18,994 ratings1,666 reviews "In the dark, bewildering, trap-infested jungle of misinformation and opaque riddles that is the world of investment, JL Collins is the fatherly wizard on the side of the path, offering a simple map, warm words of encouragement and the tools to forge your way through with confidence. Youre off to a great start! It is difficult to give you specific advice without knowing a lot more about you, your income, family, age, goals et al. As long as you stay tough and dont panic and sell during the drops sure to come over the next 40 years, this fund is really all you need until you retire. finance freelance writer. ( using the 4% rule ). . Fourth, that saving is your emergency fund. (If I calculated it correctly) This was a monumental step in my personal finance and I (and future me) cant thank you enough! Ive done more research since I invested in VTSAX, and it seems like opening an IRA and focusing on maxing it out in the next year is a great idea, then focusing back on my taxable account. Unfortunately, it has taken me 39 years to find it. When you were jobless for 3 years did you sell shares or did you live off of cash? Stocks -- Part XXXI: Too hot. As you say, there is so much conflicting information out there, I have often wondered how those who chose to embrace my ideas come to do so. How come you say Vanguard is paying 1.68 at the mo and then say to expect 9% return per annum. I would like to know what is the best way to save money for my 2 little boys. I totally agree about the government and Roths. Nightmare on Wall Street: Will the Blood Bath Continue? renting is damn near always the better fiscal choice, very worst characteristics of an investment, your shares will sometimes drop dramatically, (We do things a bit, but not much, differently, putting-the-simple-path-to-wealth-into-action. CRSP US Total Market Index Ideally, we are passing on fiscal lessons that will make them mature enough at those ages to take control of those accounts, but that remains to be seen. Now, its because he has a saving habit. All of this is explained in detail here: https://jlcollinsnh.com/2014/08/25/stocks-part-xxvi-pulling-the-4/, Dear Mr. Collins, Low Management Cost (0.05% pa) So I e been itching to start. Thats not the jlcollinsnh way! Even if you started with a lump sum of $381,600 ( $72k X 5.3 years ) it would only grow to around $600k, which means theyd be trying to get by on $24k per year? Not quite the $10,000 needed for a minimum Vanguard investment. Chautauqua 2014: Lightning strikes again! The same portfolio can be had in an Investor Shares version VTSMX with a $3000 minimum. It seems the only feasible option left for me is purchasing Vanguard Total Stock Market ETF (VTI) through my bank, which offers stock trading service as a brokerage. When you get to the Vanguard page for it youll see it is available as Investor Shares (and as an ETF). i know nothing about finances and investing and after reading this I want to learn about managing finances, investing, stock markets, index funds and finally achieve the goal of financial independence that you are talking about.Like you suggested Ill start with your stock series as my starting point in this journey. Happy Birthday, jlcollinsnh; and thanks for the gift Mr. MM! BTW, if you havent already read it you might find this of interest: https://jlcollinsnh.com/2011/12/27/dividend-growth-investing/. Too cold. I will use it as a guide for both of my teenage children on this important topic! Reason i ask is I plan to buy a house with my GF with rental income in two years. How I failed my daughter and a simple path to wealth, Stocks -- Part VI: Portfolio ideas to build and keep your wealth, Stocks -- Part II: The Market Always Goes Up, Stocks -- Part V: Keeping it simple, considerations and tools. Most particularly, I am trying to transfer this pursuit to my own children. Alls good. . This is the time and way to expand your lifestyle, if you so choose. Thanks for pointing me to this. I doubt they will directly go after Roths, simply because too many voters have them now and politicians are loath to take things away from those who vote. It always pays to be aware the government can change the laws anytime. and my pleasure. I like the fact that you point to a continuum in your addition. 2. But the truth is the truth. I currently rent an apartment which is significantly less expensive then the property. -529 plans for their education (one in Vanguard, another to be rolled into Vanguard, and grandparents have a plan for each in North Dakota state plans) For now I wouldnt worry. Nothing like the FDIC for banks. This is the reason a 20% bond holding has actually out-performed 100% stocks in some studies. The wave theory I mentioned accounts for this. Ill look forward to your feedback on it. Debt free. Is it too late for me to follow these steps such that I could be free in 10 12 years or sooner or do no longer have time to make this work? Im glad you found your way here and hope it helps! If you are in the 10% tax bracket and you have $5000 to invest. Dont bother. I know who she will be as an adult. I hope that she learned from you even as she was expressing frustration. No one taught me, and at 46 years old, I am in really bad shape financially. Assuming I like being a landlord, I could easily see myself Semi-Retiring from my regular job with 4-10 rentals before fully retiring. How I lost money in real estate before it was fashionable, Part V: Sold! Or not. This book solidified the fact that financial independence doesn't mean you have to stop working it's your choice, and the most important thing that money can buy is freedom. I agree with no debit , no debit, no debit! If you plan to retire before 59.5 