The Wealth-Building Strategy You Can Use RIGHT NOW
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- เผยแพร่เมื่อ 5 ก.พ. 2025
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Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.
He's so excited! Now I'm so excited!! 😄
I like this format, y'all!
This strategy puts things into perspective! I used to throw money into my 401(k) without thinking much about taxes, but now I see how balancing between these three buckets can make a huge difference in retirement. I will reassess my allocations - thanks for breaking it down so clearly!
Love this video format. Way better than the blown out back and forth discussion format
1:55 - The breakdown of Roth accounts was solid-having tax-free withdrawals in retirement really is a game-changer for long-term planning.
0:07 I was worried for a sec
I was about to say oh no he's not excited 😂
Good explanation. This should be of value to your viewers. Thanks Bo.
The rainbow road short cut clip!!! LoL I am dying on the floor here. 🤣😂🤣
everyone of my new hires needs to see this, Thank you Bo
As long as you’re paying and not making employees work for free to watch it boss
I like these short videos that aren't highlights.
Also, I think the answer is no, but do I haven't heard you specifically discuss so... Do I count FICA/Medicare or state FMLA taxes towards my marginal tax rate?
Yes, they discuss in other videos to count your full tax load
@chemquests that seems odd to me since SS tax is only up to $176000 income. Then your marginal would go back down?
@@diligentDawg99 I misspoke, they do indeed focus on the effective rate. I was just saying it should encompass all the tax you pay
Hi Money Guy team, if i want to retire at 55 using the 401k rule of 55, which bucket should i prioritize next after my 401k? I know the roth gives a greater tax benefit and growth potential, but I like the idea of having access to a regular old taxable account at 55.
Just in case anyone is looking to more abroad, here in Australia, employers provide a minimum employer contribution of 11.5% of your salary to your retirement fund. This will increase to 12% next year. No tax is paid on contributions up to $27,500 per year. Potentially something to think about.
Yes agreed. One thing some people have is their employers adding 1/2 of your extra contributions you make on top of the super guarantee (so if you salary sacrifice 3% the employer add an extra 1.5%). It really helps if you get benefits like this
For determining whether to do pre or post tax contributions, isn't your time horizon equally/more important than your relative tax rates?
🎉🎉🎉🎉
Would like more information on what types of investments to load up into these accounts. I have a general guideline, but specific examples / types of Vanguard ETS to add in each bucket would be invaluable information.
I think I am being too conservative right now in my asset allocation.
Nobody can give specific financial advice over youtube, BUT I would recommend looking into broad market ETFs that cover the SP500, or maybe even a total stock market ETF!
Such ideal strategy to split up savings/investments into those 3 buckets.
First!
Assuming this applies to married filing jointly figures w re to the marginal tax rate and bucket strategy?
Now, the taxable brokerage account can let a couple, married filing jointly, live tax free off of $96,700 of capital gains, due to those long term capital gains rates. The actual amount of tax free living will be more, due to the fact that part of your withdrawal will be from your contributions.
Likewise, because of the “step up in basis” rule, brokerage accounts can be inherited tax free.
In the UK we get 20% tax relief at source on tax deferred pension.
Plus the first 25% withdrawal tax free.
Which means that bucket is by far the best bucket to be in.
Someone please correct me if I’m wrong.
Can't access it until 55 (and going up to 57) is the big downside, plus it is somewhat open to political meddling. ISAs are good too (essentially the same as a Roth IRA, with a much higher annual allowance) and the two combined can allow you to pay very little tax in retirement.
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Thanks for your response.
I’m 55 so I forgot about the age issue.
But I worked out that given a £100k input, you’re around 33% better off than an ISA.
I’m late to the game so having to work this out for myself.
Yeah in that case it is almost certainly superior.
With TSP you can switch between traditional and Roth 401k
Even better is that if you contribute to the Roth the government contributes to the traditional. You get the best of both worlds.
After you get the upfront savings on taxes by filling up the “tax-deferred” bucket, doesn’t that money just become the same as the money in the “taxable” bucket? I don’t get why these are 2 different buckets
My understanding is the “taxable bucket” becomes especially helpful 1. Once you maxed out the first 2 buckets, and 2. If you retire or are thinking of retire early because you can withdraw from them at any time with no penalties.
3. If you have a major purchase expected down the road.
I'm not 100% certain, but I thought some of the account types in the tax-deferred bucket also reduced your taxable income rate. E.g. if you make 100K a year but put 10K in a 403b then your taxable income is only 90K. I didn't think the taxable bucket was able to do this.
I could be wrong though, so if anyone has confirmation or clarity that'd be great!
@@aaronkling You are correct. That’s why i was asking about after you get those upfront savings on taxes. But @thewerfs makes a good point that they’re still separate buckets after the tax savings because of the flexibility of the “taxable” bucket.
Tax deferred is basically useless like they've shown...if you're paying less than 25% in taxes. The taxes on long term cap gains are very low assuming broad market index funds. Also using a taxable brokerage in retirement can easily get you into the 0% tax bracket (right around 100k of gains for married filing jointly).
Me personally, I am maxing out my Roth and then everything else goes into taxable brokerage.
this is the 3 bucket strategy i get behind not the time based 3 buckets which is great in theory but is more complicated in implementation regarding refilling of the buckets and when to use the short term bucket.
There's another 3 bucket strategy for spending in retirement. You guy should consider changing the name so it's not confusing.
They didn’t invent this concept, and they’ve coexisted for some time. I’m not sure which came first but the water is already murky. I’m skeptical money Guy word choice will undo it.
Where is the Bitcoin bucket?
The high risk speculation bucket. They’ve got a video on this. They dabble with money they can afford to lose. Brian reiterates the issue with digital currencies is that it’s not clear how it creates value, so it’s hard to predict what the rich price should be (& thus where we should expect it to go)
@chemquests seems like they misunderstand Bitcoin then. I've been dca into 401k for a decade and dca into Bitcoin for 4 years. Bitcoin is almost worth more than my 401k and I don't get a company match on Bitcoin. The real high risk is to not have Bitcoin.
Number 1 way to save thousands of dollars each year is to NOT hire a CFP/A who charges a yearly AUM fee.
Which they also advise. The abundance cycle they advocate is to use this free knowledge they’re sharing, and their value is helping you maintain the wealth once you’ve built it. Screwing up retirement is easy enough since you only got your one experience, and they’ve done it hundreds of times.
@@chemquests Hence hire a financial coach or hourly expert. In fact, use multiple people to cross check and get perspectives.
Sounds great, until you've accumulated enough money that something as simple as which investments are in which account can cost you six or seven figures in taxes, or cost your heirs 55% in gift tax.
@@TommyTombstone one of the primary ways they create value is by optimizing your tax strategy. I hope to have enough wealth that my biggest problem is taxes; that’s a great problem to have
@@TommyTombstone Nothing a good tax expert and financial coach can't help you with by an hourly charge. AUM fees are absurd.
Give us the limits please..as I can adjust my overtime! 230k combined household right? Either way. I am 57 and playing catchup as I thought it was toooo late for trump to fix thangs and biden would ruin the usa, so I went to gold in 2015.. btw. For those listening, playing catch up sucks so bad! Getting into the market at these highs puts everything at risk! I should be getting out of risk! I know I am just asking for it!
No need to make math political. If you’re playing catch up, that’s not any politician’s fault. Unfortunately you’ll either have to take some risk or invest more principal. Those are your only options mathematically. The limits are a google search away. Best of luck!