@ErinTalksMoney I believe i have heard it being referred to as quadruple. Lowers taxable income, it comes out before fica, invest it, and withdrawals are tax free for medical expenses.
Great content Erin. I like the brokerage account as well. Whats your take on having more than one brokerage account? Also have two retirement accounts as well.
You need a third party to help you out. A financial planner or accountant can run through your figures, including your projected income and expenditures when you retire, along with your retirement goals, your emergency fund and any other strategies you need to put in place for such things as long-term care.
@@AnatolyIvor hmm thats impressive I did some findings on, Loren really seem to know her stuff. educational background, qualifications was really impressive. Kudos and thanks for sharing. I left a note and booked a consult. Maybe I will get feedback
Thats impressive Ana. After working for 30 years I currently have less than 2 million put together after my husbands company allocation, despite the markets new highs we are finding it difficult to grow past the 2 million threshold after it depleted December 2021. We need some of the funds for our kids college and the rest to last us the next 15-20 years. This advisor Loren Lena Walker I have checked out and hope to consult with, I pray she gives me her time
I have 401K, Brokerage, HSA, and Roth accounts. If I could go back and do it again, I would have put more emphasis on the brokerage account. My opinion, 401k up to the company match, Roth IRA, HSA, and then brokerage account for the rest. YMMV depending on your specific situation and goals. No harm, no foul though. I ran the numbers and retirement is now less than a year away. I was going to wait until the end of 2024, but after looking at things I moved that up to June 2024. The simulators are giving me a 97 - 99% chance of success. I can't make more time, so I might as well take the leap.
I thought I was the only one with this preference. I like tax advantaged accounts, but I LOVE the freedom and flexibility of a regular taxable brokerage account. No withdrawal requirements or limits, no contribution limits, just good old fashioned complete flexibility and freedom.
Work until 70 if you WANT to work to 70. But plan so you don't HAVE to work to 70. I knew a lady that retired at 83, and that was only because her health got to the point where she really had to stop working. She didn't want to --- she loved her job. I remember her telling me about how her high school counselor told her that if she went to college she could become a nurse or teacher. She insisted she wanted to become a chemist!
I for one would not want to work until 70, maybe I’ll have to, idk what life has in store for me, but I’d like to retire the day I have a grandchild, which I guess isn’t guaranteed
Thanks for your perspective on this. I have a similar view and am buying index funds in my brokerage account but haven’t actually withdrawn anything yet. Is tax loss harvesting something we should consider if just buying index funds? Also, I’d like to know more about using charitable gift funds to reduce capital gains taxes too. Maybe you can elaborate on how to make the most of these brokerage accounts in future videos. Thanks again!
I do have a video on brokerage accounts, index funds and tax loss harvesting: ua-cam.com/video/P80OHUs8Wg4/v-deo.html&feature=sharec But I definitely need to make one on charitable contributions 😊 I’m happy to make loads of videos on brokerage accounts
A brokerage account was a great place for us to hold our money while we saved up over 7 years to make a 20% downpayment on our first home. -- We wouldn't have been able to do that if we had only held it in a savings account. Brokerage accounts are great for multiplying money you want to use before retirement, and, obviously, retirements are even better for multiplying money you will use in retirement accout. Like you said. -- Having options, and using those options are great.
Great Video! Brokerage accounts are great if you can resist the temptation of dipping into them for non-essentials. (its kind of like a big plate of cupcakes sitting in front of you...mmmmm cupcakes!). Also it is tough to stay focused on the right investments. Too often I feel that people invest emotionally or have knee-jerk reactions with their investments (too much money in investments that promise super quick growth). My financial advisor has been a godsend to me because I like cupcakes... he takes a small fee, but is well worth it. And he slaps my hand when I reach for those cupcakes. 🙂
Hey, my lamborghini Huracan is essential🤣 Just because you have a taxable/non-retirement brokerage account doesn't mean you are actively trading/gambling. I apply the same boring index fund etf logic as I do in my retirement brokerage accounts, although I do like me some individual stocks.
IRA's are great, both serve a purpose. One for tax free growth, and one for write off's. Sadly, 5-8% which is what I average isn't enough. It's a small, very small part of my plan. Though I do like the write offs from my traditional as I have a lot of different incomes and it helps offset tax cost. I have to agree the brokerage wins out with a good overall investment plan of blue chips, high dividend ets, and some higher risk picks. And then of course options trading can really be useful as well at times. It's been said that "only the top 1% invest in stocks" and that's a bunch of crap. We ALL have the choice to invest in the market and it's honestly not that hard to have a great base and hit a homerun here and there. It's so easy to learn. Most just make that choice to stay poor and not put in the work.
Terrific video; I hope some young people out there see this and follow this lady. Base income is huge as is discipline; some will always do better than others; but everyone can do well if they give it the max effort
I don't find myself disagreeing with you often, but since we are talking about opinions, everyone is correct in what they like. I love brokerages also, but I think some of the negatives you gave for the other options are missing the mark. You talked about restriction on access to money on Roth's, HSA, etc, but that's only partially true. With the roth, you always have access to the principal, and the HSA you always have access to pay for medical expenses. Also, both of those grow tax free, whereas the dividends and capital gains are taxed, depending on your income. For me, the order is HSA, Roth or IRA (depending on current income), and brokerage. However, I have a mix of all these, as they all play a role in financial planning, for tax planning. One final point. You talked about choices. With an IRA, roth or otherwise, and often 401k's, you have the option to invest in low cost index funds. I have a Roth and traditional IRA's, and a brokerage account with Fidelity, and because I manage them, there is no fee to Fidelity.
All very wonderful points!! And thanks for sharing your preferred order 🙏 I still very much love Roth accounts, HSAs and even traditional retirement accounts. They all have their place in a portfolio. My other thing I might add, is that while most employers sponsored plans offer index options these days, and I would bet even more and more will continue to do so going forward, not all do. That was my intention when I said greater options and flexibility in brokerage accounts. 😊
I really like my kids 529 accounts. Tax free growth and if the money isn't used for education because of scholarships or whatever the kids can roll those into roths. Erin doesn't look like you have kids from the house background but I would like your opinion.
Love it. Couldn't agree more with the need for control and ease of access, thus a brokerage account. We have one for the very reason of wanting a bridge fund in early retirement to "bridge us" to when we an tap our 401Ks and IRAs. Having multiple buckets if you will to earn and pull money from is fun !!
Roth IRA is my favorite because, like a brokerage account, you can access contributions if you need them. That’s a valuable option that lets you take a little more risk with other funds than you might do if the Roth money were locked up for decades. Also, the earlier you start investing, the more valuable that Roth is because the balance in your account at retirement will be mostly gains, not contributions, and you’d rather get those tax free.
You can set up a Roth in a brokerage account. The big limitation is you don't have margin, which means shorting is not allowed. Also, active trading is hampered some because you are waiting for each trade to settle before you can open a new position.
