Search found 8354 matches

by KlangFool
Tue Apr 24, 2018 8:46 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Compared to taxable, and considering: 1) the market is up more years than it is down, and 2) if you've been stashing away in either a 529 or taxable for ~18 years, you are dealing with more lots with gains than lots with losses when a tuition bill arrives during a downtown, then I think a 529 would...
by KlangFool
Tue Apr 24, 2018 8:02 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Compared to taxable, and considering: 1) the market is up more years than it is down, and 2) if you've been stashing away in either a 529 or taxable for ~18 years, you are dealing with more lots with gains than lots with losses when a tuition bill arrives during a downtown, then I think a 529 would...
by KlangFool
Tue Apr 24, 2018 7:48 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

If your expenses grow faster than inflation, but your investments do not, then you won't be to FI in 25 years. ThriftyPhD, I just did the math. It works perfectly if the inflation rate is constant. Let's assume the inflation is 3% and the starting expense and saving are X. For year 0, the expense i...
by KlangFool
Tue Apr 24, 2018 6:54 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

If your expenses grow faster than inflation, but your investments do not, then you won't be to FI in 25 years. ThriftyPhD, I do not know how to model this. Even in this case, you are saving 1 year of expense every year. Aka, your savings is growing at the same rate as the expense, you might still b...
by KlangFool
Tue Apr 24, 2018 6:34 pm
Forum: Investing - Theory, News & General
Topic: Why are rising Bond Yields bad?
Replies: 21
Views: 1841

Re: Why are rising Bond Yields bad?

OP, A) It is a good thing if you are a saver. Your money are being paid with more interest. B) It is a good thing if you are prepared for a market crash and recession. You get to buy stock on sale. C) If your mortgage is on a fixed rate, this is a good thing. D) If you have an Adjusted Rate Mortgage...
by KlangFool
Tue Apr 24, 2018 6:23 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Why can't you treat it the same? Most people don't, and get conservative near the time of withdrawals, but your argument that started this back and forth was that a drawback to 529s was that the different time frame and is usually not compatible with one's long term horizon and AA. But this is only...
by KlangFool
Tue Apr 24, 2018 5:19 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Why can't you treat it the same? Most people don't, and get conservative near the time of withdrawals, but your argument that started this back and forth was that a drawback to 529s was that the different time frame and is usually not compatible with one's long term horizon and AA. But this is only...
by KlangFool
Tue Apr 24, 2018 5:14 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

I repeat, there is no reason to change your asset allocation based on whether you have a 529 account or not. This is a fundamental misunderstanding of the difference between asset location and asset allocation. The 529 simply changes the tax treatment of a certain amount of your money. Same as a 40...
by KlangFool
Tue Apr 24, 2018 4:41 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

KlangFool, My question was about your specific argument against 529s based on using a different investment horizon for them. It seems like a straw man to me. One could invest at their normal AA in a 529 with no harm. FoolMeOnce, Okay. Please explain to me how is this supposed to work if my AA is 60...
by KlangFool
Tue Apr 24, 2018 4:11 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

I would favor stocks in the 529 account (and Roth) and increase bonds elsewhere. You want your highest expected return in the accounts that will never be taxed again. Chuck, 1) So, when the stock crashes 50% and your kids go to college at the same time, what do you do? 2) In the taxable account, I ...
by KlangFool
Tue Apr 24, 2018 4:06 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

KlangFool, My question was about your specific argument against 529s based on using a different investment horizon for them. It seems like a straw man to me. One could invest at their normal AA in a 529 with no harm. FoolMeOnce, Okay. Please explain to me how is this supposed to work if my AA is 60...
by KlangFool
Tue Apr 24, 2018 3:05 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

Your calculation is wrong anyhow. I didn't provide any calculation. If I am fully-employed, at my saving level, I can "cash flow" my kids' college education. I do not need to use my taxable account. This is a common fallacy, but your money doesn't care where it "comes from." Chuck, So, as per your ...
by KlangFool
Tue Apr 24, 2018 2:33 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

Based on reading a lot of your posts, I suspect our philosophies are not that different. I saved diligently during my working years, putting a small portion of it towards college savings. Always made sure funding retirement/FI came first. While i do value education very highly, If it had come down ...
by KlangFool
Tue Apr 24, 2018 2:13 pm
Forum: Investing - Help with Personal Investments
Topic: Deciding Whether To 'Convert' 457B to Roth IRA
Replies: 14
Views: 519

