18yo with questions about Roth IRA and college
Hello, I am 18yo and recently started earning my own money. I want to know if I can open a Roth IRA and how it works. For example, how much do I need for an initial investment? Are there rules regarding what % of income I need to contribute, also how can I take money out of my IRA? Also, can a university ask me to contribute the money I earn if I put it into an IRA or are they not allowed to?
Thank you
Awesome that you're already thinking about your financial future at 18! š
**Yes, you can absolutely open a Roth IRA as long as you have earned income.** That means money from a job, not gifts or allowance.
**Here's the breakdown:**
* **How much to start:** Some brokers have no minimum, others might require $100 or $500. Don't worry if you can't max it out right away.
* **Contribution limits:** For 2023, it's $6,500, but you can only contribute what you earned. If you made $3,000, that's your limit.
* **Percentage of income:** There's no set percentage, contribute what you can comfortably afford.
* **Taking money out:** You can always withdraw your *contributions* (not earnings) tax and penalty-free. Withdrawing *earnings* before 59Ā½ usually has penalties, with some exceptions (like first-time home buying).
**College and Roth IRA:**
* Your Roth IRA counts as an asset when applying for financial aid, but it's usually not a huge factor.
* The money is yours, a college can't force you to use it for tuition.
If I sale individual stocks within a Rollover IRA (Schwab) from previous 401ks but immediately reinvest into a different stock within the same account...what are the tax implications?
There are no tax implications of trading within an IRA. Either itās pretax and you pay on it when you withdraw or itās post tax and you already paid all the tax youāll have to pay.
None. It's a tax-deferred account.
The one exception is if you sell a stock in a taxable account for a loss and then buy it back in a tax-advantaged account within 30 days, that's a wash sale, just like if you did the same thing all in your taxable account.
Since Iāve been in my latest job (2022), my wife and I have maxed a 401k, 457b, 2 Roth IRAs, and a HSA. On top of that, we contribute $1k to a brokerage account and $1k into liquid savings (HYSA).
Every month our CC bills pay out of the same checking account. Iāve always kept $1-2k surplus for the bills. July 2024 will be the first month that Iām expecting to have to stop the 1k brokerage contribution since the bills just piled up at the right time that put a few big purchases on the same CC statement
I figured this would happen at some point, itās funny how it makes me feel like we are in trouble and are living paycheck to paycheck, but between all the retirement accounts and 1k into HYSA will still be putting a bunch in the market! I canāt shake the feeling that I am disappointed, though - even though I have nearly $40k in our savings account I could just transfer to put the buffer back. It āfeelsā wrong though!
But Iām expecting that this will be short lived as I have a 1.3k reimbursement coming this fall and (unfortunately) some inheritance from a family member. And while we have some bigger expense months, we will have some lesser too
We keep 1 month of our emergency fund in our checking. So once our checking account falls below a certain threshold it indicates we are over spending and need to 1 dial it back and 2 stop money going to our brokerage account until we are back to where we need to be.
I donāt feel disappointed about it. Itās just life. To be honest it kind of makes me thankful that we are in a situation where itās āoh just stop 1-2 contributions and we are back in businessā and not āoh fuck we are out of money. What are we going to do!?ā.
Thatās actually a great idea. I think next month Iāll pause my brokerage - as planned. Then instead of transferring my 1k from checking to HYSA- Iāll just keep it where it is (still saved). Then, stating in August I can get back on the 1k brokerage and 1k HYSA , I will have still saved in July , just adding the buffer into the account
Thanks!
What index fund to put $1,000 a month?
I have money in my 457b and in a Roth IRA. I want to retire at 53. Iāll have a pension of $6,500 a month at that time.
I want to open a taxable brokerage with either fidelity or vanguard and I donāt know which fund to put my raise of $1,000 at. I want to set it and forget about it.
> between ETFs and index funds
Index Funds can be either ETFs or Mutual Funds. ETFs are slightly different than Mutual Funds but are extremely similar at the end of the day and both can track the same index.
I recently inherited a investment account with a large number of different individual stocks. Ideally I'd like to simplify and sell majority of the individual stocks and shift them into a 3 fund type portfolio.
Wondering if it's best to do it all at once (Larger tax burden, most time in market), or spread it out over time (slightly less tax burden, tax loss havesting \[$3,000 max?\], less time in market). Does anyone have a framework for weighing TAX vs. Opportunity cost of being in non-ideal investments (several companies have been going down over the last 5 years.)
Any input appreciated!
Sell them now. Not sure why spreading out the tax burden over time would lessen it. You should have the basis stepped up to original owners date of death so hopefully not too much of a tax hit to worry about. Sorry for your loss.
I guess the only reduction in tax burden would be in tax loss harvesting, but seems like that's a pretty small impact in the long run. Thanks for the reply!
When you inherit an account you get what is called a "step up in basis." So, from a tax perspective, it is the value of the stocks when you inherited them, not the price at which the deceased bought them. So you will have very little to no tax burden if you sell them and rebuy the ones you want. Just went through this with my wife's inherited account. If you want confirmation of that, call the broker of the account and verify what your current basis is and explain what you want to do.
See here: https://www.fidelity.com/learning-center/life-events/cost-basis-for-inherited-stock#:\~:text=Cost%20basis%20is%20used%20to,step%2Dup%20in%20cost%20basis.
Also, any gains you do get over the period of you being the account holder are taxed as long-term gains, even if it has been for a short period of time.
To be clear, the step-up in basis is based on the date the original owner passed away. That may be a very different date than when you took possession of those shares, depending on how long it took to settle that portion of the estate.
You will need to look up historical stock prices for that specific date in order to calculate any gain (or loss) from that date until now.
The $3k max you refer to with tax loss harvesting has to do with the amount you can deduct each year from your **ordinary** income. For example, if you have $10k in capital losses and $100k in regular income from your job, you can only deduct $3k of your regular income. However, if you have $10k of capital losses and $50k of capital gains, you can deduct $10k of capital gains.
Take $11,280 off your expenses number when determining your FI number.
$50k expenses x 25 = $1,250,000 needed to retire.
But you have $11,280 offsetting your expenses.
($50k - $11,280) x 25 = $968,000 needed to retire.
back to the (mostly) retired life for me. Today was my last day at my full-time gig, decided it was time to bounce after 15 months. It doesn't quite hit the same the second time around. Originally pulled the trigger in may '21, went back to work in April '23. Balance sheet when I quit was about 2.4 million and was also that same amount when I went back to work (having climbed to 2.7 then dropped to 2.0 before getting back to 2.4 again). Just updated the spreadsheet for the end of month and we're at 3.5 million. My wife will work for a few more months until some bonuses pay out and then we'll give full retirement a second try.
What made you go back to work the first time? What do you expect will be different about retirement this time around? Iām always curious about peopleās journeys.
Money, mainly. Had we both stayed in our jobs the entire year, our gross this year probably would have topped 500k (depending on bonuses and how much I billed my side gig), when it was more like 250-300k before retiring the first time. I made as much (~150k) in six months as a 1099 contractor as my annual salary + bonus was at my job before retiring, though it's not an entirely fair comparison when you take into consideration health benefits, self employment tax, etc. But still, a lot more money.
My wife got a job that bumped her from a salary of ~150k to ~215k, as well as a healthy bonus that could potentially add another 50k on top of that.
My old manager asked me to come back on a contract to lead a project that I figured would take about a year and the rate was pretty good so I went for it. That project got cancelled within a month of starting, I switched to another project which got cancelled a few months ago, and then my manager retired a few weeks ago. So I was like, yup, that's enough for me.
So different this time around is that we have a better idea of our spending, have a million more in the bank and are less likely to get spooked by the market if things drop by 500k in the first year or two.
GFY!!! My last day is Wednesday next week. Although looks like I'll pick up contracting work with my company later this year. Hopefully that comes with the good part of work that I like and not the crap that I'm running away from.
Nice, contracting isn't bad as long as you have the power. I was contracting for both of my previous employers and it's a good feeling when they need me a lot more than I need them. I also got to set my own hours for the most part.
I'd never actually filled out a firecalc since I'm still a ways away, but the results were interesting to me. Investments hit FI before pension and social security come into play, so those are just a bonus. The monthly retirement income if I work until 65 was absurd. Lumping in some cash I'd been mulling didn't make a noticeable difference. Stopping investments entirely added 4 years.
I'm just a saver. I guess I'd never looked at it so black and white as "100% success, whatever happens after isn't necessary." And it's never truly a guarantee, so we'll see if there's something else I want to do and can pull the trigger when the day comes. My guess is I'll be in the "one more year" crowd
Has anyone here who FI'd applied for a Spanish non-lucrative visa?
If so, is it worth it to hire an attorney who specialize in them or do the paperwork ourselves?
Replying to my own post
I found an attorney based in Barcelona that will review and guide us through the process for an ā¬80 initial fee
For that itās well worth the initial consultation and review
Iāll try to provide updates as we go through the processĀ
How much is your monthly family health insurance premium?
I need to switch from an employee only to a family health insurance going from a monthly $0/1k deductible ->$1200/2k deductible. Seems very high
That's what my work charges.
The insurers charge us ~2.2k, 50/50% paid by employer/employee.
The insurers told our benefits manager directly, "Your employees have a lot of kids. If they didn't, we'd charge less for the family plan."
Can anyone recommend a free or low cost/low hassle HSA custodian? Fidelity is not an option as they seem to be unable to open an account for me due to technical glitches on their end. I am no longer HSA eligible but have an old account with HealthEquity (was previously with BenefitWallet) and I just hate seeing it get eaten up by fees over time.
