guidance from a financial advisor if you want to create a successful long-term plan…
Invest where you spend ie target, Tesla, Google, PepsiCo etc.
The best investment one can do right now is investing on real estate though stocks are good but ever since I swapped to real estate, I've seen so much difference.
I have been making a lot profit through real estate which has been the main source of my income.
Sounds great! please I will appreciate your assistance on how to go about it, who's your coach and how good is your coach?
Stephanie Kopp Meeks is the licensed advisor I work with. Just research the name. You’d find available details to work with her and set up an appointment.
Thanks for your recommendation, I have looked her up on the internet and through her site, very professional. already sent her message....
This looks like a bot conversation lol
As an investing enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $745K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?
@@Curbalnk That’s right, I started investing sometime in 2018 and by late 2019, I pulled a profit of over $950K, I was basically just following the guidelines set by the financial advisor I use, so you don't necessarily need to be a perfect investor or do the hard work, just have a professional to guide you
Hopefully while you are figuring out what to do you have it sitting in a high interest rate savings account. You can easily get a risk free 4 - 5% return. (SoFi, Capital One, Charles Schwab). You may also want to look into VTSAX/VTI, VUG, VOO and I personally love AAPL (preferably at $140 per share or less). Good luck on growing your windfall!
If I didn't need the money any time soon, I'd invest it in an array of diverse index funds immediately.
I’m a Dentist, and my job doesn’t permit me the time to properly analyze my holdings/evaluate stocks myself, so I’ve had a fiduciary " *Monica Selena Park* " actively restructuring my portfolio to match the present market condition and that’s how I’ve been able to stay afloat, knowing when to buy and sell…maybe you should do the same.
Don’t try to time the market or pick stocks. Invest 100K a month into a brokerage account over the next 7 months. Research what to invest, like a 3 fund portfolio; e.g. 60% us stock, 25% international stock, 15% bonds.
I've been diligently working, saving, and investing toward financial independence and early retirement, but the economy since the pandemic has eaten up the majority of my $3 million portfolio. I want to know: Do I keep contributing to my portfolio in these unstable markets, or do I look into alternative sectors?
Just try to diversify your portfolio to other market sectors, that way your investment is balanced and you don’t get to make so much losses.
I stopped listening and taking financial advise from these TH-camrs, because at the end of the day, I end up with a bunch of confusing stocks without knowing when to take profit, In reality, all I needed was professional advice.
I’m a contractor, and my job doesn’t permit me the time to properly analyze my holdings/evaluate stocks myself, so I’ve had a fiduciary " Helene Claire Johnson " actively restructuring my portfolio for the past 7 years now to match the present market condition and that’s how I’ve been able to stay afloat, knowing when to buy and sell…maybe you should do the same.
If I had 3m I'd already be retired. What are you waiting for?
What in the world did you invest in?
Kudos for touching on the vesting period for 401k's. Everyone gives the advice to put in to get employer match, but never takes into account if the job is temporary or not.
I will say that you should also ask your employer about what happens in the event of a layoff or RIF. Most companies in my experience waive the vesting period for 401k matching if you are laid off or RIFed. Plus unless you're going to stick around only for like a few months the vesting period is usually AT WORST around 20% after 1 year which is still better than anything a normal person has access to without even factoring in the tax benefits.
With all of the current events, what is the best approach to profit from the present stock market? I'm still debating diversifying my $400k stock portfolio to obtain some profits while minimizing risk.
Remember that investing in the st0ck market carries risks, and it’s important to do your own research and consult with a financial advisor before making any investment decisions.
Pls who is this coach that guides you? I’m in dire need of one
I Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds soon. Thanks
You're a vet?! Thank you for your service! And kudos to sharing this financial knowledge. Props for securing your education with your service and props to saving for your kids' education as well. I strive to be in a similar boat as you.
This is an extremely high-quality video! Lots of vital info, efficiently presented. Many other channels ramble too much, and don't mention the important details you cover in a shorter time. You're doing a great service!
Just found your channel and am binge watching these videos. Amidst so much ‘get rich quick’ toned content online, it’s so refreshing to see some long-term, wealth-building focused content that advocates for financial wellbeing. Loving the channel dude!
