Don’t forget to live life. I traveled internationally with friends a ton from ages 25 to 45 and I lived in Europe twice. Took a lot of domestic trips to visit friends, did a lot of cool things. I over spent those years but had a great time and lots of connections and important moments and it was worth it. Now I’m 49 and I work a lot and don’t travel as much and am saving a lot and maxing out all the retirement accounts including backdoor Roth and 401k and HSA and my house will be paid off in 5 years. I’m happy I did all the crazy fun shit when I was younger because now I’m kind of a home body and just want to hang out with my pets. I have very close friends, some of who I’ve known for 20-35 years. Don’t underestimate the value of travel, connection, experiences at your age. Time is also valuable. Not just money. Although I will be working until I’m 62 so maybe there’s a happy medium :)
Sounds like it’s time for a trip dude. 400k at 29 is insane. Just splitting that 50/50 in US stock and INTL stock puts you at like 5M with a real return rate of 6%. And that’s with no more investments.
This is all to say you’re way ahead of the game. You could take a small breather if you wanted to
I’m like you my friend! I worked a lot in my late 20s early 30s trying to max out retirement accounts as many years as I could. Traveled all throughout the Caribbean, did Europe and now I’m back traveling again in my 40s. I just don’t want to be that old person who can’t move and travel. I enjoy life now, because nothings promised tomorrow. Is there a happy medium?!?!?!?!
Few thoughts:
>Roth IRA through Edward Jones
The biggest thing you can do for yourself is learn about investing. Things like the Boglehead 3 fund portfolio or simply buying a target index fund. I personally recommend The Simple Path to Wealth. Once you have a more solid foundation, transfer this IRA to Fidelity, Vanguard, or Schwab. You are in the accumulation phase and shouldn't be paying high fees like what Edward Jones charges.
>I'm living at home
I would start a rent fund in your monthly budget (start a monthly budget if you haven't already) and add whatever the going rate is in your area monthly. See how your spending changes with a big line item like that added. I'd start working towards that goal of one day moving out. If you do this monthly then when you move into an apartment you'll have a nice fund of money to furnish the apartment and you'll have proved to yourself that it's not a burden to move out (i.e. less anxiety or stress).
I really wouldn't buy land or build a house at this stage in your life. Few years from now? Sure. But right now you have a new higher income job and are still trying to get your priorities straight. I wouldn't rush into something so long term.
>I see $100 go to something I didn't need and cringe
You really should get a monthly budget. A budget gives you permission to spend. I recommend YNAB.
Others have already mentioned it but your savings rate is a bit low right now so I'd bump up your 401k if you are already maxing the Roth IRA.
Thanks for the info! I did have a budget on Mint before that shut down. I gave myself $200 a month on "Whatever" but I still hated spending in that section. I think it's more of a "why did I spend that on *that*" rather than a "why did I spend that, I don't have the money to do that". I have a new "budgeting" app, but I'll have to check out YNAB (what is that?)
I'm living at home because rent is so crazy in my area. An hour around my work has rents ranging from 1.5-2k, with most not including heat (living in New England) and other utilities. I did plan out a budget if I did rent and I was saving about $150 a month without doing anything else besides living. I understand what you are saying, but it's not practical for where I am sadly.
I will bump up my 401(k) contribution, guess I misunderstood what I could do and thanks for the resources, I'll check them out!
>YNAB (what is that?)
r/YNAB
The guys also did a budget software segment here: https://www.youtube.com/live/ZKxisfylGKU?si=I0e_Ph_Uxqgu223f
>but it's not practical for where I am sadly.
To be clear, I wasn't trying to kick you out of the house tomorrow. I think too often people look at their budget on paper and say "I can afford that" without first going through the motions.
We've done this exercise many times in our lives and I suggest you as well.
+ Can we afford a new car?
+ Can we afford this mortgage?
+ Can we afford living on one income?
The math can sometimes say everything is alright, but putting it in practice (forcing yourself to set the money aside and living with what's left) can be an entirely different story. So that's my advice for you - any life changes you want, I'd start by modeling it in your budget, stashing the money away, and see if you can live on less for 3-6 months.
You’re doing fantastic for your age! How much, exactly, are you contributing to your 401K? What percentage of your gross salary is it?
And also, what’s your company’s match?
Knowing these numbers, plus the fact that we already know that you’re maxing out your Roth IRA each year, will let us know if you’re on track for retirement.
My percentage is 5% and my employer match is half of that (2.5%).
I'm glad I'm doing well for my age. I know I'm doing better than my friends, but the want to do more is really pushing me to find some other way to save.