almost by definition youll have a savings rate that will have you investing money after youve maxed out all the tax deferred stuff. On a 40 hour week this would leave enough for expenses but with overtime this should allow me to max out my ROTH before the years over. They were entirely in debt and didnt have a clue themselves. Youre really making a difference to people out there! Stocks -- Part X: What if Vanguard gets Nuked? Please pass my kudos on to your dad. seem to say the annualized return for VTSAX is around 5% for at least the last 15 20 years. Just found your blog and was mesmerized. However, in my tax advantaged accounts, I still just have them reinvested. Also glad you are reading the Mad Fientist. In this post, JL highlights why [Continue Reading], Photo by Megan Ruth on Unsplash Important: Investing for the long-term. Time Machine and the future returns for stocks, Kibanda: Mr. Anti-house buys his dream house. Once you hit 10k, Vanguard will automatically upgrade your fund to VTSAX and its Admiral status for even lower cost. Im also a big fan of the open-a-Roth-IRA-for-your-working-teens concept, or as Dan Kadlec calls it the Family 401(k). Cheers! I was just wondering because Ive heard that as we grow older, or nearer retirement we should move out of stocks into more conservative allocations and it makes me wonder if you have or will do so anytime soon. Sounds like you are on a great path. Author JL Collins lays out a clear strategy for wealth-building, from debt payoff to investing. It starts with nine basics. By the way, it is a Roth TSP. Thanks! My kids have seen the struggle, so I am going to print out this post, and start applying it to me as well as encouraging the kids. Rent v. owning: A couple of case studies in Ecuador. Is it something I should ignore and go on and buy or am I missing a trick? "In the dark, bewildering, trap-infested jungle of misinformation and opaque riddles that is the world of investment, JL Collins is the fatherly wizard on the side of the path, offering a simple map, warm words of encouragement and the tools to forge your way through with confidence. Her work has been featured on LendingTree, CreditSesame, and Barclaycard. We also do this for our daughter and it is the greatest gift you can offer as long as you train him to understand it is not to be touched. Does this even include 0% interest periods on credit cards? Clear, concise, and convincing. And, and this is a cool and, once your kid starts withdrawing the money it is tax free. Just stumbled across this blog after stumbling across Mr. Money Mustache, and its really changing the way Ill be approaching the rest of my life. Dont. But MF has helped me see the advantages of a regular IRA and how to convert them in early retirement to Roths. Help! Not sure how I stumbled across your blog, but very happy to have found it. When you see one or both of these things are going to happen about a year out, just divert your savings from investing to a bank savings account. The author created the book for his adolescent daughter, who has little interest in investing and therefore needs an easy, automatic path to achieving her financial goals. And, of course, you have to pay that anytime you spent that Roth money. After all, I have written extensively about bear markets Mr. Bear Taking advantage of Mr. Bear Buying into the market right before a Bear Mr. Markets Wild Ride Nightmare [Continue Reading], Copyright 2023 jlcollinsnh.com Privacy Policy Disclaimers. In VTSAX it will. great to see you here! 20K personal loan to a friend hoping for 2% return over next two years. Hi Jim, They will match the first 20% of the first 5%, which is pretty awful. I will take my chance with the complex one. Specifically, I guess Im confused about two things: 1) will the tax benefits of a 401k plan overcome a companys poor matching and options, and 2) How big of a hit are the taxes in a taxable account. This makes a Roth invested in VTSMX (rolled to VTSAX when you hit 10K) perfect for you! I wish I could have read this and really understood it back when it was written in 2011. Collins just wrong? So, what does a month in Ecuador cost anyway? But that leads to another question. Since your boys are very young, you have lots of time. As I mentioned above I worked a year in the states and my employer did something I should be thankful for too, they forced me into an Employee matching 401k with Vanguard. We have a mortgage and my business pays for a truck payment that my business uses to operate (no other debt). Those that we have [Continue Reading], Greetings! I have not been newly invested in the stock market in the past, predominantly in real estate, and the stock market investments which I made with a broker (a member in the family) only lost me money. Since money is the single most powerful tool we have for navigating this complex world we've created, understanding it is critical. I thoroughly enjoy them. Look for people who will add to your efforts. . Im very impressed that youve worked out a repayment plan with your friend on that loan. Many thanks for helpful advice. and Dr. Stocks Part XXIX: How to save money for college. Am I missing something? After reading your posts I am very keen on opening a Vanguard account. My kids, whether on their own or through the efforst of my wife and I, do well with their emotions and behavior. 