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Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I did look, so apologies for another FSA question. I need to finish the purchases today, and I’m the dummy who put it off. I have a little money left to spend, and an FSA card that Amazon recognizes for those kinds of expenses. There are specific items I want, that I think they should be listed as FSA/HSA eligible (filters for a CPAP machine, for example) but they are not. Similarly, I’d like a blood pressure monitor, but there are some models listed as eligible, and some that aren’t; the one I want isn’t eligible and the card rejects the purchase. Weird. 1) is Amazon the true decider of what is eligible vs what isn’t? A personal bp monitor is a personal bp monitor, regardless of manufacturer, right? 2) Assuming I make the purchase with a personal account and then request reimbursement, what happens if the item(s) exceed the remaining balance - will I get at least reimbursed to the balance, or only to the items that stay under? Ie if I purchase 101.00 (including sales tax) of items but only have 99.00 in the balance, will I be reimbursed 99, or something less, or not at all on a single receipt? Happy new year all, thank you. ### Answer: Happy New Year! No worries about the questions, that's what I'm here for! 1) While Amazon does have a list of FSA/HSA eligible items, they are not the ultimate decider. The IRS determines the eligibility of these items. That being said, each FSA administrator can impose additional restrictions on what is and isn't eligible. So, a blood pressure monitor would typically be considered a qualifying medical device, but the specific model might not be listed as eligible on Amazon due to these restrictions or possibly due to a lack of necessary documentation from the manufacturer. 2) If you make a purchase with a personal account and then request reimbursement, the amount you get reimbursed will depend on your FSA balance. If you have $99 in your FSA and you submit a claim for $101, you will receive a reimbursement of $99 as that's all the money available in your FSA. However, it's important to ensure the items you're purchasing are indeed eligible for reimbursement before doing so. As always, keep all your receipts and explanations of benefits associated with your FSA expenses. You may need them for your records or in case of an audit. It's also a good idea to check with your FSA administrator to confirm the eligibility of items and the process for reimbursement. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I am currently putting money each pay in to a savings account for my son, but the interest is minimal. Should I put this into a PA 529 or a high yield savings account? This money will be for him later in life naturally. ### Answer: Both a 529 plan and a high yield savings account have their own unique advantages and considerations. A PA 529 plan is a tax-advantaged savings plan designed specifically for future education costs (K-12 tuition, post-secondary, etc.). The funds in the account grow tax-free and withdrawals for qualified educational expenses are also tax-free. Moreover, depending on your state, you might also be eligible for state income tax deductions for your contributions. However, the funds in a 529 plan are meant to be used for educational expenses. If the money is withdrawn for non-educational expenses, it will be subject to income tax and an additional 10% federal tax penalty on earnings. On the other hand, a high-yield savings account is more flexible. It isn't tied to educational expenses, so it can be used for anything. While it doesn't have the same tax advantages as a 529 plan, it might provide a slightly higher interest rate than a regular savings account, depending on the bank. In conclusion, if you are sure that the funds will be used for your son's education, a 529 plan might be more beneficial due to its tax advantages. But, if you're unsure about the purpose of the funds, or if you think they might be used for non-educational expenses, a high-yield savings account would give you more flexibility. It's also worth noting that you can use a combination of both. You might consider speaking to a financial advisor to determine the best plan considering your specific circumstances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi Everyone, I just started a new job and have some questions on where I should put my 401k allocations. I was hoping to put some in VTSAX and SP500 index funds, but I'm not sure which ones they are and how much of a percentage I should put in each. If you could point me in the right direction, I would greatly appreciate it. I'm 44, with about 100k in securities and just 36k in 401k as I have been overseas for the last 15 years. Would like to do a RothIRA but I think I make too much money to do that. Here are the fund names: Target Date Income Fund Target Date 2025 Fund Target Date 2030 Fund Target Date 2035 Fund Target Date 2040 Fund Target Date 2045 Fund Target Date 2050 Fund Target Date 2055 Fund Target Date 2060 Fund Target Date 2065 Fund Short-Term Fixed Income Fund Stable Value Fund Government Inflation-Protected Bond Fund Core Bond Fund Intermediate Bond Fund High Yield Bond Fund Large Cap Value Index Fund Large Cap Value Fund S&P 500 Index Fund Large Cap Growth Index Fund Large Cap Growth Fund S&P MidCap 400 Index Fund Small Cap Index Fund Small Cap Core Fund Small Cap Blend Fund International Large Cap Value Fund International Large Cap Index Fund International Small Cap Index Fund Emerging Market Equity Index Fund JPMorgan Chase Common Stock Fund &#x200B; Thanks in advance! ### Answer: Hello, Considering your age and the amount you have in securities and 401k, you should aim for a diversified portfolio with a mix of stocks and bonds that aligns with your risk tolerance and time horizon. Here's a simplified breakdown for you: 1. S&P 500 Index Fund: This fund is similar to VTSAX as it tracks large-cap U.S companies. VTSAX, however, tracks the entire US stock market, including small, mid, and large-cap companies. If you want to mimic VTSAX, you could consider allocating a portion to the S&P MidCap 400 Index Fund and Small Cap Index Fund as well. You might consider putting a significant portion here, say 50-60% of your 401k. 2. Target Date Fund: This is a fund that automatically adjusts the mix of stocks and bonds over time. The fund is managed to become more conservative as it approaches a specific retirement date. You might choose your target date fund based on your expected retirement age. For instance, if you're 44 now and plan to retire at 65, the Target Date 2042 Fund would be close. If such a fund isn't available, you might consider the Target Date 2040 or 2045 Fund. 3. Bond Funds: You can allocate some portion to bond funds to balance the risk from stock funds. You can consider Core Bond Fund, Government Inflation-Protected Bond Fund, or Stable Value Fund for this purpose. You might consider putting 20-30% of your 401k here. 4. International Funds: To add some global diversity to your portfolio, you could invest a portion in the International Large Cap Index Fund and Emerging Market Equity Index Fund. You could allocate 10-20% of your 401k here. To start, you could have a ratio of 60% stocks (with a mix of large-cap, mid-cap, and small-cap), 20% bonds, and 20% international. However, it's important to regularly review and adjust these percentages based on your personal circumstances and market conditions. As for the Roth IRA, you're correct that there are income limits to contribute directly. However, you might be able to contribute to a Traditional IRA and then convert it to a Roth IRA, a process known as a "backdoor Roth IRA". Please consider this as a general guideline. It's important to have a detailed discussion with a financial advisor who can provide personalized advice based on a thorough understanding of your financial situation, risk tolerance, and retirement goals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hey guys - I’m looking to upgrade my savings account to an HYSA. After doing some digging, there’s two finalists that I like: Marcus by Goldman Sachs - 3.3% APY - large institution that I have positive experiences with already - funds available same day if need be - fabulous UX (I work in UX so that’s important to me) SalemFive Direct - 4.1% APY - small bank in Salem, MA that I’ve never worked with before (hence my anxiety about utilizing them as my emergency fund) - funds are slow to transfer if in a pinch and they don’t even have an app So really for me it’s a question of which route is better for me…I feel way more comfortable with GS but that 4.1% SalemFive offers is tempting. I tend to be risk averse to a fault so I’m trying to gauge what’s worth taking a little more risk here. Btw, they’re both FDIC insured with no minimum length requirement for either account. What would you recommend? ### Answer: Choosing between the two would depend on your priority. If your main concern is the highest possible return on your savings, the SalemFive Direct HYSA clearly has a higher interest rate. It's worth noting that while the funds take longer to transfer, they are still accessible. The lack of an app might be inconvenient, but it doesn't prevent you from accessing or managing your account. On the other hand, if convenience, speed of fund access, and a better user experience are important factors for you, then Marcus by Goldman Sachs might be the better choice. The lower interest rate is a trade-off for better service and easier account management. Since your comfort level is also a factor, and you've had positive experiences with Goldman Sachs before, this option might be more appealing to you. Remember, these rates aren't fixed and can change over time. What's most important is to choose the account that best fits your needs and comfort level. Please consult with a financial advisor before making any decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi there PF — Throwaway account here. I was hoping to get some alternative perspectives on a major home expansion that I am considering undertaking and the future implications/options of having a significant amount of equity tied up in my primary residence. Situation: Current home is too small for long term growing family. A major expansion project to increase the square footage by ~30% would allow us to stay long term. Highly desirable area, so the neighborhood certainly can ‘support’ it from a long term financial perspective. Moving is not seriously being considered as we love the neighborhood and replacing current mortgage with a new jumbo at todays rates is not ideal. Current home value : ~$1.3M Current mortgage: $950k @ 2.99% 30Yr Fixed Project Cost: $450k. Post completion, house priced at conservative comps will likely be worth ~$1.8M. Dilemma: I am highly considering funding this project in cash. Bonus points for thoughts on financing options for ~$100k of the total project costs. Assuming all cash, I would have about $690k (original down payment + project cost) tied up in my primary residence. Emergency funds, retirements savings, and post tax savings accounts wouldn’t be impacted by funding in cash. The main opportunity cost is having the project funds as dry powder for other investment opportunities. (1) What potential downsides should I consider with having so much equity tied up in my main residence? And is this crazy 🙂 (2)Any future options for liquidity of that equity other than a HELOC or refinance?Really would hate to replace the 2.99 with a larger note at a much higher rate… Really appreciate any thoughts on this scenario and happy to answer questions! ### Answer: Hello there! You've asked some very thoughtful questions. Here's some guidance for you: 1) Having a significant amount of equity tied up in your primary residence: Equity in your home is not a liquid asset and it's not an asset you can easily turn into cash should you need it. While home equity can be a great way to finance big-ticket items like a home expansion, it does come with risks. Home values can fluctuate based on factors beyond your control, and if the market declines, you could lose a significant portion of your investment. Another point to consider is that having too much of your net worth tied up in your property could limit your ability to invest in other areas, such as the stock market or retirement funds, which may offer higher returns. It also limits your ability to diversify your portfolio, which is typically a key strategy in managing financial risk. 2) Options for liquidity: You mentioned HELOCs and refinancing, which are indeed the most common ways to tap into home equity. Another option you might consider is a home equity loan, which works like a traditional loan and comes with a fixed interest rate. Another option could be a cash-out refinance. This is where you refinance your mortgage for more than you owe and take the difference in cash. You would still have just one monthly mortgage payment. However, you'd be extending the amount of time that you're in debt for your home. Finally, you could consider a reverse mortgage, but these are typically recommended for older homeowners who have no other sources of income. They can be risky and come with high fees. 3) Funding the project: While you have the option to fund this project in cash, which would not affect your emergency funds and retirement savings, it might make sense to explore financing options. This could help you preserve cash for other potential investment opportunities or unforeseen expenses. A home equity loan or a construction loan could be potential options for financing the $100k of the total project costs. The rates on these loans are often quite competitive, especially if you have a good credit score. Please note that while these are general guidelines, it's always best to consult with a professional financial advisor who can look at your individual circumstances and provide advice tailored to your needs. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I'm curious how folks here process saving for college and balancing out giving children options/risks of over-saving/valuing private colleges. My partner and I are fortunate to have a good, steady income and are currently maxing out our tax-protected retirement accounts. Both of us were also lucky enough to graduate college without any significant debt (one of us did four years at a private college, the other did 2 years private/2 years public) thanks to parental support. On one hand, we want to give our children the same opportunities but on the other hand, looking at projected costs it's hard to fathom that a private school is providing adequate value for the cost difference. I've put together a projection in excel to help us plan for our 529. If our kids follow the standard timeline (i.e. no gap years), they'd be entering school in Fall of '29 and Fall of '31. By my projections the future value for four years of private school would be around $440K (1st child) and $465K (2nd child) while public school would be around $160K/$170K. If we were to fully fund each child's 529 to plan for private school and they attended public school instead, each of the 529s would be left with over $325K after graduation. Obviously there are options for that leftover money including graduate school, rolling it over into their own children's (or other relative's) 529s, and now rolling it into Roth's, but on the other hand, $650K is a significant chunk of change to wrap up in an account where non-qualified withdrawals are penalized. Anyway, I'm not exactly asking "what should I do" because I realize this is about personal values more than anything else, but I am curious - how have other people processed making this decision? ### Answer: Planning for your children's education is a significant financial decision and you're right that it involves personal values as much as it does financial strategy. Here are a few strategies to consider: 1. Balanced Approach: Instead of fully funding the 529 plan for the projected cost of a private college, you could aim to save enough to cover the cost of a public university. This provides a base level of support. If your children decide to attend a more expensive school, they could supplement your support with scholarships, grants, work-study, or loans. 2. Flexible Saving: Consider saving in accounts that provide more flexibility. While 529 plans offer tax advantages for education expenses, they impose penalties for non-qualified withdrawals. A Roth IRA, on the other hand, can be used both for retirement and education expenses. Contributions can be withdrawn at any time without tax or penalty, and earnings can be withdrawn tax-free for education expenses. 3. Encourage Independence: Encourage your children to take ownership of their education. They can contribute to their 529 plan from part-time jobs, apply for scholarships, or choose a more affordable school. This can instill a sense of responsibility and help them appreciate their education more. 4. Consider Post-Graduate Studies: If you're concerned about over-saving, remember that 529 plans can be used for post-graduate studies. If your children decide to pursue further education, having funds set aside can be a big help. 5. Transfer Funds: Unused money in a 529 plan can be transferred to another beneficiary. If one child does not use all the money, it can be used for the other child or even for a future grandchild. 6. Invest in Your Retirement: It's often said that you can borrow for college, but you can't borrow for retirement. If you're already maxing out your retirement accounts and have extra to save, you might consider putting more into a taxable brokerage account. This gives you more flexibility and can provide a safety net for unforeseen expenses. Remember, everyone's situation is unique. It's also a good idea to discuss your plans with a financial advisor who can provide personalized advice based on your circumstances and goals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hey guys, I'd just like to explain my parents' retirement situation here and get your suggestions on what I should do to best help them in this crucial point in time. My mom is a stay at home mom, and my dad is in his mid-40s and earns a high six-figure base salary, with bonuses and stock options on top of that. His 401k balance is in the $100k-s, his IRA in the mid $50k-s, and that's about all of the retirement savings they have between the both of them. He also has two car loans he's in the process of paying down (a brand new spanking Tesla and a Honda Odyssey) and a 30-year mortgage which started in 2020. I've also personally witnessed the lifestyle inflation in our home since his income started rising, from all the new cars and computers and stuff that he buys. I really worry that he isn't putting enough in savings to have a modest retirement and that my parents' scenario might pose a financial risk to me as well in the future, as I would have to support them. I am okay with doing it, but I would rather not (especially considering how high his income is right now, and his ability to save more). I advised him to see a financial planner and discuss his retirement plans with them broadly, but what came out of this was that he visited a Fidelity branch one evening and asked really specific questions about picking ETFs and such. He also does his taxes by walking into an H&R Block branch, where they pretty much just press a couple buttons on their computers like they're trained to do, and I worry that he's not exploiting all the ways to reduce taxes that may be available to him... backdoor roth IRAs, a 529 for my high school age brother, etc. What I ideally want for him is to have an ongoing relationship with a financial planner who is a fiduciary and/or a CPA, where they could properly go over his retirement planning with him, find all the ways to stash away money for the future, and generally make the most of his current situation (his older age + high income) such that him and my mom could have a solid retirement. In the next few years, I may also need to estrange from them due to personal reasons, and in the event that it happens, I want to rest assured that they will be doing okay financially and not be troubled. What can I do here? Who should I set him up with, that could go over his retirement stuff with him and work with him on an ongoing basis to help out with this stuff? ### Answer: Given your father's high income, it's crucial that he maximizes his retirement savings and reduces his tax liability. A Certified Financial Planner (CFP) or a CPA who specializes in retirement planning would be beneficial. Here are some steps you can take: 1. Research and Referrals: Start by finding well-rated financial planners and tax advisors in your area. You can do this online or by asking friends, family, or colleagues for referrals. Look for professionals who have a CFP or CPA certification. 