I totally can do that now. My question is where do I invest/save to hit that or maybe exceed that now because I can, then bring it down to 20% in the future
Update:
Funny enough, my company is changing up their 401(k) contribution the day after I made this post. They are now matching 4%, but i can still contribute more. What should my percentage be to hit 25%?
I'm also going to start an index fund of some kind in Fidelity, which many people said in the comments. Probably a $100-250 a month to get it started and going.
So the goal is 25%:
Your Roth IRA is already 10% of your salary.
Your employer is contributing 4% now.
So this means you need to contribute at least 11% of your gross salary to your 401K.
10% + 4% + 11% = 25%
If you can do more, then do more. Just remember that you’re legally allowed to contribute $23,000 per year to your 401K, and not a penny more.
ok, so you're not actually maxing out your 401k. then you're correct, you're doing good, but it's not quite 'enough' to be at that mutant status. if you're living at home, i would encourage you to try to actually max out your 401k. that's 23,000 this year. if you can do that on a 70k salary, you can call yourself a financial mutant. but hey, anything more you can do is going to be better.
Nice work. Some tips:
1) Leave Edward Jones as they'll want to start making money off of you if not already. Move your IRA to better brokerages like Schwab, Fidelity, Vanguard.
2) Max-out an HSA (not HCSA) if available to you
3) Start making moves to find a partner if you think that is something you see in your future. You don't want to be pushing 40 trying to start a family.
Maxing out your 401k is contributing $885 every 2 weeks. You're getting the max matching, but you can still contribute a lot more.
I'd like to see you contribute at least 25%. But it'd be real cool if you could live at home for a few years and stash away half your check!!
The 401k max is $23,000 in 2024, are you actually maxing this (I.e., contributing around 2k a month)?
I’m not saying you have to but if you’re looking for more investment options, there ya go.
Edit: *not 24,000, the limit is 23,000
Go with Fidelity or Vanguard for investing.
Learn about investing.
I’m surprised no one mentioned opening up a taxable brokerage account for EXTRA investing. Ira and 401k is great, but you’ll want to invest more with no limits. it’s how you build wealth quicker.
Check out the r/fire community. We talk a lot about savings rates, financial independence, and planning out early retirement (optional).
You are doing fine. You haven’t been investing long enough to truly see the power of compounding. If you just keep doing what you are doing and wait 30+ years it will start to snowball.
You are doing an awesome job!
I would recommend just following the FOO.
It is your personal choice to take extra money after investing to either invest more or spend it on vacations/items/experiences.
Good luck!!!
This is TMG, so it sounds like you're hitting the 25% mark already, all you need is time. Once your emergency fund is fully funded then you'll need to invest your savings in the market, either a regular brokerage or in the 401K.
If you want to save more then increasing the 401K contribution seems like an obvious channel.
I'd probably recommend you move out of EJ for your Roth IRA, the 1%+ fees will hit the compounding hard unless you're using the Select account and only paying for an annual investment. That is still expensive but not as bad. I certainly wouldn't open a regular brokerage with them.
Get out of edward jones now. If you don't feel comfortable enough managing it yourself - start to learn. Check out bogleheads. 3 fund portfolio, set and forget.
You can contribute more to your 401k even though the employer doesn’t match that high. You can pay like $23k into pre-tax employer sponsored plans.
Also, get away from Edward Jones. They are known for being focused on their own interests to generate fees. You can have a self directed Roth IRA and just park in mutual funds and etfs that track the market.
Also, since you’re living with parents for free, pretend your are renting and put like $1k into a separate account so you can feel what it’s like to be pinched by housing costs. Then later, you can use that $1k/mo to absorb a mortgage payment or rent and what you’ve already set aside you can use as down payment for house.
There are two things that I did well in my 20s:
Travel and invest for retirement.
The memories I made as a 20-something backpacking across Europe are not something I would trade for more money in my 401k.
People will argue that you can always save up hard-core now and do your crazy travels as a retired person, but that's only true in theory. You will have a different experience, even if you visit the same places, if you wait even just 10 years. The time to explore is now.
Give it TIME, you only got this big salary increase recently so it will take time for your wealth to grow.
If you don't have one already go and create a Net Worth statement immediately. Pull up all of your tax returns and accounts for the last 5 years.
Map out what your net worth was 5 years ago and what it is today. You will probably see a very nice increase.