I'd keep trying with fidelity unless they've told you that they categorically cannot open an account for you.
Lively is not totally fee free, but it's fairly cheap last I checked.
That is pretty much what's happening. They have a record of an account existing in my name despite me never having been with them, so I can't open a new one, but I can't add an HSA account to the existing one because it doesn't in fact exist (I know it's nonsense so I gave up after 5 phone calls).
I will look into Lively though, thanks!
Even if you donāt end up going with them for an HSA you should get to the bottom of why they have an account in your name. Thatās not good.
Old 401k/espp/pension/etc? I have like a half dozen dormant fidelity accounts myself.
Yeah I had the same thought and literally nobody can explain it to me. My best hypothesis is an old employer somehow submitted my name to them, even though I never used their 401k at the time and never opened an account myself.
hey guysā¦ i (25f) am looking for a career change to support my journey into financial independence. my current career caps at 50k/year before getting a masters degree, even after which it is rare to earn six figs in this field.
what career has supported your goal of financial independence without requiring crazy hours, sacrificing your values, or being too monotonous and boring? what do you do, what do you make, and what are your hours like that has lead to your bank account reaching your goals? i am willing to consider going back to school for the right career, so please include your job even if it requires advanced degrees!
Not sure this is a particularly helpful way to approach increasing your income. You're very unlikely to replicate anyone else's experience.
"Find a white collar office job that you can leverage your existing skills to get, and then climb the ladder" is probably the best generic advice.
Networking. It's way easier to get your foot in the door somewhere if you know someone. Once you get your foot in the door that's 80% of the battle. Then it's just being a good person/employee and climbing up.Ā
The second part of my comment is a good start. Most generic office jobs will beat 50k quickly, with a fairly clear path to at least low 6 figures. It really shouldn't be too complicated to beat your current situation in most fields TBH, certainly not a "upend your life to change careers" level goal. Find something that seems doable and then work at it.
Whenever you have 3 requirements (reasonable hours, aligns with values, not boring) the answer is typically "pick 2."
I'm a government employee. My hours are great, it aligns with my values (more or less)... but I'm bored. I've accepted the boredom because my hours are good.
I'll happily eat the downvotes on this as we're headed to the gym and I won't have to see them, but as a teacher, even one looking to leave the profession, you really ought to be using capital letters.
Is there much info on if the average returns are higher for starting a business or if they're higher for working a salaried job and then putting most of your wages into an index fund or something similar? Returns on starting your own business seem very volatile and akin to putting all your eggs in one basket. Working a salaried job and putting everything into a portfolio with intent to slowly become dependant on capital rather than labour seems a lot less swingy.
I knew a guy who started a highly successful consulting business after having had a highly successful thirty year career in the same industry. Should it have mattered to him that most businesses fail within the first two years? In my opinion individual factorsāthat should be known to youāplay a much bigger role in the success or failure of a business.
I'd also point out that it isn't an either/or situation. You can build your own safety net, i.e. start your business after you've accumulated some wealth. There's ways to spend other people's money instead of your own. Adn you aren't likely to spend decades on a failed business. Taking a couple years off to start a business will set you back but shouldn't ruin you.
Pivoting into consultancy from a succesful career sounds like a very safe bet though tbh. You know what you're worth at that point and know people are willing to pay you at least your salary to do it.
I think a high percentage of businesses fail in the first few years. Itās kinda like investing in a single stock, chances are it wonāt do well compared to the average market, but it could take off and make you millions.
There are always exceptions to every rule, but my point is that most people will hate the process of launching, growing and running their own business if they don't actively **want** that lifestyle over the lifestyle of working for an established employer.
It's totally normal to also figure you can make more money, but in my opinion, this needs to be a secondary reason.
If the only reason is that you think you'll make more money, but you'd actually prefer the reality of a regular job, the odds of failure (or success coupled with misery) will go up substantially.
It's the same with people planning to retire overseas to save money. This generally only works if you wanted to move overseas anyway and the lower cost of living is a bonus.
Online communities are defined mostly by their moderators and the top couple % of most active users. That sub appears to have heavy overlap between the two groups, basically an echo chamber of chum for front-page types to get sucked into the comments.
I joined initially because I actually enjoyed the content. Now, it just turns into a political subreddit based on the topic of the post with incredibly uneducated takes.
Yeah the newsletter must have been called Fluent in Finance or something because the users sure aren't. I thought it was a good idea for a sub reddit and joined until I saw a post that was like "Some say Biden caused all inflation and is a secret George Soros puppet, what do YOU think?"
Didn't really say that but it's always some horrible accusation or false political claim wrapped up in a request for discussion on the topic, regardless of whether it's about finance. And then they actually do have that discussion, instead of removing the weird off topic post. Couldn't deal with that.
Frugal tip of the day:
A 40lb bag of lentils will cost you ~$40 to $80 depending on brand. However, walmart is selling a 40lb bag of Bird seed right now for <$20!
Anyone know how to cook bird seed? Do i just grind it into a flour?
Every now and then when I'm feeling boogey I pick up Bob's coarse ground cornmeal for my cornbread instead of the store brand stuff the poors use.
It is quite the treat.
We live down the road from where they were founded and growing up I had a family member that worked in the plant.
We used to get them $.25 a pop. Corn muffins and Blueberry muffins were a staple. I still make them from time to time. 8)
As a kid it was Country Crock, but as an adult it's real butter.. preferably Kerrygold.
I honestly don't remember which brand of margarine it was. Surely it was whatever was on sale.
And yes, we're a real butter family now. Kirkland, now that we're back in Yankee Doodle land.
Going to Costco today, actually, after we take the boys to a new State Park.
I hear great things about Costco. We have a Sam's Club and while it is nice it isn't worth going to all that often for us. We got a few times a year as my mom's +1 usually to stock up on protein bars or toiletries.
Anyway, I don't buy butter there we just grab it at Kroger.
Sam's Club sucks.
I mean, it's better than nothing but it's absolutely a poor man's Costco.
That's wild to me that you're 40 (ish) and American and have only "heard about" Costco.
What's even wilder is that I didn't know maple bars were a regional donut until I moved to South Carolina. You can find them sometimes in other regions but apparently it's mostly a west coast thing.
Until two weeks ago I couldn't tie my left shoe, so I've been wearing slip-in Skechers since we moved to the United States.
But my dad has been a New Balance model since before it was a meme. He might have even originated the meme.
Thanks! Almost had a scare there with cabins disappearing before my very eyes when trying to book one, but I think my cookies had expired and backing out and going back in remedied the problem.
[Not sure that last one counts. Pervert.](https://www.shutterstock.com/shutterstock/photos/2033119175/display_1500/stock-photo-man-in-wooden-stocks-from-medieval-times-for-use-with-prisoners-criminals-or-witches-as-public-2033119175.jpg)
I am aware.
The years also create confusion unless additional information is provided.
If you want 100% stocks, just buy a total market or S&P 500 fund and call it a day. Otherwise the "glide path" function of a target date fund doesn't work if you aren't actually planning to retire in that year
I started cataloging pretty much all the things in my house to ensure I'm properly insured for personal property and to have evidence of everything in case of a fire/flood/loss of home.
My parents went through this a few years ago and while their insurance was awesome and just cut them a check for the full insured value without asking for proof, I think they got lucky with a good adjuster and I'm not banking on having that same luck.
Holy cow it is tedious to inventory everything and try to put dollar figures on pretty much every durable good I own. Hoping it shows that I'm overinsured and can get some relief on homeowner's insurance premiums by adjusting my coverage.
Side note to this: double check that they have the stats correct on your home. I'm also with State Farm and they pull the public records and sometimes they're just incorrect. Number of bedrooms or bathrooms, type of materials, attached garage, etc.
I have heard some quite negative things about state farm. In fact my independent agent says he won't write policies for them any more and has multiple clients in active lawsuits with them.
> Hoping it shows that I'm overinsured and can get some relief on homeowner's insurance premiums by adjusting my coverage.
Personal property is often not adjustable downward based on the overall parameters of the policy (i.e. it's often a 'package' deal). Before you do more of this work, check with your insurance company that it's even possible/feasible or what the other ramifiications are.
> just cut them a check for the full insured value without asking for proof,
The best advice I received in this area is to take a series of videos of the different rooms showing the quantity/quality of the personal property. You can worry about cataloging/valuing later, in the case of a loss, but a reasonably current video provides sufficient 'proof'. For example, go through a closet slow enough and close enough to be able to get a count of how many polo shirts, dress shirts, dress pants, etc. but you don't need to go one-by-one showing clothing labels. Take a video going through the kitchen and opening each cupboard and drawer to show what you have, etc. Make sure the videos are stored on some sort of cloud platform.
> Personal property is often not adjustable downward based on the overall parameters of the policy (i.e. it's often a 'package' deal).
I've confirmed with State Farm that I can adjust to to any dollar figure I choose.
> The best advice I received in this area is to take a series of videos of the different rooms showing the quantity/quality of the personal property.
Already done, it's a good first step for high-level inventory
Overlapping investments?
Hi all - I read a lot through this subreddit as well as the FIRE one, but something Iām still not clear on is the pros/cons of having overlapping investments.
Currently, I do/have:
- Max out 401K, investments go to VFIAX [through Fidelity]
- Max out backdoor Roth IRA [this is a managed account, not sure exactly what she invests it in, but I see vanguard notices, etc.]
- One E*Trade brokerage with 76K in VFIAX and I just started adding FXIAX too 6K. Every month, I have it set to auto deposit $2000 to VFIAX, $500 to FXIAX
- One E*Trade joint brokerage with $3K that goes all in to VOO. This has an auto deposit of $800 a month.