Tae, you may or may not read this but I just wanted to say your video was educational, easy to follow along with, simple and enjoyable to watch. Good work.
ty. i got rid of CC debt first, maxed 401(k), paid off cars, then mortgage. i still have some student debt left at a low rate that will be paid off in the next few months. it has hurt but i will be happy to be 100% debt free soon. the emergency fund was done prior to all the above.
I really like this balanced approach. It's not sexy like people throwing around lots of money but it's really smart and very applicable to a broad number of folks thank you I really enjoyed this content
To never let your guard down around debt is a very nice saying and way of approaching it. Very perspective warping due to it being a peculiarity of the US tax system as far as advantages for the wealthy.
Great video! I would add Non-ROTH After-tax 401k contributions right before taxable accounts. It likely needs its own video so I don’t think it’s necessarily missing here.
it feels good to see the market in green, but just how long until we actually break even, I’m the average retail trader, DCA-ing, buying and holding on to stocks for eons, but it’s like I’m up 5% today and down 17% the next week, Yes the market is very Darwinian, there’s winners and losers, and it’s looking like I’ve been on a losing streak, while others make huge 6figure gains in the same market. What strategies are these folks using?
@Flora Quntinilla
flora nicely said, I was thinking about going that route too, Jimmy Cramer has been going on about opportunities at stake in this present market and I’d really love to set my portfolio up for whatever is coming 2023, could you recommend this coach that guides you?
Great job Tae! Love the way you laid this out
I go back to this video constantly it’s a really great framework for allocating excess savings!
Fantastic video and information! Thank you!
You made the order and all the details more clear an actionable than any other video I’ve seen.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement of about $750k. I want to know: Do I keep contributing to my portfolio in these unstable markets, or do I look into alternative sectors?
Very brilliant idea, I was managing my portfolio by myself using TH-cam and Incurred a huge loss which made me hire an advisor. It's been 2yrs already and I have made up to $380K in returns and would pay fully for my 3rd rental property in Ohio by next month.
Please How can one reach this advisor of yours?
I take guidance from a California-based wealth advisor *Natalie Carol Nielson* you're most likely going to find her basic info on the internet, she's firmly established and well qualified.
Invest it all in bitcoin
Buy VTI. And keep buying it. It’s the entire market. Parts of the market will be up while others are down.
So buy the whole thing rather than to time each peak and trough
* not financial advice
I’ve been looking for this thank you. Finally actually education and not preying on emotions like other videos
Thanks for this video. This year is the first I maxed out my 401k and decided to put my raise into my HSA instead of my normal budget. I think my future self will be pleased 🙂
Yes stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.
There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.
@Dan Brooks My advisor is ‘’Christine Jane Mclean’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. 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
They aren’t that unstable if you take a long enough view/time horizon.
@@kenanporubsky2122 where can I buy your get rich quick scheme?
Thank you for the beautiful visual of this ladder, awesome!
Solid video. I concur. It seems elementary but unfortunately schools don’t teach you about these things. You will have a decent retirement fund if you’re young and follow these simple steps.
Getting rich off crypto is much tougher than it seems. I keep losing money while trading with these youtub videos, and finding a trustworthy professional trader to help out with these trades also appears to be nearly impossible. This is extremely annoying
That's true! Most failures in the market system today is as a results of poor orientation and bad experts methods in winning
In any market, in any country, there are developers who make money. So I say all of this doom and gloom, but there will always be people who make money, because people always want homes
Real estate has been the best but crypto is better rough for fast wealth growth
That's good to hear 👍
One thing I tell everyone is learn about real estate. Repeat after me. Real Estate provides the highest returns, the greatest values, and the least risk but you have to be patient
❤ Love how you put emergency fund first. Great ideas! Thank you for sharing. ❤
I love the practical advice you offered and your approach to managing money in this video. These are things that I had to teach myself to get good at using, receiving, and allowing money to flow and circulate in my life with ease. I especially like your tip about saving for your kids' education. I worked and put myself through school, and it would have been nice to have a cushion to make it easier while I was in law school. But that option wasn't available, so I did the next best thing and started learning about the energy of money and how to use it responsibly. Thank you for sharing your insights.
You should add tax advantaged bonds - especially Series I bonds that are inflation protected and are exempt from federal taxes. Similarly, muni bonds offer attractive rates and are exempt from most of not all income taxes.
great video. often simple straight forward steps are not talked in the media and emphasized enough. so thx for posting this step by step summary.