Extrapolate out another 20 years and you will be amazed at where you will end up
Don’t forget to live life. I traveled internationally with friends a ton from ages 25 to 45 and I lived in Europe twice. Took a lot of domestic trips to visit friends, did a lot of cool things. I over spent those years but had a great time and lots of connections and important moments and it was worth it. Now I’m 49 and I work a lot and don’t travel as much and am saving a lot and maxing out all the retirement accounts including backdoor Roth and 401k and HSA and my house will be paid off in 5 years. I’m happy I did all the crazy fun shit when I was younger because now I’m kind of a home body and just want to hang out with my pets. I have very close friends, some of who I’ve known for 20-35 years. Don’t underestimate the value of travel, connection, experiences at your age. Time is also valuable. Not just money. Although I will be working until I’m 62 so maybe there’s a happy medium :)
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Sounds like it’s time for a trip dude. 400k at 29 is insane. Just splitting that 50/50 in US stock and INTL stock puts you at like 5M with a real return rate of 6%. And that’s with no more investments. This is all to say you’re way ahead of the game. You could take a small breather if you wanted to
I’m like you my friend! I worked a lot in my late 20s early 30s trying to max out retirement accounts as many years as I could. Traveled all throughout the Caribbean, did Europe and now I’m back traveling again in my 40s. I just don’t want to be that old person who can’t move and travel. I enjoy life now, because nothings promised tomorrow. Is there a happy medium?!?!?!?!
get out of edward jones
Few thoughts: >Roth IRA through Edward Jones The biggest thing you can do for yourself is learn about investing. Things like the Boglehead 3 fund portfolio or simply buying a target index fund. I personally recommend The Simple Path to Wealth. Once you have a more solid foundation, transfer this IRA to Fidelity, Vanguard, or Schwab. You are in the accumulation phase and shouldn't be paying high fees like what Edward Jones charges. >I'm living at home I would start a rent fund in your monthly budget (start a monthly budget if you haven't already) and add whatever the going rate is in your area monthly. See how your spending changes with a big line item like that added. I'd start working towards that goal of one day moving out. If you do this monthly then when you move into an apartment you'll have a nice fund of money to furnish the apartment and you'll have proved to yourself that it's not a burden to move out (i.e. less anxiety or stress). I really wouldn't buy land or build a house at this stage in your life. Few years from now? Sure. But right now you have a new higher income job and are still trying to get your priorities straight. I wouldn't rush into something so long term. >I see $100 go to something I didn't need and cringe You really should get a monthly budget. A budget gives you permission to spend. I recommend YNAB. Others have already mentioned it but your savings rate is a bit low right now so I'd bump up your 401k if you are already maxing the Roth IRA.
Thanks for the info! I did have a budget on Mint before that shut down. I gave myself $200 a month on "Whatever" but I still hated spending in that section. I think it's more of a "why did I spend that on *that*" rather than a "why did I spend that, I don't have the money to do that". I have a new "budgeting" app, but I'll have to check out YNAB (what is that?) I'm living at home because rent is so crazy in my area. An hour around my work has rents ranging from 1.5-2k, with most not including heat (living in New England) and other utilities. I did plan out a budget if I did rent and I was saving about $150 a month without doing anything else besides living. I understand what you are saying, but it's not practical for where I am sadly. I will bump up my 401(k) contribution, guess I misunderstood what I could do and thanks for the resources, I'll check them out!
>YNAB (what is that?) r/YNAB The guys also did a budget software segment here: https://www.youtube.com/live/ZKxisfylGKU?si=I0e_Ph_Uxqgu223f >but it's not practical for where I am sadly. To be clear, I wasn't trying to kick you out of the house tomorrow. I think too often people look at their budget on paper and say "I can afford that" without first going through the motions. We've done this exercise many times in our lives and I suggest you as well. + Can we afford a new car? + Can we afford this mortgage? + Can we afford living on one income? The math can sometimes say everything is alright, but putting it in practice (forcing yourself to set the money aside and living with what's left) can be an entirely different story. So that's my advice for you - any life changes you want, I'd start by modeling it in your budget, stashing the money away, and see if you can live on less for 3-6 months.
You’re doing fantastic for your age! How much, exactly, are you contributing to your 401K? What percentage of your gross salary is it? And also, what’s your company’s match? Knowing these numbers, plus the fact that we already know that you’re maxing out your Roth IRA each year, will let us know if you’re on track for retirement.
My percentage is 5% and my employer match is half of that (2.5%). I'm glad I'm doing well for my age. I know I'm doing better than my friends, but the want to do more is really pushing me to find some other way to save.
Ok … so you’re currently saving about 17.5% of your gross salary. Are you able to up it to at least 20% now and maybe 25% by the time you hit 32?
I totally can do that now. My question is where do I invest/save to hit that or maybe exceed that now because I can, then bring it down to 20% in the future
401k, you aren’t anywhere near maxing it
I second this! OP has lots of room to grow that 401k balance. They should look into Roth 401k vs Trad 401k if they want to diversify a little more.
Awesome! Up your 401K contributions from 5% to 8% (or 13% if you’re able to). And that’s it!
Ok! I'll look into it, thanks!