Re: Deciding Whether To 'Convert' 457B to Roth IRA

02nz, Yes, but you could remove the earning and contribution from the 457B penalty free. If OP retires early and waits for a low-income year, he could withdraw the money tax-free and penalty-free. KlangFool The OP didn't state whether early retirement was in his plans - unless he has a much larger ...
by KlangFool
Tue Apr 24, 2018 1:56 pm
Forum: Investing - Help with Personal Investments
Topic: Deciding Whether To 'Convert' 457B to Roth IRA
Replies: 14
Views: 519

Re: Deciding Whether To 'Convert' 457B to Roth IRA

OP, Do not convert your 457B. There is no 10% early withdrawal penalty before 59 1/2 years old for 457B. You lose that if you convert to Trad. IRA or Roth IRA. I do not know about the expense ratio of your 457B. But, for my wife's 457B, the expense ratio of the mutual fund is very low. So, even wit...
by KlangFool
Tue Apr 24, 2018 1:52 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

Your calculation is wrong anyhow. If I am not employed, I would not be paying for my kids' college education. KlangFool I was unemployed for more 1 year when both of my kids went to college. I had to use my taxable account to feed my family besides paying for college. KlangFool I surrender. You cle...
by KlangFool
Tue Apr 24, 2018 1:25 pm
Forum: Investing - Help with Personal Investments
Topic: Deciding Whether To 'Convert' 457B to Roth IRA
Replies: 14
Views: 519

Re: Deciding Whether To 'Convert' 457B to Roth IRA

OP, Do not convert your 457B. There is no 10% early withdrawal penalty before 59 1/2 years old for 457B. You lose that if you convert to Trad. IRA or Roth IRA. I do not know about the expense ratio of your 457B. But, for my wife's 457B, the expense ratio of the mutual fund is very low. So, even with...
by KlangFool
Tue Apr 24, 2018 1:09 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Right. So let's say in year one you save and spend 50k, but after 25 years of inflation you save and spend 100k. At that moment, you do not have 25 years of upcoming spending saved. You do not even have 25x100k (25 years of contemporary spending, aka Year-25 spending) saved. Assuming you averaged t...
by KlangFool
Tue Apr 24, 2018 1:01 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

KlangFool, My question was about your specific argument against 529s based on using a different investment horizon for them. It seems like a straw man to me. One could invest at their normal AA in a 529 with no harm. FoolMeOnce, Okay. Please explain to me how is this supposed to work if my AA is 60...
by KlangFool
Tue Apr 24, 2018 12:48 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Two issues with this: 1) You stated 0% real returns, that inflation with match the nominal gains. The 25 year target is based on the Trinity study and others, looking at a range of returns based on historical input and measuring for success at 30 years out. 25 years with 0 real return will get you ...
by KlangFool
Tue Apr 24, 2018 12:41 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Why not invest in the 529 at the same AA as one's 20-40 year horizon? If the market drops right before tuition bills arrive, you are in the same position as paying all from taxable anyway or Roth contributions, but with the tax benefits on gains (and more in states with state tax deductions for con...
by KlangFool
Tue Apr 24, 2018 12:12 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Rule #1 Save 1 year of your current annual expense every year. Then, you could be FI in about 25 years even with 0% real growth. All well and good if you don't plan on living any longer than 25 years. Or am I missing something? Wouldn't be "all well and good if you don't plan on being retired for a...
by KlangFool
Tue Apr 24, 2018 12:11 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

All of the above does not have the limitation of the 529. This is non-sequitur to the discussion of whether or not to use a 529 account when paying for college expenses is an expected outcome . Chuck, Back to you. Expectation does not have to meet reality. In my case, if I am unemployed long enough...
by KlangFool
Tue Apr 24, 2018 11:08 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI [Financial Independence]

Regarding the 529: An unqualified withdrawal from a 529 is pro-rata basis and investment gains. You will pay regular income tax on the gains, plus a 10% penalty. (The basis is post-tax anyway.) If you received any state tax benefit from the contribution, you'll likely have to pay it back as well. I...
by KlangFool
Mon Apr 23, 2018 3:55 pm
Forum: Investing - Help with Personal Investments
Topic: Too Much Money in Taxable Acct/House Payoff/401k
Replies: 8
Views: 906

Re: Too Much Money in Taxable Acct/House Payoff/401k

OP,

If you pay off the mortgage, you cannot max up your Trad. 401K (18.5K ) and 2 x Roth IRAs (11K) for the next few years. So, do not pay off the mortgage.