@@neuideas Yes, by “brokerage account” I meant “taxable brokerage account” as the term is often used colloquially. Yes, a Roth IRA is almost always a self-managed brokerage account where you do your own trading. Agreed, a limitation of all IRA accounts is that there are regulatory limitations on the use of margin. However limited margin is allowed. Schwab, for example, allows you to apply for and be approved for _limited margin_ to cover trades clearing (so you can reinvest right away for a single trade, but not for repeated day trades), and they also allow you to apply for the margin needed to trade _option spreads_ with your Roth IRA. One could do any more-exotic option training in other accounts, if needed.
Three questions: 1) Do prefer VTSAX over its ETF equivalent? Why? 2) What will you do in your taxable account when you are older and want to reduce risk using Bonds? Most Bonds are tax inefficient. 3) What about having an HSA account? Thanks
1. B/c vanguard allows for automatic investments in index funds - simple as that, otherwise they are darn close to being identical 2. I will change how I allocate my dollars toward investments if my risk tolerance changes 3. I have an entire video on HSAs 😊ua-cam.com/video/yLEYXVEKh2s/v-deo.html&feature=sharec
An HSA is a great account to have due to all the tax benefits it has. That being said, I believe they are only eligible to those with certain high deductible heath coverage. To me that’s a double edge sword, yes I would love all the benefits of that type of account. However I’d much rather have an affordable health plan with more comprehensive coverage. Those do still exist, particularly at certain government employers, but they certainly are not the norm these days.
@@takethecurseOFFwashingmachine HEALTH is WEALTH. Our insurance is sick care vs well care. It’s busted. Health care IS an industry made to generate $$$ on sickness. It pays to be sick for those in this business
If you love what you do then keep doing it for as long as you’re able. If you retire early and don’t have something to get up for or look forward to doing then it’s just a ticket to an early grave. Balance is the key and of course taking the time to learn about good nutrition and get some exercise and most importantly is what you inherited from your parents.
If someone has no hobbies then they are pretty boring. I was furloughed for 6 months of the pandemic. A mid life mini retirement. Spent my days: running (as normal), golfing, fishing, making new things like mead and kombucha, watching content at night that i could finally get to, build an AR-15, got to the shooting range, go kayaking, more cooking of new meals, plus many other things. There was loads more i never ended up doing but could have. Retirement someday will be the same thing. This is why old people rot away sitting in their recliners. Not using their muscles so they become weaker more quickly. Makes it harder to walk. No lubrication of joints means arthritis more quickly. Etc.
FSKAX is earning considerably more over its life and costs less than half of the expense ratio of the vanguard total market index you showed. Check it out. Over 20-30 years this will make a HUGE impact.
I'm honestly surprised at this topic. I always thought traditional retirement accounts were better because of the tax advantages. I can see the benefits of a brokerage account too though- no contribution limits and more freedom to withdraw and choose your investments. If you only had enough money to invest in one type of account, what would it be? For me the Roth IRA works best because I don't max it out and I get to choose my investments, while growing my money tax free
Well, miss young lady. Trust me, when you get to retirement age, you're gonna love that Roth a WHOLE LOT MORE. And yes, health was a big consideration for me retiring at 52. My mom passed at 59, a few month's after she retired. I loved my self employed work I did, until I didn't, and retirement was within reach. Things do change and I hope you reach yours goals and stay happy.
As long as your company allows it you can do that. I recommend making sure beforehand. My 401k advisors at my companies retirement seminar had not heard of it, so I delayed my exit from 58+ to 59.5
So I have a traditional Ira, would like to convert it to a Roth just not sure how to go about it. I have 50,000 in the traditional any advice would be great
I see this mistake over and over on financial channels. You are correct the Roth IRA balance would be much more however you must state you first have to have the ability to deposit the same contribution on an after tax basis (which may be up to 34% more) in order for your comparison to be accurate. But overall you are doing good work encouraging people to save
Love it. This is the 5th video of yours that I watched, and I now just subbed. And yes, I have a work Fidelity 401K, a Roth with Fidelity and a Vanguard account with little over 100K of index funds in it. Your advice is spot on - thanks
I have a Roth IRA with Fidelity and invest in a couple different index funds. I also have a wros-tod brokerage account with Fidelity but I’m not sure if there is an annual maximum contribution amount. 👍🏻✌🏻
My favorite "investment account" is an HSA, max it out every year, and attach to a HSBA and resist ever touching it. Triple tax free for medical purposes (money goes in PRE-tax, tax free investment growth and tax free for medical use... AND becomes basically an all purpose ROTH at age 65.
Glad to see another person who started investing young (beginning to think I was just weird 😢) My parents always invested and when I started high school my dad asked if I wanted to try (with a custodial account) YES. Used my saved money from odd jobs, birthdays whatever. Don't remember if I even had an allowance, just didn't spend much. Traditional brokerage still my favorite, have traditional and Roth IRA's and a 401K at my employment, rolled other 401K into IRA's.
Democrats want a 40% capital gains tax. It doesn’t seem worth investing outside of a tax protected account. I think a 5.35% (Brio Direct) high yield savings bank account, owned by a roth 401k is better in my opinion. You still have access to your bank money, and it’s earning tax free interest.
I max out my 401k and Roth. If I have anything left over, I throw it in my brokerage account and let it grow. I only dip into it if I need to make a big purchase like a car which only happens once every 10 years or so. I also treat it as a kind of insurance policy if were to develop a major health issue that isn’t completely covered by health insurance. It’s all index funds and, like my Roth and 401k, I don’t have to check on it frequently. I’m confident I’ll have enough when I retire.
Hello, did we both learn from the great Dave Ramsey? lol It is SCARY AF that only 35% of people invest outside of IRAs or work sponsored programs?! All that means to me is I better save more because I'm going to be supporting my peers in the future because I chose to save rather than spend $7500 on a couch I'm afraid to sit on. My question is, what do you think of having your accounts manages by someone that takes a percentage? I personally think my financial planner does a pretty good job, but I wonder if I just managed it myself with index funds if we'd be better off long term?
Thanks for information! I love your videos! They make me think about investing and saving in new ways. You mentioned a pension in this video. I will be retiring next year from the Army. I'm looking for videos about pension and retirement planning. Do you have or can you do a video on this?
You may hear some tax savvy people state that people with SEPs are well to do skirting taxes with the increased contribution limits. While that may be true in a minority of cases it's more the exception than the norm. This lady never had access to a 401k account for a large portion of her career and likely isn't rich enough to be contributing $63k/year to that account or 25% of income whichever is less. Congress recently tried to do away with these increased limits luckily they failed. They may try to again eliminate them in the years ahead if one political party has their way. The villanize Peter Thiel and then try to ban the Mega Backdoor Roth IRA strategy but that ban will also likely include SEPs. Their proposal last time also banned regular Roth IRA backdoor contributions starting in 2032. With this risk it quantifies why it's so important to contribute as much now when the legislative environment may be more favorable than in the years ahead.