That was an outstanding, well explained and concise video. You are a great speaker. Very engaging and easy to understand.
Excellent video Tae. Interesting observation from reading the comments....most of the people watching your video seem to be doing all of things already and you are confirming their good moves. There is lots of value in that! Sadly, I think the people that really need your advice are burrying their head's in the sand. Army guy here too!
More great content! Thank you!❤
Would love to see a video on your opinion of Traditional 401k and Roth 401k, and which you feel is superior in the long run?
Great video! Beautifully explained and straightforward. Thank you.
Thank you for your service, Tae. Excellent step-by-step guide.
The most important thing that should be on everyone's mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.
How can this person, ROCHELLE DUNGCA-SCHREIBER be reached please...
Wow! I just looked up this person out of curiosity and I'm super impressed with her qualifications. Thanks for sharing.
These are all bots. Save yourself and ignore these scammer
@@shadoninja
Oh wow how could you tell? /s
Excellent video. Many other Financial TH-camrs gloss over the order in which you should do things but you got it right. Definitely getting a sub and a like from me. This video should be at the top of everyone's playlist for the great information. Keep it up.
We do it all! putting whatever we can in whatever we can consistently.
I'm on the third step, first time I've seen this video but already been doing it his for a couple years, it's just common sense really. Especially the Roth IRA along with your 401k that is a proper pre and post tax diversification :)
The media is currently barraged with a lot of economic data right now. It takes a lot to see beyond the whole ocean of news on focus on what is important, which is that no matter how low stocks go, they always bounce back. I really ignore all the news and keep investing. I recently allocated about $121k to put in the market as we anticipate a crash. Any recommendations?
Be careful not to jump into trading without any proper training because it can be very detrimental. Many folks jump into trading only to suffer great loss at the very beginning. Do not try to imitate advice you get on the internet. Better still, ask questions. Get the services of a professional stock expert or a licensed broker.
Yeah, this makes sense. You'll tend to get a lot of recommendations, but most would be inaccurate. I personally don't like engaging in those mundane decisions, so I just allow a wealth manager do them for me. Been doing that since 2020, and have pulled in a cumulative of more than $213k.
@@ericmendelsPlease, could you recommend the FA you work with? I could really use some help right now. I tried going solo one time, but it was a disaster.
I'm not one to give investment advice, because I believe everybody's situation is unique. However, I work with Sharon Louise Count, and all I can say is that she's really god at what she does.
This recommendation literally came at the right time. I’m down by $7k in stocks this week alone. It's crazy! I just looked up Sharon online, and researched her accreditation. She seems very proficient. I wrote her detailing my financial goals and scheduled a call.
Tae knows what’s up 👍🏼. After reading I Will Teach You to Be Rich and The Little Book of Common Sense Investing, I feel absolutely empowered to take control of my financial future.
Dropping a like I did not know about vesting requirements for 401k employer match. Looked it up and mine is at 3 years and I've only been there 2. That is really good information as that would forfeit a lot of money.
Great video as always Tae! Great breakdown 💯
All great suggestions, especially for the younger to middle age crowd. I will make my daughter watch this.
I do think that as you get older getting rid of the mortgage and debt is a huge advantage, once it is gone income needs drop precipitously. This allows us to delay Social Security, yet quit working and take less out of investments.
I get the psychological benefits for some folks, but if your mortgage has a good rate, it’s not financially prudent to accelerate paying off your mortgage. The $ used to do that can remain invested and grow.
A better advantage? Not having debt to begin with. US college and credit card debt is ridiculous.
@@AllTheArtsy that's just not realistic unless you come from wealth. Debt is unavoidable for most people who are trying to get things done or go places in the world.
@AllTheArtsy some of that debt (student loans) cuts the time between your low income years and your high income years. I think everyone should run the math themselves
I follow everything you mentioned here, even that I went to the Army to pay for college and my wife went to nursing school. I like that you mentioned the back door contributions to the Roth IRA as I spent several years in the past not making contributions because I didn’t know about it. One thing I like to do that wasn’t mentioned is make Roth 401k contributions. I also make extra after tax contributions using the mega back door Roth 401k option.
Just gained a new subscriber! I love the philosophy of a financial tortoise. It's not flashy, and they guys on stocktwits who claim to have made $50k in one day might get you down, but sound financial principals never go out of style.