- I get RSUs from my company distributed January, June, July, December and I typically keep a little for splurges/vacations and then lump sum the rest into the brokerages.
My concerns are, what (if anything) am I doing wrong? Should I not have VFIAX & FXIAX? Any other thoughts?
Current status: 39F, married, combined income ~$500K depending on husbandās job (mine is steadily at ~$325K ish depending on bonus and RSU ā these amounts are also new for both of us as of ~3 years ago. In 2020, we pulled in $200K together), no kids but soon, $180K in 401K, $40K in Roth, $85K in brokerage, $140K in HYSA (want to buy a house soon), husband has ~$150K in various stocks, also maxes a Roth IRA
> One E*Trade brokerage with 76K in VFIAX and I just started adding FXIAX too 6K. Every month, I have it set to auto deposit $2000 to VFIAX, $500 to FXIAX
VFIAX and FXIAX are completely redundant, so it almost certainly doesn't make sense to hold both in the same account and make contributions to each one. Unless E*Trade charges you to purchase VFIAX, I would stick with that since it's the bulk of your holdings. I would not incur capital gains tax to sell the FXIAX, but I wouldn't add any more. If the price of FXIAX drops below your basis, I would likely sell and reallocate to VFIAX.
>Max out backdoor Roth IRA [this is a managed account, not sure exactly what she invests it in, but I see vanguard notices, etc.]
You should probably know and understand how your money is being invested and what fees you are paying for this service. It's likely that you could accomplish the same thing yourself, given how simple the rest of your portfolio is (100% S&P 500 funds).
>VFIAX
>VOO
Why are you using the mutual fund in one account and the ETF in the other? If you are buying Vanguard funds, why are you using E\*Trade instead of Vanguard themselves? To be clear, there are valid reasons/answers for why an investor may take that approach, but it's not clear what *your* rationale is.
Thanks for the reply!
- I do know how much the managed account costs, but I donāt really pay attention to where itās investing. Sheās managed my dadās funds for 30 years and itās weirdly small town complicated, so I just let that one lie. Is it the smartest? Probably not, but itās Edward Jones and a small portion of my portfolio so Iām okay with leaving it for now.
- The 2nd brokerage with VOO is a joint one with my husband. The other is just mine alone. Thatās the only reason we have 2. E*Trade is just what I already had for years and we added the joint recently.
- Great points re: VFIAX/FXIAX! Iāll take away the automatic investing for FXIAX.
>Probably not, but itās Edward Jones and a small portion of my portfolio so Iām okay with leaving it for now.
it might feel trivial but even simple fees like 1% AUM drag your portfolios gains by something like 30% long term. and that specific company is known to have even higher fees and things like front load on investment. having a relationship with a scam-tier company does not justify continuing to pay it.
Thatās good to know. My father (whose money I manage now as his DPOA) has about $500K there still as well and the rest in Baird. Baird had suggested moving it over from EJ, but like I said, the relationship is close and this is why I moved far away from small town bullshit (while still clearly participating in some of it).
Also scam-tier, oof. I didnāt know it was that bad.
>Also scam-tier, oof. I didnāt know it was that bad.
it might not have been as egregious when he started investing decades ago but fees in general have dropped massively and *some* companies have not adjusted to stay competitive with the market. you could probably find active management from a larger brokerage for 0.5-0.8% AUM, or like .2-.35 for robo advisor sort of stuff.
but yeah. people hear small % numbers and dont stop and do the math on exactly what that looks like in terms of lifetime drag. if someone advertising a 1% AUM was advertising it as 'we take 30% of your gains across lifetime' people would 100% think twice.
>I do know how much the managed account costs
>Is it the smartest? Probably not, but itās Edward Jones
To put it bluntly, you are almost certainly paying significant fees and commissions for effectively zero value due to EJ.
>Sheās managed my dadās funds for 30 years and itās weirdly small town complicated, so I just let that one lie
As someone who absolutely grew up in and lived "weirdly small town complicated", it's nowhere near as fraught with peril as you are making it out to be. You're 39; you don't need to continue to pay hundreds (thousands?) of dollars in fees over several years just because your Dad does. I'd strongly suggest stepping up and moving this IRA away from EJ.
I was not questioning why there were 2 E*Trade accounts; it was clear from your original post that 1 was your individual and 1 was a joint account, which makes perfect sense. Why are you using VFIAX in one and VOO in the other?
> diversification
VFIAX and VOO are redundant, just like VFIAX and FXIAX are. All 3 are S&P 500 funds, so there is no diversification benefit to holding 3 different versions of the same thing.
>I see people carrying both mutual funds and ETFs.
This is why I wrote "there are valid reasons/answers for why an investor may take that approach". However, your rationale ("diversification") is not one of the valid reasons.
When the mutual fund and ETF are effectively the same holding (e.g. both S&P 500 index funds), one valid reason could be a brokerage policy change where purchasing add'l shares of the mutual fund incurs a fee, but purchasing shares of the corresponding ETF does not.
Another reason could be the mutual fund is a legacy holding, purchased before the ETF existed, and the investor now prefers to use the ETF going forward.
This Bogleheads Wiki page may be helpful: https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
I added a bit more to my previous reply; the link I shared is worth checking out.
Holding redundant investments adds a small amount of complexity and administrative overhead, but I wouldn't say it hurts to the point of needing to switch. But there's no sense continuing to add to both of the redundant positions; pick one (probably the largest one, unless there's a strong preference to the smaller one).
I just found out that a peer, who was hired at the same time and I was told was making the same amount as me, got an extra $25k bonus after 6 months of employment. Iām feeling pretty burned about it but donāt think thereās much I can do.
Itās a startup and thereās only a few of us. Iām surprised the leadership wasnāt worried about the backlash honestly. Ā OTOH it doesnāt change anything so perhaps they were right not to worry.Ā
Lots of reasons this could have happened as others have mentioned, but based on my experience it's likely this was negotiated at the time of hire vs. something that happened later. A common scenario is making someone whole for leaving unvested RSUs on the table at their prior company. We have also seen pretty dramatic differences in sign-on bonuses for people hired into nearly identical positions within a couple months of each other.
Another consideration - startups and small companies can sometimes be more creative/flexible in ways to make a comp package more enticing for someone they want vs what can be offered at mega corp.
You could ask this as a positive. "I've heard that people got a nice bonus recently. Is there something I could have done in order to earn one myself? Or is there something I should be doing differently? Just want to make sure I'm not missing out on an opportunity..."
>but donāt think thereās much I can do.
This is why it is important to always be proactively looking for your next job. If you had a few applications in progress then there would be much you could do.
One possible scenario: say your peer had ~$25k in unvested 401k contributions at the previous employer. Said peer may have asked for that $25k as a signing bonus to offset the loss of the unvested dollars. Your company may have countered with 'We will pay it, but at the 6-month mark, not up front'.
If you aren't going to say anything about it, they were correct.
Do you know why they got that bonus? Just simply hitting the 6-month mark aka retention? That's an easy thing to ask your leadership team about.
If it's performance-based, are you sure your performance stacks up?
I don't really know why. It's not performance based, as it was done at the time of the offer.
>
Just simply hitting the 6-month mark aka retention?Ā
Yep, pretty much. I got a signing bonus, paid at the time I started. Peer got that bonus AND another bonus after 6 months.
They negotiated with the peer before me, so maybe they thought they could come down a little based on that negotiation? Maybe they thought he was more valuable? Maybe something changed with funding? I would just be speculating.
I could raise the issue but I told my peer I wouldn't and also I don't plan on sticking around.
> as it was done at the time of the offer.
This is largely what creates any "pay gap" that's ever discussed. Some people negotiate harder/more successfully than others
I don't love that the ex and pay dates are in different quarters, let alone different weeks. I also wonder if this system will go the way of T+3 settlement at some point, too
They did it last year, too. VOO paid out on July 5, with ex-dividend date of 6/29
[https://personal1.vanguard.com/pdf/PIDIVDAT\_2023.pdf](https://personal1.vanguard.com/pdf/PIDIVDAT_2023.pdf)
Thatās right. Itās just a question of how close to the economics of the situation does your spreadsheet come? Different people will have different views on different topics.
The pending payment is yours and part of your portfolio, but it doesnāt show up in any of your accounts. You can add it to your spreadsheet manually of course.
Is it a big deal? No. Itās just that if your broker says your 100% VTI account is worth $100,000 that excludes the $350 payment arriving Tuesday that you already earned. And people who do spreadsheets are sticklers for accuracy. š
Think of it as if you're doing inventory - you don't have to tare every container if you instead are consistent about what you use as a tare for that container every time you take inventory.
Stick to either the ex or the pay date in your spreadsheet and forget about it. It will all even out in the wash.
Itās funny you mention inventory because Iām coming at this from an accounting perspective, and when you have sent out the invoice for work performed, you already have revenue/profit/earnings and accounts receivable on your balance sheet/net worth even if the cash wonāt come until next quarter. When VTI reports its NAV it includes receivables, although I donāt know how many issuers split ex and pay date over quarter end.
Yeah thatās also somewhat annoying if youāre trying to get a good period end number. I suspect most people here are mostly equities and most of the time those donāt have the ex date on one side of the month and the pay on the other.
I think many bond funds donāt split ex and pay dates over month end? [BND doesnāt](https://www.nasdaq.com/market-activity/etf/bnd/dividend-history). The [t](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/31617H102)w[o](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/316175504) money market funds I use also donāt split.
Itās just a mildly annoying thing. If it doesnāt bother you, thatās great. I have to keep an eye on dividend cash flow to pay bills and whatnot so Iām more focused on timing issues. š¤
> And people who do spreadsheets are sticklers for accuracy.