🤫my favorite investment account is the coffee can on the second cupboard to the left facing the refrigerator. why are you doing SEP-IRA rather than SOLO 401k? Also, make sure that husband doesn't play sneaky to have you sign away SBP when he retires. SBP is better than life insurance if he really loves you😁 There is some confusion here. Almost all Vanguard accounts are brokerage accounts. So, your Roth IRA account with Vanguard is a Roth IRA Brokerage Account, TIRA is a TIRA Brokerage Account, Inherited IRA is an Inherited IRA Brokerage Account, etc. Your non-IRA taxable Brokerage Account at Vanguard is a Brokerage Account, so maybe use the term non-IRA brokerage account or taxable brokerage account.
I'm shoveling as much as I can into tax advantage retirement accounts because the FAFSA doesn't consider them in calculating the estimated family contribution (ability to pay).
What about strategies for reducing money visible to colleges when children file for financial aid? A loaded brokerage account is just ripe for the picking... thoughts?
Dang a 40% savings rate. That’s way way more than most people can or should do. Not saying you shouldn’t. But many people simply can’t live a normalish life and save that much because they need to buy. Housing food health care etc. this is not advice for the masses.
Your welcome to your view but I won't be taking your advice. Avoid accounts. The banks are not your friend. they need your money to pay huge salaries to their senior executives. Store Gold or silver. At least it's value will outstrip the dividend on a bank savings account.
Read content, good video. I’m sure you’ve already know this but it wasn’t mentioned, is the importance of loss harvesting. If done correctly it should be able to wipe out any taxes you would pay on gains.
Good information. I am a bit shocked that only 19% of people have a Roth. This seems pretty basic to me. I think it is a good idea to have multiple accounts in case a Bernie Madoff type ends up the CEO of your only retirement account.
You never discussed an important nuance to using a brokerage account. You may not receive the same protections from bankruptcy or litigation that you receive by having your money in a 401K, IRA, or other company plan. There are a lot of specifics on this topic, but you need to be aware of this.
I think, for me, my favorite account is a Roth IRA for the following reasons: (1) assuming no withdrawals of earnings are made until after age 59.5, said earnings completely escape tax, (2) there are no RMD's during the account owner's lifetime, (3) pre-age 59.5 withdrawals of cumulative contributions can be made penalty-free and tax-free, and (4) pre-age 59.5 withdrawals can also be made penalty-free and tax-free if done after the 5-year post-conversion clock has run out.
I wish I'd had this video years ago when I first started earning a paycheck (or before even). I took so long to actually start investing, I don't even want to think about the opportunity cost.
Don't forget IRS rule 55 for 401K. You can take it early at 55 without penalty if retire from company at 55 and Don't move your account. Make sure to check with your company 401k administrator
Not a fan of HSA's, particularly if you have health issues or expect to use health services more frequently (such as starting a family). Sure, you can invest in a very high deductible catastrophic health plan, but you never know if or when you may have a catastrophic health event that may possibly disabled even short term.
You should talk about estate planning how complicated it can be when someone receives an inherited IRA. One of main reasons why I like the brokerage account. When someone inherits a IRA that isn’t a spouse they need liquidate all the holdings after a certain amount of years.
There is no choice , the law was changed after the fact, that it had to cleared out in ten years. many of us had no Roth option for much of our working careers. I’ve converted what I can in the window I had before pension kicked in.
Here in Canada, the tax advantages in our tax-deferred (RRSP, or Registered Retirement Savings Plan) and after-tax (TFSA, or Tax-Free Savings Account) investment accounts are persuasive, and thus make a taxable brokerage account something you think twice about unless the retirement accounts are full. While there is some criticism of our RRSP here -- people chafe at having to pay tax on withdrawals, withdrawals must begin in the year you turn 71 -- there's a lot to like about tax-free compounding. That said, with my retirement accounts now full, I've begun investing in a taxable brokerage account. They require special handling, as selling from them involves tricky tax calculations. To minimize selling, I keep an ETF there. I always enjoy those stories of your childhood investing under your grandmother's influence, the making of a financial prodigy. I've something similar, in that my mother ran a small credit union attached to a labour union local in my small Ontario community from a spare room in our house when I was a child. I remember workers coming to get loans, and get other money-related business done. While years of grad school meant I got a later start in investing, as there was very little to invest, I've saved aggressively, moreso now with my mortgage paid. So the brokerage account really defines the future of my investing strategy, and I'm glad you are giving such accounts profile here. They are often neglected as investors think about their options.
None of us KNOW what the 'end of life' will be for ourselves. I'm 79. My dad was mentally sound and died at 70. My mum had dementia before she was 79. I don't have dementia. But I came close to dying Dec 2022. Jsn 2023 they fixed me, TAVR. I'm better now. Since then I cashed in sever $K of I & EE bonds and invested in a special rate bank CD and stated a T-bill ladder. People are so lucky to have smart people like you on U Tube. 50 years ago everybody was only on their own.
As a USA expat in Asia I am only legally able to use brokerage accounts and buy stocks or etf’s. It’s my total strategy and I’ve been amazed at how hard it was to get help sorting it out. The book Millionaire Expat, and Charles Schwab were to only real help to me for this situation. Would love more dedicated content on expats.
i'm not sure this makes any sense. What do you mean only able to legally use brokerage accounts to buy stocks or etf's? How else are you going to buy stocks and etf's? The word "legally" is also confusing. I presume you mean that you aren't eligible to contribute to an IRA because you don't have any earned income in excess of all your deductions and exclusions, primarily the Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusion (FHE). If you income in excess of your deductions and exclusions, you would still be eligible to contribute to an IRA.
It's going to sound odd, but my favorite "account" has a zero balance. It's a HELOC. A HELOC affords you tremendous flexibility - it's a source of money available at an instant, for an unexpected expense or any reason at all. But keep the balance zero most of the time (i.e. when you're NOT experiencing a money emergency) so as to not pay any interest on it. Having a HELOC in your back pocket means you don't need an emergency fund or a low-interest savings account, allowing you to keep all your assets invested at all times.
HSA's you can buy anything you want with the funds. Meaning non eligible expenses. However, you will just get hit with the penalty. But at least it is quickly accessible and liquid via the hsa debit card if need be in an emergency. Even with the low contribution limit, this is my fav and most beneficial account to invest in. Only downside is you can only invest 3600 per year. My employer puts 900 into every year. And it rolls over forever! And you can invest into far more options than a mesely 401k account. Which is one downfall to employer accounts. Why settle for sp500 average type gains of 10% per year, when you can instead go tech/innovation heavy stocks and make 15 or even 20% year to year! Ex: Stock ticker ARKK Having said that i always invest in my 401k up to the employer match. Right now at my new job it is dollar for dollar up to 6%. My previous job of 5 years was they gave me 1.50 for every dollar i invested up to 6%. I also have a brokerage account that is a dividend growth account.
That is awesome you started a roth at 18. i had a teacher explain that if you funded your IRA at 18 -23 and obtained a 10 percent return by the time you retired you could be a millionaire. Sounded good in 1981!