KlangFool
by KlangFool
Mon Apr 23, 2018 3:18 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Folks, <<For my housing rule. 1) I use PITI at 20% to 30% lower than rent in order to account for the additional financial risk and maintenance cost of house ownership. 2) I use net worth excluding the house at 2.5 times of the house purchase price. You could use a lower number if you believe you ar...
by KlangFool
Mon Apr 23, 2018 1:48 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Rule #2 I think is impossible for 90% of people. I know when we bought a house our total non-house NW was maybe 1/3-1/2 of the house value... but it worked out OK and 10 years later we are closing in on your rule. It's not impossible for most, but it's certainly impractical. Most following this wou...
by KlangFool
Mon Apr 23, 2018 1:42 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

I did read through the thread, but I am going to go back and quote the first post to ask some follow up questions..... KF, can I ask you a general question - what specific kind of engineer are you? I've seen you mention being an engineer and also mention IT. But you also talk about HCOL area and fa...
by KlangFool
Mon Apr 23, 2018 11:49 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

I did read through the thread, but I am going to go back and quote the first post to ask some follow up questions..... KF, can I ask you a general question - what specific kind of engineer are you? I've seen you mention being an engineer and also mention IT. But you also talk about HCOL area and fa...
by KlangFool
Mon Apr 23, 2018 9:41 am
Forum: Investing - Theory, News & General
Topic: Recent grad looking to safeguard his earnings and invest (MEX) I know this is a US-centric forum but hear me out.
Replies: 10
Views: 724

Re: Recent grad looking to safeguard his earnings and invest (MEX) I know this is a US-centric forum but hear me out.

Your first step should be investigate local brokerages that allow you to buy US assets. I have no experience with that so I can't help there. If you can't find one.... Interactive Brokers is generally considered the best "worldwide" broker: https://www.interactivebrokers.com I was able to open an a...
by KlangFool
Mon Apr 23, 2018 7:46 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

It might be to your benefit to give some thought to some of the recommendations that people have given you. Spend a little time analyzing their recommendations for your particular situation. You might decide that making a few changes or thinking about a few things differently may make your financia...
by KlangFool
Mon Apr 23, 2018 7:38 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

I agree with KF's rules for the most part. However, I do think that being conservative is wise but has a cost as well. The idea of cash flowing college expenses has clear advantages over 529 in one main respect: flexibility. This allows money to be available for other purposes for whatever reason (...
by KlangFool
Mon Apr 23, 2018 7:34 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

This has been an interesting thread. I never thought about the idea of funding college via cash flow once my retirement goals have been met -- always thought you had to do it through 529s from the start. KF's method makes sense, I am just not sure yet if it's the best method for me (still searching...
by KlangFool
Sun Apr 22, 2018 9:28 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

bling, <<2) just because you can save enough to pay for college doesn't mean you should give up tax benefits of a 529. by that logic you don't need to put anything into a 401k or IRA either.>> 401K and IRAs are for retirement and FI. They are not limited to college education funding. The simple fac...
by KlangFool
Sun Apr 22, 2018 6:21 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

The simple fact that is I do not have the money to fund college education until my retirement/FI is funded. Some folks have higher income and saving. They can afford to do both at the same time. KlangFool Your description of your situation seems to be all over the place depending on what argument y...
by KlangFool
Sun Apr 22, 2018 5:24 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

marcopolo, 1) At higher income/saving/tax level, the tax advantage of 529 is significant versus the taxable account. 2) At higher income/saving/tax level, the person could save enough for the college education without affecting retirement/FI. 3) At higher income/saving/annual expense level, there i...
by KlangFool
Sun Apr 22, 2018 4:41 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

2) If I save for 529, I would not have 1 million that I am free to use for anything. How would I know how much I can afford for 529? I would have to be extremely lucky to pick the right amount. I am not that lucky. you don't have to be right or lucky. you just need to pick something that's sensible...
by KlangFool
Sun Apr 22, 2018 3:09 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

2) If I save for 529, I would not have 1 million that I am free to use for anything. How would I know how much I can afford for 529? I would have to be extremely lucky to pick the right amount. I am not that lucky. you don't have to be right or lucky. you just need to pick something that's sensible...
by KlangFool
Sun Apr 22, 2018 2:18 pm
Forum: Investing - Help with Personal Investments
Topic: which retirement vehicle is best?
Replies: 7
Views: 1272

Re: which retirement vehicle is best?

