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  • Opinions on current financial options and retirement accounts

    Since i mentioned multiple different topics I wasnít really sure which section to post this in, so sorry if it belonged somewhere else.

    Here is a brief background on where I am at right now and wondering what others would recommend.


    I am 26 years old, started my career less than 2 years ago where i make roughly 56k at the moment (bottom step) that has really good overtime opportunities To Where I could potentially double my income if I REALLY put in the hours. (My normal shift is a 12 hour overnight shift so if I work too much overtime it will really cut into my normal life, running errands, getting things done. But I try to work at least an extra 8 or so hours a week of overtime sometimes more. Goal at the moment is to make an extra 20-30k a year.

    anyways. I currently have 3 retirement accounts set up.

    - A 414H pre tax( state pension) that takes about 20% off the top of my bi weekly paycheck.

    -A 457B deferred comp. that currently only takes about $100 a paycheck. this account is fairly new so I only have $400.

    -I also have a Roth IRA that I personally fund and choose investments. (At this time I donít fully max it out but I try to get as close as I can). I opened this account a few years ago before I started my career


    Along with all that, I try to put about 20% of whatís left into my savings account/ EF.

    My question is, is it worth it to keep all 3 accounts or should I get rid of the 457B and focus on my Roth And open a taxable brokerage account. I know I will take years but my goal is to get financial freedom to where I can get passive Income form stocks/ dividends that supplement my career income before i hit that ROTH Ira retirement age. As of right now I have dividends in my ROTH that are on reinvestment status and I do play around a little bit with investing as well while Iím still learning within the Roth.


    Also, I am currently in the process of attempting to purchase my first house (cheap fixer upper) and renting out a few rooms to friends to also help with mortgage. I am saving money for that as well and I do have money in mutual funds put aside that can help

    With a decent down payment along with savings without breaking into my EF. ( grew up learning trades so I have knowledge or connections in almost all fields involved in real estate building / updating)


    So my question is, do you think it is beneficial now to open up a taxable account to where I wonít get penalized for receiving dividend checks when they are high enough to consider an extra income other than having to pay taxes. I feel if I start that now it will start the growing process sooner than later . Obviously if i do this I will start being more serious on maxing out my Roth First.






  • scfr
    replied
    Originally posted by Mouse View Post
    Well, I just put a the initial deposit down on my first house, next is inspections and what not. 3 bedroom 2.5 bath.. finished basement.. has space if I want to make additional bed room(s). Itís a little larger house for just me but I got for decent price from knowing the seller. I also know some friends willing to move in if need be.


    Youre right about having to hold off and put slightly less contributions into my other accounts now that Iím in the house buying process..

    I have not really put any time frames on goals.. I probably should start doing that as well.
    Thank you for the update. Good luck with your new venture!

    Leave a comment:


  • Mouse
    replied
    Well, I just put a the initial deposit down on my first house, next is inspections and what not. 3 bedroom 2.5 bath.. finished basement.. has space if I want to make additional bed room(s). Itís a little larger house for just me but I got for decent price from knowing the seller. I also know some friends willing to move in if need be.


    Youre right about having to hold off and put slightly less contributions into my other accounts now that Iím in the house buying process..

    I have not really put any time frames on goals.. I probably should start doing that as well.

    Leave a comment:


  • jiM_Mi
    replied
    I wouldn't change advice of anyone here. I will offer some alternative thoughts.

    1) Have you looked into the COSTS of the real estate transaction? It's one thing to tell yourself you can afford a $1000/mo mortgage. It could take $20k-80K (or more) to close on that property.

    2) Have you put a time on any goals? I read a broad set of actions (mulltiple accounts) for a broad set of goals (buy a house, early retirement, rent out rooms) and did not see a timetable for those.
    2a) I would suggest putting a COST of time and money on each goal
    2b) I would suggest putting a plan together which gets the house "sooner". Meaning if you have to lower the contributions short term to get house in 1-2 years, I think you will see cash flow improve over 5 years because of rental goals.

    3) Have you looked at school districts. My experience is that 3 BR rentals in good school districts are rare in Detroit, Cincinnati and Denver areas where I have looked.

    Leave a comment:


  • Mouse
    replied
    Originally posted by bjl584 View Post

    To add to this, get to know someone locally who is already investing in real estate. Pick their brain for info and contacts such as lawyers, contractors, etc. Assuming this is really something you want to pursue of course. I would caution against renting to friends however.

    Thatís the thing, I know plenty of contractors, and tradesmen in every field needed. The only people I donít know yet are real estate investors or stock market investors.

    My cousin is a new-ish real estate agent so Iíve been in contact with him a lot but he isnít at the level yet where he actually invests or properties. Heís the closest person i know personally who has some form of real estate knowledge

    Leave a comment:


  • Mouse
    replied
    thats a good point, Iíll try and do more research and see what each of my account FULLY offers and benefits and what not.. I initially opened them based solely off the advice of others who have been around a longer and have already benefitted form it or who regret not opening one. (The 457b)



    Originally posted by scfr View Post
    Thank you for the update.
    It's great to hear that you are taking advantage of your driving time to expand your knowledge!
    "The Next Millionaire Next Door" (an update to the classic The Millionaire Next Door) was recently released, so the author Dr. Sarah Fallaw has been making the rounds on the podcasts. You may enjoy listening to one of her interviews.
    Are you getting the audiobooks from the library?
    I did not know the ďnextĒ millionaire next door came out! Thank you Iíll have to look into picking that up. And usually Iíve just been buying the audio book CDs online or finding a free version online(unsure if itís the WHOLE version or not through).