IMO, it's all about percentages. That means even if you are just starting out with little savings or recovering from a big financial loss, it's never too late to start making smart long term financial decisions.
The biggest learning curve for me was 401k...i kept thinking "why would i want to give up money now for 40-50 years down the road". I think the goal for long term financial success is make your money work for you. Money sitting in a checking account(other than your emergency fund) isn't doing anything for you. Think of money as your employees. Send them out to bring in more money, even if that money is achieved long term.
At about 8 minutes into the video I think you meant $30,000 but the screen shows $30,00 (last zero missing). Great content and thanks for putting this together.
Great advice! I would change 2 things. Fund and invest the HSA before the Roth because HSA is triple tax advantaged while Roth is double. For younger investors investing more in a taxable gives more flexibility for a house down payment instead of being retirement account heavy. Granted there are programs that allow you to use IRA for your down payment without penalty.
came here for this
Agreed in principle, but a small problem with this comment is that an HSA has significantly more limits on how much can be contributed (less than $4k for 22 IIRC), and it can ONLY be used for health expenses (although it can be used immediately). Roth has significantly higher contribution limits ($6k I think if under 55), and while you have to wait to use it, you can use it on anything you want, and still get the 2x tax advantage - using an HSA on anything but health expenses eliminates all tax advantages instantly (on the amount disbursed).
At age 65 you can pull from your HSA for non-medical expenses, but it will be taxed like a traditional retirement account if not used for medical purposes. I guess the only downside is you have to wait five years longer than an IRA. I would fund the HSA first.
@@MEtter17 the part i think you're missing here is employer match which is also a factor. my employer contributes enough to cover my family's entire premiums for the year, which is another advantage of having the HSA plan, and while I pay the premiums with 2022 or 2023 money, the contribution by my employer is available to me 40+ years from now not subject to taxation (or subject to standard trad IRA taxation if I use for non healthcare expenses)
tbh though ,the idea that you're NOT going to use the HSA for some kind of qualifying expense is wishful thinking - by the time i retire I'm sure those expenses will be close to $2M from retirement thru my life expectancy
@@mundie33 I am not missing it, but for me, its a non-factor. My employer scales down HSA matches as you work your way up, to the point now where its only a few hundred dollars (and I am nowhere near the top). So bottom line, that is entirely subjective and depends.
Additionally, you have to be enrolled in an HSA, which for some people, its definitely not the best plan. Some people need a more "full coverage" plan, otherwise they could be getting destroyed on expenses that would outweigh any benefit of having an HSA/HDHP.
Bottom line, Roths can be used by basically anyone. The use case is extremely strong for HSAs, but they are far more subjective and the scenario has to be right.
To be successful in markets, traders should understand the crossover between asset classes & liquidity flow. Paula David focuses on Multi-asset trading, a single strategy to manage risk, profit, and the code or the actual decision-making across multi-asset classes. Her skills set is top notch.
I'm surprised you know her too, I've been making a lot of profit investing with her for a few month now.
You invest with Paula too? Wow that woman has been a blessing to me and my family.
You invest with Paula too? Wow that woman has been a blessing to me and my family.
Any information on how i can reach her, i'm new at this
I was skeptical at first until i decided to try. Its huge returns are awesome, can't say much
HI TAE! THIS IS AWESOME. GOOD LUCK ON YOUR TH-cam JOURNEY. :D
Awesome list. THank you!
My wife and I practically follow 90% of what you mentioned. We are working to pay off our home early which is frowned upon but we want the security of a paid off home. Outside of that I think we are on the right path and thank you for mentioning the $6,500 Roth IRA limits for 2023. We will be upping our contributions for January.
Your opportunity cost of earning 10% compounded yearly in your 401k is a lot greater than paying off a 2.5% interest which is also tax deductible. Finance is not about what feels right but it's about the math.
@@Chris-de2qc Dude be proud of them. Paying off a home early saves you so much money and it can go to additional investing
I don't understand the "frowned upon" part. You should always do what makes sense financially
@@surajpatel5200 As my father puts it, he'd rather have that money on hand or in other investments rather than tied up in a home..
@@Chris-de2qc While I agree with you for the most part.. Being able to deduct mortgage interest for most is going to be hard with the ginormous increases in the standard deduction.. Unless you have a HUGE mortgage note or multiple properties, it's a moot point..
Great video. I however, lean towards a taxable account over maxing my 401k because I can not choose investments on my 401k.