One other thing Erin.....Your first video has 479 views and this one has 45,000 views. Did you think you would ever get this big ? (And bigger ?!?!?) Are we going to see The Erin (last naMe) Show like the Dave Ramsey Show ? Woot Woot !! I hope that put a smile on your face.
I literally tell to my husband every video and say - “remember when my videos would only get 4 views…and I was two of them” (and he was the third) 😂 😂 it is absolutely unbelievable to me!!
You mentioned that the reason the brokerage account is because you have complete access to your money whenever you want. You do have access to the principal investment in a Roth, too, at any time….although that taking money from the Roth before retirement would be a poor decision.
Huge credit to you for thinking through the tax bill on a brokerage account paying mostly LTCG tax. Too many people just blindly say Roth or traditional IRA/401k is always best. I find them naive. 🏆 for you!
I'm surprised you didn't mention roth conversion ladders and substantially equal periodic payments. The money in your retirement accounts is certainly harder to access than that in your brokerage account, but as long as you can project what you'll need in five years it's still quite accessible.
You said having income is the only qualification to contribute to an IRA. You can still contribute to your spouse's IRA even if they don't have an income when you file a joint tax return. I have been maxing out my wife's IRA contributions every year and she has not earned an income for over 8 years (she stays home with our three children).
I click on the video for the amount of financial info I know I'm going to get for roughly 10 minutes of my time. I stay because there are no magic tricks.
You were so lucky to have a grandmother like that! I was taught to hate anyone who handles money... bank, post office, insurance agent, business people in general. I had to re-educate myself and adjust my attitude. I started investing later in life, but I'm doing fine. Thank you for an informative video. My favorite accounts are my three brokerage accounts. I also don't like IRAs ... but they are good for those who have trouble with self discipline. I've become a very regular and careful dividend and value investor. 🎉
Another thing that needs to be strongly considered is the company that sponsors your brokerage accounts. So far, one of the best I've seen is Fidelity. The rates of return for their cash sweep accounts are very generous and I don't seem to pay any commission for Fidelity-based mutual funds. If their UX design was a little more like Ameritrade was, especially for realized gains and losses, it would be even better.
That’s so cool that your grandma was into investing. I got interested in investing about 3rd or 4th grade. One grandma wanted to give the grandchildren American girl dolls, but when she asked which one I wanted, apparently (I have no memory of it, haha) I said that I would prefer to invest the money. Well, I got no American girl doll and no investing money. And my interest in investing faded away for nearly 2 decades. Nobody knew enough about it to help me.
I have had a brokerage account since I left college in the late 1970's (when I was in my early 20's). And I have maxed out my 401k's at every employer that offered them. Whenever I left an employer (they kept going out of business!) I rolled over the 401k into an individual retirement account. I still have an individual brokerage account, a regular IRA, a Roth IRA, an employer 401k, and three roboadvisor accounts (I am comparing how they work).
@@pioneer7777777 As you would expect... More than some and less than others. If you are just a working stiff like I am, then putting in the savings over the long haul is the way to go. If you are a trust-fund baby or a hedge fund manager, you are already set for life.
I like my brokerage account, but the best investment I ever made was to serve our country in the US military for 24 years. I've saved over $300k in just the past few years by not having to pay for medical procedures my wife and I required. My pension and VA disability payments go right into my brokerage account each month. My wife's job pays the bills🙂 I enjoy your content. Thanks.
For me personally the tax benfits of a traditional 401k is too huge to pass up. We have 8% state income tax and 22% federal. So 1/0.7 =1.42, meaning right off the bat its a 42% gain. Add in the $3k per year match and thats $25500 of dollars invested for the equivalent of $15,750 post tax. So before any gains, thats a 62% gain. Then add in 10% per year gain on average and that's 72%. Beats my brokerage account. I've gotten a fair bit saved up over the past few years, enough to be in the top 10% of retirement savers according to the data.
I might have miss it but I did not hear the restriction on the income limit for contributing to a ROTH IRA. $153,000 for single filer and $228,000 for filing jointly.
Thanks for focusing on a brokerage. Going into Social Security draw years, the combination of a Roth and brokerage can result in 0 federal taxes, which is a huge part of the goal. Pensions and traditional accounts result in large tax bills on Social Security and possibly capital gains. The next gen worker should understand pre-tax, tax free, and brokerage (also can be tax free) to maximize income in retirement.
Consider using an ETF like VTI rather than a mutual fund like VTSAX. It gives you more flexibility and freedom to change rather than waiting until EOD to buy/sell. Mutual funds is the old way of investing.
Another account, which I think is the best deal of all, is the HSA. Tax free on the way in, tax free growth, and tax free on the way out. IMHO everyone who has access to one should invest in one. You can also save up your EOB statements if you don't use the HSA funds now, and pay yourself back in the future for any past health expenses. Makes a great companion to a Roth for tax free income!
Unless you love your job, but Warren Buffett quoted, "Work until you die if you can't find a way to make money while you sleep". Same here, brokerage account is always my favorite.
I thought for sure it would be the HSA.
That was my thought as well. Can't think of anything that really beats the tax advantages. Worst case it can act like a pre-tax retirement account.
HSAs are wonderful! How can you bet an account that can offer triple tax advantages!?!? But I still like the freedom of a brokerage 😊
Same here …
Hsa is my favorite as well. Tax deductible, tax free growth, and can use it for any medical expenses.
@ErinTalksMoney I believe i have heard it being referred to as quadruple. Lowers taxable income, it comes out before fica, invest it, and withdrawals are tax free for medical expenses.
Great content Erin. I like the brokerage account as well. Whats your take on having more than one
brokerage account? Also have two retirement accounts as well.
You need a third party to help you out. A financial planner or accountant can run through your figures, including your projected income and expenditures when you retire, along with your retirement goals, your emergency fund and any other strategies you need to put in place for such things as long-term care.
@@AnatolyIvor hmm thats impressive I did some findings on, Loren really seem to know her stuff. educational background, qualifications was really impressive. Kudos and thanks for sharing. I left a note and booked a consult. Maybe I will get feedback
Thats impressive Ana. After working for 30 years I currently have less than 2 million put together after my husbands company allocation, despite the markets new highs we are finding it difficult to grow past the 2 million threshold after it depleted December 2021. We need some of the funds for our kids college and the rest to last us the next 15-20 years. This advisor Loren Lena Walker I have checked out and hope to consult with, I pray she gives me her time
I have 401K, Brokerage, HSA, and Roth accounts. If I could go back and do it again, I would have put more emphasis on the brokerage account. My opinion, 401k up to the company match, Roth IRA, HSA, and then brokerage account for the rest. YMMV depending on your specific situation and goals.
No harm, no foul though. I ran the numbers and retirement is now less than a year away. I was going to wait until the end of 2024, but after looking at things I moved that up to June 2024. The simulators are giving me a 97 - 99% chance of success. I can't make more time, so I might as well take the leap.
I thought I was the only one with this preference. I like tax advantaged accounts, but I LOVE the freedom and flexibility of a regular taxable brokerage account. No withdrawal requirements or limits, no contribution limits, just good old fashioned complete flexibility and freedom.