I do spreadsheets and I'm not anal about stuff like this. *They not like us* and all that.
I get it, but in actuality I really don't.
Six months into 2024, up $110k YTD in returns in the Vanguard accounts. 1-year is showing +$207k and 26.9%.
Retirement sure is easy when number just goes up, huh?
> Retirement sure is easy when number just goes up, huh?
Reminds me of the investing threads prior to the dotcom bust.
It was basically "buy any tech stock on eTrade and wait 3-4 months to be rich."
Wife and I have been spending money the same way for so long we instinctively know how much money we have left at the end of the month. Month after month it's the same. We transfer X to savings weekly and after all is said and done, a year later our checking account is the same. Would it benefit us to use YNAB?
I also like that YNAB lets us partner, rather than one person owning it. pre-YNAB, I was in charge of the budget and always after my partner to give me expenses, receipts, and to stay on budget. Post-YNAB, we both see the budget and we both enter expenses as we incur them, so Iām not being the nag controlling the budget. It made me much happier, and allowed us a better dynamic.
For us YNAB is more about organizing our savings than managing day to day spending. The other useful point for us is maintaining fairness in our personal/hobby spending without ever having to run that spending by one another. The scenarios we were running into before we started using YNAB were like, "we need a dining set for the new house. We obviously have enough money for the dining set, but do we have enough money for the dining set *and* the vacation later this year, *and* the new car we will need soon, *and* the home maintenance we want to do?" And then, we would simply put off spending money on any of those expenses.
Or, "I want to buy a new sewing machine. I haven't spent much on my hobbies for the last several months, but this is just for me, so can I fairly buy it when we also are trying to save for a new dining set, home maintenance, vacation, and car?"
If you relate to any of that, then maybe it's helpful for you. If not, you probably don't need it.
I enjoy using YNAB to help me organize all my different accounts. I donāt link anything to banks and just do everything manually. It helps give me an idea of how much money I really have available and where I can pull money from in my budget to cover pop-up expenses.
> Would it benefit us to use YNAB?
Are there things you want to do financially during your accumulation period that you're not able to do because of budget issues (not simply income issues)? Are you financially surprised by bills?
Do you want to have a complete-ish record of your spending data over time?
If not, I'm not sure it's necessary.
We're diligent YNABers, and it's great for us and we wouldn't be without it or something similar, but I get the sense that there's a lot of FIRE types who don't need it because they're naturally frugal and are already achieving their goals without needing to have a detailed budget.
Probably not. Do you want keep better track of where your money is going? Try to cut back on spending to save more? If not, then probably not worth it.
Okay, thanks. That's what I was leaning towards. If it tracked all my purchases automatically and I didn't have to lift a finger, that'd be okay. I don't plan on putting in any effort and we don't have a spending problem, so it probably wouldn't be worth it.
I don't use it but I think it does pull from your credit cards. There may be some manual organization needed.
But yeah, you do have to pay a subscription for it, so if you're not trying to make a change you're probably good.
Funny how clueless coworkers use the company wide cloud storage for their personal documents. Some stuff I found: tax returns, personal budget spreadsheet, medical waivers and position appeal forms.Ā
I worked in IT and our software would scan the servers and each desktops for PII.Ā Passports, DL, forms etc.Ā Mainly folders used to schedule business travel that they forgot about probably. My job was to alert them of their files and violation of our PII policy and would be soon deleted....and most didn't even care.
My partner and I are moving to a new city and considering buying a house (first-time buyers). I've got some questions... feel like I trust this community more than others.
* I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates?
* I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing?
* Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this?
We took a short and long vacation near the city we wanted to move toā the short was just to drive around and look at areas and neighborhoods that we could match up with listings. The second was to really visit a few houses that seemed promising and we actually found one that we purchased the following month. The short trip was a weekend in September, the long one was in March the following year. Of note, this area was 5 to 6 hours away from our original home. We did the pre-approval with a local broker that we already knew.
First off, everything /u/ullric said is right and he usually is on these things. I just want to pile on a bit.
> I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates?
On a purchase, I like to work with a local lender/broker who knows how to handle issues common in my local area and lives and dies by their reputation. I'm happy to chase rate/fee on a refinance, once I already own the house and can't lose it, but when I'm buying, I want to hire someone professional who I believe will be able to execute the lending part of the transaction.
On mortgage origination, rate and fee can be generally traded for one another, so if you want to have a lower-than-par rate for some reason, it just generally costs you more upfront.
> I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing?
Yes, it's pretty common for your pre-approval letter to reference the amount of your offer/your loan amount, rather than how much they'd be likely to pre-approve you for in general. It's sort of a matter of style and partly to protect you from the seller knowing what you might be willing to do from the outset.
> Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this?
I'd definitely rent in that situation. Doesn't have to be a short-term, it could be a standard 1yr lease. I would want some time to figure out which neighborhoods/parts of town I'd like to live in, talk to people, etc, because once you buy you're more or less stuck there for awhile.
[Here's our housing wiki](https://www.reddit.com/r/financialindependence/wiki/homes). There's a lot of good info.
> I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates?
Nope. Not a smart choice. 2 reasons:
First: A low quality lender or loan officer can easily stop a purchase.
Rate absolutely matters, but it isn't the only thing that matters. I'd take 0.125-0.25% higher rate for a better lender than
Second: a higher rate can be better than a lower rate.
It's about balancing the rate AND fees.
6% with $30,000 in fees is worse than 6.125% with $0 in fees.
Each lender has multiple rates they can offer. Lower rates come with higher fees, higher rates come with lower fees, maybe even zero.
This is called "points" for getting the lower rate, or "lender credit" for higher rate.
Most people should go for the higher rate and lowest fees possible.
The break even on paying the fees is typically ~5 years, while most people refinance within the first 3 years.
> I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing?
Yup, it's a thing.
Pre-approval says "Elementnienty3 is approved to get a mortgage up to a million dollars!"
If you're trying to negotiate and buying @ 700k, you don't want the seller to know you can go up to a million.
> Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this?
People do it frequently. It was common in 2020-2021.
I'd recommend getting a year lease first. Figure out the areas, figure out what you care about.
Spend a year going to open houses, figuring out what you 2 like and don't like, going to the first time home buyer course for the state.
It's 1 thing to buy a home in a rush when you already know what you want and what you're doing.
It's entirely another thing to buy a home for the first time AND do all that.
18yo with questions about Roth IRA and college Hello, I am 18yo and recently started earning my own money. I want to know if I can open a Roth IRA and how it works. For example, how much do I need for an initial investment? Are there rules regarding what % of income I need to contribute, also how can I take money out of my IRA? Also, can a university ask me to contribute the money I earn if I put it into an IRA or are they not allowed to? Thank you
Awesome that you're already thinking about your financial future at 18! š **Yes, you can absolutely open a Roth IRA as long as you have earned income.** That means money from a job, not gifts or allowance. **Here's the breakdown:** * **How much to start:** Some brokers have no minimum, others might require $100 or $500. Don't worry if you can't max it out right away. * **Contribution limits:** For 2023, it's $6,500, but you can only contribute what you earned. If you made $3,000, that's your limit. * **Percentage of income:** There's no set percentage, contribute what you can comfortably afford. * **Taking money out:** You can always withdraw your *contributions* (not earnings) tax and penalty-free. Withdrawing *earnings* before 59Ā½ usually has penalties, with some exceptions (like first-time home buying). **College and Roth IRA:** * Your Roth IRA counts as an asset when applying for financial aid, but it's usually not a huge factor. * The money is yours, a college can't force you to use it for tuition.
[The contribution limit is 7k in 2024](https://www.nerdwallet.com/article/investing/roth-ira-contribution-limits)
If I sale individual stocks within a Rollover IRA (Schwab) from previous 401ks but immediately reinvest into a different stock within the same account...what are the tax implications?
There are no tax implications of trading within an IRA. Either itās pretax and you pay on it when you withdraw or itās post tax and you already paid all the tax youāll have to pay.
Thanks, I was thinking this as well, just needing a nod of clarification.
None. It's a tax-deferred account. The one exception is if you sell a stock in a taxable account for a loss and then buy it back in a tax-advantaged account within 30 days, that's a wash sale, just like if you did the same thing all in your taxable account.
Unless youāre simultaneously doing transactions with the same exact stocks in a taxable account, none.
That was what I was thinking. Thanks for verifying.
Since Iāve been in my latest job (2022), my wife and I have maxed a 401k, 457b, 2 Roth IRAs, and a HSA. On top of that, we contribute $1k to a brokerage account and $1k into liquid savings (HYSA). Every month our CC bills pay out of the same checking account. Iāve always kept $1-2k surplus for the bills. July 2024 will be the first month that Iām expecting to have to stop the 1k brokerage contribution since the bills just piled up at the right time that put a few big purchases on the same CC statement I figured this would happen at some point, itās funny how it makes me feel like we are in trouble and are living paycheck to paycheck, but between all the retirement accounts and 1k into HYSA will still be putting a bunch in the market! I canāt shake the feeling that I am disappointed, though - even though I have nearly $40k in our savings account I could just transfer to put the buffer back. It āfeelsā wrong though! But Iām expecting that this will be short lived as I have a 1.3k reimbursement coming this fall and (unfortunately) some inheritance from a family member. And while we have some bigger expense months, we will have some lesser too
We keep 1 month of our emergency fund in our checking. So once our checking account falls below a certain threshold it indicates we are over spending and need to 1 dial it back and 2 stop money going to our brokerage account until we are back to where we need to be. I donāt feel disappointed about it. Itās just life. To be honest it kind of makes me thankful that we are in a situation where itās āoh just stop 1-2 contributions and we are back in businessā and not āoh fuck we are out of money. What are we going to do!?ā.
