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265

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 save so much money for retirement. In fact, it's almost always the opposite. Why? It's because your question is a good one and that same compelling argument ...


210

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 will the co-payments rise significantly? I'll be living in my own house that is already paid off at that point, so no rent or mortgage payments. Unless ...


181

Split the difference. Keep $30K in the bank and pay $25K of loans now. Use your $4,300/month to pay the remainder of the loans over the next 6 months, and then use the following 6 months to replenish your bank account to $55K (if that is the amount you feel like you need liquid for emergencies). By paying some of the loans now, you demonstrate to your ...


141

Here are some possibilities: pay off the credit cards (and don't incur anymore revolving debt) if your employment has a 401(k) or 403(b) fully fund (to the maximum extent % possible) and keep doing that- choose equities (stocks) funds from low cost providers if no employment retirement available, open an IRA, depositing the annual maximum (but do it in ...


110

Can a middle class family do it with 15%? Yes, quite easily, in fact. You left a lot of numbers out, so lets start with some assumptions. If you are at the median of middle income families in the US that might mean $70,000/year. 15% of that is an investment of $875 per month. If you invest that amount monthly (starting at age 25) and assume a 6% return, ...


105

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 retires.* What would anyone do with all of that money? There are plenty of ways to spend wealth that you haven't discussed. Here are a few goals that you haven'...


102

Endowment manager here. An endowment is a large lump of money that is invested to create "forever income". They are held by universities and the like, and there are countless billions of dollars in them. They are also very tightly regulated, including how they are invested. To the astonishment of most novices, not only are they allowed to be heavily ...


89

Remember that a salary is temporary. Until you are independently wealthy—that is, until you can live off the income generated by your invested capital—there's always more investing you could do with the excess. Invest outside your 401k if you are at the limit for contributions. Plain investing accounts continue to exist. Learn more about doing ...


75

If your interest on those loans accumulates monthly, it's cheaper to pay them off now (unless the interest rate is below what your money earns you in the savings), though I would make sure I have enough money socked away for an emergency($2k-$5k plus a couple months expenses minimum). If the interest was assessed at the onset of the loan, and early payback ...


68

First, I would point you to this question: Oversimplify it for me: the correct order of investing With the $50k that you have inherited, you have enough money to pay off all your debt ($40k), purchase a functional used car ($5k), and get a great start on an emergency fund with the rest. There are many who would tell you to wait as long as possible to ...


66

This is a great question. Kudos to you for recognizing that you want to make a change. The secret to saving is to have a goal in mind. Saving money for the future is great, but unless you have a goal or purpose for that money that is accumulating, it is too easy to raid it when the next game comes out. College is a very worthwhile goal, however, there ...


64

Paying off your house quickly should be a #2-level priority, behind making sure you have some basic savings but definitely ahead of any investing concerns, because your house is not an investment; it's your home. (If you're brave/foolish enough to try buying houses-as-investments in the current climate, this obviously doesn't apply to you!) This isn't a ...


64

Look at how much interest keeping that mount in cash is costing you. At 5% interest, that's $200 a month wasted in interest payments just for the peace of mind of having cash in the bank. I agree with your wife. Pay the debt, start saving and/or investing again and that $48k will be built back up in less time that it would have taken you to pay it off a ...


58

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 are the odds that sometime between wherever you are now and your 70 year old self, you will find yourself out of a job, with no prospects of finding another ...


58

Nobody ever got to retirement age and said "Wow, I saved too much". Your wealth has a direct effect on your quality-of-life in retirement - how much you travel, whether you go to movies vs. the opera, for instance. Near to endlife, it decides how good your situation will be: the quality of your independent living, assisted living, skilled nursing or ...


58

What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die. Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do ...


58

40% of Americans can't cover a surprise $400 expense out of saving The average American has $6,200 in credit card debt You are way ahead of most Americans Like buying a house, investing in a second property, having a fancy car etc. And how much savings do they have? Probably not as much as you. How much credit card debt do they have? Probably a lot more ...


55

It depends on how much you save, how much your savings earns each year. You can model it with a very simple spreadsheet: Formula view: You can change this simple model with any other assumptions you wish to make and model. This spreadsheet presumes that you only make $50,000/year, never get a raise, that your savings earns 6% per year and that the market ...


54

A Roth IRA is a great idea. You can only put in as much as you earn (as in, get in paychecks) each year, but that shouldn't be too much of a problem for you right now. You're paying nothing in taxes, or nearly nothing, so you'll have a great opportunity to get some squirreled away in a safe place! And since it's a Roth, you can always withdraw the ...


54

Flexible savings accounts are almost all variable interest, meaning the rates go up and down with market rates. The reason for this is that if they did not, people could pay into the fixed interest ones when rates elsewhere were low, and take money out when rates elsewhere were high (and invest it at a higher rate in other accounts), making a profit at the ...


54

What brokerage firms have failed or are about to fail because of GameStop? It's the hedge funds who got whacked not the little guy. But I can't help but think that the investors of some of the now bankrupt firms will just go on to find other highly paid jobs, but what about the layman? Investors don't have to find other highly paid jobs if a firm goes ...


53

All of the above can happen. Lottery winners are invariably people with little experience in handling extremely large amounts of money. For most lottery winners, everything about their life changes overnight. They typically take the lump sum prize, giving them immediate access to a fortune, with no guaranteed income beyond that. They quit their job, move to ...


52

Unlike others, I do NOT recommend putting your $6k into a retirement fund this early. It's a bad idea.1 If you're overflowing with money after college and don't know what to do with this $6,000 then, you can do the same thing then2 (edit: see below3)—this extra 4-5 years of interest or capital gains really isn't going make or break you, but the penalty and ...


49

I often say "don't let the tax tail wag the investing dog." I need to change that phrase a bit to "don't let the tax tail wag the mortgage dog." Getting a tax deduction on a 4% mortgage basically results (assuming you already itemize) in an effective 3% rate mortgage. The best way to avoid tax is save pretax in a 401(k), IRA, or both. You are 57, and been ...


48

It doesn't really make sense to worry about the details of "what counts as saving" unless you also move beyond a simplistic rule of thumb like "save 10% of your income". That said, most of the sources I see pushing rules of thumb like that are talking about saving for retirement. That is, you need to sock that money away so you will be able to spend it ...


48

Which of these categories are emergency funds meant to cover? Emergency funds are for emergencies, which to me means expenses that are unanticipated and can't be covered out of "normal" cash-flow. Oil changes are not an "emergency" and should be part of your normal budget. Car/house repairs and doctor visits might be an emergency depending on the severity ...


48

To actually answer your (financial) question: What are my options in this situation? Rent out the property share the profit / remaining costs while building equity until you find a buyer. Lower the asking price. You may have to sell it at a loss. Too late to complain now. As they say, you make the money in buying. Looks like you bought too high. Split ...


46

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 will be paying on mortgages until the day they die. I wouldn't need (or want) a car, and would probably use a bicycle or maybe some cheap future-scooter... ...


44

Are there businesses which professionally invest ethically? Yes. The common term for this is "socially responsible investing". Looking at that page and googling that term should provide you with plenty of pointers to funds to investigate. Of course, the definitions of "ethical" and "socially responsible" vary from person to person and fund to fund. You'...


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