It may be a good idea to speak with a financial advisor who can help you develop a portfolio based on your individual goals and risk tolerance.
Work until 70 if you WANT to work to 70. But plan so you don't HAVE to work to 70. I knew a lady that retired at 83, and that was only because her health got to the point where she really had to stop working. She didn't want to --- she loved her job. I remember her telling me about how her high school counselor told her that if she went to college she could become a nurse or teacher. She insisted she wanted to become a chemist!
I for one would not want to work until 70, maybe I’ll have to, idk what life has in store for me, but I’d like to retire the day I have a grandchild, which I guess isn’t guaranteed
Thanks for your perspective on this. I have a similar view and am buying index funds in my brokerage account but haven’t actually withdrawn anything yet. Is tax loss harvesting something we should consider if just buying index funds? Also, I’d like to know more about using charitable gift funds to reduce capital gains taxes too. Maybe you can elaborate on how to make the most of these brokerage accounts in future videos. Thanks again!
I do have a video on brokerage accounts, index funds and tax loss harvesting: ua-cam.com/video/P80OHUs8Wg4/v-deo.html&feature=sharec
But I definitely need to make one on charitable contributions 😊 I’m happy to make loads of videos on brokerage accounts
A brokerage account was a great place for us to hold our money while we saved up over 7 years to make a 20% downpayment on our first home. -- We wouldn't have been able to do that if we had only held it in a savings account.
Brokerage accounts are great for multiplying money you want to use before retirement, and, obviously, retirements are even better for multiplying money you will use in retirement accout.
Like you said. -- Having options, and using those options are great.
Great Video! Brokerage accounts are great if you can resist the temptation of dipping into them for non-essentials. (its kind of like a big plate of cupcakes sitting in front of you...mmmmm cupcakes!). Also it is tough to stay focused on the right investments. Too often I feel that people invest emotionally or have knee-jerk reactions with their investments (too much money in investments that promise super quick growth). My financial advisor has been a godsend to me because I like cupcakes... he takes a small fee, but is well worth it. And he slaps my hand when I reach for those cupcakes. 🙂
😂 I love it! Yes! You absolutely have to resist the temptation to touch it!!
@@ErinTalksMoney But cupcakes, man. Ya' gotta have when ya' need em'.
😂😂
Hey, my lamborghini Huracan is essential🤣 Just because you have a taxable/non-retirement brokerage account doesn't mean you are actively trading/gambling. I apply the same boring index fund etf logic as I do in my retirement brokerage accounts, although I do like me some individual stocks.
IRA's are great, both serve a purpose. One for tax free growth, and one for write off's. Sadly, 5-8% which is what I average isn't enough. It's a small, very small part of my plan. Though I do like the write offs from my traditional as I have a lot of different incomes and it helps offset tax cost. I have to agree the brokerage wins out with a good overall investment plan of blue chips, high dividend ets, and some higher risk picks. And then of course options trading can really be useful as well at times. It's been said that "only the top 1% invest in stocks" and that's a bunch of crap. We ALL have the choice to invest in the market and it's honestly not that hard to have a great base and hit a homerun here and there. It's so easy to learn. Most just make that choice to stay poor and not put in the work.
Terrific video; I hope some young people out there see this and follow this lady. Base income is huge as is discipline; some will always do better than others; but everyone can do well if they give it the max effort
I don't find myself disagreeing with you often, but since we are talking about opinions, everyone is correct in what they like. I love brokerages also, but I think some of the negatives you gave for the other options are missing the mark. You talked about restriction on access to money on Roth's, HSA, etc, but that's only partially true. With the roth, you always have access to the principal, and the HSA you always have access to pay for medical expenses. Also, both of those grow tax free, whereas the dividends and capital gains are taxed, depending on your income. For me, the order is HSA, Roth or IRA (depending on current income), and brokerage. However, I have a mix of all these, as they all play a role in financial planning, for tax planning. One final point. You talked about choices. With an IRA, roth or otherwise, and often 401k's, you have the option to invest in low cost index funds. I have a Roth and traditional IRA's, and a brokerage account with Fidelity, and because I manage them, there is no fee to Fidelity.
All very wonderful points!! And thanks for sharing your preferred order 🙏 I still very much love Roth accounts, HSAs and even traditional retirement accounts. They all have their place in a portfolio. My other thing I might add, is that while most employers sponsored plans offer index options these days, and I would bet even more and more will continue to do so going forward, not all do. That was my intention when I said greater options and flexibility in brokerage accounts. 😊
I really like my kids 529 accounts. Tax free growth and if the money isn't used for education because of scholarships or whatever the kids can roll those into roths. Erin doesn't look like you have kids from the house background but I would like your opinion.
I love a 529, and I have a baby 😊
One of my accounts is a Ragnoroth. It's in my Asgard account. 🙃😛
Love it. Couldn't agree more with the need for control and ease of access, thus a brokerage account. We have one for the very reason of wanting a bridge fund in early retirement to "bridge us" to when we an tap our 401Ks and IRAs. Having multiple buckets if you will to earn and pull money from is fun !!
Roth IRA is my favorite because, like a brokerage account, you can access contributions if you need them. That’s a valuable option that lets you take a little more risk with other funds than you might do if the Roth money were locked up for decades. Also, the earlier you start investing, the more valuable that Roth is because the balance in your account at retirement will be mostly gains, not contributions, and you’d rather get those tax free.
You can set up a Roth in a brokerage account. The big limitation is you don't have margin, which means shorting is not allowed. Also, active trading is hampered some because you are waiting for each trade to settle before you can open a new position.
@@neuideas Yes, by “brokerage account” I meant “taxable brokerage account” as the term is often used colloquially. Yes, a Roth IRA is almost always a self-managed brokerage account where you do your own trading.
Agreed, a limitation of all IRA accounts is that there are regulatory limitations on the use of margin. However limited margin is allowed. Schwab, for example, allows you to apply for and be approved for _limited margin_ to cover trades clearing (so you can reinvest right away for a single trade, but not for repeated day trades), and they also allow you to apply for the margin needed to trade _option spreads_ with your Roth IRA. One could do any more-exotic option training in other accounts, if needed.
Three questions:
1) Do prefer VTSAX over its ETF equivalent? Why?
2) What will you do in your taxable account when you are older and want to reduce risk using Bonds? Most Bonds are tax inefficient.
3) What about having an HSA account?
Thanks
1. B/c vanguard allows for automatic investments in index funds - simple as that, otherwise they are darn close to being identical
2. I will change how I allocate my dollars toward investments if my risk tolerance changes
3. I have an entire video on HSAs 😊ua-cam.com/video/yLEYXVEKh2s/v-deo.html&feature=sharec
@@ErinTalksMoney Thanks for the answers
Excellent channel. I have my 20-something year old kids watching your channel as well. Financial Literacy education at its best
That is awesome!
As a person nearing retirement the key factor is time. Started investing early 20’s. 40 years of investing has produced great gains.
HSA is probably my favorite account, but I also do love the brokerage as well!
