271 votes

Why do people save so much?

When people over 60 reflect back on their life, they generally do not say: I wish I took out more student loans. I wish I bought more expensive cars. I wish I bought fancier clothes. I wish I didn't ...
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  • 45.7k
215 votes

Why do people save so much?

Why do they need so much money as old people? The future is unexpected. My country has universal healthcare, so medical expenses are not a worry. Will it have UHC in 50 years? Probably... but ...
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  • 49k
182 votes

What happens to people without any retirement savings?

I'm afraid you have missed a few of the outcomes commonly faced by millions of Americans, so I would like to take a moment to discuss a wider range of outcomes that are common in the United States ...
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  • 11.6k
159 votes
Accepted

Oversimplify it for me: the correct order of investing

I am a firm believer in the idea of limiting debt as much as possible. I would not recommend borrowing money for anything other than a reasonably sized mortgage. As a result, my recommendations are ...
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109 votes

Why do people save so much?

The reason some people save so much so young is that they understand the growth potential of COMPOUND INTEREST. Every dollar that I put away for my daughter at 2 years old can be worth $1,000 when she ...
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78 votes
Accepted

Is a higher salary worth not having a 401(k)?

From a long-term planning point of view, is the bump in salary worth not having a 401(k)? In this case, absolutely. At $30k/year, the 4% company match comes to about $1,200 per year. To get that ...
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  • 115k
67 votes
Accepted

Would compound interest work better if all my accounts were combined into one?

No. The compounding is a multiplier, and multiplication is distributive over addition. So 1.1 * (x + y) = (1.1 * x) + (1.1 * y). That is assuming that the accounts are large enough that no ...
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67 votes
Accepted

Aging parents with no investments

Do they want your help? Many times parents have difficulty taking advice from those whose nose and butt they wiped. Your accomplishments and investments are independent of the fact. What are their ...
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  • 75k
65 votes

401(K) Very high negative rate of return

There is not one right answer to this but in my opinion, this is not the time to move to safer options for someone in your position. You are very young and this is a retirement account, you want to ...
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  • 2,063
62 votes

Best way to invest $300,000 inheritance for a couple intending to retire in 10 years

Lots of people will post lots of advice about what to invest in, or which research blog to read, but definitely the best advice is: Talk to a financial planner As newbie investors there are lots of ...
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  • 30.7k
60 votes

Why do people save so much?

For myself, I saved because having accumulated a nice pile of money - enough to live modestly on the income (what I call being "independently poor") is both security and freedom. Take security. What ...
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  • 11.1k
57 votes
Accepted

How risky is real estate?

Where is the risk? The short answer is... Property damage from weather, termites, tenants, whatever. How about tenants who stop paying the rent and you need to go through legal channels to evict ...
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  • 73.9k
51 votes

Why should a person approaching retirement age make their portfolio less risky?

What occurred in 2000 and 2008 is "why this is true". If one were to have retired in 2007, with a major portion of their retirement invested in stocks, their portfolio value dropped significantly, ...
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  • 1,184
50 votes

Why do people save so much?

I'll be living in my own house that is already paid off at that point, so no rent or mortgage payments. This very much depends on where you live. In the major cities of the costal USA many folks ...
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49 votes

What is the median retirement savings in the United States today?

I find this very hard to believe Believe it. The bottom quarter of American households have negative net worth, and the bottom three quarters have no more than a tiny amount saved up. https://en....
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  • 4,769
49 votes

50% portfolio in single stock, JPM - appropriate for 80 year old?

This seems to me irregular both in terms of risk, lack of diversification Me too. Is this a suitable allocation of assets? Putting 50% in one stock is acceptable, I think, if that one stock is a ...
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  • 49k
46 votes

Aging parents with no investments

Probably they shouldn't be investing. It's too late for that. And if they aren't investing it's pretty simple: Sell the big property before they urgently need the money because that takes time, then ...
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  • 817
46 votes

Can a small family retire early with 1.2M + a part time job?

Can a small family retire early with 1.2M + a part time job? With the right sacrifices, almost certainly. Can you retire early in the scenario you described? No. You're spending more per year than ...
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  • 64.6k
45 votes

Oversimplify it for me: the correct order of investing

401(k) up to matched amount High interest debt Emergency fund 401(k)/Roth 401(k) / IRA/Roth IRA Pay off student loans Pay off mortgage One can generalize on Traditional vs Roth flavors of accounts, I ...
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44 votes
Accepted

Should I Use an Investment Professional?

People ... are nearly twice as likely to ... feel confident Great, confidence is amazing. That and $5 will buy you a cup of coffee. 44% [who hired a pro] have $100K or more [vs.] 9% of DIYers ...
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43 votes

Do I need term life insurance at age 57?

The answer to your question will depend on your own preferences and circumstances, but I would argue that generally at your stage of life you do not need nor want term life insurance. Life insurance ...
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  • 14.9k
42 votes
Accepted

What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones?

There are two parts to the hack you describe. One is moving to a high-cost, high-pay country to work, and the other is moving to a low-cost, low-pay country to retire. As Dilip mentioned in a ...
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  • 23.8k
41 votes

Why do people save so much?

My country has universal healthcare, so medical expenses are not a worry. People in their 20s (and 30s) thinking about the future may choose not to gamble that the government in 50 years will look ...
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  • 6,228
39 votes
Accepted

If I switch jobs to a lower tax bracket right before I retire, do I save on 401k taxes?

Your tax bracket is determined by your total taxable income in a given year, where money drawn from a traditional-style deferred-tax 401k or IRA is taxable income. (Money drawn from a Roth account was ...
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  • 31.8k
38 votes

My ignorance keeps me awake at night (specifics below)

Some comments: Some disastrous taxation event that I don't know about. These are rare. Usually disastrous taxation events are well publicized in advance and require a lot of legislative work. Seeing ...
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  • 131k
36 votes
Accepted

What happens to people without any retirement savings?

Well, if you worked in the United States you have social security, and medicare and medicaid in most cases as well. So you have a small amount of income to spend every month to cover your most basic ...
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  • 1,462
35 votes

What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones?

I was at a restaurant in NYC, 1st Avenue and 63rd street. I don't recall how the conversation started, but the woman at the next table remarked how none of her friends from the West side, 9th avenue ...
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34 votes

How much should you save for retirement in a country that automatically takes care of retirement savings?

You give hints, but don't quite answer the key question - At the time you retire, what fraction of your income will be replaced by the benefits you list? If that amount is your 'happy' number, you ...
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34 votes

Can a small family retire early with 1.2M + a part time job?

$90K expenses. Less $12,000 Income. That’s $78,000. You are asking if $78,000 can be returned from an investment of $1.2M. As a rule of thumb, we talk about a 4% safe withdrawal rate. But even then, ...
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34 votes

What is so good about IRAs?

For the reasons you cite may prefer the Roth IRA where you pay tax on the money contributed now, but future withdrawals are tax free. However there is a benefit to pretax plans such as traditional ...
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  • 75k

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