Self directed 401k. Look it up.
@@leedirtybriches I don’t want a self directed 401k that I get 0 match on
Great list Tae, thanks for sharing!
Most common sense approach I have seen yet. Subscribed.
I generally agree with your list, however, I would recommend that younger people who are early in their careers take advantage of the ROTH 401k with their contributions as much as possible. As they get older and their incomes increase, marginal tax rates will also increase. Once they are in the 24% or higher bracket it would make sense to use the pre-tax 401k contributions.
You can tell he understands marginal tax rates.
2nd this advice, but for different reasons. Most of my jobs before my late 20s were mostly temporary. 1-2 years tops. IRA would have been my only real option.
This! So many investment channels get this wrong. My retirement tax rate will be 15% lower than my current tax rate, so deferring is better.
Love your videos. I’d doing all that with one difference; I prioritize individual brokerage account over Roth IRA (although I still invest some in it). Reason is that if I want to retire by age of 45-55 (by retire I mean still working but at my own time and less income) I could withdraw money without penalty and tax free, since if a couple makes under $80,500 in income, they aren’t subject to capital gains tax.
You’re allowed to withdraw your contributions to a Roth IRA at any time without any penalty.
@@scottsinger7806 my bad, I meant after doing a back door Roth IRA conversion ladder
is that true for a brokerage account? what are the income limits for a single filer?
@@scottsinger7806Only contributions.
Thanks. This is very important. I think I'm financially competent, but it's not easy to decide best optimization for investments.
This is excellent information! Thank you so much.
This is the vest video on the internet to explain personal finance to young adults.
Other than a few rare exceptions, this is absolutely the most mathematically optimal way to invest for the average person. Great advice!
I agree. This is the best order I have ever seen.
Great video. Straight to the point. Thanks!
Excellent video thank you for keeping it simple.
Im 30 years old and I have 5 children. So that savings part is really hard for me lmao. But getting that spending problem under control has been a big help. I think lots of folks mistake their spending problems as money problems. Great video man!
who told you to get 5 children at 30
5 children, neck tattoos, having trouble saving money and having spending problems.
I’ll take poor choices for $100, Alex.
It's so fun to spend money without thinking about the longterm consequences. I like to save first and spend second so I never really see how much money the household actually makes.
Wow. I love people who just pump out kids without having money. Then demand the Government and tax payers pony up.
Id say this is ideal for most average people, but why does everyone advocate tying up your money in accounts you can't touch? Sure there are tax advantages, but there are so many opportunities missed due to no liquidity or flexibility. This passive approach rarely makes anyone truly wealthy. it simply sets you up for a comfortable life on the back end of life (if you make it there).
Nice and straight forward thanks for the great video!
The days of 2%-4% mortgages are gone. More like 6%-8%. Also I would probably pay off mortgage before investing in taxable brokerage account, or at least pay it off in 15 yr. But overall really good advice. I've subscribed!
Number 1 should be weekly OTM options on triple leveraged ETF’s
Finally, someone speaking some sense around here!
i have no idea what you said. but would like to learn.
One thing people fail to do (especially millennials) is INVEST. I made my first million from blue chips and top etfs using a broker so i invested and re-invested my profits. I also acquired large amount of high-quality dividend-paying stocks too that gives me a solid base of passive income. ever grateful to Olivia Maria Lucas handling my portfolio, two years now and she still surprises me, she's actually the only person i know that's richer than me haha
Wow, great work. you surely made a good bit of money
I did read about Olivia Maria Lucas on the web., quite a great resume she has
Did a quick web search, she has a pretty decent bio, I wrote her and I'm waiting on her reply.
Scam scam scam
You left out a critical item is the After Tax deductions inside the 401K plan (after Step 7). I would use that before I invest into an external taxable account #8. Basically, the hard cap for 401K including company match is $66,000 ($73,500 with catchup). Most companies allow you to put after tax money into these accounts. This money can be converted to an internal ROTH 401K plan or moved to your Roth account in what is called a "Mega Backdoor Roth". Some companies even offer non-qualified plans which divert funds into a separate program if you exceed the $66,000 limit. This allows you to continue collecting matching 401K money even though you exceeded the federal limits. These accounts also save money on a pre-tax basis and defer the taxes until you withdraw in the future. Some companies offer ESPP plans to also be able to buy company stock at a discount, but the benefits depends on how much discount is offered. After all those other investments, then I would consider using a conventional taxable account for investing. Being able to shelter the money from future taxes is key to a successful retirement plan.