HSA if one is young and just starting is a must ! Agreed! It’s the trifecta of tax savings. Wish I had access to it years ago
An HSA is a great account to have due to all the tax benefits it has. That being said, I believe they are only eligible to those with certain high deductible heath coverage. To me that’s a double edge sword, yes I would love all the benefits of that type of account. However I’d much rather have an affordable health plan with more comprehensive coverage. Those do still exist, particularly at certain government employers, but they certainly are not the norm these days.
@@takethecurseOFFwashingmachine HEALTH is WEALTH. Our insurance is sick care vs well care. It’s busted. Health care IS an industry made to generate $$$ on sickness. It pays to be sick for those in this business
If you love what you do then keep doing it for as long as you’re able. If you retire early and don’t have something to get up for or look forward to doing then it’s just a ticket to an early grave. Balance is the key and of course taking the time to learn about good nutrition and get some exercise and most importantly is what you inherited from your parents.
If someone has no hobbies then they are pretty boring. I was furloughed for 6 months of the pandemic. A mid life mini retirement. Spent my days: running (as normal), golfing, fishing, making new things like mead and kombucha, watching content at night that i could finally get to, build an AR-15, got to the shooting range, go kayaking, more cooking of new meals, plus many other things. There was loads more i never ended up doing but could have. Retirement someday will be the same thing. This is why old people rot away sitting in their recliners. Not using their muscles so they become weaker more quickly. Makes it harder to walk. No lubrication of joints means arthritis more quickly. Etc.
FSKAX is earning considerably more over its life and costs less than half of the expense ratio of the vanguard total market index you showed. Check it out. Over 20-30 years this will make a HUGE impact.
I'm honestly surprised at this topic. I always thought traditional retirement accounts were better because of the tax advantages. I can see the benefits of a brokerage account too though- no contribution limits and more freedom to withdraw and choose your investments. If you only had enough money to invest in one type of account, what would it be? For me the Roth IRA works best because I don't max it out and I get to choose my investments, while growing my money tax free
Well, miss young lady. Trust me, when you get to retirement age, you're gonna love that Roth a WHOLE LOT MORE.
And yes, health was a big consideration for me retiring at 52. My mom passed at 59, a few month's after she retired. I loved my self employed work I did, until I didn't, and retirement was within reach. Things do change and I hope you reach yours goals and stay happy.
Keep in mind “The rule of 55” allows you to withdraw money from your 401k at age 55 without penalty should you decide to retire.
As long as your company allows it you can do that. I recommend making sure beforehand. My 401k advisors at my companies retirement seminar had not heard of it, so I delayed my exit from 58+ to 59.5
I like the way you think.
I enjoy trading from my tax-advantaged accounts...downside to that is there's no deduction for losers.
So I have a traditional Ira, would like to convert it to a Roth just not sure how to go about it. I have 50,000 in the traditional any advice would be great
I see this mistake over and over on financial channels. You are correct the Roth IRA balance would be much more however you must state you first have to have the ability to deposit the same contribution on an after tax basis (which may be up to 34% more) in order for your comparison to be accurate. But overall you are doing good work encouraging people to save
Love it. This is the 5th video of yours that I watched, and I now just subbed.
And yes, I have a work Fidelity 401K, a Roth with Fidelity and a Vanguard account with little over 100K of index funds in it.
Your advice is spot on - thanks
Welcome to the channel!! 🙏😊
I have a Roth IRA with Fidelity and invest in a couple different index funds. I also have a wros-tod brokerage account with Fidelity but I’m not sure if there is an annual maximum contribution amount. 👍🏻✌🏻
My favorite "investment account" is an HSA, max it out every year, and attach to a HSBA and resist ever touching it. Triple tax free for medical purposes (money goes in PRE-tax, tax free investment growth and tax free for medical use... AND becomes basically an all purpose ROTH at age 65.
Glad to see another person who started investing young (beginning to think I was just weird 😢) My parents always invested and when I started high school my dad asked if I wanted to try (with a custodial account) YES. Used my saved money from odd jobs, birthdays whatever. Don't remember if I even had an allowance, just didn't spend much. Traditional brokerage still my favorite, have traditional and Roth IRA's and a 401K at my employment, rolled other 401K into IRA's.
Democrats want a 40% capital gains tax. It doesn’t seem worth investing outside of a tax protected account. I think a 5.35% (Brio Direct) high yield savings bank account, owned by a roth 401k is better in my opinion. You still have access to your bank money, and it’s earning tax free interest.
I max out my 401k and Roth. If I have anything left over, I throw it in my brokerage account and let it grow. I only dip into it if I need to make a big purchase like a car which only happens once every 10 years or so. I also treat it as a kind of insurance policy if were to develop a major health issue that isn’t completely covered by health insurance. It’s all index funds and, like my Roth and 401k, I don’t have to check on it frequently. I’m confident I’ll have enough when I retire.
Hello, did we both learn from the great Dave Ramsey? lol It is SCARY AF that only 35% of people invest outside of IRAs or work sponsored programs?! All that means to me is I better save more because I'm going to be supporting my peers in the future because I chose to save rather than spend $7500 on a couch I'm afraid to sit on.
My question is, what do you think of having your accounts manages by someone that takes a percentage? I personally think my financial planner does a pretty good job, but I wonder if I just managed it myself with index funds if we'd be better off long term?
I just opened a brokerage account. How should I invest? ETF's or Index Funds?
Thanks for information! I love your videos! They make me think about investing and saving in new ways. You mentioned a pension in this video. I will be retiring next year from the Army. I'm looking for videos about pension and retirement planning. Do you have or can you do a video on this?
You may hear some tax savvy people state that people with SEPs are well to do skirting taxes with the increased contribution limits. While that may be true in a minority of cases it's more the exception than the norm. This lady never had access to a 401k account for a large portion of her career and likely isn't rich enough to be contributing $63k/year to that account or 25% of income whichever is less.
Congress recently tried to do away with these increased limits luckily they failed. They may try to again eliminate them in the years ahead if one political party has their way. The villanize Peter Thiel and then try to ban the Mega Backdoor Roth IRA strategy but that ban will also likely include SEPs. Their proposal last time also banned regular Roth IRA backdoor contributions starting in 2032. With this risk it quantifies why it's so important to contribute as much now when the legislative environment may be more favorable than in the years ahead.
To think that the contribution limit ($2000) to an IRA was the same for 29 years!
🤫my favorite investment account is the coffee can on the second cupboard to the left facing the refrigerator. why are you doing SEP-IRA rather than SOLO 401k? Also, make sure that husband doesn't play sneaky to have you sign away SBP when he retires. SBP is better than life insurance if he really loves you😁 There is some confusion here. Almost all Vanguard accounts are brokerage accounts. So, your Roth IRA account with Vanguard is a Roth IRA Brokerage Account, TIRA is a TIRA Brokerage Account, Inherited IRA is an Inherited IRA Brokerage Account, etc. Your non-IRA taxable Brokerage Account at Vanguard is a Brokerage Account, so maybe use the term non-IRA brokerage account or taxable brokerage account.