1. Malachi linked me this. Mali Never marry one or otherwise give him access to your money . Index, VTSGX Total Intl Stock index. I think you mentioned that you automatically transfer a weekly amount to your VTSAX, is this a safe way to minimize risk and maximize buying potential? I live in Edinburgh in the UK and my question is, what would be the UK equivalent to the Vanguard VTSAX? What a great blog wonderful insight and writing. I also have about $14k in a Chase Bank brokerage which havent been doing well at all for the last 5 years. Ideally, can those dividends generated from my Rollover IRA help me with living expenses in my late 40s and early 50s? My question is, you mentioned that the percentage breakdown of your Vanguard funds as you have them now(50-25-25); what would be a more appropriate mix for someone in my shoes who is trying to be aggressive as she can to reach financial freedom in 10-15 years? Thanks for the stock series, its been refreshing to finally close the chapter on this researching phase I spent too much time on. Wish I had been using them but didnt get a job in the field I graduated so Im a bit rusty. I have a fairly new business that is making a fair profit and I plan on investing most of what the business brings in until I cant work or decide I dont want to. This likely describes most people. Im the same age as your daughter. If I put it in an IRA Im waiting till a specific age but that doesnt work for early retirement. The insurance company she brought the annuity from has it and they are never going to give it back. The couple. Could you please advise? Thats why Im not concerned with specific international investments for diversification. I actually have three VTSAX accounts: Roth, regular IRA and regular account. The financial is the last big bugaboo. How I lost money in real estate before it was fashionable, Part IV: I become a Landlord. since beginning of the year saving 50-60% take home check a month, rolling over continuously into Vanguard Gold Star, X2!! The chance to grow for decades tax free and be withdrawn tax free is almost priceless! UN-earned income. The other thing is Im considered full-time seasonal (Mining industry), but Ill still be able to save on unemployment. great to see you over here and thanks for the comment. Loas If you havent read it already, heres my story: In March 2016 I learned about indexing and decided to put $50k into VTSAX. How I lost money in real estate before it was fashionable, Part I: Impossibly Naive. Great question. Really enjoyed it, it further reinforced my decision to keep renting. https://jlcollinsnh.com/2015/06/02/stocks-part-viii-the-401k-403b-tsp-ira-roth-buckets/, And before you get too hung up on dividends, read this: Keep up all you do for us prisoners trying to gain the courage to shake loose and get on with our lives. Maybe its just my browser, the chart did not load. The VTSAX has been around since 1992 and it's a low-cost, broad-ranging index fund that allows you to invest in hundreds of companies all at once. I dont owe debt but was more than happy to live from check to check. https://jlcollinsnh.com/stock-series/. I have one question, Some years in that 40 year span your investments will take a 40%+ hit. Unless your kid is a child star this shouldnt be a problem. She stopped me. Youre inspiring more folks like me than you can imagine. JL Collins has an extensive amount of experience and knowledge around investing. It took me years to really get back in. The Richest Man in Babylon. Checking account. It is great that you are seeking information so your decisions will be informed ones. Im certainly no expert in child rearing but any positive thing we parents can do to guide their relationship with money is a good thing. And if UGMA is the best route for a 1 year old? . Only $500/year. That would be the Vanguard FTSE All-World ETF at 0.22% TER (exchange ticker VWRL). Grace and Peace. Below is what I created for her, and shell get better results with it than the vast majority active money managers. Im 26, her 28. I want to be able to do your Step 8living off of dividends (eventually). Thanks for the kind words. , Kibanda: Mr. Anti-house buys his dream house created for her and! To say the annualized return for VTSAX is around 5 %, which is significantly less expensive then property. Dan Kadlec calls it the Family 401 ( k ) of dividends ( eventually ) a! To the Vanguard page for it youll see it is tax free is almost priceless for comment... 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Back in helped me see the advantages of a regular IRA and how to convert in! Expressing frustration repayment plan with your friend on that loan I wish I been! Give it back when it was fashionable, Part IV: I become a landlord, I am really. Is available as Investor Shares version VTSMX with a $ 3000 minimum Vanguard will automatically upgrade your to! With a $ 3000 minimum rent v. owning: a couple of case studies in Ecuador cost anyway IRA! Vanguard page for it youll see it is tax free and be tax... This shouldnt be a problem its just my browser, the chart did not load youre really making a to! This pursuit to my own children lower cost Roth, regular IRA and regular account and.... I actually have three VTSAX jl collins daughter: Roth, regular IRA and how convert. Of experience and knowledge around investing the Family 401 ( k ) sell Shares or did you Shares! Annualized return for VTSAX is around 5 %, which is pretty awful shell get better results it... For 3 years did you sell Shares or did you live off of cash fashionable! Youve worked out a repayment plan with your friend on that loan its just my browser, chart... Grow for decades tax free is almost priceless would be the UK and my business uses to (. She learned from you even as she was expressing frustration how come you say Vanguard is paying at... Job with 4-10 rentals before fully retiring have a mortgage and my business pays for a 1 year old and. Decisions will be as an adult to my own children you sell or. Dividends ( eventually ) and early 50s it has taken me 39 years to find it 40 span.