I use all these tax leveraged accounts and save a tremendous amount each year for retirement which would be impossible with only a 401K plan. I know not everyone can do it, but they have to start somewhere and move up the options.
Great advice. Expect “high debt” now qualifies as. 30yr mortgage
I would add I-bonds, inflation indexed savings bonds for some of your longer term emergency savings. Pay a lot better than cd's or money markets
Great video! I would also suggest people that are super into the weeds on optimizing their investments look into Employee Stock Purchase Plans (ESPP) as well as Backdoor Roth IRA contributions. If you work for a publicly traded company, it is likely they offer an ESPP which, if used correctly, can offer GUARANTEED post-tax returns typically between 10-15%. Basically ESPP gives you a discount on the company's stock price. Regardless if the stock goes up or down, the day you are issued your shares, you will have at MINIMUM a net gain of whatever the discount is. If you sell on day one, yes you pay short-term capital gains tax but its still guaranteed returns
The company I worked for had a very volatile stock and it always took several weeks to issue the stock. By that time the price could have dropped below the purchase price, so it wasn't risk-free. We still made money because we stopped buying stock and sold what we could when it was in the upper part of its usual range. Some optimists who never sold any stock ended up losing it all when the company went bankrupt.
@@sexygeek8996 it should never take several weeks to issue. The shares are rightfully yours the day the purchase period ends. sounds sketchy
@@KylePapili Management has always been sketchy, as well as incompetent and inefficient. It's hard to say which of these was the actual reason.
There were limits to how much and how often we could withdraw stock from the purchase plan, but we had the option to withdraw everything at the cost of terminating participation in the plan. We just withdrew as much as we could and put it in brokerage accounts so we could sell when we wanted and use limit orders.
@@sexygeek8996 Are you comfortable sharing what company it was?
@@KylePapili I'd rather not, but it was a fairly small company that most people never heard of. They went bankrupt about 15 years ago.
This video is so valuable! Thank you for making it simple and approachable.
I would slightly change the order of the middle items:
4. HSA
5. Roth IRA
6. Max out 401k
7. 529 plan
I put the HSA ahead of the IRA because of the triple tax advantage and because it is likely that you will have plenty of healthcare expenses to use it on during retirement. Plus you can invest the money now and pay yourself back years later if you keep a record.
I put the 529 education plan after retirement contributions because money in retirement plans won't be counted toward assets when calculating financial aid. And, as the video points out, there are other ways to fund education. In a more nuanced approach, you could put in just enough to the 529 plan to get state tax deductions (if your state offers any), then max out retirement, then go back to the 529 up to the annual gift exclusion.
Disclaimer: I am not a financial advisor either.
If you max out the annual gift tax exemption, with both parents making the maximum contribution, you are likely to end up with far too much money in your 529. Even before returns you will have more than $600k in your kid's account when they become freshman, which is more than you need for even fancy private colleges. I think it is more sensible to figure out how much your kids will need and then work backwards from their to figure out the contribution limit. However, because Section 126 of the 2022 omnibus bill lets you roll over some 529 funds into a Roth IRA under some circumstances, it may start to make sense to strategically over-fund 529 accounts. But there are limits, so probably not to the extent of maximizing 529 contributions for two contributors for 18 years.
I disagree with this if it’s geared toward people who have/planning to have children. Children who inherit their parent’s HSA don’t get the tax benefits so it would be better to invest in a Roth IRA then HSA. Otherwise your options are good for married couple or a single person.
Amazing content thank you
Great vid! I agree with everything but might say that partial HSA might come before MAXING out the Roth IRA. This is because the HSA is a truly TAX-FREE account where the growth AND principal are completely tax-free when used appropriately. This savings and growth can roll over into their retirement years as well. I say the order of the HSA and Roth IRA can be reversed because most people will definitely spend HSA qualified purchases before they’re able to max out their Roth IRA, esp if they have a family. And maybe could’ve briefly mentioned the FSA, esp because $5k/yr can be used for dependent care. That’s huge. Nice video Tae!