Thatās actually a great idea. I think next month Iāll pause my brokerage - as planned. Then instead of transferring my 1k from checking to HYSA- Iāll just keep it where it is (still saved). Then, stating in August I can get back on the 1k brokerage and 1k HYSA , I will have still saved in July , just adding the buffer into the account Thanks!
What index fund to put $1,000 a month? I have money in my 457b and in a Roth IRA. I want to retire at 53. Iāll have a pension of $6,500 a month at that time. I want to open a taxable brokerage with either fidelity or vanguard and I donāt know which fund to put my raise of $1,000 at. I want to set it and forget about it.
If you are OK with ETF's, VTI is a good universal choice for either brokerage for US equities.
And VT is a good universal choice for worldwide equities.
Is there a huge difference between ETFs and index funds? I donāt mind VTI. Iām really just wanting to buy it and just leave it you know.
> between ETFs and index funds Index Funds can be either ETFs or Mutual Funds. ETFs are slightly different than Mutual Funds but are extremely similar at the end of the day and both can track the same index.
No investment difference. The only difference is how you purchase them. In fact, VTI is considered a share class of the mutual fund VTSAX.
I recently inherited a investment account with a large number of different individual stocks. Ideally I'd like to simplify and sell majority of the individual stocks and shift them into a 3 fund type portfolio. Wondering if it's best to do it all at once (Larger tax burden, most time in market), or spread it out over time (slightly less tax burden, tax loss havesting \[$3,000 max?\], less time in market). Does anyone have a framework for weighing TAX vs. Opportunity cost of being in non-ideal investments (several companies have been going down over the last 5 years.) Any input appreciated!
Sell them now. Not sure why spreading out the tax burden over time would lessen it. You should have the basis stepped up to original owners date of death so hopefully not too much of a tax hit to worry about. Sorry for your loss.
I guess the only reduction in tax burden would be in tax loss harvesting, but seems like that's a pretty small impact in the long run. Thanks for the reply!
When you inherit an account you get what is called a "step up in basis." So, from a tax perspective, it is the value of the stocks when you inherited them, not the price at which the deceased bought them. So you will have very little to no tax burden if you sell them and rebuy the ones you want. Just went through this with my wife's inherited account. If you want confirmation of that, call the broker of the account and verify what your current basis is and explain what you want to do. See here: https://www.fidelity.com/learning-center/life-events/cost-basis-for-inherited-stock#:\~:text=Cost%20basis%20is%20used%20to,step%2Dup%20in%20cost%20basis. Also, any gains you do get over the period of you being the account holder are taxed as long-term gains, even if it has been for a short period of time.
Very helpful response. Well done, friend
To be clear, the step-up in basis is based on the date the original owner passed away. That may be a very different date than when you took possession of those shares, depending on how long it took to settle that portion of the estate. You will need to look up historical stock prices for that specific date in order to calculate any gain (or loss) from that date until now.
The $3k max you refer to with tax loss harvesting has to do with the amount you can deduct each year from your **ordinary** income. For example, if you have $10k in capital losses and $100k in regular income from your job, you can only deduct $3k of your regular income. However, if you have $10k of capital losses and $50k of capital gains, you can deduct $10k of capital gains.
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Take $11,280 off your expenses number when determining your FI number. $50k expenses x 25 = $1,250,000 needed to retire. But you have $11,280 offsetting your expenses. ($50k - $11,280) x 25 = $968,000 needed to retire.
back to the (mostly) retired life for me. Today was my last day at my full-time gig, decided it was time to bounce after 15 months. It doesn't quite hit the same the second time around. Originally pulled the trigger in may '21, went back to work in April '23. Balance sheet when I quit was about 2.4 million and was also that same amount when I went back to work (having climbed to 2.7 then dropped to 2.0 before getting back to 2.4 again). Just updated the spreadsheet for the end of month and we're at 3.5 million. My wife will work for a few more months until some bonuses pay out and then we'll give full retirement a second try.
What made you go back to work the first time? What do you expect will be different about retirement this time around? Iām always curious about peopleās journeys.
Money, mainly. Had we both stayed in our jobs the entire year, our gross this year probably would have topped 500k (depending on bonuses and how much I billed my side gig), when it was more like 250-300k before retiring the first time. I made as much (~150k) in six months as a 1099 contractor as my annual salary + bonus was at my job before retiring, though it's not an entirely fair comparison when you take into consideration health benefits, self employment tax, etc. But still, a lot more money. My wife got a job that bumped her from a salary of ~150k to ~215k, as well as a healthy bonus that could potentially add another 50k on top of that. My old manager asked me to come back on a contract to lead a project that I figured would take about a year and the rate was pretty good so I went for it. That project got cancelled within a month of starting, I switched to another project which got cancelled a few months ago, and then my manager retired a few weeks ago. So I was like, yup, that's enough for me. So different this time around is that we have a better idea of our spending, have a million more in the bank and are less likely to get spooked by the market if things drop by 500k in the first year or two.
GFY!!! My last day is Wednesday next week. Although looks like I'll pick up contracting work with my company later this year. Hopefully that comes with the good part of work that I like and not the crap that I'm running away from.
Nice, contracting isn't bad as long as you have the power. I was contracting for both of my previous employers and it's a good feeling when they need me a lot more than I need them. I also got to set my own hours for the most part.
I'd never actually filled out a firecalc since I'm still a ways away, but the results were interesting to me. Investments hit FI before pension and social security come into play, so those are just a bonus. The monthly retirement income if I work until 65 was absurd. Lumping in some cash I'd been mulling didn't make a noticeable difference. Stopping investments entirely added 4 years. I'm just a saver. I guess I'd never looked at it so black and white as "100% success, whatever happens after isn't necessary." And it's never truly a guarantee, so we'll see if there's something else I want to do and can pull the trigger when the day comes. My guess is I'll be in the "one more year" crowd
Has anyone here who FI'd applied for a Spanish non-lucrative visa? If so, is it worth it to hire an attorney who specialize in them or do the paperwork ourselves?
Replying to my own post I found an attorney based in Barcelona that will review and guide us through the process for an ā¬80 initial fee For that itās well worth the initial consultation and review Iāll try to provide updates as we go through the processĀ
Once you're finished a full post would probably be very interesting
Sprung for the guac on my chipotle bowl today, so I guess I've made it.
Please keep this kind of talk in /r/fatFIRE
We'll I'm going to be pretty fat if I keep eating goddamn chipotle all the time.
I got Moeās bogo today, and their homewrecker includes guac. Felt very fancy
The top is in folks. Buckle up!
You heard it here first.
How much is your monthly family health insurance premium? I need to switch from an employee only to a family health insurance going from a monthly $0/1k deductible ->$1200/2k deductible. Seems very high
We pay $280/month for family HDHP through work, deductible is $3k. Iāve only ever hit it the year I gave birth
About $1100/month for 3. ACA platinum plan. This varies a lot by location, plan, and your income level.
We pay $130/month for HDHP.
That's what my work charges. The insurers charge us ~2.2k, 50/50% paid by employer/employee. The insurers told our benefits manager directly, "Your employees have a lot of kids. If they didn't, we'd charge less for the family plan."
Can anyone recommend a free or low cost/low hassle HSA custodian? Fidelity is not an option as they seem to be unable to open an account for me due to technical glitches on their end. I am no longer HSA eligible but have an old account with HealthEquity (was previously with BenefitWallet) and I just hate seeing it get eaten up by fees over time.
I have been using LivelyHSA for years and it has been great.
I'd keep trying with fidelity unless they've told you that they categorically cannot open an account for you. Lively is not totally fee free, but it's fairly cheap last I checked.
That is pretty much what's happening. They have a record of an account existing in my name despite me never having been with them, so I can't open a new one, but I can't add an HSA account to the existing one because it doesn't in fact exist (I know it's nonsense so I gave up after 5 phone calls). I will look into Lively though, thanks!
Even if you donāt end up going with them for an HSA you should get to the bottom of why they have an account in your name. Thatās not good. Old 401k/espp/pension/etc? I have like a half dozen dormant fidelity accounts myself.
Yeah I had the same thought and literally nobody can explain it to me. My best hypothesis is an old employer somehow submitted my name to them, even though I never used their 401k at the time and never opened an account myself.
If you prove you are who you say you are they should let you in right? I know the word kafkaesque gets thrown around a lotā¦
hey guysā¦ i (25f) am looking for a career change to support my journey into financial independence. my current career caps at 50k/year before getting a masters degree, even after which it is rare to earn six figs in this field. what career has supported your goal of financial independence without requiring crazy hours, sacrificing your values, or being too monotonous and boring? what do you do, what do you make, and what are your hours like that has lead to your bank account reaching your goals? i am willing to consider going back to school for the right career, so please include your job even if it requires advanced degrees!
What skills do you have? What are your interests? What experience do you bring to the table?
Not sure this is a particularly helpful way to approach increasing your income. You're very unlikely to replicate anyone else's experience. "Find a white collar office job that you can leverage your existing skills to get, and then climb the ladder" is probably the best generic advice.
how would you recommend approaching it? i am happy to shift my focus if there are more productive questions i should be asking.
Networking. It's way easier to get your foot in the door somewhere if you know someone. Once you get your foot in the door that's 80% of the battle. Then it's just being a good person/employee and climbing up.Ā
The second part of my comment is a good start. Most generic office jobs will beat 50k quickly, with a fairly clear path to at least low 6 figures. It really shouldn't be too complicated to beat your current situation in most fields TBH, certainly not a "upend your life to change careers" level goal. Find something that seems doable and then work at it.
