| help deciding the future of my money |
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| What should i do with my money? |
| Pay in cash for a house (little or no mortgage) |
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0% |
[ 0 ] |
| max out a retirement portfolio |
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0% |
[ 0 ] |
| find a mortgage to pay for a house |
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0% |
[ 0 ] |
| forget the house and save up my money |
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0% |
[ 0 ] |
| buy a rental and rent it out while i don't need a place to live |
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100% |
[ 1 ] |
| combination mortgage and max out retirement |
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0% |
[ 0 ] |
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| Total Votes : 1 |
xpcpsx
New Member
Cash: $ 0.65
Posts: 3
Joined: 04 Jan 2011
Location: Los Angeles
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| help deciding the future of my money |
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i'm going to ask for some advice on how to handle my money. I know i will get a variety of responses so please state some facts that i can check up when giving suggestions.
Bottom Line:
I'm 27 making about 130k and i'm looking to use my money wisely. I used to have mutual funds and such but opted to cash out during the 2008 crisis (may or may not have been a mistake but it's done and i really needed the money as a starving student). Some things to keep in mind: I really want to go back to school so obviously i would take a hit in income. My job is extremely stressful and not easy to do which is why i make 6 figures (basically means I don't know how long i can do it for).
Here is my income to debt ratio.
Currently i own my own car with normal expenses (gas, insurance)
Daily cost stuff (including cell phone but excluding food is about a couple hundred a month)
All in all...I'm banking about 90% of my income at about 9k/mo give or take a couple hundred bucks. My big questions are:
Should I try and buy a first time house especially with housing prices so low? At what cost should I buy? Currently I have close to 100k saved up but obviously i'm not willing to drop all of my money into a house at once. If i mortgage what should i look for (keep in mind i might want a mortgage that i can handle while being a student)?
My next biggest question is retirement. How should i start saving for this? I've had a mutual fund before and i think the biggest mistake i made was pulling out of it although i did make a decent amount of money. My company does offer 401k but not match/vesting until 3 years i think (i might stay in the industry i am in but not with this company). I know that the max contribution to 401k right now is 16.5k and Roth IRA is 5k (i believe i still qualify for the max amount on Roth IRA due to the fact that i think around 90k of my income is non-taxable). If i should invest in my retirement should i max it out this year? I am comfortable with dropping 21.5k into it. Do you think this is wiser than putting more down payment to a house?
Obviously, i haven't thought of all the options or all the avenues...please suggest to me any other ways of both keeping my money/making my money earn for me.
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Tue Jan 04, 2011 6:32 pm |
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oldguy
Senior Member
Cash: $ 309.30
Posts: 1481
Joined: 21 May 2006
Location: arizona
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quote:
due to the fact that i think around 90k of my income is non-taxable).
No, only about $8000 is non-taxable if you are single.
What is your major? And what degree are you going back for?
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Tue Jan 04, 2011 11:04 pm |
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xpcpsx
New Member
Cash: $ 0.65
Posts: 3
Joined: 04 Jan 2011
Location: Los Angeles
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my income isn't taxable because it wasn't made in the US. I was a psychology major but i'm thinking about changing it to a hard science or maybe some sort of engineering degree.
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Wed Jan 05, 2011 5:31 am |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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Your income made outside the U.S. might be taxable if brought back into the U.S.; depending where and how earned and other devious and arcane IRS rules instituted to not allow any pennies to slip out of their grasp. That part of the tax code I'm not too familiar with, and if you aren't as well, it might be something you want to look into before assuming it's not taxable. 
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Wed Jan 05, 2011 7:49 am |
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xpcpsx
New Member
Cash: $ 0.65
Posts: 3
Joined: 04 Jan 2011
Location: Los Angeles
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it's taxable after 91k...either way my take home money each month is around 9k so i'm looking for advice as to where to put the money.
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Wed Jan 05, 2011 7:59 am |
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oldguy
Senior Member
Cash: $ 309.30
Posts: 1481
Joined: 21 May 2006
Location: arizona
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quote:
either way my take home money each month is around 9k so i'm looking for advice as to where to put the money
I like your plan to get a science degree - pysc BAs aren't worth much these days, for some reason it was trendy a few yrs ago to be a pysc major, now the market is flooded. Conversely, the applied skills - engineer, accountant, nurse, teacher - are all in demand, especially for those with math skills.
The KEY for you is to put your $9k/m into 10% to 12% products - in 20 years at 11%/yr it will be $7,700,000 - not bad at age 47. Don't get wrapped around the axle with the mechanics of taxation - the three account types are taxable, posttax (Roth), and pretax (401k). But whether you put the whole $7.7M in one type or split in 2 or 3, it is still $7.7M. When you pay lots of tax, that means that you made lots of money, you never lose money by paying taxes.
The successes over the past 40 yrs were those who 'bought to hold' - ie, they invested incrementally (monthly, annually) and accumulated steadily, no 'market timing'. Just bought something like an SP500 Index Fund and added steadily.
Ironically, human intuition fails you in market timing. It seems so simple to sell in a downturn and buy back near the bottom. But almost no one does it - people "wait for the market to recover so that they can get back in" - think about that, they wait for it to go up so that they can buy? In one 23 yr study, clients who held steady got a >12%/yr return for the 23 yrs - the clients who sold when the market failed and bought back later got a 2.8%/yr return for 23 yrs - ie, they got 2.8% in a 12%/yr market environment.
So - consider a Total Market Index Fund, the SP500 Index Fund, or a Target 2050 Fund. I've never had one, but if I was young I would probably use a Target Fund (they are a fairly recent product, maybe a decade).
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Wed Jan 05, 2011 3:32 pm |
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