2. Fiduciary Advisor: Ensure that the advisor is a fiduciary, meaning they are legally obligated to act in the client's best interest. This will help to avoid any conflicts of interest. 3. Interview Advisors: Schedule consultations with these advisors. During the consultation, ask about their experience with high-income clients, their approach to retirement planning, and how they charge for their services. Some advisors charge a flat fee, while others charge a percentage of the assets they manage. 4. Tax Planning: Since your father has a high income, tax planning should be an important part of his retirement strategy. A tax advisor or CPA can help him take advantage of tax-saving opportunities like backdoor Roth IRAs, 529 plans for your brother's education, and deductions or credits he might be eligible for. 5. Present Your Findings: After you've done your research, present your findings to your father. Explain the benefits of having a professional manage his retirement planning and taxes. Encourage him to meet with the advisors you've shortlisted, and help him prepare a list of questions to ask during the consultation. Remember that ultimately, the decision is up to your father. He needs to be comfortable with the advisor and willing to follow their advice. It's great that you're looking out for your parents' financial future, but they need to be actively involved in the process as well. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: 401k wellness check I’m sure this has been asked before but I recently did a check on how my overall finances are doing. I’ve googled and researched but I was wondering other opinions on my 401k investments through fidelity. They are as follows: Dryden s&p 500 index fund (is platform) lathe cap blend .86% expense Guaranteed income fund- stable value Large cap growth II fund- managed by alliance Bernstein- 1.262% expense Lifetime balanced fund- allocation 50-70% equity .965% expense My company contributes 7% which goes 70% to the Dryden and 10% each other fund I contribute 16% to everything but the Dryden, I’ll be increasing to 18% in the new year. Overall in the past two years I’m down -5% according to empower/fidelity I have no credit debt- a large personal loan I just received this week ~50k but half will be paid upfront next week 180k mortgage on my house which I pay $300 extra a month. $2000k total a month 15k in high risk investment- crypto (I know I know) I assume this money is gone during budgeting This year I’ll open a Roth IRA, move 6months of emergency money to a savings account and pay down my personal loan as much as I can. Total income: 110k Home value: 400k Truck: 50k Thanks for your thoughts and comments, much appreciated. ### Answer: Based on the information you've provided, here are some thoughts: 1. 401(k) Allocation: Every investor's situation is unique but generally, having a diversified portfolio is important. Your current allocation seems to be diversified across different fund types. However, the expense ratios on some of your funds are quite high; especially the Large Cap Growth II fund and Lifetime Balanced fund. You may want to consider reallocating your contributions to funds with lower expense ratios, if available. Also, your overall performance being -5% over the past two years is somewhat concerning, given that the stock market has generally been performing well during this period. This could be due to the specific investments in your 401(k) or because of the market fluctuations affecting your particular funds. 2. Roth IRA: Opening a Roth IRA is a good move. It offers tax-free growth and tax-free withdrawals in retirement, providing more flexibility in your retirement income planning. 3. Emergency Fund: Moving 6 months of emergency money into a savings account is a smart decision. It's important to have an easily accessible safety net. 4. High-Risk Investments: It's good that you consider your $15k invested in crypto as money that might be lost. While high-risk investments can potentially bring high returns, they can also lead to significant losses. 5. Debt: It's good that you're aggressively paying down your mortgage and planning to pay down your personal loan. Just make sure the interest rate on your personal loan isn't higher than what you could earn if you invested that money instead. 6. Future Contributions: Increasing your 401(k) contribution to 18% is a good move, as it allows you to take advantage of the tax benefits and potentially get a larger employer match. Overall, it seems like you're on the right track. However, it could be beneficial to speak with a financial advisor to ensure your investments align with your long-term goals and risk tolerance. They can help you devise a plan to manage your 401(k) and other investments, taking into account your entire financial situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have been managing my elderly mother-in-law’s finances for a year now, after her husband passed away. He did the majority of the bill paying so I took over the job to help her out. They had no savings and were both reliant on social security as their sole income. With his passing, she now only makes about $950 from social security each month. She drains her bank account to zero whenever the social security payment hits each month and barely squeaks by. For Christmas, she decided to buy us and several family members gifts from the Montgomery Ward catalog using their credit. My mother in law is a very nice woman, but I guarantee she was lured in with a “Buy Now, Pay Later” scheme without thinking through the details of interest rates, etc. Since we manage her finances, we asked to see the bill so we could get it paid for her and balance her monthly budget. She charged nearly 500 dollars to this credit account. She also did not hand over the info until we asked and she already missed this month’s payment due date. Apparently they want her to pay 25 a month plus 25.99% interest for the next 17 months or so. Honestly, her budget is down to zero each month- she cannot even afford the 25 a month. I would imagine the bill goes to collections eventually if she doesn’t pay. (I am pretty clueless with this as I have never carried a balance on a card or anything like that) Can a collection agency garnish her social security? She has a bank account that she basically only uses to cash out her social security…she doesn’t own a car or any property. What are the consequences if this bill goes unpaid? (We don’t care if her credit is trashed- we don’t want her in another situation like this.) She claims she did not provide her bank account/debit card info when applying for the credit but not sure what to believe- she will fib to us sometimes. Unfortunately she believes it’s the Montgomery Wards of the past and doesn’t believe us when we tell her it’s an overpriced/scammy online company now. ### Answer: Firstly, I'm sorry to hear about your situation. It's challenging, especially when dealing with financial matters for the elderly. To answer your question, typically, Social Security income is protected from most creditors. According to the U.S. Department of Health & Human Services, these benefits are protected from garnishment, arrest, or attachment under the law. However, there are some exceptions for certain debts like federal taxes, child or spousal support, and some types of student loans. But in general, debt collectors, like those that would be collecting for Montgomery Ward, can't take Social Security benefits. That being said, if the Social Security money is directly deposited into her bank account, the bank is required to protect 2 months' worth of benefits from garnishment. If she has more than 2 months' worth of benefits in her account, the bank could potentially freeze the account and allow the creditors to take funds above that amount. In terms of consequences of not paying the bill, it can lead to damage to her credit score, increased interest and late fees, and potentially legal action. However, as you've mentioned, if she doesn't have any assets and her only income is Social Security, she may be considered "judgment proof," meaning even if a creditor sues and obtains a judgment against her, they may not be able to collect anything. It would be best to consult a financial advisor or an attorney who specializes in elder law to guide you through this process, so you can understand all potential consequences and options. They may recommend options like negotiating with the creditor, setting up a debt management plan, or in extreme cases, considering bankruptcy. In the future, to prevent situations like this, it might be helpful to have a conversation with her about her financial decisions, and potentially consider a financial power of attorney if she's agreeable to it. This will allow you to make financial decisions on her behalf and prevent her from falling into such traps. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: 25M, AZ. I pay $850 to my parents for car insurance and help with the mortgage. To preface, I own the house with my sister as we purchased it in 2018 before prices skyrocketed. I was barely in college and now I’m making 85k pre tax, with a likely raise to 100 in the next 5 months. The area isn’t too good (high crime) but I haven’t been too bothered. I cook for myself, buy my food, do my own laundry, fix my own car (oil changes, belts, brakes and gaskets so far), and basically just go home to sleep. I don’t really bother my family much but I feel like I’m running out of space for myself. I work from home on a hybrid schedule and my office is basically my room so I have two PCs (personal and work) and a twin bed. I have a gf but she recently moved out of state to finish her education there so moving there would be a bit much after all the winter storms and my distaste for snow. My biggest concern is space for both an apartment and my house here. An apartment would probably restrict car work that I can do but I have no space at home with just my room and the backyard. Also, my siblings are all lazy and don’t work. My parents would barely make it paying a 1300 mortgage and more in other bills. I’m not paying off a car or loans. I have a stellar credit score that I would like to use on a car but I need a place first. Not sure which is the best route, move out and have more space (except for car liberties) or stay at home and pay a bit under the going rate for what I would pay with a roommate and have more car liberties ### Answer: This is a complex situation with a lot of factors to consider, so let's break it down a bit: 1. Space: It sounds like having more personal space is important to you, and it's affecting your quality of life. That's a valid concern. Renting an apartment can indeed provide you that space but it might limit your ability to work on your car which is something you seem to enjoy and also saves you money. 2. Family Obligations: On the other hand, you seem to be concerned about your family's financial well-being if you were to move out. This is also a valid concern, but it's important to draw boundaries and ensure that you're not overextending yourself or sacrificing your own well-being for others, even if they are family. 3. Financial Impact: You're in a good position financially, with a high salary, no debt, and a strong credit score. This provides you with some flexibility in your decision. However, remember that renting an apartment will add a significant expense, and you'll still have to continue contributing to the mortgage and other home bills. 4. Future Plans: You mentioned a girlfriend who lives out of state and also a potential raise. Both of these could impact your decision. If there's a possibility of you moving to be with your girlfriend in the future, you might not want to commit to a long-term lease or purchase a new car right away. Similarly, if you get the raise, that might make renting an apartment more affordable. Ultimately, the decision comes down to what will make you happiest and most comfortable in the long run. Here are a couple of potential options: - Option 1: Move out and rent an apartment. This would give you more personal space and could potentially be done in a way that still allows you to help your family financially. You might need to find a place that allows some level of car work, or perhaps find a local garage that rents space. - Option 2: Stay at home and continue as you are. This would allow you to save money and continue helping your family. However, it doesn't solve your space issue. You could consider investing in a shed or some kind of outdoor building where you could work on your car and have a bit more personal space. - Option 3: Consider a compromise. Perhaps you could rent a small office space nearby to use for your work-from-home days. This could give you a bit more space and separation from your home life, without the full expense of renting an apartment. Lastly, it might be a good idea to have a frank discussion with your family about your concerns and see if there's any way they might be able to contribute more to the household expenses. You could also consider talking to a financial advisor or counselor to help you navigate this situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hey guys, got told recently that I'm about to be a father. I am wondering what financial accounts I should look into setting up, comparing. What are your experiences? What did you wish you did/could do differently? I grew up without any financial accounts, no 529, no brokerage and got told to figure it out. It made me who I am today, but I'd like to create generational wealth for my child. Any help/advice is appreciated. ### Answer: Firstly, congratulations on the upcoming arrival of your child. It's admirable that you're already considering how to provide for their future. There are several financial accounts and strategies you might consider: 1. Emergency Fund: If you haven't already, start building an emergency fund for unexpected expenses. Ideally, this should be enough to cover 3-6 months of living expenses. 2. Life Insurance: Consider getting a life insurance policy if you don't already have one. This can provide financial stability for your child in the event of your passing. 3. 529 College Savings Plan: A 529 plan is a tax-advantaged account that allows you to save for your child's education expenses. The funds can be used for tuition, books, and other education-related expenses. 4. Custodial Account (UGMA/UTMA): These accounts allow you to save and invest on behalf of your child. The child takes control of the account once they reach the age of majority (usually 18 or 21, depending on the state). 5. Roth IRA for Kids: If your child has earned income (from a job, self-employment, etc.), they can contribute to a Roth IRA. This could be a good way to start saving for retirement early and instill the importance of investing. 6. Brokerage Account: A regular taxable brokerage account can provide flexibility as it doesn't have the same restrictions or penalties for withdrawals that retirement accounts or 529 plans might have. 7. Trust Fund: If you're considering creating generational wealth, you could consider setting up a trust fund. This can provide a financial safety net for your child and future generations. Remember, the best plan for you will depend on your family's needs and financial situation. Also, consider talking to a financial advisor to help you navigate these options. What's more, teaching your child about money management and investing at an early age can be one of the most valuable lessons you give them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Right now (age 30), I make roughly $58,000 a year before taxes with an extra $6,000 from a side-job. With this, I make in total of $64,000 a year. My total investments monthly include: $600 a month personal stocks (VTSAX), $541 a month in Roth IRA (VTI), $262 a month Roth 401k, and $262 a month Roth 401k Match. With this, I am putting away roughly $1665 a month into these investments (A little under 40% of my income). In total my investments are around $5000 in Roth 401k, $48,000 in stocks (VOO), and $29,000 in VTI Roth IRA (which I will invest $6,500 at the start of the year). My overall expenses are pretty small. I have an escrowed mortgage of roughly $1000. Next biggest expenses are food at $250 and $250 in unknown emergencies (car troubles, house problems, doctor visits, etc.). Then there are small charges here and there that equate to about $800 in total (gasoline, television, internet, gym, etc.). In total, I am spending a little less than I am making including everything. The extra money either goes into an emergency fund or small leisure activities. The reason why I have stock investments in VTSAX was incase I decided to retire a couple of years earlier than my 401k would allow. I'm starting to feel a little burnt out now and have really been wanting purchase a VR Treadmill, headset, and computer (roughly $4000-$5000 dollars). This isn't a due or die purchase, but what I'm doing now will not allow this. In general, I want to know what the reddit community thinks about how I am investing and what their suggestions might be. It's easier on here to get a bunch of different opinions rather than my friends/family group since they are a rather small group with not a diversed set of thinking (you hang out with people like you... correct?). Thank you! ### Answer: As an AI, I don't have a personal opinion, but I can provide some suggestions based on general financial wisdom. Firstly, you're doing a great job by investing nearly 40% of your income. That's a significant amount and it shows you're making your money work for you. Your diversification between personal stocks, a Roth IRA, and a Roth 401k also seems sensible. Regarding the VR equipment, it's important to balance between saving for the future and enjoying the present. Given that you're saving a good portion of your income, it might be reasonable to save up for this purchase specifically, rather than dipping into your investments. You could set aside a small amount from your income each month until you have enough to buy the equipment. In terms of your investments, the choices of VTSAX, VTI and VOO are all solid, broad-market, low-cost index funds. These are typically recommended for long-term investors due to their diversification and low fees. It's also great that you have an emergency fund. That's a vital part of any sound financial plan. You may want to consider maximizing your Roth IRA contribution if you aren't already. For 2021, the maximum contribution limit is $6,000, or $7,000 if you're age 50 or older. Lastly, you may want to consider speaking with a certified financial planner or advisor. They can provide personalized advice based on your specific financial situation and goals. Remember, the best financial strategy is the one that aligns with your personal goals and risk tolerance. It's always a good idea to do your own research and consult with a professional if you're unsure. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I started my career later than usual (28) and for the last 3 years I‘ve been contributing to both pre-tax and post-tax 401k via my company. Recently, I had a large salary increase to ~$136k gross/year and I contribute about 7% to my pre-tax account, 5% to my Roth account and I get 100% employer match at 3% which is about 15% total contributions. I understand the concept of why one should/shouldn‘t contribute to a Roth 401k, but I wanted to explain my understanding and get your advice. After running the numbers, I realized that, with inflation and continuing on my current path, my withdrawals in retirement would be in the same tax bracket that I am currently in (24%). Obviously if I continue on my current trajectory of increasing my salary until retirement, at some point I will be in a higher tax bracket than when I will withdrawal and at that point I should decrease the amount I put into my Roth 401k and put that into my pre-tax 401k, right? But what I’m wondering is if I should I do this already in 2023? In addition to that, I should be doing the backdoor Roth IRA method with the smaller amount I will continue to contribute to my Roth 401k, right? Or should I first focus on maximizing my 401k contributions first before I worry about any IRAs? For context, I am paying off student loans and trying to save up for a house so I am currently not maxing out my 401k contributions because that money is going into a HYSA. Thanks all for your time! ### Answer: First off, congratulations on your salary increase and your proactive approach to retirement planning. It's never too late to start, and it's great that you're thinking ahead. Your understanding of the Roth 401k vs pre-tax 401k is generally correct. In an ideal world, you'd want to contribute to a Roth 401k when you expect your tax bracket at retirement to be higher than your current tax bracket, and vice versa for a pre-tax 401k. As for your question about whether you should already switch more of your contributions to your pre-tax 401k in 2023, it depends on a few factors such as your expected salary growth, the tax laws at that time, your expected retirement age, and your expected income needs in retirement. The backdoor Roth IRA is a strategy typically used by high earners who aren't eligible to contribute to a Roth IRA due to income limits. It involves contributing to a traditional IRA, then converting that into a Roth IRA. If you're considering this, be aware of the pro-rata rule which could lead to unexpected tax consequences if you have other traditional IRAs. When it comes to prioritizing between maxing out your 401k contributions vs contributing to an IRA, there's no one-size-fits-all answer. It depends on your personal financial situation, your goals, and other factors. Generally, it's a good idea to at least contribute enough to your 401k to get the full employer match (which it sounds like you're doing), since that's essentially free money. After that, whether you should prioritize maxing out your 401k or contributing to an IRA depends on factors like the investment options in your 401k vs the IRA, your tax situation, and your income. Given your current financial goals of paying off student loans and saving for a house, it's understandable that you're not maxing out your 401k contributions. A HYSA can be a good option for short-term savings goals like a house down payment. Keep in mind that everyone's situation is unique and what works best for one person might not work best for another. It might be a good idea to consult with a financial advisor to discuss your specific situation in more detail. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi, I’m new to US and I earn $80k/yr. I pay $307 per pay check (bi monthly ) for my 401k. I see my taxes are around $900 per pay check. I end up with only 4K in hand In a month after deductions. I spoke with one of my friend who makes $55k/yr and she gets around $3k a month and pays only $150 on her 401k. I’m not sure if there’s something wrong but I feel like my in hand salary is too less. I would appreciate any thoughts! Added - (bi-monthly) Gross pay - $3076.93 Taxes and deductions - $928.82 Take home - $2148.11 Thanks ### Answer: Hello, I'm happy to help you understand your payroll deductions. First, let's clarify that taxes and other deductions can vary based on a number of factors, including your income level, your tax filing status (married, single, etc.), the number of exemptions you claim, and the state you live in, among others. Here's a rough breakdown: 1. 401k Contributions: You are contributing $307 per paycheck towards your 401k. That's a good amount, especially if your employer matches your contributions. This comes to $7,368 per year, which is a healthy savings rate for retirement. Remember, the money you contribute to your 401k is pre-tax, so it reduces your taxable income. 2. Taxes: In the U.S., taxes are progressive, meaning that as you earn more, you pay a higher percentage of your income in taxes. The $900 per paycheck you're seeing includes federal income tax, Social Security, Medicare, and probably state and local taxes as well. So, although you earn more than your friend, you're also paying more in taxes. 3. Net Income: After your 401k contributions and taxes, you're left with $4,000 per month. This is about $48,000 per year, or 60% of your gross income. This is a rough estimate, but it's not unreasonable given your 401k contributions and the likely tax rates at your income level. In comparison, your friend who earns $55,000 per year and contributes less to her 401k has a take-home pay of $3,000 per month, or $36,000 per year. This is about 65% of her gross income, which is slightly higher than yours as a percentage, likely because she's in a lower tax bracket and contributes less to her 401k. In conclusion, while it might seem like you're not taking home as much as you expected, remember that a significant portion of your paycheck is going towards your future in the form of 401k contributions. However, if you feel your taxes are too high, it's always a good idea to consult with a tax professional to ensure you're not overpaying. They can help you understand your tax withholdings and if there are any ways you can reduce your tax liability. Hope this helps! Let me know if you have any other questions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi all! Apologies if this isn't quite the right sub but I figure a lot of people on here have opinions. I am a longtime Mac Quicken user getting restless for other options. When they did the total rewrite of the app some years back, it lost a lot of the graphing and reporting features that I enjoyed using. Quicken on the web/iOS has even fewer reporting features, making it essentially useless to me. I essentially use Quicken as a ledger for all my accounts and a means to get reports on how I'm spending my money. I don't really need advanced tax or budgeting features (I have an Excel spreadsheet for this), and I don't really care about syncing accounts with bank websites (I prefer to enter transactions manually, I "trust" that process more) but I would like an application that lets me sync data between multiple Macs/iPads/iPhones and produce pretty graphs of how much I'm spending where, income vs. expenses, reports on the performance of my relatively simple investments, that sort of thing. I would also want something that could import data from Quicken, where I have years worth of info I don't want to lose. MoneyWiz and Banktivity look interesting and I'd love to hear from people who use them but I'm open to other suggestions. I don't object to paying a reasonable subscription fee (like under $80/year say) for such an app. Thanks in advance. ### Answer: Certainly, there are several alternatives to Quicken that might fit your requirements. Here are a few for you to explore: 1. Personal Capital: This is a free tool that specializes in investment tracking, but it also offers budgeting and expense tracking. It provides a clear overview of your income, expenses, and net worth. It also has good reporting features for investments, though it may not be as detailed as Quicken. 2. YNAB (You Need A Budget): While YNAB is primarily a budgeting app, it also provides expense tracking and reports. It's known for a unique budgeting approach that encourages you to 'give every dollar a job'. YNAB syncs across multiple devices and also allows manual transaction entry. 3. Mint: Created by Intuit, the same company that once owned Quicken, Mint is a free personal finance app that allows you to track expenses, create budgets, and get a complete overview of your finances. It doesn't have quite as many reporting features as Quicken, but it might still meet your needs. 4. Banktivity: You've already mentioned this, but it's worth noting that Banktivity is a Mac-specific app that has strong reporting features and allows for manual transaction entry. It also syncs across devices and allows for investment tracking. 5. MoneyWiz: Another app you've mentioned, MoneyWiz also offers strong reporting features and transaction entry. It also allows you to track investments and syncs across multiple devices. 6. Moneydance: This is a powerful personal finance software that has strong reporting and graphing tools. It also allows for manual transaction entry and investment tracking. Remember, each app has its strengths and weaknesses, and the right one for you depends on your personal needs and preferences. You might want to try out the free versions or trials of these apps before committing to a subscription. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi! In early 2020 I bought a condo for $172K when I was 24, jointly with my dad in order to qualify (I had the income to make all the payments, just not the income history or down payment). Thought I would live there quite a while, but had an unexpected job opportunity so I moved and now I rent (for a federal civil service job), and I have a renter in the condo and make about $250/month profit from the rental price. I think the condo may now be worth something like $200K, based on recent sales in the complex, and I have $150K to go on the mortgage. I love my new city and like the job, and I hope to stay in federal service in this area for sure. I daydream regularly about owning instead of renting my primary residence, but I am wondering what I ought to know about trying to purchase a second condo in new city without changing the arrangement of the old condo (renter likes it, I like keeping it as an investment). I would be looking for about the $300-350K range. Will the requirements for me be higher trying to get a second mortgage, this time solo? Does it help me? Could I still do something like a 5% down payment and PMI (how I did old condo), or would they want it higher? Will my age work against me? Anything at all I should know would be so helpful!! TIA ### Answer: Hello! Congratulations on your successful investment and career progress so far. Buying a second property can be a good investment, especially if you plan to stay in the new city for a long time. However, there are a few things to consider: 1. Income and Debt-to-Income Ratio: Lenders will consider your income, including the rental income you're receiving from your current condo. They'll also look at your debt-to-income ratio (DTI) which includes your current mortgage, car loans, student loans, and credit card debt. The lower your DTI, the better your chances of getting a loan approved. The preferred DTI is typically below 43%. 2. Credit Score: A good credit score will be crucial in securing a second mortgage. Lenders will typically look for a score of 620 or above, but the higher your score, the better your interest rate will be. 3. Down Payment: While it's possible to get a mortgage with a 5% down payment, many lenders may require a higher down payment for a second mortgage, often 20% or more. This is to lower their risk since second homes are often considered higher risk. However, this is not a hard and fast rule and can vary depending on the lender. 4. PMI (Private Mortgage Insurance): If you put down less than 20%, you'll likely have to pay PMI, which protects the lender in case you default on the loan. PMI will increase your monthly payment. 5. Interest Rates: Interest rates on second homes can be higher than for primary residences. 6. Property Management: Consider the responsibilities of being a landlord for two properties. Are you prepared to handle maintenance and repairs on two properties? 7. Your Age: As long as you meet all the financial requirements, your age should not be a barrier. Finally, it's also worth considering getting pre-approved for a mortgage before you start looking. This will give you a better idea of how much you can afford and can make the buying process easier. Remember, it's always a good idea to consult with a financial advisor or a mortgage professional before making any big financial decisions. They can provide you with personalized advice based on your specific situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In 2022, I've had a balance in a Rollover IRA. These had originally been traditional 401k contributions at a previous employer. In 2023, I want to make a backdoor Roth contribution. To avoid triggering the pro-rata rule, I am rolling my Rollover IRA into my current employer's 401k, which allows reverse rollovers. However, because I am forgetful, I only filled out the paperwork with Vanguard today, so the reverse rollover won't actually take effect until sometime in January. Therefore, I will be holding a non-zero traditional IRA balance (in my Rollover IRA) for a few days in 2023. Does this mean that, if I perform a Roth conversion on 2023 IRA contributions, my Rollover IRA balance will be taxed per the pro-rata rule? Essentially, have I missed the window for a 2023 backdoor Roth contribution, and should I wait until 2024? ### Answer: The pro-rata rule for IRAs looks at your total IRA balance at the end of the year. If you have rolled over your balance to your current employer's 401k by the end of 2023, it won't be factored into the pro-rata calculation. The timing of your paperwork should not affect your ability to perform a backdoor Roth conversion in 2023. As long as the rollover to your 401k is completed by December 31, 2023, you would not have a non-zero traditional IRA balance to factor into the pro-rata rule. However, it's important to confirm the completion date of the rollover with your financial institution. In addition, you should also consider seeking advice from a tax professional to ensure you're correctly interpreting these rules, as they can be complex and are subject to change. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi! I'm 29, m and currently work in tech. Up till now, I've sort of juggled my career with moving around the world. I've lived in 5 different cities in my 20's, in and out of the country, some where I had a job, some where I didn't. I've been pretty thoughtful up till now with my finances--I constantly invest in my 401k, roth IRA, etc. when I'm employed (which is the majority of the time) and have also continued to build my career. Now that I'm almost 30, I'm thinking about this next decade. My parents have made it seem like your 30's are the time you need to "settle down somewhere long-term" for financial stability. It saddens me a bit, because there are so many places I want to try living still. At this point, I feel like I'm financially solid--I'm well on my way to building out my retirement and foundation--but I'm definitely not as affluent as I could be if I just stayed in one place and worked constantly. I think I want to continue with my lifestyle of trying different places, but just want to confirm that there's no incredibly important reason why I need to settle in one place in my 30's. I don't want to struggle later in life or be living paycheck to paycheck, so if there's something I need to do or focus on in my 30's to avoid that, I'll do it. Thanks for the help! ### Answer: Hello! It's great to see that you've been thoughtful about your finances thus far and have been diligent in your retirement savings. This will serve you well in the long run. As for your question, the idea of needing to "settle down" in your 30s largely stems from traditional views, where stability in location often equated to job stability and therefore financial stability. However, in today's global and digital economy, this is no longer necessarily the case. Your ability to save and invest for the future does not hinge on your location, but rather on your income, expenses, and savings habits. If you can maintain a steady income, keep your expenses in check, and continue to invest wisely while moving around, then there's no financial reason you need to stop. Here are a few things to consider as you move forward: 1. Job Stability: Can you maintain a steady income while moving around? This could be through remote work, freelancing, or finding new jobs in each location. Without steady income, your ability to save and invest could be compromised. 2. Cost of Living: Different cities and countries have different costs of living. You'll want to ensure that you can afford the lifestyle you want in each place you move to without dipping into your savings or investments. 3. Emergency Fund: Living a more transient lifestyle may come with unexpected costs, so having a robust emergency fund is crucial. 4. Health Insurance: Ensure you have a plan that covers you wherever you are. Health costs can be a significant financial burden if not properly planned for. 5. Taxes: Living in different places, especially different countries, can complicate your tax situation. You may want to consult with a tax professional to ensure you're not missing any obligations. 6. Long-Term Goals: If your long-term goals include homeownership or starting a family, for example, you'll want to consider how your lifestyle affects these goals. Remember, financial planning is all about making your money work for you and your lifestyle, not the other way around. As long as you're thoughtful about your finances, there's no reason you can't continue to explore the world while building a solid financial foundation for the future. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi, I have opened a rainy day savings account with Barclays - who offer a 5% gross on all savings up to £5,000. After this, the rate drops to 0.5%. My question is - if I was to go over the £5k - would I still generate the 5% on the £5k, and the lower rate on everything over this? ### Answer: Hi, Typically, with these kinds of savings accounts, you would earn the higher interest rate (5% in your case) on the balance up to the limit (£5,000). Any amount you deposit over that limit would then earn the lower interest rate (0.5% in your case). However, the details can vary from bank to bank. It's always best to confirm with your specific bank to understand how they calculate and apply interest rates in these situations. Please contact Barclays directly to make sure you understand their policy. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have a self-managed Vanguard traditional IRA account that I contribute to yearly. I checked my balance today and noticed there's a button where I can convert it to a Roth IRA. Since my contributions are coming out of my pocket post-income tax would it be better to convert to a Roth or leave it alone? ### Answer: Deciding whether or not to convert a Traditional IRA to a Roth IRA depends on multiple factors including your current tax rate, your projected tax rate at retirement, your ability to pay taxes on the conversion, and your retirement plans. 1. Tax Rates: If you expect to be in a higher tax bracket when you retire, converting to a Roth IRA could be beneficial as you pay taxes now at a lower rate and can make withdrawals tax-free at retirement. Conversely, if you expect to be in a lower tax bracket when you retire, it may be better to stick with your Traditional IRA. 2. Ability to Pay Taxes: When you convert a Traditional IRA to a Roth IRA, you must pay income taxes on the amount converted. If you can't cover these taxes from sources other than your IRA, it's typically not a good idea to convert. 3. Retirement Plans: If you don't foresee needing to take distributions in retirement (perhaps you have other income sources), a Roth IRA can be a good choice because it doesn't have Required Minimum Distributions (RMDs). However, you mentioned that your contributions are post-income tax. This could mean that you've been contributing to your Traditional IRA with after-tax dollars, which is not typically the case. Traditional IRA contributions are usually pre-tax (i.e., tax-deductible), meaning you don't pay taxes on the money until you withdraw it in retirement. If you've been contributing post-tax money, it might be more beneficial to switch to a Roth IRA, where contributions are after-tax and distributions in retirement are tax-free. In any case, it's important to consult with a tax professional or financial advisor to understand the potential implications of conversion on your unique financial situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I'm in no rush to actually buy a house any time too soon for several reasons (at least a couple years away), but I'm trying to start learning a bit about them to know what to consider/expect when the time comes. I read about the various rules of thumb when it comes to house budgets, but I'm hoping you guys can tell me how much of that applies more specifically to my situation. Relevant info: * Mid 20s, single w/ no dependents * 120k salary (technically also have 12k bonus and 100k in RSUs vesting over next 4 years, but I haven't been at this company long enough to know how consistently this bonus will pay out in full, and the stock has historically not been a very strong performer so it could be next to nothing by the time it actually vests. Thus I'm not comfortable counting them when budgeting). * I take home 2.5k biweekly after maxing 401k and HSA contributions. * No major debts except monthly CC statement, which is generally somewhere between $1k-1.5k each month. * Current rent is $2k and that's pretty comfortable I feel. I think I could realistically pay more like 2.5k for housing. Maaaaybe 3k? (but that might involve cutting down savings being put into markets, let me know if this is a terrible idea) * Currently have about 100k in index funds, adding 1k biweekly so hoping it will be larger than that when it comes time to buy. Rules of thumb advise spending up to 3x gross income on a house (~360k), but the places I see for sale on Zillow in that price range are a bit of a letdown in the NY metropolitan area. I hope that my savings and lack of debt could increase that budget, but maybe you fine folk can tell me if that's true, and by how much. ### Answer: Based on your situation, you are in a fairly good position to consider buying a house in the future due to your high income, low debt, and solid savings. Here are a few things to consider: 1. House price: The 3x gross income rule is a general guideline to ensure you don't overstretch yourself. However, in high cost of living areas like NY, it's often hard to adhere to this rule. Lenders typically consider your debt-to-income ratio, which should ideally be below 36%. Given that you have minimal debt, you may be able to afford a more expensive home. 2. Down payment: You should aim to save at least 20% for a down payment to avoid paying PMI (Private Mortgage Insurance). Your current savings in index funds could be used towards this. 3. Emergency fund: Ensure you have an emergency fund that can cover 3-6 months of living expenses. This should be separate from your down payment. 4. Other costs: Don't forget about closing costs, which can be 2-5% of your loan amount. Plus, home ownership comes with additional costs like property taxes, insurance, and maintenance. 5. Future income: You mentioned an inconsistent bonus and RSUs. If these become consistent in future, they could supplement your income and help increase your housing budget. 6. Savings: You mentioned potentially cutting down on savings being put into markets. This is a personal decision based on your risk tolerance and future plans. Remember, real estate can also be a good investment, but it's less liquid than stocks. In conclusion, you might be able to afford more than the 3x rule, but it's important to consider all the associated costs and risks. It would be beneficial to speak with a mortgage advisor who can give you a more accurate idea based on your specific circumstances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello all. Many people are telling me to freeze my 401k. Its about $168k, I’m only 42. I’m sure I’ll be working for another 15-20 years. I’ve always heard to leave it alone. Thoughts? ### Answer: Hello, it's a pleasure to assist you. When someone suggests "freezing" a 401k, they might be referring to ceasing further contributions towards it. Whether or not you should do this really depends on your individual financial situation, goals, and other available investment options. Here are some factors to consider: 1. Employer Match: Many employers offer a 401k match up to a certain percentage. This is essentially free money and a guaranteed return on your investment. If your employer matches your contributions, it's usually a good idea to contribute at least up to the match. 2. Tax-advantaged Savings: 401k contributions are either pre-tax (traditional 401k) or post-tax (Roth 401k). This can provide significant tax advantages either now or in retirement, depending on which type you choose. 3. Investment Options: 401k plans sometimes have limited investment options and higher fees compared to other investment accounts. If you have a high-cost plan with poor investment choices, it might be worth considering other tax-advantaged accounts, like an IRA. 4. Financial Goals: If you have other financial goals, like saving for a house or college tuition, you might want to allocate more money towards those goals. However, it's important to balance this with your need for retirement savings. 5. Diversification: Diversifying your investments can help reduce risk. If all your savings are in a 401k, you may want to consider other types of investment accounts for diversification. 6. Risk Tolerance and Retirement Timeline: Since you're still relatively young, you have time to weather the ups and downs of the market. This could mean it's safer for you to continue investing. However, if you're closer to retirement, you may want to take a more conservative approach. Before making any decision, it's a good idea to speak with a financial advisor who can consider your entire financial picture and provide personalized advice. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hey all, I opted to do my own payroll for our nanny, which has been an eye-opening experience for how complicated small business taxes are. I have to transmit the wages I paid to the social security administration by the end of January. To setup an account online, the SSA was supposed to mail me an activation code. I didn’t want to leave this to the last minute but a month later nothing has arrived in the mail. I’ve tried emailing them no response, and I can’t get someone on the phone in a timely manner. Now that it’s a holiday this is just going to have to wait until early January. Anyways just wondering if anyone has successfully been able to setup an online account, specifically with the SSA Small Business Office, and if not does anyone here have experience filing paper W2/W3? I find the instructions online a little bit confusing because they explicitly say you cannot just print the form and mail it in. Like do I need to buy forms at staples or something and the print them on there? It’s like their trying to make it impossible to comply with tax laws. Very frustrating. I know for some people here this stuff is second nature, but super confusing for me. Thanks in advance for any advice! ### Answer: Hello, I understand your frustration. The process can indeed be confusing, especially for the first time. I'm here to help guide you through it. 1. Setting up an online account with SSA: Typically, the SSA does mail you an activation code to set up your online account. But as you've noticed, it can sometimes take a while. If you haven't received it, I recommend trying to contact them again in early January. You could try reaching out to your local Social Security office or see if they have online chat support. 2. Filing Paper W2/W3: Regarding the paper forms, the reason SSA doesn't allow you to simply print them out and mail them is because the copies you print from the internet are not scannable. This is why they require you to either get the official forms from a distributor or file online. You can order the official forms from the IRS directly or from an office supply store (like Staples). They usually come with instructions for how to fill them out. 3. Filing Online: If you're unable to get the paper forms or set up your SSA account in time, another option is to e-file using the Social Security Administration's Business Services Online (BSO). This is a free service and you can file W-2s electronically. It can be a bit tricky to navigate, but there are step-by-step instructions available on their website. 4. Get Professional Help: If all of this is a bit overwhelming, you might want to consider hiring a payroll service or a CPA to handle this for you. It might be an added expense, but it could save you a lot of time and stress. Remember, you need to submit your W-2 forms to the SSA by the end of January, but you also need to provide copies to your nanny and possibly your state tax department, depending on where you live. So make sure to keep track of all deadlines and requirements. I hope this helps! If you have more questions, feel free to ask. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hopefully this is the right place to post this, let me know if there is a better sub for it. Trying to help my parents out as they had an oil leak in their car and took it to a local shop a little over 2 months ago. This car has a bumper to bumper warranty from the dealership. The shop fixed what they believed was the issue, and submitted their claim to the warranty company, only to discover that they had misdiagnosed it. The warranty company now is not covering that work as it was not a legitimate issue with the car, so my parents are paying out of pocket for it. Warranty company is also giving issues with the new repairs as it is under the same claim. The shop also did not originally offer them a loaner car, so my parents paid out of pocket for a rental for a few weeks, which cost them about $2k. After that, the shop did give them a loaner, which has been a piece of junk, has multiple error lights on and says not to drive it any further. Which means they will have to resort back to paying for another rental car. As mentioned, the shop has been holding their car for over 2 months, with little to no updates other than the occasional "it will be ready by the end of this week!", which it never is. What is the best course of action here? ### Answer: I'm an AI financial advisor, and while I can't offer legal advice, I can suggest some steps that might help ease the financial strain of this situation. 1. Reach Out to the Warranty Company: Your parents should contact the warranty company directly, if they haven't already. They can explain the situation and ask for clarification on why the repairs aren't being covered. They should also inquire about the warranty terms regarding rental cars. Some warranty companies do cover rental costs if a car is being repaired. 2. Document Everything: They should keep a record of all communications with both the repair shop and the warranty company. This includes emails, invoices, and any other relevant documents. This could be useful if they need to take legal action later on. 3. Contact the Car Dealership: If the warranty is from a specific car dealership, your parents might want to reach out to them. They could potentially advocate on their behalf with the warranty company, or assist by offering a loaner vehicle. 4. Get a Second Opinion: If possible, your parents should consider getting a second opinion from another repair shop about the necessary repairs and costs. This could help them negotiate with the original repair shop. 5. Seek Legal Advice: If none of the above options work, your parents might consider consulting with a lawyer. Depending on the cost of the repairs and rental car, it might be worth exploring legal options. 6. Review Insurance Policy: They should also check their auto insurance policy. Some policies cover rental cars while your vehicle is being repaired. Remember, it's crucial to understand the warranty's specifics and the limitations on what it covers. It's also essential to communicate clearly and document all interactions in situations like this. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Does anyone have a financial dashboard recommendation I can use as a one stop shop overview? I’m okay if it I have to manually add information. Preferably something free. Or even a template for Google Sheets or Excel would be fine as well. I’d like to track income, debt, and investments. Maybe even a spot for financial goals too. ### Answer: There are several financial dashboard tools that you can use to track your finances, including income, debt, investments, and financial goals. These tools range from apps to Google Sheets or Excel templates. Here are a few suggestions: 1. Mint: Mint is a free, comprehensive personal finance app that can help you track your income, expenses, investments, and more. It offers a single dashboard where you can see all your financial information. 2. Personal Capital: This tool is great for investment tracking. It's free and allows you to see all your accounts in one place, including investments, savings, and checking accounts. 3. Tiller Money: Tiller Money automates your financial tracking in Google Sheets. It isn't free, but it does offer a 30-day free trial. 4. Google Sheets or Excel Templates: Both Google Sheets and Excel have a variety of free templates for personal finance dashboards. - Google Sheets: You can find templates in the "Template Gallery" within Google Sheets. A good one to start with is the "Monthly Budget" template, which can be customized to include income tracking, debt, and investments. - Excel: Microsoft offers free personal finance templates that you can download and use in Excel. The "Family Budget Planner" or "Personal Budget" templates might be a good starting point. Remember to regularly update your dashboard with the latest information to make sure it provides an accurate representation of your financial situation. Regarding financial goals, most of these tools allow you to set and track goals. However, it might be helpful to have a separate document or sheet where you clearly outline your financial goals and the steps you plan to take to achieve them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Ive been funding a mid-term (10-15 years from now) brokerage with VTSAX (80%) and VTIAX (20%) for the past 5 years. With no interest rates at or near their peak, is now the time to start rebalancing with bonds? ### Answer: The decision to rebalance your portfolio by adding more bonds should be based on your risk tolerance, investment goals, and time horizon, not just the current interest rates. VTSAX (Vanguard Total Stock Market Index Fund) and VTIAX (Vanguard Total International Stock Index Fund) are both stock index funds that provide broad, diversified exposure to the U.S. and international stock markets respectively. They can offer higher potential returns but also come with higher volatility and risk. Bonds, on the other hand, typically offer lower potential returns but also lower risk and volatility. They can help provide income and stability to your portfolio, especially during times of market downturns. If you're planning to use the money in your brokerage account in 10-15 years, you might want to consider gradually adding more bonds to your portfolio to reduce risk and volatility as you get closer to your investment goal. However, with interest rates at or near their peak, bonds may be less attractive as their prices tend to fall when interest rates rise. It's also important to remember that rebalancing doesn't just involve adding more bonds. It also involves maintaining your desired asset allocation by periodically selling some investments that have performed well and buying more of those that have not. Before making any decisions, you should consider your overall financial situation, risk tolerance, and investment objectives. It's also a good idea to consult with a financial advisor or a trusted financial professional. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I'm 28 and want to structure my finances to take better advantage of an admittedly fortunate situation. I have no debt or loans and my only major expense is my rent which is \~20% of my monthly income. I want to tighten up my spending and structure my savings/investments to build a comfortable nest egg for long-term. What advice, accounts, and strategies do you recommend for someone in my position? Current accounts (allocating \~5600 monthly income after rent): * Roth 401k - 1,000/month * Passive investment account - 500/month * HYSA -1,000/month (building to 3 months expenses) * Individual Stocks - 100-500/month TIA! ### Answer: You're already on the right track by having a budget and investing in a variety of accounts. Here are some recommendations to optimize your financial situation further: 1. Emergency Fund: Good job on building up your emergency fund in a high yield savings account (HYSA). Aim for at least 3-6 months of living expenses. Once you've reached this goal, you can reallocate the money going into your HYSA to other investments. 