I'm shoveling as much as I can into tax advantage retirement accounts because the FAFSA doesn't consider them in calculating the estimated family contribution (ability to pay).
What about strategies for reducing money visible to colleges when children file for financial aid? A loaded brokerage account is just ripe for the picking... thoughts?
Erin, why don’t you have a Solo 401(k) instead of a SEP? You could sock away so much more money in a tax-favored account.
Dang a 40% savings rate. That’s way way more than most people can or should do. Not saying you shouldn’t. But many people simply can’t live a normalish life and save that much because they need to buy. Housing food health care etc. this is not advice for the masses.
Your welcome to your view but I won't be taking your advice.
Avoid accounts. The banks are not your friend. they need your money to pay huge salaries to their senior executives.
Store Gold or silver. At least it's value will outstrip the dividend on a bank savings account.
Read content, good video. I’m sure you’ve already know this but it wasn’t mentioned, is the importance of loss harvesting. If done correctly it should be able to wipe out any taxes you would pay on gains.
Good information. I am a bit shocked that only 19% of people have a Roth. This seems pretty basic to me. I think it is a good idea to have multiple accounts in case a Bernie Madoff type ends up the CEO of your only retirement account.
You never discussed an important nuance to using a brokerage account. You may not receive the same protections from bankruptcy or litigation that you receive by having your money in a 401K, IRA, or other company plan. There are a lot of specifics on this topic, but you need to be aware of this.
I think, for me, my favorite account is a Roth IRA for the following reasons: (1) assuming no withdrawals of earnings are made until after age 59.5, said earnings completely escape tax, (2) there are no RMD's during the account owner's lifetime, (3) pre-age 59.5 withdrawals of cumulative contributions can be made penalty-free and tax-free, and (4) pre-age 59.5 withdrawals can also be made penalty-free and tax-free if done after the 5-year post-conversion clock has run out.
i was totally expecting you to say HSA! i think there are ways to access your 401k before 59 ?
I wish I'd had this video years ago when I first started earning a paycheck (or before even). I took so long to actually start investing, I don't even want to think about the opportunity cost.
Don't forget IRS rule 55 for 401K. You can take it early at 55 without penalty if retire from company at 55 and Don't move your account. Make sure to check with your company 401k administrator
Absolutely!
Not a fan of HSA's, particularly if you have health issues or expect to use health services more frequently (such as starting a family). Sure, you can invest in a very high deductible catastrophic health plan, but you never know if or when you may have a catastrophic health event that may possibly disabled even short term.
Very informational and helpful.
You should talk about estate planning how complicated it can be when someone receives an inherited IRA. One of main reasons why I like the brokerage account. When someone inherits a IRA that isn’t a spouse they need liquidate all the holdings after a certain amount of years.
There is no choice , the law was changed after the fact, that it had to cleared out in ten years. many of us had no Roth option for much of our working careers. I’ve converted what I can in the window I had before pension kicked in.
@@g.t.richardson6311 that’s why I use a brokerage account don’t need things to be complicated.
I would like more information on index funds if you got any. I don't think i fully understand them.
Long term cap gains rates are pretty good right now but all signs points to those rates going up, possibly significantly.
Here in Canada, the tax advantages in our tax-deferred (RRSP, or Registered Retirement Savings Plan) and after-tax (TFSA, or Tax-Free Savings Account) investment accounts are persuasive, and thus make a taxable brokerage account something you think twice about unless the retirement accounts are full. While there is some criticism of our RRSP here -- people chafe at having to pay tax on withdrawals, withdrawals must begin in the year you turn 71 -- there's a lot to like about tax-free compounding.
That said, with my retirement accounts now full, I've begun investing in a taxable brokerage account. They require special handling, as selling from them involves tricky tax calculations. To minimize selling, I keep an ETF there.
I always enjoy those stories of your childhood investing under your grandmother's influence, the making of a financial prodigy. I've something similar, in that my mother ran a small credit union attached to a labour union local in my small Ontario community from a spare room in our house when I was a child. I remember workers coming to get loans, and get other money-related business done. While years of grad school meant I got a later start in investing, as there was very little to invest, I've saved aggressively, moreso now with my mortgage paid. So the brokerage account really defines the future of my investing strategy, and I'm glad you are giving such accounts profile here. They are often neglected as investors think about their options.
Also, the value of your pension is a large factor in all of this. That does not apply to the large majority of people.
None of us KNOW what the 'end of life' will be for ourselves. I'm 79. My dad was mentally sound and died at 70. My mum had dementia before she was 79. I don't have dementia. But I came close to dying Dec 2022. Jsn 2023 they fixed me, TAVR. I'm better now. Since then I cashed in sever $K of I & EE bonds and invested in a special rate bank CD and stated a T-bill ladder.
People are so lucky to have smart people like you on U Tube. 50 years ago everybody was only on their own.
I am almost 70 and have no investing experience,any help is welcome.
As a USA expat in Asia I am only legally able to use brokerage accounts and buy stocks or etf’s. It’s my total strategy and I’ve been amazed at how hard it was to get help sorting it out. The book Millionaire Expat, and Charles Schwab were to only real help to me for this situation. Would love more dedicated content on expats.
i'm not sure this makes any sense. What do you mean only able to legally use brokerage accounts to buy stocks or etf's? How else are you going to buy stocks and etf's? The word "legally" is also confusing. I presume you mean that you aren't eligible to contribute to an IRA because you don't have any earned income in excess of all your deductions and exclusions, primarily the Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusion (FHE). If you income in excess of your deductions and exclusions, you would still be eligible to contribute to an IRA.
ROTH $6,500. Not nearly enough.
And VTSAX seems like a pretty low yield...even if you DRIP. Just my 2 cents.
Huh? You'll have to explain the pretty low yield comment.
I have a nice mix. You can't buy time don't work till 70
I applied for a debit card for my brokerage account but Invested the remaining cash I hadn't yet so good timing I guess.
It's going to sound odd, but my favorite "account" has a zero balance. It's a HELOC. A HELOC affords you tremendous flexibility - it's a source of money available at an instant, for an unexpected expense or any reason at all. But keep the balance zero most of the time (i.e. when you're NOT experiencing a money emergency) so as to not pay any interest on it. Having a HELOC in your back pocket means you don't need an emergency fund or a low-interest savings account, allowing you to keep all your assets invested at all times.
That’s nearly the same as a credit card
@@Zachery_ Good point, although the HELOC interest rate is going to be a lot less.
HSA's you can buy anything you want with the funds. Meaning non eligible expenses. However, you will just get hit with the penalty. But at least it is quickly accessible and liquid via the hsa debit card if need be in an emergency. Even with the low contribution limit, this is my fav and most beneficial account to invest in. Only downside is you can only invest 3600 per year. My employer puts 900 into every year. And it rolls over forever! And you can invest into far more options than a mesely 401k account. Which is one downfall to employer accounts. Why settle for sp500 average type gains of 10% per year, when you can instead go tech/innovation heavy stocks and make 15 or even 20% year to year!