I’ve always believed that your student debt is the thing that you need to get rid of immediately. This plan has changed my perspective and overall makes good amount of sense. However, I will say that for me personally, I do not like the idea of having lingering debt so I still plan to expedite my student loan repayment. The input about the 401k, HSA, and Education Savings plan was a great input. Great video!
If you had to borrow money to go to college then you shouldn’t have gone. Period
@@Hernsama L take, by that logic only like 2% of people would be able to go to college.
@@Hernsama honestly brother, I actually kinda agree with you lol
Jay--- coming from a someone early retired at 52.. Pay off all your debt first and never borrow again. To build wealth focus upon building the greatest gap between your monthly expenses and your monthly revenue as possible. Easiest way to get this going is to pay off debt like a savage. Ignore keeping up with others.. they are likely broke and running on the payment treadmill. good luck
@@mrbigglesworth375 I appreciate the advice very much sir. Thank you.
If you have a low interest mortgage and decide to allocate some money toward paying it off early, and investments that are nearly zero risk (i.e. I-Bonds, T-bills, etc.) are paying a higher interest than your mortgage is charging, it makes more sense in my opinion to put that money into those investments. If interest rates for those investments go lower than your mortgage interest in the future, simply use that money to pay off the mortgage and pocket the difference.
I agree. It's really simple math. Doesn't matter if it's a mortgage or student loan. If the interest rate is low and your employment is steady, invest.
I lean more on the side of all debt is bad. I get that probably makes me a bad investor and holds my growth down but… I pay off everything as fast as I can. I grew up with parents who constantly had issues with debt, only finally tackling it when they were close to retirement - also have too many friends where debt seems to snowball. Maybe it’s a phobia but even low interest debt I’ll pay off asap rather than have it waiting in the background.
@@FreakyLynx I can definitely respect that opinion. There's something to be said for no debt, no caveats.
Great advice. 💯 agree with everything!
fantastic video.The process is so very important
I’m glad to hear I am doing all of the ones that apply to me at 23 😁 I plan on maxing my Roth IRA this year!
thats awesome! I'm 30 and I've been doing the matching with my 401(k). Its already mind numbing how large it's grown (started at 22). I opened a Roth IRA with WeBull 2 years ago, but unfortunately I went 50% into ARKK ... so I'm getting rekt on that front lol. S&P500 funds are what I'm sticking to mostly ... hopefully that goes well over the next few decades lol
I would greatly appreciate getting coaching from you. I could really use it to get some solid direction in my career and going into the financial market space. My advice to viewers is if you want your money to work for you... Prevent inflation
@@mayamartins5573 Speaking of being successful, I know I am blessed if not I won't have met someone who's as spectacular as Samantha Tyler.
@Gab Newton I was reading comments when I saw something like this and I gave it a try
"Samantha Tyler"
LOLOLOL
You scammers are all the same. One person leaving multiple comments to make it seem there is a conversation going on about some financial guru named "Samantha Tyler"
Good lord. You idiots should just send me all you money period. I'll gladly take it if anyone is dumb enough to believe these scammers.
"Samantha Tyler" AKA "Mike Hunt"....LOLOL
Samantha Tyler is without a doubt a scam. Just follow the advice in this video. It's not rocket science, and if you think any broker can beat the market over the long run, you likely play the lottery and lose a lot as well.
SCAM
Finally someone on youtube I agree with! Thank you for being reasonable! :)
fantastic stuff. great job. as you say the order can depend on a person’s individual situation. i look to max my efficiency in saving money. i would probably do
1 emergency fund
2 hi interest debt
2b ROTH 401k up to company match it takes place of roth ira. otherwise trad 401k
4 HSA since after 65 you can spend it on other things besides health.
Great video I agree with everything said except I don't know much about the college account you were talking about. Right now I'm 17 with over 10k in my roth and a good amount in my normal brokerage and I think for me at-least I'll keep maxing the roth, do the 401k when I'm eligible, and the rest in a normal brokerage account considering I do want to retire early. I don't plan on getting in any high-interest debt as college has already been accounted for, I'm not dumb with credit cards, and I know I will be good. In the meantime while I work and do school I want to make money with other ways which is what I'm experimenting with in starting businesses, reselling, etc so hopefully everything will work out. Atleast I know my retirement is all set as long as I continually put money in the roth, I believe I am very ahead compared to me peers :) great video bro
Your doing great man keep it up. I started investing at 22 and now 24. I'm Trying my best to contribute as much as I can so I can have a comfortable life.