2. Retirement Savings: Maximize your Roth 401k contributions if you haven't already. The maximum contribution limit for 2021 is $19,500. Consider opening a Roth IRA account if you're eligible. The maximum contribution limit for 2021 is $6,000. This will provide you with additional tax-free income during retirement. 3. Investment Strategy: It's good that you're investing in individual stocks and in a passive investment account. However, ensure the individual stock investing is done wisely and isn't a significant portion of your portfolio due to the higher risk. 4. Diversification: Consider diversifying your investments more. This could include index funds, mutual funds, bonds, or real estate. This will reduce risk and potentially increase your returns. 5. Health Savings Account (HSA): If you're eligible, consider contributing to an HSA. It's a triple tax-advantaged account if used for medical expenses and can be invested similar to a retirement account. 6. Automatic Saving and Investing: If you haven't already, set up automatic transfers to your savings and investment accounts. This ensures that you're consistently saving and investing. 7. Budgeting: Review and adjust your budget regularly. Keep track of your spending habits and find areas where you can cut back. This will help you save more in the long run. 8. Financial Goals: Establish clear financial goals. This could be saving for a house, starting a business, or retiring early. Having clear goals will help guide your savings and investment strategy. Remember, everyone's financial situation is unique, so these strategies should be adjusted to fit your own personal goals and risk tolerance. It's also a good idea to consult with a financial advisor for personalized advice. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: So I've been reading the wiki. The flowchart is too pixilated though for me to read. But anyway this will eventually lead to a "what do I do with x money" question. So I'm debt free (paid off car and college, renting apartment) Have a savings account worth like 2 years of living (I know its a lot) I maxed out my employer 401k I still have money coming that I dont want to dump into my savings account. If I'm reading the wiki right, the next step is to get an IRA and put 6 grand into that yearly to reduce taxes? Is that the next approach or am I missing a step? Thanks in advance for any and all help. Side note: I came to the realization that I'm very ignorant on how to reduce taxes and that may be the next big thing to research. ### Answer: Congratulations on your financial discipline so far. You're doing great! Given the information you've provided, opening an Individual Retirement Account (IRA) could indeed be a good next step. There are two main types of IRAs, Roth and Traditional. A Traditional IRA provides you with a tax deduction now, but you'll need to pay taxes when you withdraw the funds in retirement. A Roth IRA, on the other hand, doesn't give an upfront tax deduction, but all withdrawals in retirement are tax-free. The choice between the two largely depends on your current tax bracket and where you expect it to be in retirement. The annual contribution limit for IRAs in 2021 is $6,000 (or $7,000 if you're age 50 or older), so you could start by investing that amount. Additionally, there are also other tax-advantaged accounts such as HSAs (Health Savings Account) or 529 plans (for future education expenses), depending on your specific needs. Finally, it's also important to consider investing in a taxable account, especially if you have more money left over after maxing out all tax-advantaged accounts. This could be in the form of individual stocks, ETFs, or mutual funds. Regarding tax reduction strategies, there are indeed many ways to reduce your taxable income, such as making full use of tax-advantaged accounts, tax deductions, and tax credits. However, tax planning is a complex topic and it might be worth consulting with a tax professional or doing more detailed research on this topic. Remember, it's always important to align your financial moves with your personal goals and risk tolerance. It might be beneficial to consult with a certified financial planner or advisor to ensure your choices align with your long term goals. Also, laws and tax codes change frequently, so it's important to stay updated or consult with a professional. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Caveat: I am not very financially savvy so keep that in mind as you read further. Thanks! My wife and I are both self-employed, our home is paid off, we have \~$200k in retirement savings, but we show very little income on taxes ... \~$40k AGI between the two of us. Our home is in a booming part of a booming city (Raleigh) and we could likely sell it for \~$600k. Maybe more, I don't really know. One thing we've talked about is selling the house and buying a much cheaper house (in the 300k range) in a smaller town and banking as much cash as possible for savings.We have stumbled across what may be our dream house up in the mountains but it doesn't fall in the 300k range. Asking price is $500k. I guess our options would be to get a bridge loan (or whatever it is) to buy the new house then pay it off when current house sells or get a whole new mortgage and rent our current house out. We can very easily split the house in 2 to kinda be a duplex) or could rent the whole thing. Either way I think we could get \~$3k/month. If we went with the rental option the rent $$ would be paying the new mortgage and my question is what would the bank need from us to prove that? A signed lease? A signed agreement with a property management company? I'll take any and all advice. Thanks and happy new year! edit: if this isn't enough info to answer the questions please let me know and I'll fill in whatever I can. ### Answer: Based on your situation and the options you're considering, here are a few thoughts: 1. Selling your current home and buying a cheaper one: This could be a good strategy to increase your savings, especially if you can find a desirable, less expensive home in a smaller town. However, you'd need to consider the costs of moving, including potential higher living costs in the new area, and the emotional impact of leaving your current city and home. 2. Buying the dream house in the mountains: If you can afford it, this option could offer a great lifestyle change. However, it's a more expensive choice and would involve taking on new debt. Banks can be hesitant to lend to self-employed individuals with low reported income, despite significant assets. Also, consider the upkeep costs, potential isolation, and changes in lifestyle living in the mountains might bring. 3. Renting out your current home: Rental income can be a good source of steady income, but being a landlord isn't for everyone and comes with its own costs and responsibilities. If you choose this route and want to use this income to qualify for a mortgage, lenders typically want to see a history of rental income on your tax returns to count it. A signed lease might be considered, but lenders will usually want to see at least one, if not two years of steady rental income. Additionally, the rental income will need to cover the mortgage payment, taxes, insurance, and any property management fees and still provide a reasonable return. In any case, it's recommended to speak with a financial advisor or a mortgage lender who can review your complete financial picture and provide customized advice. They can help you understand your borrowing capacity, the potential tax implications of each option, and the overall impact on your financial goals. Remember, while it's important to think about the financial aspects, it's also crucial to consider what will make you and your wife happiest in the long term. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I'm new to investing, I've been doing so for roughly half a year. My goal is to invest in stocks that pay dividends and continuously re-invest those dividends back into more shares over the roughly 30 stocks I have shares in. I've created a strategy which I believe will let me increase my dividends slightly faster but I'd like to share here and confirm. Every 2 weeks, I make my investments, combining a fixed amount from my paycheck with whatever dividends I've received in the previous 2 weeks. My strategy is to heavily favor buying shares in stocks where the ex-date will occur within the next 2 weeks. My reasoning is that I will see a slight return from that investment pretty soon in the form of dividends paid out by that stock within the next month or so. As I keep doing this, I'll be compounding dividends faster. I believe this is valid because of this thought experiment: let's say I have 4 stocks which pay once per year. Each stock pays dividends in a different quarter: stock A for Q1 up to stock D for Q4. Each pays 4% dividend. I'll have $100 each quarter to invest. * If I invest $100 in each quarter all into stock D, I'll have $400 in stock D and have a total value of $416. * If I invest $100 in each stock at each quarter, I'll have: * $100 in A, which yields $4 * $104 in B, which yields $4.16 * $108.16 in C, which yields $4.3264 (I'm not sure how the rounding would actually work but here I'll use fractional cents) * $112.4864 in D, which yields $4.499456 * At the end, I'll have a total value of $100 + $104 + $108.16 + $112.4864 + $4.499456 = $429.15 My question here is, does this logic carry over into the real world, and are there any drawbacks which I'm not aware of. ### Answer: Your strategy seems to be a version of 'dividend capture', which seeks to buy stocks just before their ex-dividend date to qualify for the upcoming dividend payout. It's a valid strategy in theory, but there are a few important factors that you should consider: 1. Price Adjustments: When a company pays out dividends, its share price is often reduced by the amount of the dividend on the ex-dividend date. This is because the company's value decreases by the amount of dividends paid out. Therefore, buying a stock just before the ex-dividend date may not necessarily yield higher returns, since the stock price could drop by the dividend amount on the ex-dividend date. 2. Taxes: Dividend income is often taxed differently than capital gains. It is important to understand how dividends are taxed in your country. In some cases, the tax on dividend income can be higher than on capital gains, which could eat into your profits. 3. Transaction Costs: If you're buying and selling stocks frequently to capture dividends, transaction costs can add up and eat into your returns. These can include brokerage fees, bid-ask spreads, and other related costs. 4. Market Volatility: The stock market is influenced by a variety of factors, and prices can fluctuate greatly. Timing your investments around ex-dividend dates exposes you to this risk. 5. Limited Opportunities: Not all stocks pay dividends, and those that do often only pay them quarterly. This could limit your investment opportunities. 6. Opportunity Cost: By focusing on dividend investing, you may miss out on other investment opportunities that could potentially provide a higher return on investment. Your theoretical example provides a good insight into how compounding works, but in reality, the stock market is much more complex, and there are numerous factors that can influence your returns. It's important to have a diversified portfolio and not rely solely on one strategy. Remember to do thorough research or consult with a financial advisor before making investment decisions. It's also important to regularly review and adjust your investment strategy based on changes in your financial situation, risk tolerance, and investment goals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Doing my first backdoor Roth IRA conversion but I received a $100 bonus for opening the Traditional IRA from Fidelity after contributing $50. It's been in a money market for some time and now it's $151.66 ($50 contribution + $100 Fidelity contribution bonus + $1.66 growth). Should I contribute an additional $5848.34 to the Traditional IRA to make total $6000 or should I contribute $5950 and have a total of $6101.66 to convert? Basically just want whatever is easiest to fill out taxes. I did call Fidelity and they told me I don't have to pay taxes on the $100 from Fidelity, that it counts as a contribution, and that I CAN still contribute $5950 to the account but they can't advise me what is best for the Backdoor Roth IRA conversion. This confused me because if the $100 is a contribution then shouldn't I contribute an additional $5850? I know I'll still have to pay taxes on the $1.66 growth following this guide: https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/ ### Answer: The annual contribution limit to an IRA (Traditional or Roth) is $6,000 for 2021 if you're under 50 years old. This limit includes all contributions made to your IRA, including any bonuses you receive from the financial institution. In your case, if Fidelity is treating the $100 bonus as a contribution, then that amount would count toward your annual contribution limit. So, you would only be able to contribute an additional $5,900 ($6,000 limit - $100 bonus) to your Traditional IRA for the year. When you perform a backdoor Roth IRA conversion, you'll indeed have to pay taxes on any earnings in your Traditional IRA before the conversion. In your case, this would be the $1.66 growth. However, when it comes to the bonus, if Fidelity says it counts as a contribution and is post-tax, then you shouldn't have to pay taxes on that amount during the conversion. In terms of simplicity for tax filing, contributing an additional $5,900 and then converting the total amount of $6,001.66 ($50 initial contribution + $100 bonus + $1.66 growth + $5,850 additional contribution) to a Roth IRA would be the cleanest approach. Remember to file Form 8606 with your tax return to document the non-deductible Traditional IRA contribution and the subsequent conversion to a Roth IRA. This will ensure you don't pay taxes on the conversion of your post-tax contributions. As always, it would be prudent to consult with a tax advisor or CPA to ensure you are following all rules and regulations correctly. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hi everyone, I’m young but saving for retirement with my ROTH. I just thought of a quick (possibly stupid) question and would like to hear input — what do you actually do with a ROTH once you’re retired? Sell it all at once? Sell in increments of $6-7k/ year? Just curious on the method of retrieving the funds. ### Answer: Hello! First off, there's no such thing as a stupid question when it comes to personal finance! It's great that you're saving for retirement at a young age. When it comes to withdrawing from your Roth IRA during retirement, you have several options. The biggest benefit of a Roth IRA is that you paid taxes on the money when you put it in, so you don't have to pay any taxes when you take it out, as long as you're at least 59 1/2 years old and the account has been open for at least five years. Here are a few ways you might consider withdrawing your Roth IRA funds when you retire: 1. Scheduled Withdrawals: Some people choose to take out a certain amount each month or year, much like a paycheck. This can help you budget your retirement expenses. 2. As-Needed Withdrawals: Other people only withdraw money when they need it for a specific expense. This allows more of your money to stay invested and potentially continue to grow. 3. Required Minimum Distributions (RMDs): Traditional IRAs require you to start taking minimum distributions by age 72, but Roth IRAs do not have this requirement. However, if you inherit a Roth IRA, you may have to take RMDs. 4. Leave It In: If you don't need the money, you can leave it in your Roth IRA where it will continue to grow tax-free. You can then pass it on to your heirs, who can also benefit from tax-free growth and withdrawals. You don't want to sell it all at once as it can be a significant income source during your retirement years. It's usually better to sell in increments, depending on your needs and your overall retirement income strategy. Planning the method of retrieving the funds should be in line with your retirement strategy, expected retirement expenses, and your overall tax situation. You might want to consult with a financial advisor to make sure you're making the best choice for your individual circumstances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: My employer is offering roth 401k contributions starting 1/1/23 in addition to the normal pre and post tax contribution options. I have been using the post-tax contribution method since I started a little over 3 years ago. Based on what I’ve read about the two different methods, I don’t understand why anyone would ever choose post tax contributions over roth. From what I understand, post tax is contributed after your paycheck is taxed, and you will be taxed on any additional gains made when withdrawn in retirement. For roth contributions, it seems the same is true where the money is contributed after taxes, but additional gains made are tax free in retirement? I feel like I understand it correctly but then that raises the question for me of why would anyone ever choose post tax over roth if the gains on roth contributions aren’t taxed? It seems too good to be true that you can just make capital gains and not be taxed on them? ### Answer: You're right that Roth 401(k) contributions are made with after-tax dollars and allow for tax-free withdrawals of both contributions and earnings in retirement, assuming you meet certain requirements (like being at least 59.5 years old and having had the Roth account for at least five years). This can be a great advantage, especially if you believe your tax rate will be higher in retirement than it is now. The traditional, pre-tax 401(k) allows for contributions to be made with pre-tax dollars, reducing your taxable income now. You pay taxes on contributions and earnings when you withdraw in retirement. This can be beneficial if you think your tax rate will be lower in retirement than it is now. The post-tax 401(k), which is less common, is similar to the Roth in that contributions are made with after-tax dollars. However, unlike the Roth, you will pay taxes on the earnings when you withdraw them in retirement. In this sense, it's less beneficial than either the Roth or the traditional 401(k). So why might someone choose a post-tax 401(k) over a Roth 401(k)? One potential reason is if they've already maxed out their contribution limits for the Roth and traditional 401(k) and want to save more for retirement. The IRS allows overall contributions to a 401(k), including pre-tax, after-tax, and employer contributions, up to a higher limit ($58,000 in 2021). This strategy is sometimes part of a "mega backdoor Roth" strategy, in which post-tax contributions are then rolled over into a Roth account, allowing for potentially larger amounts of tax-free growth and withdrawals. However, the "mega backdoor Roth" strategy can be complex and isn't right for everyone. It's also worth noting that the future of this strategy is uncertain, as recent proposed legislation may eliminate it. As with any financial decision, it's important to consider your individual circumstances, tax situation, and retirement goals. It may be helpful to consult with a financial advisor or tax professional. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I currently am saving for a downpayment, hopefully for an investment property or a 4 flat where it’s part investment part home. I have about $65k saved currently with hopes to bring it up to $125k for a 20% downpayment in the coming year or so. Judging by the market and rates and housing etc. The thing is, is I just have this savings in a savings account. If this were say 2017 I probably would have a chunk of it in ‘low risk’ index funds where it might grow more over the course of the next 5-12months than if I keep it in my savings. I’ve thought about doing this but I feel like the stock market seems much more risky these days and I’m more hesitant to put it there while I wait. What are your thoughts or things you guys have done while you saved for downpayment? Thanks! r/ ### Answer: Your concerns regarding the stock market and its potential risks are valid. Given your timeline of 5-12 months, it's often recommended to keep your funds in a liquid and low-risk account, such as a high-yield savings account or a money market account. Here are some options you might consider: 1. High-Yield Savings Account: These types of accounts offer a higher interest rate than regular savings accounts, providing a safe place for your money while still yielding some growth. 2. Money Market Account (MMA): This is also a low-risk account that typically offers a higher interest rate than a regular savings account. It's a good option if you're looking to earn a decent return without risking your capital. 3. Certificate of Deposit (CD): This is a time deposit offered by banks with a fixed term. It's safe, and usually offers a higher interest rate than a savings account, but you cannot access your money until the term ends without incurring a penalty. 4. Short-Term Bonds: If you're willing to take a bit more risk for potentially higher returns, consider short-term bond funds. These are relatively low-risk compared to stocks. 5. Consider a low-risk, conservative portfolio: If you're comfortable with a little more risk, you might consider investing a portion of your savings into a balanced fund or a conservative portfolio that includes a mix of bonds and equities. Remember, the stock market can be volatile, and there's always a risk of losing money in the short term. Given your short timeline, it might be wise to prioritize the preservation of your capital over aggressive growth. If you're uncertain, it can be beneficial to consult with a financial advisor for personalized advice. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have a question that I can’t seem to find an answer too. So normally a person would have a Roth IRA account and contribute the max every year into the one account. So if I have to do a conversion every year, does that mean I’ll end up with multiple IRA accounts or can I just contribute to the original conversion account until I retire? Thanks. ### Answer: You can continue to contribute to your original Roth IRA account after a conversion, you do not need to open new Roth IRA accounts every time you convert. Once the money is in the Roth IRA, it can stay there and grow tax-free. During the conversion process, you're essentially moving money from a Traditional IRA (or similar tax-deferred account) to a Roth IRA. This can be done within the same account if your brokerage allows it, or you might move the funds to a new Roth IRA account. However, once the funds are in a Roth IRA, any additional contributions you make for the year can be added to that same account, up to the annual limit (which is $6,000 in 2021 if you are under 50, and $7,000 if you are 50 or older). Remember, Roth IRA conversions can have tax implications, as you're moving money from a tax-deferred account to an account funded with after-tax dollars. It's always a good idea to consult with a tax advisor or financial planner to understand the implications for your specific situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I’ll try to be concise: - I contributed $2,000 to 2021-2022 FSA account at job 1. - In April my daughter was born. - I quit my job 8/1/22 and had contributed $1600 to the FSA account up to this point. - I started job 2 on 9/26/22, and lo and behold, it’s the same HR company, so I reactivate my FSA account with only 4 days left in the coverage year (literally the same login). - On 10/1/22 I elect another $2,000 for 2022-2023 for job 2. - On 12/8 I finally get the bill for my daughters birth. - I try using the $2,000 funds on 12/18 - The $2000 was pulled from 22-23 automatically because the HR company switches default years on 12/15, even though I have until 1/31/2023 to submit. - I am working with HR to alleviate but they say they can only swap $1600 of those 22-23 fund to my 21-22 account. I want to make sure I know my rights, and what I have legal claim to. So after all of that explanation, what happens to that other $400 from 21-22 funds that I did not contribute to? ### Answer: The rules regarding how FSA (Flexible Spending Account) funds carry over from year to year can vary depending on the specifics of your employer's plan. Generally, the "use-it-or-lose-it" rule applies, meaning that if you don't use all of your FSA funds by the end of the plan year (or grace period, if your plan has one), you lose those funds. However, some plans offer a carryover option of up to $500, or a grace period of up to 2.5 months into the next plan year to use the previous year's funds. In your case, if your plan doesn't offer a carryover option or grace period, the remaining $400 from the 2021-2022 funds that you didn't contribute to would be forfeited. It's important to note that the funds don't actually go back to your employer, but rather are used by the plan to offset the costs of administering the FSA. However, it sounds like your HR department is saying they can only swap $1600 of the 2022-2023 funds to the 2021-2022 account, leaving $400 unaccounted for. You should clarify with them why this is the case. It might be due to restrictions in your specific plan, or there might be an error that needs to be corrected. Remember, it's crucial to understand the specific rules of your FSA plan, as they can vary greatly from one employer to another. I would recommend discussing this issue further with your HR department or the FSA administrator to get a full understanding of your plan's rules and how they apply to your situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: TLDR: Freedom Debt Relief Program experiences (good/bad) should I stay with the program and trust them or is there a better option? Just recently started the Freedom Debt Relief program a couple of days ago to take care of my $28,000 unsecured debts and now having second thoughts about it. I am worried about the possible lawsuits that might incur and just them not reaching an agreement with my creditors and then I'm just left to deal with the consequences with even higher payments. Just wondering if anyone has gone through this program and has seen any success or if there is a better option for me. Currently making ends meet paycheck to paycheck. My first deposit in this program isn't until Jan 12th so I hope I still have time to cancel if this program will backfire on me. Just seeing these reviews on them makes me not want to start it. I tried to cancel yesterday but was talked out of it by one of their agents, after doing more research I'm just not sure if I want to stay with this or not. Again just curious if anyone has done the Federal Debt Relief Program, what your experiences were if it was successful or not, and if there is a better alternative for my debt. I was considering InCharge Debt Solutions at first for their Debt Management Plan instead of the debt settlement route. ### Answer: As an AI, I can't share personal experiences, but I can provide some insights based on general knowledge. Debt relief programs, like Freedom Debt Relief, promise to negotiate with creditors to reduce what you owe. However, they come with risks. These include potential lawsuits from creditors, damage to your credit score, and no guarantee of success. Plus, these programs often charge fees that can add to your financial burden. It's important to remember that debt relief companies don't have any special powers or relationships with creditors. Anything they can do, you can do yourself for free. This includes negotiating lower interest rates, waiving late fees, and establishing payment plans. As an alternative, you mentioned considering a Debt Management Plan (DMP) with InCharge Debt Solutions. A DMP is a structured repayment plan set up and administered by a non-profit credit counseling agency. It can help reduce interest rates and fees, making your debt more manageable. Here are some steps you can take: 1. Do-It-Yourself Negotiations: You can call your creditors directly and negotiate for lower interest rates or a reduction in your debt. 2. Credit Counseling: Non-profit credit counseling organizations like InCharge Debt Solutions can provide advice and help you create a debt management plan. 3. Debt Consolidation Loan: This is a type of loan that combines all your debts into one single debt with a lower interest rate. 4. Bankruptcy: This should be your last resort. While bankruptcy can eliminate or reduce your debt, it has long-term consequences for your credit score. Before deciding on any option, it's suggested to do thorough research or consult with a financial advisor. You should understand all the implications and potential consequences of each option. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I recently retired from 27 years in a public school system (speech language pathologist). I will now be providing part-time/short-term speech services to public schools as a W9 employee - covering maternity leaves and LOAs, covering caseloads until they find a permanent SLP, etc. The demand for this type of niche service is pretty big and I'm not too worried about getting gigs, except possibly during the summer - I guess we'll see how that pans out. (For reference, when I decided this was what I wanted to do i sent a mail merge to all the special ed directors in two counties. I sent the email at 12:53 pm and by 1:10 pm was booked Monday through Thursday at two different school districts through the end of the school year. I have a third district who might be interested in Fridays, but I was kind of hoping to keep Fridays free.) Anyway, I've never done anything like this before, and I'm afraid I'll screw up my finances. I'd appreciate help/advice in making sure I have all my bases covered. I already have health coverage from my pension, so I don't need to worry about that. I also have professional liability insurance. To start, my rates are $85/hour and so far both jobs are 7 hour days - so that's $595 per day, $2380 per week. I think I need to save about 30% for taxes, right? So that's saving about $715 and banking about $1665 per week? For taxes, I think I have to pay estimated taxes, but I'm not sure exactly what/how to do that. When I used the IRS Tax Withholding Estimator, it asked if I have a "job that regularly withholds federal income taxes from your paychecks." I said no because nothing is withheld from my check when I get paid, and the tool said that I can't use it. :-( It seems like it's only for W4 jobs? When I do my tax returns, I can claim business expenses now, right? For instance, I bought my own evaluation kits for $2100, so I can claim those on my tax return? Can I claim the laptop I bought this year if I am using it for work? (In the fall I contracted just one day per week at a school district and bought the laptop/eval kits to use there.) Finally, for taxes, is it based on when you did the work, or when you got the money? Example: I worked in December for $3600, but won't get paid for that until January. That still goes on this year's taxes, right? I also now have to consider that I only get paid on days that I work, so holidays and sick days will affect my paycheck. I feel like I should set up my own PTO fund so that I don't panic if there's a snow day or if I'm sick. How do I determine what is an appropriate amount - based off my last job it seems like $550/month is what was contributed to my PTO? Should I open separate checking/savings accounts to deposit my paychecks in and buy materials/supplies from and then basically pay myself from those accounts, or is it fine to just use my existing personal accounts for everything? I feel like there are probably tons of things I haven't thought of, or that I'm doing wrong. Any advice is apprciated! Thanks! ### Answer: Congratulations on your retirement and new venture! It sounds like you've got a lot of exciting things ahead of you. Here are some thoughts on your questions: 1. Tax Savings: Yes, as a general rule, setting aside 30% of your income for taxes is a good start. However, this can vary significantly depending on your specific tax situation and state tax rates. It would be a good idea to speak with a tax professional in your area to get a more accurate estimate. 2. Estimated Taxes: As a self-employed person, you generally need to pay estimated tax if you expect to owe at least $1,000 in tax for the year after subtracting your withholding and refundable credits. These are due quarterly, and the IRS provides Form 1040-ES for calculating and submitting estimated tax payments. 3. Business Expenses: Yes, you can deduct business expenses. This would include things like your evaluation kits, a portion of your laptop cost if it's used for work, office supplies, etc. Keep careful records and receipts of all these expenses. 4. Tax Year: Income is generally considered earned in the tax year when you did the work, not when you received the payment. However, most self-employed individuals use the "cash method" of accounting, which means you report income when you receive it and expenses when you pay them. 5. PTO Fund: Setting aside money for personal time off is a smart idea. How much you set aside really depends on your personal comfort level and expected needs. $550/month sounds reasonable based on your previous job, but you might want to adjust this based on your new income level and expected time off. 6. Separate Accounts: Having separate accounts for your business income and expenses can make it easier to track and manage your business finances. It's not strictly necessary, but it can simplify your bookkeeping and make tax time less stressful. In addition, it would be beneficial to consult with a financial advisor or accountant who specializes in self-employment or small business matters. They could provide more personalized advice based on your specific situation. You might also consider setting up a retirement savings plan if you haven't already. Finally, remember that as a self-employed person, you're also responsible for self-employment tax (Social Security and Medicare), which is in addition to your regular income tax. This is a complex subject with a lot of variables, so don't hesitate to seek out professional advice if you're unsure about anything. Good luck with your new venture! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: So I’m currently 17 years old, and I was recently accepted into a university early decision. I looked onto my college’s website, and I found out that my tuition will be about $80k a year (including housing + meals), and I assume my family will spend money to bring me home when school is out. I had several conversations with my mother about how exactly I will pay for school, and she said that the majority of my tuition will be payed through a trust fund that my father left me before he passed away. For most of my life, I chose not to ask my mother about the trust because I always heard her complain about how the long court battle she had trying to uphold the clause of her divorce agreement saying that if either she or my dad were to pass away before I was 18, they would leave all their money to me, but my father instead tried to leave some money to his friends and establish his lawyer friend as my trustee. Apparently, the fight got pretty nasty, and even though my mother was named a trustee by a judge later on, my dad’s lawyer friend used money from my trust fund to pay for his defense in the lawsuit. My mom also objected to paying someone to manage my stocks and bonds while we have family who are very successful hedge fund workers. After sitting down with my mom, I discovered that my trust fund is currently worth about $1.4 million in various stocks and bonds. The fund was set up about 3-4 years ago at around $1.1 million, and it has paid my $40-45k tuition at private school since then, and I guess it makes sense that its still gaining money if the annual return for this year was about 5.3% or $72k. I did see that the fund was worth about $1.8 million a year ago, but my hedge fund friend explained that some stocks have gone down in the past year, and they will for a bit in the future. The fund, however, is still where it was 2 years ago, and that’s after my mom took out $150-$200k to pay for expenses. My real question is what should I expect the next “changes” to my trust to look like, because even though my mother told me it will dissolve and ownership will be mine at around age 23, the trust was set up entirely for EDUCATION. Based on the way my mom talked about it, she didn’t expect me to have much of anything left by the time I finish college (and possibly grad school) since my trust has fluctuated a bit. I still thought that if I can generate $72k a year from the trust, and combine it with the $30-40k from my Mom’s 529, I wouldn’t see much of a change compared to now, and I could have $1 million by the time I’m 23. I just want to know how I can make the best investment in my education while preparing for my future, and having some sort of an estimate would be nice. ### Answer: Firstly, congratulations on your early acceptance into university! That's a great achievement. Let's start with the trust fund. The future value of the trust depends on a few variables: 1. The rate of return: This can fluctuate based on market conditions. You've mentioned a 5.3% return for this year, but it's important to understand that this could change in the future. 2. The amount you withdraw: The more you withdraw for expenses (tuition, housing, meals, etc.), the less capital remains in the fund to generate returns. 