OP, 1) Roth 403B is the wrong choice for you. You are paying more taxes by contributing to the Roth 403B. Contribute to the max of Trad. 403B and put the tax savings into the Roth IRAs. Contribute to the HSA too. 2) Invest the rests of the savings into a taxable account. Check out the thread below. ...
by KlangFool
Sun Apr 22, 2018 12:34 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Why do you use a Roth IRA instead of saving those same dollars in to taxable accounts? I am sure you have good reason to do so. If you are going to pay at least some of your kids college expenses, a 529 has exactly the same advantage as a Roth. marcopolo, No. I can use Roth IRA's money for anything...
by KlangFool
Sun Apr 22, 2018 12:32 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

I save 60K per year. So, why would I put 5K into 529? KlangFool I think you mentioned you earn about $150k and save about $60k. I guess it is a matter of priorities, but given those numbers, I would be very comfortable saving 3.3% of income (or 8.3% of my savings) for my kids future. marcopolo, Ove...
by KlangFool
Sun Apr 22, 2018 12:25 pm
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Why do you use a Roth IRA instead of saving those same dollars in to taxable accounts? I am sure you have good reason to do so. If you are going to pay at least some of your kids college expenses, a 529 has exactly the same advantage as a Roth. marcopolo, No. I can use Roth IRA's money for anything...
by KlangFool
Sun Apr 22, 2018 11:50 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

I save 60K per year. So, why would I put 5K into 529? KlangFool I think you mentioned you earn about $150k and save about $60k. I guess it is a matter of priorities, but given those numbers, I would be very comfortable saving 3.3% of income (or 8.3% of my savings) for my kids future. marcopolo, Ove...
by KlangFool
Sun Apr 22, 2018 11:45 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

A) Because if you are planning to pay for some of your kids college expenses, the 529 is the vehicle optimized to save for that. B) That depends on how much you plan to spend towards college. For, in-state, one kid maybe 5-10k. For Ivy, may be 20k? We did ~10/yer per child while they were young. ma...
by KlangFool
Sun Apr 22, 2018 11:14 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Folks, Slice and dice versus all-in-one fund. Let's assume 50K in a taxable account with AA of 60/40. 1) You could put all the money into a Lifestrategy Moderate Growth Fund. Then, you add the money to the fund every month. Or, 2) You could put the money into the 3 funds and start a spreadsheet. Th...
by KlangFool
Sun Apr 22, 2018 11:10 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

A) Because if you are planning to pay for some of your kids college expenses, the 529 is the vehicle optimized to save for that. B) That depends on how much you plan to spend towards college. For, in-state, one kid maybe 5-10k. For Ivy, may be 20k? We did ~10/yer per child while they were young. ma...
by KlangFool
Sun Apr 22, 2018 10:18 am
Forum: Personal Finance (Not Investing)
Topic: Interesting vs higher paying job
Replies: 40
Views: 2890

Re: Interesting vs higher paying job

The $ differential is something like 90k in HCOL and 150K in Silicon Valley. That's face value, and I know that living in SV cuts the difference down significantly. TheTurtle, They do not pay you well enough to work in the Silicon Valley. So, between 90K versus 150K, you will make more money in the...
by KlangFool
Sun Apr 22, 2018 9:23 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Folks, Slice and dice versus all-in-one fund. Let's assume 50K in a taxable account with AA of 60/40. 1) You could put all the money into a Lifestrategy Moderate Growth Fund. Then, you add the money to the fund every month. Or, 2) You could put the money into the 3 funds and start a spreadsheet. Th...
by KlangFool
Sun Apr 22, 2018 9:19 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Do not agree with “do not save for college” — agreed that you should put your own retirement goals before saving for college, but assuming I make good money and have everything else under control, why would I not take advantage of tax advantage college saving space for my kids (assuming I plan to p...
by KlangFool
Sun Apr 22, 2018 9:14 am
Forum: Investing - Theory, News & General
Topic: KF's simple rules to achieve FI [Financial Independence]
Replies: 248
Views: 14027

Re: KF's simple rules to achieve FI

Which is exactly why you might want to think harder about the core of the issue in coming up with rules, if you want the rules to be helpful. It's easy (and not very effective) for anyone to say "save a lot of money and all will be fine." It's a lot harder (but also a lot more effective) to talk ab...