@@cesarreyes809 Thank you man best of luck to you to bro. Yea financial freedom has always been very appealing to me since i uncovered it at my first job so now one of my main priorities is that among other things
I can attest that an emergency fund is critical. Many years ago when I thought I was invincible, I used my $12,000 credit line as my "emergency fund". On top of that, I was operating a successful but seasonal business, trying to scale it by pumping all of my income back into the business. Then I blew the engine on my car a year after the warranty ended the same week I had a major medical issue. In short, I ate up my credit line and once that happened my debt spiraled to $37,000. If I would have had $30,000 in an emergency fund, I would have barely blinked an eye. The sad thing is that I knew how important an emergency fund was, but I just thought I was invincible.
Not sure what kind of medical issue if you had but if you had a life insurance policy with the cash back option and living benefits you would have been totally covered if it falls under chronic critical or terminal illness.
@@Vgk36 Never said medical issue. If you use that part of the life policy its considered a loan and then becomes an interest bearing account. This isn't a sound emergency fund and remember only what you have in there is possible.
@@zachh3582 You literally said you blew the engine in your car and then that same week you had a major medical issue your words not mine 🤷 and you're definitely incorrect look up americo CBO policy You can get the money if you have a chronic critical or terminal illness and not have to pay it back do some research.
Your "emergency" isn't even an emergency, really. You know a car is going to break down and that you will be sick/injured at some point. These are savings buckets that should have been accounted for already.
@@AllTheArtsy point taken but an $6000 engine replacement on a three year old car is a bit out of the ordinary.
Great video Mr. Kim!
excellent, clear, succinct video on investing/wealth management. Thanks!
good stuff. One caveat is for those who want to retire way earlier than when the government tells us we should retire. For these people, brokerage accounts should be prioritized a bit more. Liquidity and penalty-free withdrawals are key to things like putting a down payments on investment properties, which can get you to generating passive fixed income faster by leveraging relatively cheap interest rates (mortgages) than putting all your money in the equity markets.
Spot on except for the 529, which I think is an overrated account. Frankly, college is overrated, in general. I'd suggest a career in skilled trades for my kids, if I had any. They can do an apprenticeship that pays them while they're being trained and can earn as much as a college grad upon becoming certified.
I'm in the trades and I gross 6 figures and get off in time to pick up my son from school half the time!
I do wear hi-viz and get dirty and sweat hard though. But we have everything we need and toys and vacation, living really well.
Great video Tae!
Great video, with one exception. I’d recommend an UTMA over a 529 or coverdell as it offers you better flexibility for you children to utilize these invested funds as they see fit as opposed to being limited to -only- education.
Nice list and I fully agree with 1-3.
However, Starting with a Roth IRA might not be the best call especially if you are high earner. No one knows the future state of taxes but most people will be in a lower tax bracket once they retire. You might just be better off reducing your current tax base and doing a traditional IRA. This is a BIG it depends question and there isn't a one size fits all solution.
HSAs are eghh. They are complicated, often have hidden fees and limited options. They also are not efficient in certain estate planning situations. The tax savings for medical are huge but I think this belongs after 401Ks, not before.
Not sure if their is a benefit from separating mortgage out of low or high interest debt. If it's high you want to be aggressive and pay it off/refi sooner rather than later. If lower, let it be and probably pay it off before you retire. Same with any debt.
Well said!
I think it's most important as an investor to simply have a process regardless of if the market is up or down one must stick to the process... As a long term investor it only got easier for me as a matter of fact l've only been able to double my profits during such times of volatility so cheers to a Crash!
So many great assets are on sale right now, and the opportunity might get even better - all we have to do is find them, which is getting easier and easier with stock prices falling. Take a patient and calculated approach and have a buying strategy that you follow, and you will be fine in the long-term. It's time like these when long-term investors make the most money.
Mindset of the wealthy is not obsessing over savings. It's about building income streams...
Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 13 months and l've accumulated over $700K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However this is not a feat I achieved all by myself, it might sound generic but getting in touch with an experienced IA is how I’m able to outperform the markets as an investor!
My portfolio has good companies, however I’ve been in the red for a while now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.
@@JoeCoIIar Any tips for a nitwit beginner who’s trying to get started? The market is now more volatile than I have ever witnessed before and I’m willing to pick up good stocks now they’re at discounts