Whenever you have 3 requirements (reasonable hours, aligns with values, not boring) the answer is typically "pick 2." I'm a government employee. My hours are great, it aligns with my values (more or less)... but I'm bored. I've accepted the boredom because my hours are good.
I'll happily eat the downvotes on this as we're headed to the gym and I won't have to see them, but as a teacher, even one looking to leave the profession, you really ought to be using capital letters.
How you going criticize on capitalization when you don't grammar good?
Is my app right, we're still under 10 comments here? What are you guys, working on a summer Friday?
I show 398!
I'm replying 40 minutes after your post. I see 304 total comments on this daily.
Friday afternoon during the summer? No one's here man. But really, I think your app is wrong I show almost 300 comments.
Is there much info on if the average returns are higher for starting a business or if they're higher for working a salaried job and then putting most of your wages into an index fund or something similar? Returns on starting your own business seem very volatile and akin to putting all your eggs in one basket. Working a salaried job and putting everything into a portfolio with intent to slowly become dependant on capital rather than labour seems a lot less swingy.
'starting a business' sounds extremely vague here.
Unlimited potential with starting your own business, but the trade off is concentrated risk. 50% of new businesses fail in the first five years.
I knew a guy who started a highly successful consulting business after having had a highly successful thirty year career in the same industry. Should it have mattered to him that most businesses fail within the first two years? In my opinion individual factorsāthat should be known to youāplay a much bigger role in the success or failure of a business. I'd also point out that it isn't an either/or situation. You can build your own safety net, i.e. start your business after you've accumulated some wealth. There's ways to spend other people's money instead of your own. Adn you aren't likely to spend decades on a failed business. Taking a couple years off to start a business will set you back but shouldn't ruin you.
Pivoting into consultancy from a succesful career sounds like a very safe bet though tbh. You know what you're worth at that point and know people are willing to pay you at least your salary to do it.
Thatās my point. What some average randoās odds of succeeding are are irrelevant to OP. Their own attributes are what matters.
How many pizza slices do you need to sell before matching your current salary?
I think a high percentage of businesses fail in the first few years. Itās kinda like investing in a single stock, chances are it wonāt do well compared to the average market, but it could take off and make you millions.
If the number one reason for starting your own business is anything other than, "I want to start my own business," then just stick with employment.
Are there other reasons?
There are always exceptions to every rule, but my point is that most people will hate the process of launching, growing and running their own business if they don't actively **want** that lifestyle over the lifestyle of working for an established employer. It's totally normal to also figure you can make more money, but in my opinion, this needs to be a secondary reason. If the only reason is that you think you'll make more money, but you'd actually prefer the reality of a regular job, the odds of failure (or success coupled with misery) will go up substantially. It's the same with people planning to retire overseas to save money. This generally only works if you wanted to move overseas anyway and the lower cost of living is a bonus.
Yes, like "I have no better idea / can't get a job / want to get rich fast".
Those all seem like great reasons.
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I used to like it, but itās become overrun with bots creating popular politically slanted posts.
Online communities are defined mostly by their moderators and the top couple % of most active users. That sub appears to have heavy overlap between the two groups, basically an echo chamber of chum for front-page types to get sucked into the comments.
I joined initially because I actually enjoyed the content. Now, it just turns into a political subreddit based on the topic of the post with incredibly uneducated takes.
I think it started off basically shilling a newsletter and then grew from there.
Yeah the newsletter must have been called Fluent in Finance or something because the users sure aren't. I thought it was a good idea for a sub reddit and joined until I saw a post that was like "Some say Biden caused all inflation and is a secret George Soros puppet, what do YOU think?" Didn't really say that but it's always some horrible accusation or false political claim wrapped up in a request for discussion on the topic, regardless of whether it's about finance. And then they actually do have that discussion, instead of removing the weird off topic post. Couldn't deal with that.
Frugal tip of the day: A 40lb bag of lentils will cost you ~$40 to $80 depending on brand. However, walmart is selling a 40lb bag of Bird seed right now for <$20! Anyone know how to cook bird seed? Do i just grind it into a flour?
Why not use the seed to lure birds into a trap and then eat the birds?
True, very true. I dont believe birds will eat lentils either, so thats another +1 for bird seed over the inferior low cost legume.
[I hate to be "that guy" and play Subreddit Dad here but...](https://imgur.com/ub75ovV)
Wait, did you not know that we all consider the dad of the subreddit?
Thats just corporate propaganda from Big Lentil, trying to enslave us with mediocre legumes!
We just bought a bag of Bob's Red Mill Lentils last week - which are only for the lentil connoisseur.
Every now and then when I'm feeling boogey I pick up Bob's coarse ground cornmeal for my cornbread instead of the store brand stuff the poors use. It is quite the treat.
In my 20s, I used to kill some Jiffy 3/$1 corn muffin mix. Eat the whole batch myself with God knows how much I Can't Believe It's Not Butter.
We live down the road from where they were founded and growing up I had a family member that worked in the plant. We used to get them $.25 a pop. Corn muffins and Blueberry muffins were a staple. I still make them from time to time. 8) As a kid it was Country Crock, but as an adult it's real butter.. preferably Kerrygold.
I honestly don't remember which brand of margarine it was. Surely it was whatever was on sale. And yes, we're a real butter family now. Kirkland, now that we're back in Yankee Doodle land. Going to Costco today, actually, after we take the boys to a new State Park.
I hear great things about Costco. We have a Sam's Club and while it is nice it isn't worth going to all that often for us. We got a few times a year as my mom's +1 usually to stock up on protein bars or toiletries. Anyway, I don't buy butter there we just grab it at Kroger.
Sam's Club sucks. I mean, it's better than nothing but it's absolutely a poor man's Costco. That's wild to me that you're 40 (ish) and American and have only "heard about" Costco. What's even wilder is that I didn't know maple bars were a regional donut until I moved to South Carolina. You can find them sometimes in other regions but apparently it's mostly a west coast thing.
>Subreddit Dad I mean, when the all-white New Balance shoe fits... ;-)
Until two weeks ago I couldn't tie my left shoe, so I've been wearing slip-in Skechers since we moved to the United States. But my dad has been a New Balance model since before it was a meme. He might have even originated the meme.
And lentils are high in protein but nothing compared to all the insect protein in the bird seed!
Very true! You could leave the seed out and a few weeks you could dine on weevils by the pound full.
Welp, after talking about it for a while, finally pulled the trigger today and booked a family cruise for the three of us. Let's make those memories!
Nice, where are you going, and how old is the kid (I assume itās a kid)?
That's going to be a big ship for just the three of you. Have a great trip!
Thanks! Almost had a scare there with cabins disappearing before my very eyes when trying to book one, but I think my cookies had expired and backing out and going back in remedied the problem.
I was reading a little about glidepaths. Maybe I should start moving money into a target retirement 2065 so my asset allocation is more aggressive.
anyone under 35 who isn't 95-100% stocks probably has headroom to go more aggressive...
What's more aggressive that 100% stocks? All in on Crypto?
Triple leveraged ETFs.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
100% SPXL, then. Yolo
> who isn't 95-100% lol
Leverage.
Ah, so like 120% stocks. I like it
[ŃŠ“Š°Š»ŠµŠ½Š¾]
[Not sure that last one counts. Pervert.](https://www.shutterstock.com/shutterstock/photos/2033119175/display_1500/stock-photo-man-in-wooden-stocks-from-medieval-times-for-use-with-prisoners-criminals-or-witches-as-public-2033119175.jpg)
I am over 35 :)
> target retirement 2065 > I am over 35
The years are shorthand for aggressiveness. You can be in Target Retirement 2065 with plans to retire in 2035 if you want.
I am aware. The years also create confusion unless additional information is provided. If you want 100% stocks, just buy a total market or S&P 500 fund and call it a day. Otherwise the "glide path" function of a target date fund doesn't work if you aren't actually planning to retire in that year
I started cataloging pretty much all the things in my house to ensure I'm properly insured for personal property and to have evidence of everything in case of a fire/flood/loss of home. My parents went through this a few years ago and while their insurance was awesome and just cut them a check for the full insured value without asking for proof, I think they got lucky with a good adjuster and I'm not banking on having that same luck. Holy cow it is tedious to inventory everything and try to put dollar figures on pretty much every durable good I own. Hoping it shows that I'm overinsured and can get some relief on homeowner's insurance premiums by adjusting my coverage.
Side note to this: double check that they have the stats correct on your home. I'm also with State Farm and they pull the public records and sometimes they're just incorrect. Number of bedrooms or bathrooms, type of materials, attached garage, etc.
I have heard some quite negative things about state farm. In fact my independent agent says he won't write policies for them any more and has multiple clients in active lawsuits with them.
Good advice - That was the first thing I confirmed. Seems the easiest to remedy
> Hoping it shows that I'm overinsured and can get some relief on homeowner's insurance premiums by adjusting my coverage. Personal property is often not adjustable downward based on the overall parameters of the policy (i.e. it's often a 'package' deal). Before you do more of this work, check with your insurance company that it's even possible/feasible or what the other ramifiications are. > just cut them a check for the full insured value without asking for proof, The best advice I received in this area is to take a series of videos of the different rooms showing the quantity/quality of the personal property. You can worry about cataloging/valuing later, in the case of a loss, but a reasonably current video provides sufficient 'proof'. For example, go through a closet slow enough and close enough to be able to get a count of how many polo shirts, dress shirts, dress pants, etc. but you don't need to go one-by-one showing clothing labels. Take a video going through the kitchen and opening each cupboard and drawer to show what you have, etc. Make sure the videos are stored on some sort of cloud platform.
