Newcomer Portfolio Questions

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

MattB wrote: Fri Jul 22, 2022 2:23 pm So, e.g., if you want another $1m in 10 years, you would need to save $100k/year for the next ten years.
Yeah not gonna happen :). When I went to a compound interest calculator, started @ 200k, 7% growth, 18% my contribution, 13% employer contribution, over 10 years -- It put me at 885K

7% is avg growth of a 20bonds/80stocks 1926-2021.

Anyone see a huge red flag with planning on those assumptions?
DIYtrixie
Posts: 187
Joined: Sun Sep 13, 2020 12:11 pm

Re: Newcomer Portfolio Questions

Post by DIYtrixie »

jbogler wrote: Fri Jul 22, 2022 11:53 pm
MattB wrote: Fri Jul 22, 2022 2:23 pm So, e.g., if you want another $1m in 10 years, you would need to save $100k/year for the next ten years.
Yeah not gonna happen :). When I went to a compound interest calculator, started @ 200k, 7% growth, 18% my contribution, 13% employer contribution, over 10 years -- It put me at 885K

7% is avg growth of a 20bonds/80stocks 1926-2021.

Anyone see a huge red flag with planning on those assumptions?
Yes: Stocks go down as well as up, sometimes for years in a row. Inflation (mostly) decreases the value of a dollar.

That’s why many of us err on the side of caution, as MattB suggested.
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

DIYtrixie wrote: Sat Jul 23, 2022 12:37 pm
jbogler wrote: Fri Jul 22, 2022 11:53 pm
MattB wrote: Fri Jul 22, 2022 2:23 pm So, e.g., if you want another $1m in 10 years, you would need to save $100k/year for the next ten years.
Yeah not gonna happen :). When I went to a compound interest calculator, started @ 200k, 7% growth, 18% my contribution, 13% employer contribution, over 10 years -- It put me at 885K

7% is avg growth of a 20bonds/80stocks 1926-2021.

Anyone see a huge red flag with planning on those assumptions?
Yes: Stocks go down as well as up, sometimes for years in a row. Inflation (mostly) decreases the value of a dollar.

That’s why many of us err on the side of caution, as MattB suggested.
Understood. Matt used 0%. What do you use?
DIYtrixie
Posts: 187
Joined: Sun Sep 13, 2020 12:11 pm

Re: Newcomer Portfolio Questions

Post by DIYtrixie »

jbogler wrote: Sat Jul 23, 2022 3:26 pm
DIYtrixie wrote: Sat Jul 23, 2022 12:37 pm
jbogler wrote: Fri Jul 22, 2022 11:53 pm
MattB wrote: Fri Jul 22, 2022 2:23 pm So, e.g., if you want another $1m in 10 years, you would need to save $100k/year for the next ten years.
Yeah not gonna happen :). When I went to a compound interest calculator, started @ 200k, 7% growth, 18% my contribution, 13% employer contribution, over 10 years -- It put me at 885K

7% is avg growth of a 20bonds/80stocks 1926-2021.

Anyone see a huge red flag with planning on those assumptions?
Yes: Stocks go down as well as up, sometimes for years in a row. Inflation (mostly) decreases the value of a dollar.

That’s why many of us err on the side of caution, as MattB suggested.
Understood. Matt used 0%. What do you use?
2% for equities, 0.5% for bonds and fixed income.
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

DIYtrixie wrote: Sat Jul 23, 2022 3:59 pm
jbogler wrote: Sat Jul 23, 2022 3:26 pm
DIYtrixie wrote: Sat Jul 23, 2022 12:37 pm
jbogler wrote: Fri Jul 22, 2022 11:53 pm
MattB wrote: Fri Jul 22, 2022 2:23 pm So, e.g., if you want another $1m in 10 years, you would need to save $100k/year for the next ten years.
Yeah not gonna happen :). When I went to a compound interest calculator, started @ 200k, 7% growth, 18% my contribution, 13% employer contribution, over 10 years -- It put me at 885K

7% is avg growth of a 20bonds/80stocks 1926-2021.

Anyone see a huge red flag with planning on those assumptions?
Yes: Stocks go down as well as up, sometimes for years in a row. Inflation (mostly) decreases the value of a dollar.