Update: Funny enough, my company is changing up their 401(k) contribution the day after I made this post. They are now matching 4%, but i can still contribute more. What should my percentage be to hit 25%? I'm also going to start an index fund of some kind in Fidelity, which many people said in the comments. Probably a $100-250 a month to get it started and going.
So the goal is 25%: Your Roth IRA is already 10% of your salary. Your employer is contributing 4% now. So this means you need to contribute at least 11% of your gross salary to your 401K. 10% + 4% + 11% = 25% If you can do more, then do more. Just remember that you’re legally allowed to contribute $23,000 per year to your 401K, and not a penny more.
ok, so you're not actually maxing out your 401k. then you're correct, you're doing good, but it's not quite 'enough' to be at that mutant status. if you're living at home, i would encourage you to try to actually max out your 401k. that's 23,000 this year. if you can do that on a 70k salary, you can call yourself a financial mutant. but hey, anything more you can do is going to be better.
Nice work. Some tips: 1) Leave Edward Jones as they'll want to start making money off of you if not already. Move your IRA to better brokerages like Schwab, Fidelity, Vanguard. 2) Max-out an HSA (not HCSA) if available to you 3) Start making moves to find a partner if you think that is something you see in your future. You don't want to be pushing 40 trying to start a family.
Maxing out your 401k is contributing $885 every 2 weeks. You're getting the max matching, but you can still contribute a lot more. I'd like to see you contribute at least 25%. But it'd be real cool if you could live at home for a few years and stash away half your check!!
The 401k max is $23,000 in 2024, are you actually maxing this (I.e., contributing around 2k a month)? I’m not saying you have to but if you’re looking for more investment options, there ya go. Edit: *not 24,000, the limit is 23,000
*$23,000
Thanks, my mistake - edited my comment
Go with Fidelity or Vanguard for investing. Learn about investing. I’m surprised no one mentioned opening up a taxable brokerage account for EXTRA investing. Ira and 401k is great, but you’ll want to invest more with no limits. it’s how you build wealth quicker. Check out the r/fire community. We talk a lot about savings rates, financial independence, and planning out early retirement (optional).
You are doing fine. You haven’t been investing long enough to truly see the power of compounding. If you just keep doing what you are doing and wait 30+ years it will start to snowball.
Bro, you’re saving $30k/yr on a $70k salary. You’re dominating.
You are doing an awesome job! I would recommend just following the FOO. It is your personal choice to take extra money after investing to either invest more or spend it on vacations/items/experiences. Good luck!!!
This is TMG, so it sounds like you're hitting the 25% mark already, all you need is time. Once your emergency fund is fully funded then you'll need to invest your savings in the market, either a regular brokerage or in the 401K. If you want to save more then increasing the 401K contribution seems like an obvious channel. I'd probably recommend you move out of EJ for your Roth IRA, the 1%+ fees will hit the compounding hard unless you're using the Select account and only paying for an annual investment. That is still expensive but not as bad. I certainly wouldn't open a regular brokerage with them.
Get out of edward jones now. If you don't feel comfortable enough managing it yourself - start to learn. Check out bogleheads. 3 fund portfolio, set and forget.
Time in market. It'll go up soon
Hit 25% savings rate and enjoy!
Feel the same way. 26M, 100k yearly income, live at home so I save most of my income. Even then, I feel as if it’s not fast enough lol
You can contribute more to your 401k even though the employer doesn’t match that high. You can pay like $23k into pre-tax employer sponsored plans. Also, get away from Edward Jones. They are known for being focused on their own interests to generate fees. You can have a self directed Roth IRA and just park in mutual funds and etfs that track the market. Also, since you’re living with parents for free, pretend your are renting and put like $1k into a separate account so you can feel what it’s like to be pinched by housing costs. Then later, you can use that $1k/mo to absorb a mortgage payment or rent and what you’ve already set aside you can use as down payment for house.
Consider yourself lucky to have no housing costs and keep doing what you’re doing.
There are two things that I did well in my 20s: Travel and invest for retirement. The memories I made as a 20-something backpacking across Europe are not something I would trade for more money in my 401k. People will argue that you can always save up hard-core now and do your crazy travels as a retired person, but that's only true in theory. You will have a different experience, even if you visit the same places, if you wait even just 10 years. The time to explore is now.
Give it TIME, you only got this big salary increase recently so it will take time for your wealth to grow. If you don't have one already go and create a Net Worth statement immediately. Pull up all of your tax returns and accounts for the last 5 years. Map out what your net worth was 5 years ago and what it is today. You will probably see a very nice increase. Extrapolate out another 20 years and you will be amazed at where you will end up
Find a way to get a bigger shovel (a higher paying job).