    The library didnít even cross my mind *facepalm*. My apartment is walking distance from our local library. Iíll have to check it out later today.

    Leave a comment:


  • bjl584
    replied
    Originally posted by james.hendrickson View Post
    Mouse - actually, getting a single family house as a first start isn't a bad idea. That will allow you to pilot your business model without the complexity of dealing with more units. Its gonna take some time to get to know the market, get your bank accounts set up, learn how much cash to hold back, develop resources for screening tenants, etc. Starting small will let you build up a knowledge base that you can scale up once you have your single family residence nailed down.
    To add to this, get to know someone locally who is already investing in real estate. Pick their brain for info and contacts such as lawyers, contractors, etc. Assuming this is really something you want to pursue of course. I would caution against renting to friends however.

    Leave a comment:


  • TinaNamdev
    replied
    I also have a Roth IRA that I personally fund and choose investments.

    Leave a comment:


  • scfr
    replied
    Thank you for the update.
    It's great to hear that you are taking advantage of your driving time to expand your knowledge!
    "The Next Millionaire Next Door" (an update to the classic The Millionaire Next Door) was recently released, so the author Dr. Sarah Fallaw has been making the rounds on the podcasts. You may enjoy listening to one of her interviews.
    Are you getting the audiobooks from the library?

    Leave a comment:


  • Thrif-t
    replied
    I'm just going to comment on the 457B account.

    My DH has one and works for a county government. Those are good accounts to have, I'd keep it if yours works the same. He can take out $$ at any time for any reason; earnings too penalty free, no age requirements, just have to pay the taxes because it goes in tax deferred. Not that we ever would, it's strictly earmarked for retirement, but I like that we have a big stash if we had some catastrophic emergency. At some point if I can find the time, I need to figure out if we can start taking money out and converting into a Roth, we can I just need to do the math for our tax circumstances.

    Another good thing, if you want to retire early before you can collect your social security or a pension, this account could be used to hold you over until either one of those income streams start. I'd start learning about your plan and see if it has the same rules.

    Leave a comment:


  • Mouse
    replied
    Thank you everyone for the response, late delay on my part..my 9 year old computer finally gave out on me and I find it harder to navigate forums on my phone but Iím getting the hang of it.

    I am still house hunting however, I am not desperate at the moment and Iíve noticed Iíve spent more time researching investment opportunities within the stock market that will develop another form of income before I accept a mortgage payment. ( just in case I donít find a roommate right away )
    I have been listening to a lot of YouTube videos, audio books, podcasts of investing , real estate, stocks..(I do this while Iím driving around at work instead of listening to the radio)

    Leave a comment:


  • snafu
    replied
    I'm so impressed with your desire to lay the foundation for your financial well being at your age. Good on you! If you are reviewing various investment streams, I suggest adding ETFs [Exchange Traded Funds] which is between Mutual Funds and choosing specific stocks, keeping in your preferred business but modifying the risk. If you choose Dividend Stock, verify the DRIP access.

    Another voice supporting your plan to buy SFH and rent rooms to friends. You lose a small amount of privacy but can make a huge difference in paying down a mortgage in the early years when such a high percentage of the sum paid goes to interest, taxes and insurance. . Choose good tenants and it can be fun. It's Important to verify rules/requirements for basement development, often called MIL suite which likely have special requirements like fire escape windows.

    Leave a comment:


  • james.hendrickson
    replied
    Mouse - actually, getting a single family house as a first start isn't a bad idea. That will allow you to pilot your business model without the complexity of dealing with more units. Its gonna take some time to get to know the market, get your bank accounts set up, learn how much cash to hold back, develop resources for screening tenants, etc. Starting small will let you build up a knowledge base that you can scale up once you have your single family residence nailed down.

    Leave a comment:


  • Mouse
    replied
    My initial plan was to look into multi families. But everything is pricey in this area. So if I canít find one within my budget Iíll consider a single family as a first investment and rent out some rooms.. and I like that idea too, continue putting away money even after the car is paid off for the future car. Iím going to try to finish paying it off within a year.


    And the house isnít confirmed yet.. I have an agent trying to plan a meeting. However, the house is a 3 bed 1 bath, approx 2k Sq ft with a good sized unfinished basement (maybe for smal apartment or at least another room with bathroom .. house does need some updating so I will need money for repairs. Current asking is about 50k less than what I personally qualify for which is good. However, I feel they are still asking more than the house is worth so it would need some negotiating. I am interested in this property because itís a decent/ cheaper price around this area. And with some updating it has potential for a nice turn around when I decide to sell. A multi family I could hold onto would be ideal for first house
    Last edited by Mouse; 09-06-2018, 04:58 AM.

    Leave a comment:


  • LivingAlmostLarge
    replied
    Agreed with jluke. How much house are you buying and will you need cash for repairs?

    Leave a comment:

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