That’s why many of us err on the side of caution, as MattB suggested.
Understood. Matt used 0%. What do you use?
2% for equities, 0.5% for bonds and fixed income.
Thanks
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

retiredjg wrote: Mon Jul 18, 2022 1:02 pm
jbogler wrote: Mon Jul 18, 2022 12:46 pm Sorry all, I am in the 22% tax bracket, Married Filing Jointly. I fixed this in the original post, I had it in the single bracket by mistake.

Income is 115k
Annual bonus: ~ 25K (before taxes)
Annual 10% bonus direct to 401k -> 11.5k
3% employer match
I contribute 8% to 401k

Entire annual 401k contribution is 21%.
Ok. This puts things in a very different light.

Having said that, some people would choose to put some in His 401k and some in Her tIRA just so there is money in both names.
Is there advantages to putting money in both names beyond equality of ownership? Is wife allowed to put money she hasn’t earned in her tIRA?
User avatar
retiredjg
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Re: Newcomer Portfolio Questions

Post by retiredjg »

I am not aware of advantages or disadvantages. If they exist, it is likely on a state level.

Yes, a non-working spouse can contribute to an IRA based on the working spouse's income.
Topic Author
jbogler
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Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

retiredjg wrote: Mon Jul 18, 2022 12:23 pm re-evaluate abd change your understanding of how much you need to be putting in for this to work out well.

Edited to add....if your core expenses are $48k a year, where is the rest of the money going?
I don’t know where the 48k expenses figure came from. I stated i was 48 years old?

I re-evaluated our monthly budget. After our core expenses, taxes, and my 8% contribution. We have 2300 left over. We have decided to bump the contribution to 18% which will get us to the max contribution of 20.5k. And leaves about 1300 each month for incidentals like doctor visitsschool costs, kids activities and whatever else that always comes up.

This new number means my total 401k contribution will be 31%. 18% mine and 13% employer.
HomeStretch
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Re: Newcomer Portfolio Questions

Post by HomeStretch »

jbogler wrote: Sun Jul 24, 2022 10:08 am Is there advantages to putting money in both names beyond equality of ownership? Is wife allowed to put money she hasn’t earned in her tIRA?
One advantage is the access to additional Roth/tax deferred space by making a spousal IRA contribution.

A less-tangible benefit is a non-working spouse having/adding to savings in the spouse’s name. It could be considered a fringe benefit in recognition of spouse’s childcare services to the household. Consider asking your spouse if this benefit/recognition matters to them.
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retiredjg
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Re: Newcomer Portfolio Questions

Post by retiredjg »

jbogler wrote: Sun Jul 24, 2022 10:26 am
retiredjg wrote: Mon Jul 18, 2022 12:23 pm re-evaluate abd change your understanding of how much you need to be putting in for this to work out well.

Edited to add....if your core expenses are $48k a year, where is the rest of the money going?
I don’t know where the 48k expenses figure came from. I stated i was 48 years old?
In an earlier post, you said "Our core expenses are approx. 4000k/month and we can probably shave some off that if we had to, we have kids at home (11yr, and 14yr)."
I re-evaluated our monthly budget. After our core expenses, taxes, and my 8% contribution. We have 2300 left over. We have decided to bump the contribution to 18% which will get us to the max contribution of 20.5k. And leaves about 1300 each month for incidentals like doctor visitsschool costs, kids activities and whatever else that always comes up.

This new number means my total 401k contribution will be 31%. 18% mine and 13% employer.
This is good. :happy
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

jbogler wrote: Sun Jul 24, 2022 10:26 am
retiredjg wrote: Mon Jul 18, 2022 12:23 pm Edited to add....if your core expenses are $48k a year, where is the rest of the money going?
I don’t know where the 48k expenses figure came from. I stated i was 48 years old?
retiredjg wrote: Mon Jul 18, 2022 12:23 pm In an earlier post, you said "Our core expenses are approx. 4000k/month and we can probably shave some off that if we had to, we have kids at home (11yr, and 14yr)."
Ah, got it. I went into quicken to check the latest. Note: on taxes I never know whether I will be due a refund or have to pay, but this is what they take out of my paycheck