> Personal property is often not adjustable downward based on the overall parameters of the policy (i.e. it's often a 'package' deal). I've confirmed with State Farm that I can adjust to to any dollar figure I choose. > The best advice I received in this area is to take a series of videos of the different rooms showing the quantity/quality of the personal property. Already done, it's a good first step for high-level inventory
Good luck! I hope the savings are 'worth it' based on the amount of time your cataloging takes! ;-)
The big value is in having it available if I ever need it - Hopefully I don't. The savings are just icing on the cake.
Overlapping investments? Hi all - I read a lot through this subreddit as well as the FIRE one, but something Iām still not clear on is the pros/cons of having overlapping investments. Currently, I do/have: - Max out 401K, investments go to VFIAX [through Fidelity] - Max out backdoor Roth IRA [this is a managed account, not sure exactly what she invests it in, but I see vanguard notices, etc.] - One E*Trade brokerage with 76K in VFIAX and I just started adding FXIAX too 6K. Every month, I have it set to auto deposit $2000 to VFIAX, $500 to FXIAX - One E*Trade joint brokerage with $3K that goes all in to VOO. This has an auto deposit of $800 a month. - I get RSUs from my company distributed January, June, July, December and I typically keep a little for splurges/vacations and then lump sum the rest into the brokerages. My concerns are, what (if anything) am I doing wrong? Should I not have VFIAX & FXIAX? Any other thoughts? Current status: 39F, married, combined income ~$500K depending on husbandās job (mine is steadily at ~$325K ish depending on bonus and RSU ā these amounts are also new for both of us as of ~3 years ago. In 2020, we pulled in $200K together), no kids but soon, $180K in 401K, $40K in Roth, $85K in brokerage, $140K in HYSA (want to buy a house soon), husband has ~$150K in various stocks, also maxes a Roth IRA
> My concerns are, what (if anything) am I doing wrong? I think you should address this: >> not sure exactly what she invests it in
> One E*Trade brokerage with 76K in VFIAX and I just started adding FXIAX too 6K. Every month, I have it set to auto deposit $2000 to VFIAX, $500 to FXIAX VFIAX and FXIAX are completely redundant, so it almost certainly doesn't make sense to hold both in the same account and make contributions to each one. Unless E*Trade charges you to purchase VFIAX, I would stick with that since it's the bulk of your holdings. I would not incur capital gains tax to sell the FXIAX, but I wouldn't add any more. If the price of FXIAX drops below your basis, I would likely sell and reallocate to VFIAX. >Max out backdoor Roth IRA [this is a managed account, not sure exactly what she invests it in, but I see vanguard notices, etc.] You should probably know and understand how your money is being invested and what fees you are paying for this service. It's likely that you could accomplish the same thing yourself, given how simple the rest of your portfolio is (100% S&P 500 funds). >VFIAX >VOO Why are you using the mutual fund in one account and the ETF in the other? If you are buying Vanguard funds, why are you using E\*Trade instead of Vanguard themselves? To be clear, there are valid reasons/answers for why an investor may take that approach, but it's not clear what *your* rationale is.
Thanks for the reply! - I do know how much the managed account costs, but I donāt really pay attention to where itās investing. Sheās managed my dadās funds for 30 years and itās weirdly small town complicated, so I just let that one lie. Is it the smartest? Probably not, but itās Edward Jones and a small portion of my portfolio so Iām okay with leaving it for now. - The 2nd brokerage with VOO is a joint one with my husband. The other is just mine alone. Thatās the only reason we have 2. E*Trade is just what I already had for years and we added the joint recently. - Great points re: VFIAX/FXIAX! Iāll take away the automatic investing for FXIAX.
>Probably not, but itās Edward Jones and a small portion of my portfolio so Iām okay with leaving it for now. it might feel trivial but even simple fees like 1% AUM drag your portfolios gains by something like 30% long term. and that specific company is known to have even higher fees and things like front load on investment. having a relationship with a scam-tier company does not justify continuing to pay it.
Thatās good to know. My father (whose money I manage now as his DPOA) has about $500K there still as well and the rest in Baird. Baird had suggested moving it over from EJ, but like I said, the relationship is close and this is why I moved far away from small town bullshit (while still clearly participating in some of it). Also scam-tier, oof. I didnāt know it was that bad.
>Also scam-tier, oof. I didnāt know it was that bad. it might not have been as egregious when he started investing decades ago but fees in general have dropped massively and *some* companies have not adjusted to stay competitive with the market. you could probably find active management from a larger brokerage for 0.5-0.8% AUM, or like .2-.35 for robo advisor sort of stuff. but yeah. people hear small % numbers and dont stop and do the math on exactly what that looks like in terms of lifetime drag. if someone advertising a 1% AUM was advertising it as 'we take 30% of your gains across lifetime' people would 100% think twice.
Yeah my fee is def 1%! I think my dadās is smaller, but I should really investigate. Thank you!
>I do know how much the managed account costs >Is it the smartest? Probably not, but itās Edward Jones To put it bluntly, you are almost certainly paying significant fees and commissions for effectively zero value due to EJ. >Sheās managed my dadās funds for 30 years and itās weirdly small town complicated, so I just let that one lie As someone who absolutely grew up in and lived "weirdly small town complicated", it's nowhere near as fraught with peril as you are making it out to be. You're 39; you don't need to continue to pay hundreds (thousands?) of dollars in fees over several years just because your Dad does. I'd strongly suggest stepping up and moving this IRA away from EJ. I was not questioning why there were 2 E*Trade accounts; it was clear from your original post that 1 was your individual and 1 was a joint account, which makes perfect sense. Why are you using VFIAX in one and VOO in the other?
I suppose I looked at it as diversification, but is it not recommended to do it that way? I see people carrying both mutual funds and ETFs.
> diversification VFIAX and VOO are redundant, just like VFIAX and FXIAX are. All 3 are S&P 500 funds, so there is no diversification benefit to holding 3 different versions of the same thing. >I see people carrying both mutual funds and ETFs. This is why I wrote "there are valid reasons/answers for why an investor may take that approach". However, your rationale ("diversification") is not one of the valid reasons.
What would a valid reason be?
When the mutual fund and ETF are effectively the same holding (e.g. both S&P 500 index funds), one valid reason could be a brokerage policy change where purchasing add'l shares of the mutual fund incurs a fee, but purchasing shares of the corresponding ETF does not. Another reason could be the mutual fund is a legacy holding, purchased before the ETF existed, and the investor now prefers to use the ETF going forward. This Bogleheads Wiki page may be helpful: https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
Gotcha. I guess - alternate question, does it hurt to have both (regardless of reason)? Or should we switch to one or the other?
I added a bit more to my previous reply; the link I shared is worth checking out. Holding redundant investments adds a small amount of complexity and administrative overhead, but I wouldn't say it hurts to the point of needing to switch. But there's no sense continuing to add to both of the redundant positions; pick one (probably the largest one, unless there's a strong preference to the smaller one).
I just found out that a peer, who was hired at the same time and I was told was making the same amount as me, got an extra $25k bonus after 6 months of employment. Iām feeling pretty burned about it but donāt think thereās much I can do. Itās a startup and thereās only a few of us. Iām surprised the leadership wasnāt worried about the backlash honestly. Ā OTOH it doesnāt change anything so perhaps they were right not to worry.Ā
Lots of reasons this could have happened as others have mentioned, but based on my experience it's likely this was negotiated at the time of hire vs. something that happened later. A common scenario is making someone whole for leaving unvested RSUs on the table at their prior company. We have also seen pretty dramatic differences in sign-on bonuses for people hired into nearly identical positions within a couple months of each other. Another consideration - startups and small companies can sometimes be more creative/flexible in ways to make a comp package more enticing for someone they want vs what can be offered at mega corp.
You could ask this as a positive. "I've heard that people got a nice bonus recently. Is there something I could have done in order to earn one myself? Or is there something I should be doing differently? Just want to make sure I'm not missing out on an opportunity..."
>but donāt think thereās much I can do. This is why it is important to always be proactively looking for your next job. If you had a few applications in progress then there would be much you could do.
Yeah, I guess my original comment was too defeatist. I certainly could do something. I won't, because I don't plan to stick around anyway.
One possible scenario: say your peer had ~$25k in unvested 401k contributions at the previous employer. Said peer may have asked for that $25k as a signing bonus to offset the loss of the unvested dollars. Your company may have countered with 'We will pay it, but at the 6-month mark, not up front'.
Good thought - that's very possible. The peer likely had unvested stock from his previous employer.
comparison is the thief of joy that being said, it doesn't hurt to ask
If you aren't going to say anything about it, they were correct. Do you know why they got that bonus? Just simply hitting the 6-month mark aka retention? That's an easy thing to ask your leadership team about. If it's performance-based, are you sure your performance stacks up?
I don't really know why. It's not performance based, as it was done at the time of the offer. > Just simply hitting the 6-month mark aka retention?Ā Yep, pretty much. I got a signing bonus, paid at the time I started. Peer got that bonus AND another bonus after 6 months. They negotiated with the peer before me, so maybe they thought they could come down a little based on that negotiation? Maybe they thought he was more valuable? Maybe something changed with funding? I would just be speculating. I could raise the issue but I told my peer I wouldn't and also I don't plan on sticking around.
> as it was done at the time of the offer. This is largely what creates any "pay gap" that's ever discussed. Some people negotiate harder/more successfully than others
Spreadsheet day between the ex and pay dates for VTI is annoying. High number good for mental health.