Ex: Stock ticker ARKK
Having said that i always invest in my 401k up to the employer match. Right now at my new job it is dollar for dollar up to 6%. My previous job of 5 years was they gave me 1.50 for every dollar i invested up to 6%.
I also have a brokerage account that is a dividend growth account.
That is awesome you started a roth at 18. i had a teacher explain that if you funded your IRA at 18 -23 and obtained a 10 percent return by the time you retired you could be a millionaire. Sounded good in 1981!
my favorite account is brokerage accout where i can invest anything myself and withdraw and deposit anytime unlike 401k, etc...
Where were you 32 years ago?! I could have used this advice then.
This is pretty much general information.
One other thing Erin.....Your first video has 479 views and this one has 45,000 views. Did you think you would ever get this big ? (And bigger ?!?!?) Are we going to see The Erin (last naMe) Show like the Dave Ramsey Show ? Woot Woot !! I hope that put a smile on your face.
I literally tell to my husband every video and say - “remember when my videos would only get 4 views…and I was two of them” (and he was the third) 😂 😂 it is absolutely unbelievable to me!!
I'm lucky to have a 401k and since I'm older than 50 I can add $30k in 401k Roth and $7500 in Roth IRA.
I’m 40 lol
You mentioned that the reason the brokerage account is because you have complete access to your money whenever you want. You do have access to the principal investment in a Roth, too, at any time….although that taking money from the Roth before retirement would be a poor decision.
agree you have full access to the principle put in but why would you
Huge credit to you for thinking through the tax bill on a brokerage account paying mostly LTCG tax. Too many people just blindly say Roth or traditional IRA/401k is always best. I find them naive.
🏆 for you!
I'm surprised you didn't mention roth conversion ladders and substantially equal periodic payments. The money in your retirement accounts is certainly harder to access than that in your brokerage account, but as long as you can project what you'll need in five years it's still quite accessible.
@erin why did you wait until you were 18 to open Ira account?
I love my 457b early withdrawals with no penalties when I terminate employment! Going to hopefully help me retire early!
You said having income is the only qualification to contribute to an IRA. You can still contribute to your spouse's IRA even if they don't have an income when you file a joint tax return. I have been maxing out my wife's IRA contributions every year and she has not earned an income for over 8 years (she stays home with our three children).
She literally actually said, “or have a spouse with an income” Ergo, YOU are the spouse with an income.
I click on the video for the amount of financial info I know I'm going to get for roughly 10 minutes of my time. I stay because there are no magic tricks.
You’re right, no magic tricks 😊
Mine, too.
Yes you definitely need a brokerage account and fund every month just like the retirement accounts
Yay! I guessed correctly! But I don’t have a brokerage account 😂
Great guess!! 😂 made you need one!?!?
You were so lucky to have a grandmother like that! I was taught to hate anyone who handles money... bank, post office, insurance agent, business people in general. I had to re-educate myself and adjust my attitude. I started investing later in life, but I'm doing fine. Thank you for an informative video.
My favorite accounts are my three brokerage accounts. I also don't like IRAs ... but they are good for those who have trouble with self discipline. I've become a very regular and careful dividend and value investor. 🎉
Your teeth are so perfectly white! What’s the secret??
Another thing that needs to be strongly considered is the company that sponsors your brokerage accounts. So far, one of the best I've seen is Fidelity. The rates of return for their cash sweep accounts are very generous and I don't seem to pay any commission for Fidelity-based mutual funds. If their UX design was a little more like Ameritrade was, especially for realized gains and losses, it would be even better.
Fidelity cash sweep is so amazing.
I’m getting a debit card from there just because of it.
& stop messing with chase’s 0% lol
That’s so cool that your grandma was into investing. I got interested in investing about 3rd or 4th grade. One grandma wanted to give the grandchildren American girl dolls, but when she asked which one I wanted, apparently (I have no memory of it, haha) I said that I would prefer to invest the money. Well, I got no American girl doll and no investing money. And my interest in investing faded away for nearly 2 decades. Nobody knew enough about it to help me.
Which broker do you like the best?
Do you contribute 40% before or after taxes?
I have had a brokerage account since I left college in the late 1970's (when I was in my early 20's). And I have maxed out my 401k's at every employer that offered them. Whenever I left an employer (they kept going out of business!) I rolled over the 401k into an individual retirement account. I still have an individual brokerage account, a regular IRA, a Roth IRA, an employer 401k, and three roboadvisor accounts (I am comparing how they work).
With that amount of work history and saving you must have some seriously high balances at this point!
@@pioneer7777777 As you would expect... More than some and less than others. If you are just a working stiff like I am, then putting in the savings over the long haul is the way to go. If you are a trust-fund baby or a hedge fund manager, you are already set for life.
Is the SEP max the same as the 415c max limit?
I like my brokerage account, but the best investment I ever made was to serve our country in the US military for 24 years. I've saved over $300k in just the past few years by not having to pay for medical procedures my wife and I required. My pension and VA disability payments go right into my brokerage account each month. My wife's job pays the bills🙂
I enjoy your content. Thanks.
Better vote Republican GF
For me personally the tax benfits of a traditional 401k is too huge to pass up. We have 8% state income tax and 22% federal. So 1/0.7 =1.42, meaning right off the bat its a 42% gain. Add in the $3k per year match and thats $25500 of dollars invested for the equivalent of $15,750 post tax. So before any gains, thats a 62% gain. Then add in 10% per year gain on average and that's 72%. Beats my brokerage account. I've gotten a fair bit saved up over the past few years, enough to be in the top 10% of retirement savers according to the data.
I might have miss it but I did not hear the restriction on the income limit for contributing to a ROTH IRA. $153,000 for single filer and $228,000 for filing jointly.
The max. contribution to a Roth IRA was raised from $7,000. in 2022 to $7,500. in 2023. Edited to add: for those who are over 50.
For those 50 and over 👍
@@ErinTalksMoney Yes, that's right. I should have added that. I forget that I'm over 50 hahaha.
Thanks for focusing on a brokerage. Going into Social Security draw years, the combination of a Roth and brokerage can result in 0 federal taxes, which is a huge part of the goal. Pensions and traditional accounts result in large tax bills on Social Security and possibly capital gains. The next gen worker should understand pre-tax, tax free, and brokerage (also can be tax free) to maximize income in retirement.
Consider using an ETF like VTI rather than a mutual fund like VTSAX. It gives you more flexibility and freedom to change rather than waiting until EOD to buy/sell. Mutual funds is the old way of investing.
Another account, which I think is the best deal of all, is the HSA. Tax free on the way in, tax free growth, and tax free on the way out. IMHO everyone who has access to one should invest in one. You can also save up your EOB statements if you don't use the HSA funds now, and pay yourself back in the future for any past health expenses. Makes a great companion to a Roth for tax free income!
Unless you love your job, but Warren Buffett quoted, "Work until you die if you can't find a way to make money while you sleep". Same here, brokerage account is always my favorite.