Annual Current:
Core Expenses: 65400 - 53%
Taxes: 18000 - 15%
Savings: 9800 - 8%
Incidentals/Discretionary - 24% (covers gym memberships, doctor, dental, optometrist, activities, school, and everything else that seems to come out of nowhere)

Annual Proposed will be:
Core Expenses: 65400 - 53%
Taxes: 18000 - 15%
Savings: 20500 - 18%
Incidentals/Discretionary - 15%
Topic Author
jbogler
Posts: 38
Joined: Wed Jul 06, 2022 6:59 pm
Location: Colorado

Re: Newcomer Portfolio Questions

Post by jbogler »

sawhorse wrote: Mon Jul 18, 2022 7:43 pm One thing that jumped out at me was how small your emergency fund is. With 2 kids and a wife, it really should be more than 3 months. I second the suggestion to open a Roth IRA. One great thing about Roth IRAs is that they can be used as a backup emergency fund.

https://www.investopedia.com/articles/p ... y-fund.asp
"You can only contribute a few thousand dollars to a Roth IRA each year, and once a year passes without a contribution, you lose the opportunity to make it forever"

I am not sure what this quote means. Why would i never be able to contribute to a Roth IRA forever, if I don't contribute for a year but want to contribute the next?
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22twain
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Re: Newcomer Portfolio Questions

Post by 22twain »

You can contribute at most $6K per year to an IRA (unless you’re over 50). If you don’t contribute $6K this year, you can’t make up for it by contributing $12K next year.
It's "IRMAA" (Income Related Monthly Adjustment Amount), not "IIRMA" or "IRRMA" or "IRMMA".
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dogagility
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Re: Newcomer Portfolio Questions

Post by dogagility »

jbogler wrote: Sun Jul 17, 2022 7:16 pm Contributions
His 401k:
Company match: 3% ($3450)
Company bonus: 10% ($11500)
My contribution: 8% ($9200)
Do you have access to a Health Savings Account? If so, it's a great retirement savings vehicle. https://www.bogleheads.org/wiki/Health_savings_account
https://www.bogleheads.org/wiki/Priorit ... nvestments
The more flexibility you have the less you need to know what happens next. -- Morgan Housel. A penny saved in a storage headache. -- Conor Friedersdorf
sawhorse
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Re: Newcomer Portfolio Questions

Post by sawhorse »

jbogler wrote: Thu Aug 04, 2022 10:48 pm
sawhorse wrote: Mon Jul 18, 2022 7:43 pm One thing that jumped out at me was how small your emergency fund is. With 2 kids and a wife, it really should be more than 3 months. I second the suggestion to open a Roth IRA. One great thing about Roth IRAs is that they can be used as a backup emergency fund.

https://www.investopedia.com/articles/p ... y-fund.asp
"You can only contribute a few thousand dollars to a Roth IRA each year, and once a year passes without a contribution, you lose the opportunity to make it forever"

I am not sure what this quote means. Why would i never be able to contribute to a Roth IRA forever, if I don't contribute for a year but want to contribute the next?
Right now the annual limit for Roth IRA contributions is $6000 for people under 50 and $7000 for ages 50+. If you don't make the contribution by the deadline, you lose the ability to contribute for that year. You can't contribute double the amount next year. The contribution deadline for 2022 is April 17, 2023.
Olentangybrave
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Re: Newcomer Portfolio Questions

Post by Olentangybrave »

Just wanted to send some encouragement your way. I posted on BH for first time this week as "Olentangy Brave" (August 10)and you can find it on Page 1 for my situation. I was self employed attorney for 40 years with 75% of income coming from court appointed criminal cases-not good. Didn't start to save and invest until 42. While I saved aggressively, I invested through Fidelity P.A.S. and paid the standard 1% A.U.M. for actively managed accounts when I should have simply used index funds a 3 fund portfolio. Needless to say, returns with index funds have vastly outperformed managed accounts since 2009. Moral of the story is to make sure you recognize opportunity when it presents itself. Despite my mistakes and regrets, I have been able to guarantee myself lifetime income of a magnitude that I will be all right. Hang in there and keep plugging away!
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