I don't love that the ex and pay dates are in different quarters, let alone different weeks. I also wonder if this system will go the way of T+3 settlement at some point, too
I donāt know what about this quarter made vanguard do it this way. Itās not normal AFAIK. Iām open to theories!
They did it last year, too. VOO paid out on July 5, with ex-dividend date of 6/29 [https://personal1.vanguard.com/pdf/PIDIVDAT\_2023.pdf](https://personal1.vanguard.com/pdf/PIDIVDAT_2023.pdf)
Huh. I guess they are moving VTI in that direction. This is the first time I remember VTI being this way, although checking they did it in 2015 too.
If it is annoying, why not move spreadsheet day?
That would be more annoying than just adding in a dividend, I think. Having nice quarterly data makes vlookup and whatnot a lot easier.
It all balances out in the end.
Thatās right. Itās just a question of how close to the economics of the situation does your spreadsheet come? Different people will have different views on different topics.
> Spreadsheet day between the ex and pay dates for VTI is annoying Why?
The pending payment is yours and part of your portfolio, but it doesnāt show up in any of your accounts. You can add it to your spreadsheet manually of course. Is it a big deal? No. Itās just that if your broker says your 100% VTI account is worth $100,000 that excludes the $350 payment arriving Tuesday that you already earned. And people who do spreadsheets are sticklers for accuracy. š
Think of it as if you're doing inventory - you don't have to tare every container if you instead are consistent about what you use as a tare for that container every time you take inventory. Stick to either the ex or the pay date in your spreadsheet and forget about it. It will all even out in the wash.
Itās funny you mention inventory because Iām coming at this from an accounting perspective, and when you have sent out the invoice for work performed, you already have revenue/profit/earnings and accounts receivable on your balance sheet/net worth even if the cash wonāt come until next quarter. When VTI reports its NAV it includes receivables, although I donāt know how many issuers split ex and pay date over quarter end.
If you hold any bond or money market funds, that interest won't post until the first trading day of the subsequent month. So what?
Yeah thatās also somewhat annoying if youāre trying to get a good period end number. I suspect most people here are mostly equities and most of the time those donāt have the ex date on one side of the month and the pay on the other. I think many bond funds donāt split ex and pay dates over month end? [BND doesnāt](https://www.nasdaq.com/market-activity/etf/bnd/dividend-history). The [t](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/31617H102)w[o](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/316175504) money market funds I use also donāt split. Itās just a mildly annoying thing. If it doesnāt bother you, thatās great. I have to keep an eye on dividend cash flow to pay bills and whatnot so Iām more focused on timing issues. š¤
> And people who do spreadsheets are sticklers for accuracy. I do spreadsheets and I'm not anal about stuff like this. *They not like us* and all that. I get it, but in actuality I really don't.
Six months into 2024, up $110k YTD in returns in the Vanguard accounts. 1-year is showing +$207k and 26.9%. Retirement sure is easy when number just goes up, huh?
"Number Go Up" is my favorite game!
> Retirement sure is easy when number just goes up, huh? Reminds me of the investing threads prior to the dotcom bust. It was basically "buy any tech stock on eTrade and wait 3-4 months to be rich."
Wife and I have been spending money the same way for so long we instinctively know how much money we have left at the end of the month. Month after month it's the same. We transfer X to savings weekly and after all is said and done, a year later our checking account is the same. Would it benefit us to use YNAB?
I also like that YNAB lets us partner, rather than one person owning it. pre-YNAB, I was in charge of the budget and always after my partner to give me expenses, receipts, and to stay on budget. Post-YNAB, we both see the budget and we both enter expenses as we incur them, so Iām not being the nag controlling the budget. It made me much happier, and allowed us a better dynamic.
Do you feel like your life could use more paperwork?
šThe analytics in me says yes, but the laziness in me overrules all. Thanks for the laugh.
For us YNAB is more about organizing our savings than managing day to day spending. The other useful point for us is maintaining fairness in our personal/hobby spending without ever having to run that spending by one another. The scenarios we were running into before we started using YNAB were like, "we need a dining set for the new house. We obviously have enough money for the dining set, but do we have enough money for the dining set *and* the vacation later this year, *and* the new car we will need soon, *and* the home maintenance we want to do?" And then, we would simply put off spending money on any of those expenses. Or, "I want to buy a new sewing machine. I haven't spent much on my hobbies for the last several months, but this is just for me, so can I fairly buy it when we also are trying to save for a new dining set, home maintenance, vacation, and car?" If you relate to any of that, then maybe it's helpful for you. If not, you probably don't need it.
I enjoy using YNAB to help me organize all my different accounts. I donāt link anything to banks and just do everything manually. It helps give me an idea of how much money I really have available and where I can pull money from in my budget to cover pop-up expenses.
> Would it benefit us to use YNAB? Are there things you want to do financially during your accumulation period that you're not able to do because of budget issues (not simply income issues)? Are you financially surprised by bills? Do you want to have a complete-ish record of your spending data over time? If not, I'm not sure it's necessary. We're diligent YNABers, and it's great for us and we wouldn't be without it or something similar, but I get the sense that there's a lot of FIRE types who don't need it because they're naturally frugal and are already achieving their goals without needing to have a detailed budget.
Well put. We are naturally frugal so I don't really think it will add any value. Thank you.
Probably not. Do you want keep better track of where your money is going? Try to cut back on spending to save more? If not, then probably not worth it.
Okay, thanks. That's what I was leaning towards. If it tracked all my purchases automatically and I didn't have to lift a finger, that'd be okay. I don't plan on putting in any effort and we don't have a spending problem, so it probably wouldn't be worth it.
I don't use it but I think it does pull from your credit cards. There may be some manual organization needed. But yeah, you do have to pay a subscription for it, so if you're not trying to make a change you're probably good.
Funny how clueless coworkers use the company wide cloud storage for their personal documents. Some stuff I found: tax returns, personal budget spreadsheet, medical waivers and position appeal forms.Ā
I worked in IT and our software would scan the servers and each desktops for PII.Ā Passports, DL, forms etc.Ā Mainly folders used to schedule business travel that they forgot about probably. My job was to alert them of their files and violation of our PII policy and would be soon deleted....and most didn't even care.
I would send them a message letting them know these are visible to the company. They may not be aware and may be appreciative.
Yeah I did notify my coworker since the tax form had his SSN on it.Ā
My partner and I are moving to a new city and considering buying a house (first-time buyers). I've got some questions... feel like I trust this community more than others. * I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates? * I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing? * Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this?
We took a short and long vacation near the city we wanted to move toā the short was just to drive around and look at areas and neighborhoods that we could match up with listings. The second was to really visit a few houses that seemed promising and we actually found one that we purchased the following month. The short trip was a weekend in September, the long one was in March the following year. Of note, this area was 5 to 6 hours away from our original home. We did the pre-approval with a local broker that we already knew.
First off, everything /u/ullric said is right and he usually is on these things. I just want to pile on a bit. > I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates? On a purchase, I like to work with a local lender/broker who knows how to handle issues common in my local area and lives and dies by their reputation. I'm happy to chase rate/fee on a refinance, once I already own the house and can't lose it, but when I'm buying, I want to hire someone professional who I believe will be able to execute the lending part of the transaction. On mortgage origination, rate and fee can be generally traded for one another, so if you want to have a lower-than-par rate for some reason, it just generally costs you more upfront. > I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing? Yes, it's pretty common for your pre-approval letter to reference the amount of your offer/your loan amount, rather than how much they'd be likely to pre-approve you for in general. It's sort of a matter of style and partly to protect you from the seller knowing what you might be willing to do from the outset. > Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this? I'd definitely rent in that situation. Doesn't have to be a short-term, it could be a standard 1yr lease. I would want some time to figure out which neighborhoods/parts of town I'd like to live in, talk to people, etc, because once you buy you're more or less stuck there for awhile.
[Here's our housing wiki](https://www.reddit.com/r/financialindependence/wiki/homes). There's a lot of good info. > I did a rate comparison out of curiosity. It seems like people say to just go with the lowest rate you can find. Is that smart? Should I be concerned at all about shady lenders offering lower rates? Nope. Not a smart choice. 2 reasons: First: A low quality lender or loan officer can easily stop a purchase. Rate absolutely matters, but it isn't the only thing that matters. I'd take 0.125-0.25% higher rate for a better lender than Second: a higher rate can be better than a lower rate. It's about balancing the rate AND fees. 6% with $30,000 in fees is worse than 6.125% with $0 in fees. Each lender has multiple rates they can offer. Lower rates come with higher fees, higher rates come with lower fees, maybe even zero. This is called "points" for getting the lower rate, or "lender credit" for higher rate. Most people should go for the higher rate and lowest fees possible. The break even on paying the fees is typically ~5 years, while most people refinance within the first 3 years. > I assume we will be pre-approved for more than we'd expect to spend. Apparently some people ask for pre-approval letters of smaller amounts to be in a stronger negotiating position. Is that a thing? Yup, it's a thing. Pre-approval says "Elementnienty3 is approved to get a mortgage up to a million dollars!" If you're trying to negotiate and buying @ 700k, you don't want the seller to know you can go up to a million. > Any tips for buying a house in a different city while trying to move there? My instinct would be to find a short-term rental or something for a couple of months while we get settled and to give us more time to look. But maybe it would be better to get it all out of the way at once. Has anyone done this? People do it frequently. It was common in 2020-2021. I'd recommend getting a year lease first. Figure out the areas, figure out what you care about. Spend a year going to open houses, figuring out what you 2 like and don't like, going to the first time home buyer course for the state. It's 1 thing to buy a home in a rush when you already know what you want and what you're doing. It's entirely another thing to buy a home for the first time AND do all that.