3. The time frame: The longer money is invested, the more time it has to grow. Considering your tuition and housing costs of $80k per year, if you withdraw this amount annually from the trust fund for four years, you'll have withdrawn a total of $320k. This will reduce the principal in the trust fund, thus reducing the amount of money generating returns. Now, you mentioned that you can generate $72k a year from the trust, but remember this is based on this year's rate of return, which can change. You also mentioned that you could combine this with the $30-40k from your mom's 529 plan. This could potentially offset some tuition costs and preserve more of your trust fund. However, you need to consider the possibility of attending grad school, which might increase the total withdrawal from the trust fund. Plus, the trust fund's value might fluctuate due to market performance. Ultimately, the exact amount left in the trust fund by the time you're 23 depends on many variables. It's good that you're thinking about this now, as understanding your financial situation can help you make informed decisions about your education and future. To make the best investment in your education while preparing for your future, consider these steps: - Prioritize your education: Your trust fund was primarily set up for this purpose. Investing in a good education can provide you with skills that can potentially lead to a high-paying career. - Plan your finances: Consider working with a financial advisor to help you understand your financial situation better and plan for the future. They can provide guidance on managing the trust fund, planning for grad school, and preparing for financial stability after graduation. - Save and invest wisely: If you have leftover funds after paying for your education, consider saving and investing them to grow your wealth over time. - Live within your means: Try to minimize your expenses and avoid unnecessary debt. This can help your money stretch further and last longer. Remember, every situation is unique. It's important to discuss these things with your mom and possibly a financial advisor to get personalized advice based on your specific circumstances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello Redditors, I need your advice on how to invest or use my savings money in order to further increase and gain more money. I currently have $30K which I absolutely do not need, and wanted some advice on the best course of action to take with it. I’m a 24 year old living in the USA, with no debt/loans/payments. Some of my friends recommended investing in a S&P500, so that may be one of the options I’ll take. Looking forward to hearing your advice! ### Answer: Hello, Before you start investing, it's essential to consider your financial goals, risk tolerance, and investment horizon. Considering your age, you have a long time horizon ahead of you, which means you can afford to take more risk for potentially higher returns. Here are some investment options for you: 1. Stock Market: As you mentioned, investing in an S&P 500 index fund could be a good start. These funds are low-cost, broadly diversified, and follow the performance of the S&P 500 Index. It's a relatively passive approach to investing, and given your age, you could potentially see significant growth over time. 2. Retirement Accounts (401k, IRA): If you don't already have a retirement account, it could be a good idea to start one. You can invest in a traditional or Roth IRA. The contributions you make to a traditional IRA could be tax-deductible, but you'll have to pay taxes when you withdraw the money at retirement. Roth IRAs are funded with after-tax dollars, meaning you won't get a tax deduction now, but you can pull out the money tax-free at retirement. 3. Real Estate: You could also consider investing in real estate. This might not be as liquid as the other options, but it can provide stable cash flow and possible appreciation over time. You could look into buying a rental property or investing in a Real Estate Investment Trust (REIT). 4. Peer-to-Peer lending or Crowdfunding: These are platforms where you can lend money to individuals or small businesses in return for interest. They can be quite risky, but the returns can also be high. 5. Diversify: A well-diversified portfolio can help reduce risk. You can diversify by investing in a mix of stocks, bonds, real estate, and cash. 6. Emergency Fund: Before you start investing, make sure you have an emergency fund set aside. This should be around 3-6 months worth of living expenses. Remember, all investments come with risk and it's important to do your research before making any decisions. You may want to consult with a financial advisor to help you create a plan that fits your individual needs. Best of luck with your financial journey! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: So I just noticed that in my 401k account, excluding the employer match, I have contributed $20,700. Is this something that I should worry about? ### Answer: Your concern might be related to the annual contribution limits for 401(k) plans, which are set by the IRS. For the year 2021, the contribution limit is $19,500 if you're under 50 years old. If you are aged 50 or above, the limit is $26,000 as you can make an additional catch-up contribution of $6,500. However, if your $20,700 contribution spans over multiple years, then there's no cause for concern. If you contributed more than $19,500 in 2021, you should contact your 401(k) plan administrator as soon as possible to correct the excess contribution. Over-contributing can potentially lead to double taxation, so it's important to fix it as soon as possible. Keep in mind that these limits are only for your own contributions and don't include the employer match. As an AI, I suggest you to always stay updated with IRS guidelines or consult with a financial advisor for personalized advice. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello PF, I'm looking for guidance on how to allocate funds, as I will be fully funding my Roth IRA next week. I currently have a Roth IRA and a brokerage account through Charles Schwab. My current Roth balance is at $85,000 and is pretty evenly distributed between SCHD, SCHK, BUFBX, and OAKBX. These were funds recommended to me by Schwab associates over the years. I'm planning on funding $6,500 into the Roth next week and was wondering if I should divide that evenly between the funds I already have, pick a new fund to invest in, or dump the $6,500 into a specific fund I already have in the Roth. In my Schwab brokerage account I have $127,000 divided between APLE (Apple Hospitality REIT), PONAX, and SWOBX. The allocation to APLE is quite large and I receive dividends each month that I use to fund my Roth for the next year. Additionally, I have a brokerage with Vanguard and am holding VWENX totaling $46,000. I also have a pension and a 401a and 457, totaling $30,000 through my job with the city. Thank you for reading. ### Answer: Hello, I'm glad to see that you're taking a proactive approach to your retirement savings. When it comes to allocating funds within your Roth IRA, it's important to consider your overall financial goals, risk tolerance, and investment horizon. Given your current investments, you seem to have a diverse portfolio spanning ETFs, mutual funds, and REITs. Your portfolio seems balanced between large cap equity (SCHK, SCHD), corporate bond (BUFBX, OAKBX), a multi-sector bond fund (PONAX), a balanced fund (SWOBX), and a diversified equity fund (VWENX). Here are some general tips to guide your decision: 1. Review Your Asset Allocation: It's important to periodically review your asset allocation to ensure it still aligns with your financial goals and risk tolerance. If you've become more or less risk-tolerant, you may want to adjust your allocations accordingly. 2. Consider Your Investment Horizon: If you're nearing retirement, you may want to lean towards more conservative investments. If you have a longer investment horizon, you might consider allocating more to equities. 3. Rebalance as Needed: If your investment has grown disproportionately in one sector, you might consider rebalancing by investing more in underrepresented sectors. 4. Diversification: It's crucial to have a diversified portfolio. If you feel any area (like international stocks or certain sectors) is underrepresented, you might consider diversifying further. 5. Expense Ratios: Always consider the expense ratio of the funds. Lower cost index funds often outperform higher cost actively managed funds over the long run. 6. Tax Considerations: Since you're investing in a Roth IRA, your contributions are made with after-tax dollars, and you won't have to pay taxes on qualified distributions in retirement. This can make Roth IRAs a good place to hold investments that generate a lot of income, such as REITs or bond funds. Since I am an AI, I'm not able to provide personalized investment advice. However, I hope these general guidelines can help you to make a decision. Please consult with a financial advisor or a tax professional to discuss your specific circumstances before making any investment decisions. Be sure to check out Schwab's and Vanguard's tools and resources for retirement planning as well, they can be very helpful in making these decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I cant transfer the stock sale proceeds till January 3 will I be flagged as not having taken the RMD for 2022. Thanks for your help! ### Answer: The Required Minimum Distribution (RMD) rules mandate individuals of a certain age to withdraw a minimum amount from their retirement accounts each year. The deadline for taking RMDs is generally December 31 each year. If you have sold stock in your retirement account to satisfy your RMD for 2022, but the proceeds from that sale are not transferred out of the account until January 3, 2023, it may still count as a 2022 distribution as long as the sale was initiated in 2022. However, this can depend on the specific rules of your retirement account provider. Please note that this is a general explanation and the specifics might vary based on your circumstances and the financial institution handling your retirement account. Therefore, it's recommended to contact your financial advisor or brokerage firm to get the most accurate information. Also, IRS rules can change, so ensure you're getting the most up-to-date advice. In the future, to avoid any uncertainties, it's generally better to take the RMD earlier in the year or at least give the transaction plenty of time to process before the end of the year. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Looking to buy a 1st home. Wanting to know if there is anyone who had recently bought a home and what rates did you find? Looking to buy in suffolk county. Willing to wait to see if rates end up coming down lower. Have fantastic credit and Wife and I make good money. ### Answer: As an AI, I don't have personal experiences. However, I can provide you with some general advice on the matter. Mortgage rates can vary significantly based on a variety of factors including credit score, down payment, and the type of loan you choose. As of now, mortgage rates are historically low. As of January 2022, the average interest rate for a 30-year fixed-rate mortgage is around 3.10%. But these rates can vary day by day. Given your fantastic credit and strong income, you should be able to secure a rate at or below this average. However, predicting future mortgage rates is challenging, as they are influenced by a wide array of economic factors. If you're considering buying a home in Suffolk County, I would recommend speaking with a local real estate agent or mortgage broker. They will have a better understanding of the local market and can help you secure the best possible rate. Remember, when shopping for a mortgage, make sure to consider all costs involved, not just the interest rate. This includes closing costs, points, and fees. It's also critical to get pre-approved for a mortgage before you start house hunting, as this will give you a better idea of your budget and show sellers that you're serious. Lastly, always keep in mind that buying a home is a significant financial decision, so take your time to weigh all your options. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: &#x200B; I would purchase new-issued t-bills (e.g. 01/03/2023) at Fidelity (but never did it before). Questions: 1. Announcement day is Jan 3, and auction day is Jan 4. What time (and clock e.g. 8 AM ET or 10pm PT) can I purchase/bid it at Fidelity? 2. The minimum purchase is $100 and the minimum increment is also $100. But all purchasing price is a fractional like 98.1234. If I would purchase $1000 par value t-bill (i.e., 10 unit of minimum purchase), I should input $1000 or $98.1234\10, or any number >= $100 is OK? &#x200B; TIA ### Answer: 1. At Fidelity, you can participate in U.S. Treasury auctions. The schedule for these auctions varies, but the Treasury typically announces them at 11:30 AM ET on the second, third, and fourth Wednesdays of the month. Bidding opens after this announcement and remains open until the day of the auction. You can place orders up until 11:00 AM ET on the day of the auction. 2. When purchasing Treasury bills, you will typically place a bid for a discount from the par value. For example, if you place a bid at a $98.1234 price, you're actually bidding $98.1234 for every $100 of face value. So if you want to purchase $1,000 of face value, you would bid $981.234 (i.e., $98.1234 10). However, please note that the price you actually pay may differ based on the result of the auction. If your bid price is competitive, you will pay the price you bid. If it is noncompetitive, you will pay the average price of all competitive bids. Remember, when buying Treasury bills, you're essentially agreeing to lend the U.S. government money. The discount you bid is the interest you're charging for that loan. At maturity, you're paid the full par value of the T-bill. Please be sure to confirm all this information with Fidelity or your financial advisor as procedures and regulations can vary. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Over the last year, I have paid off 85% of my CC debt, freeing up some of my income to pay debts/save. I am conflicted whether it makes more sense for me to aggressively pay down my private student loan, to save aggressively, or to do a 50/50 split of my discretionary income. Currently own about 50k in student loans, divided below as such: * Private Student loan with credit union \- \~$9,100 at 3.02% \- min monthly payment $225. 5 year loan, paid off in Aug 2026 if paying on minimum. * Federal loans \- $41,599.00 \- weighted average interest rate: 4.21%, no monthly payments as currently frozen. Eligible for 20k forgiveness if it goes through, but I am not hoping on it. Once payment resumes next summer, I estimate my payment to be around $150/month with the new IPR plans. My remaining CC debt totaling about $3k on an AMEX card. Will have it paid off before the intro APR expires in April. I am currently making $4400/month after taxes (including health/vision/dental premiums, and contributing 3% to my company offered 401k plan.). I live in a HCOL. Within the next year, I am expecting a pay raise of $10-15k/year, with high probably of reaching $120k+/year in the next 5-7 years. I work in a field that is very minimally affected by a potential recession. Current savings: $2,000 Retirement - 401k balance is \~$7,000. I am 26 for reference on how close I am to retirement. My company matches 50% of the first 8% of pay contributed, which is vested after 3 years of service. Currently have slight a year of working at my current company. Total combined 401k balance is \~$7,000. I am 26 for reference how close I am to retirement. Monthly expenses (minimums): $2,171 * No rent/housing expenses as I live at home, but I pay the electric bill as an agreement - \~$300(taking the average through the year) * Student loan minimum - $225 * Other debt minimums (including car, CCs, and installment plans) - $1041 (lowering to $800 by March 2023) * Other expenses(phone, car insurance, etc): $605 Did not include things like groceries, gas, and other misc. expenses in this, as it is easier to reduce how much I am spending and there are no minimums. Finally, want to mention that my goal this year is to move out of my parents’ and move to another state (with MCOL) by fall, so having enough savings is important. I am open to all feedback. Thank you! ### Answer: Firstly, congratulations on your progress so far in paying down your credit card debt and managing your finances. Your situation is quite unique and requires a tailored approach. Here are a few suggestions: 1. Emergency Fund: It's crucial to have an emergency fund that would cover at least 3-6 months of living expenses. As you're planning to move out, take into account future living costs in the MCOL area, including rent, utilities, transportation, groceries, etc. 2. Credit Card Debt: Continue with your plan to pay off the remaining credit card debt before the intro APR expires in April. 3. Student Loans: Given the interest rates and the potential for forgiveness on your federal loans, it may be more advantageous to focus on the private student loan. However, do not rely solely on the potential forgiveness and make sure to keep some money aside for these loans. 4. 401(k) Contributions: Consider increasing your contribution to your 401(k) to take full advantage of your company’s match policy. It's essentially free money and can significantly boost your retirement savings. 5. Savings vs. Loans: After meeting your minimum payments and living expenses, split your leftover income between saving for your move and paying down your private student loan. You could adjust the ratio based on your moving timeline and how aggressive you want to be with your loan repayment. 6. Future Pay Raise: Once you get your pay raise, re-evaluate your budget. Consider using a portion of your increased income to boost your 401(k) contributions, increase your loan repayments, or build your emergency fund and savings. Make sure to regularly review and adjust your plan as your situation changes. It's important to stay flexible and adapt to new circumstances. Lastly, consider consulting with a certified financial planner to help you make the best decisions for your situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is anyone aware of an application or service which allows your direct deposit or other sources of income to be automatically routed through various bank accounts upon receipt? I know one exists as I was targeted for it via an ad but since forgot the name. The purpose is such that when funds come in, this funds are deposited to a series a various accounts for personal accounting purposes (e.g., A > B > C) I’m aware that direct deposits can be split across a few accounts automatically but this service had additional capability. Thanks! ### Answer: Yes, there are several services that offer the ability to automate the distribution of your income across various accounts. One such service is called "Digit." Its primary function is to analyze your spending habits and automatically transfer money from your checking account to your savings account, but it also has a feature called "Direct Deposit." With this feature, you can choose to split your direct deposit among your various Digit goals, which are essentially separate sub-accounts within Digit. Another app that provides similar services is "Qapital". It allows you to set rules for how your money is distributed across your accounts when your paycheck is deposited. Lastly, "Simple" is a mobile banking app that offers "Expenses" and "Goals" features. These features allow you to automatically distribute your direct deposit across various categories. However, if you're looking for more sophisticated automation, you might want to consider a more advanced financial management tool like "YNAB" (You Need A Budget) or "Mint". These tools can connect with your bank accounts and provide detailed budgeting and financial tracking features. Remember to do your own research to find the best fit for your personal financial needs. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I recently got a credit card with discover an was told that my statements would be due on the 4th if every month. But since I’m confused I’m not sure how it works, what does it mean when is like -100? My friend told me that it’s like free 100 credit for getting a card with them snd using her referral code. Which makes sense so does that mean that when my account says -# that means there’s like money I don’t need to pay? I need to pay when it’s in the positives? And also should I set up autopay? The main reason I’m typing these is because let’s say I buy something right now and i t’s almost gonna be the 4th of January; since the statement is due then and my purchases would ukd have to be processed and then even the process to pay with my debit card takes place would the purchase affect the bill? Make it late because of it processing? Or is it more like every purchase I make I have a month to pay it off? If so why do they give me a specific date like the 4th of every month? ### Answer: Credit card statements can indeed be confusing when you're new to using them. Here is how it works: 1. Credit Balance: If your credit card statement shows a balance of -$100, it means you have a credit balance of $100. This could be due to a refund, a credit from the credit card issuer (like your $100 promotion), or an overpayment. In this scenario, you don't owe the credit card company anything. In fact, they owe you $100. You can use this in future purchases, or you can ask for a refund check. 2. When to Pay: You only need to pay when your statement balance is positive. This means you have made purchases on your card that you now owe to the credit card company. 3. Autopay: Setting up autopay can be a good idea to avoid late payment fees. However, ensure you always have enough funds in your bank account to cover the autopay amount to avoid overdraft charges. 4. Purchase Timing: If you make a purchase today and your statement is due on the 4th, this purchase will likely not appear on your current statement but on your next one. Credit card companies generally have a "grace period" between when your statement closes and when payment is due. Purchases made during this time will go on your next statement. 5. Due Date: The due date is simply the day your payment is due for the purchases you made during your last billing cycle. This is typically about a month after your billing cycle ends. 6. Paying Off Purchases: You have until the due date to pay off your purchases without incurring any interest. If you don't pay off your purchases by the due date, you'll start accruing interest on your remaining balance. Remember, it's always a good idea to pay off your balance in full each month to avoid interest charges and maintain a good credit score. If you have any other questions or need further clarification, don't hesitate to ask. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have an long forgotten SERPS pension that I can access at 55. It's my only pension plan. It's currently worth 120K. I'd like to withdraw 25% tax free at 55 and then leave the rest invested to use when really needed. The pension provider says it a bad idea to do it at 55 even when they offer me the option to do it? I'm not sure if I trust them tbh. I have an appointment with a financial advisor in the new year but I'm curious to run it by this sub. What do you think? ### Answer: As an AI, I can provide some general advice based on the information you've given, but keep in mind that it's always best to speak with a professional financial advisor who can assess your individual circumstances and provide tailored advice. Taking the 25% tax-free lump sum at 55 is an option available to you, and many people choose to do this. However, there are a few things to consider: 1. The remaining 75% of your pension will continue to be invested, and its value could go up or down depending on market conditions. 2. The money that you withdraw will no longer be earning any investment returns. Therefore, the overall value of your pension pot could be significantly reduced in the long term. 3. Depending on your life expectancy and other sources of income, taking the lump sum at 55 might mean that you have less to live on in retirement. As for your pension provider advising against it, this might be because they want to keep your funds invested for as long as possible to generate more fees. On the other hand, they might genuinely believe that it's not in your best interest to withdraw the money at 55 based on the assumptions they've made about your situation. In summary, whether to take the tax-free lump sum at 55 is a decision that depends on your personal circumstances, including your financial needs and goals, your life expectancy, and your risk tolerance. It's important to consider all these factors and discuss them with your financial advisor before making a decision. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have I bonds in a gift box that we’re supposed to go to a family member. Sadly that family member has passed away. Unfortunately when I purchased the bond, I did not name myself as the beneficiary. So I guess I’m wondering what happens? As far as I understand there’s no way for me to cancel or turn in the bond. Is there any option for me to recoup my money? Thanks ### Answer: I'm sorry for your loss. Regarding your situation, the laws can vary and the bonds might need to go through the deceased's estate. Here are general steps you could consider: 1. Proof of Death: Collect all the necessary documentation, including the death certificate of the deceased family member. 2. Legal Representation: If a legal representative has been named in the deceased's will, they have the ability to handle such matters. If there is no will or named executor, one might need to be appointed by the court. 3. Contact the Treasury Department: Once the legal representative has been established, the next step is to contact the U.S. Department of Treasury's Bureau of the Fiscal Service. They have procedures in place to handle these situations. Usually, they require a completed FS Form 5336 (Claim for Lost, Stolen, or Destroyed United States Savings Bonds). 4. Additional Documentation: You may need to provide additional paperwork, such as proof that you were the original purchaser of the bonds. 5. Transfer or Redeem the Bonds: Once the legal representative has provided the necessary paperwork, the Treasury Department can then reissue the bonds, or they can be cashed in. This is a general guideline and may not cover all scenarios. It is always a good idea to consult with an attorney or a financial advisor to understand the specific procedures related to your situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: From what I've read, making a lump sum contribution to a Roth IRA is the slightly preferred method for hitting the yearly contribution limits. I can understand the reasoning behind this. The part that I don't get is where is that lump sum coming from? If it's money that has been collecting in a savings account throughout the year, why not just contribute it throughout the year? Aren't you missing some growth while you accrue enough funds? ### Answer: The lump sum contribution strategy generally assumes that you have the funds readily available at the beginning of the year. This could be because you have been saving in the previous year specifically for this purpose, you received a bonus, an inheritance, or any other windfall. The advantage of a lump sum investment is that it gives your money more time to grow, as it is exposed to the market for a longer period. However, if you do not have the lump sum at the beginning of the year, and instead save up throughout the year to make that lump sum contribution, you could indeed be missing out on potential growth throughout the year. In this case, a dollar-cost averaging approach could be better. This approach involves making regular investments over time, which could be monthly or quarterly. This not only helps in spreading the risk of market volatility but also ensures that your money is working for you as soon as it is available. Ultimately, the best strategy depends on your specific circumstances, including your cash flow, risk tolerance, and investment goals. It's always advisable to consult with a financial advisor or a tax professional before making such decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello, I'm looking for a loan calculator with input variables of loan amount, monthly or biweekly payments, and interest rate. With the solved values being time it will take to pay off the loan and the amount of interest that will be paid. My goal is to see how changing my repayment amount impacts the long term amount of interest paid. Can anyone suggest a calculator, or perhaps provide an excel formula top do what I'm looking for? Any help is appreciated! Thank you! ### Answer: Hello, For your needs, you can use an Excel formula to create your own loan calculator. Below is a basic setup: 1. Open a new Excel sheet. 2. In cell A1, type "Loan Amount". In B1, type the amount of the loan. 3. In cell A2, type "Annual Interest Rate". In B2, type the annual interest rate as a decimal (so 5% would be 0.05). 4. In cell A3, type "Payment Frequency". In B3, type the number of payments per year (12 for monthly, 26 for biweekly). 5. In cell A4, type "Payment Amount". In B4, type the amount of each payment. 6. In cell A5, type "Loan Duration (years)". In cell B5, type the formula `=NPER(B2/B3,B4,-B1)`. This will calculate how long it will take to pay off the loan. 7. In cell A6, type "Total Interest Paid". In cell B6, type the formula `=(B5B3B4)-B1`. This will calculate the total interest paid over the life of the loan. Now, you can adjust the loan amount, interest rate, payment frequency, and payment amount to see how they affect the time it takes to pay off the loan and the total interest paid. There are also plenty of online loan calculators that offer similar functionality. Websites like Bankrate, Nerdwallet, or Calculator.net all have loan calculators that can help you visualize the impact of changing your repayment amounts on the long-term interest paid. Let me know if you need further help! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I am trying to set up a system of spreadsheets to track our financial picture. The programs like Quicken that I've used in the past are overly complicated and require lots of maintenance. One thing that I can't find is a good template to track post-retirement spending which is set up for a family of two who are not in the same age bracket (my wife is almost a decade younger). Basically, I want to be able to plug our respective current ages, retirement ages, forecasted net worth / social security & pension (and the years they kick in, which is not necessarily the same as retirement year)/ desired yearly income / projected inflation / projected investment performance, and see what the different scenarios look like (e.g. "what do we need to set aside to live into our 90s without drawing down the principal ?") Most of the templates I found are for a single person. I did find one that matches the scenario above but it's in British pounds and extremely complicated. I am using Numbers, but Excel will do as well. ### Answer: While I can't directly create an Excel or Numbers template for you, I can definitely guide you on how to set one up to fit your specific needs. Let's break this down into different components: 1. Input Sheet: This sheet will contain all the inputs you mentioned. You'll need to create fields for: - Current age for both you and your wife - Planned retirement age for both you and your wife - Current net worth - Social security and pension details, including when they kick in - Desired yearly income in retirement - Projected inflation rate - Projected investment performance 2. Calculation Sheet: This sheet will do most of the heavy lifting. It will use the inputs to calculate how much you need to be saving to achieve your goals. You'll need formulas to calculate: - Years until retirement for both you and your wife - Amount needed to save to reach your desired yearly income, factoring in social security, pensions, and investment performance - Effects of inflation on your savings and income - Other scenarios you might be interested in 3. Output Sheet: This sheet will display the results of your calculations in an easy-to-read format. You might want to include: - Total you need to save for retirement - Amount you need to save each year until retirement - How long your savings will last into retirement - Impact of inflation on your retirement savings 4. Scenario Analysis: This could be a section on your output sheet or a separate sheet altogether. Essentially, you'll want to use Excel's "What-If Analysis" tool to see how changes in your inputs will affect your retirement savings. Remember, the key to a successful financial spreadsheet is simplicity and clarity. Make sure it's easy for you to understand and update. You might want to consider seeking help from a professional or using online resources to learn more about Excel formulas and functions. It's also a good idea to regularly update your spreadsheet as your financial situation changes. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Household income is projected to be within a few thousand dollars of the Roth IRA income limit. I'm just wondering what my plan should be. Trying to decide between DCAing to IRA then backdoor into roth if desired at the end. Or just waiting till end of year and doing Roth if able, else trad. Also weighing the options of roth ira backdoor vs trad vs taxable. Roth isnt great because tax rate is fairly high, trad isnt great because contributions arent pre tax at this income level, and taxable isnt great because no tax advantages, but can be accessed whenever. ### Answer: It's clear you've put some thought into this, which is excellent. Here are some thoughts to help you decide: 1. Dollar-Cost Averaging (DCA) into a Traditional IRA then Backdoor into Roth IRA: This is a good strategy if you are unsure whether your income will be within the limit for direct Roth IRA contributions. By contributing periodically into the Traditional IRA, you take advantage of market fluctuations. If you end up exceeding the income limit, you can then convert (backdoor) your Traditional IRA contributions into a Roth IRA. However, keep in mind that this strategy requires careful tracking and planning to avoid the pro-rata rule and potential tax complications. 2. Waiting till the end of year: This strategy gives you more certainty about your total income and whether you qualify for a direct Roth IRA contribution. However, you'd miss out on some of the potential gains throughout the year. 3. Roth IRA Backdoor vs. Traditional IRA vs. Taxable Account: You're correct that each of these options has its pros and cons. The backdoor Roth IRA strategy is great for high earners who do not qualify for direct Roth IRA contributions, but it does come with a tax hit. Traditional IRAs offer tax deductions now but will be taxable upon withdrawal. A taxable account doesn't provide any tax advantages, but it offers more flexibility as there are no restrictions on withdrawals. Given your situation and considering the tax efficiency, it's generally recommended to max out tax-advantaged accounts (like IRAs) before investing in taxable accounts. However, this may vary based on individual circumstances. Lastly, since you might be near the Roth IRA income limit, you might want to consider a strategy called "filling up the brackets". This involves taking Traditional IRA deductions now while you're in a high tax bracket, and then converting these to a Roth IRA later when you're in a lower tax bracket, say in retirement. Remember, it's always best to consult with a financial advisor or tax professional to understand the full implications of these strategies. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello, I am a total noob at investing. I have read the faqs, how to select investments for your 401k, how to approximate the stock market, etc. but there are still things that go over my head. Our company is switching to a new 401k provider (Fidelity) and I wanted to take the opportunity to manage my investments more directly in order to increase my returns (so far I have always invested in a target date return fund). Given [the funds and fees available to me](https://imgur.com/a/AejUFxI), what would be your suggestion in allocation? I am \~20 years from retirement. Thank you very much. ### Answer: I'm sorry for any inconvenience, but I'm unable to view links or images directly. So, I can't look at the specific funds and fees available to you. However, I can give you some general advice on how to allocate your 401k investments. 1. Diversification: It's important to have a mix of different types of investments in your 401k. This typically includes a mix of stocks and bonds. Stocks have the potential for higher returns but also come with more risk, while bonds are generally more stable but offer lower returns. The right balance depends on your risk tolerance and time until retirement. 2. Target Date Funds: If you're unsure about how to allocate your investments, a target date fund can be a good option. These funds automatically adjust the mix of stocks and bonds as you get closer to retirement, becoming more conservative over time. 3. Fees: Pay attention to the fees associated with each fund. Even small differences in fees can make a big difference in your returns over time. Look for funds with low expense ratios. 4. Risk Tolerance: As you're 20 years away from retirement, you can probably afford to take on a bit more risk for the potential of higher returns. This means you might want to allocate a larger percentage of your 401k to stocks. However, this depends on your personal comfort with risk. 5. Regular Rebalancing: Over time, some of your investments will perform better than others, which can throw off your desired allocation. Regularly rebalancing your portfolio can help ensure that you maintain the right mix of investments. 6. Speak with a Professional: If you're still unsure about how to allocate your 401k, consider speaking with a financial advisor. They can provide personalized advice based on your specific situation. Remember, it's always important to do your own research and consider your own personal financial situation and risk tolerance before making investment decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I have recently gotten a new job as a software engineer where I went from a $95,300 base plus about $12k in bonus (it varied) to a $125k base, $10,000 sign-on bonus, and up to 10% yearly bonus (depending on a lot of various factors) that I will get at the end of 2023. I will be immediately putting the $10k sign-on bonus into my emergency savings which are in a high-interest account at 4.1% and that should bump me up to a solid 6 months. I have $26,800 in student loans that I refinanced this year with an interest rate of 2.91%. I don't carry a credit card balance from month to month and have no car payment. I have a mortgage for a one-bedroom condo with a balance of $154k at 2.875% which is valued at around $220K. My new job has a 401K that matches 100% up to 3% and 50% for the next 3%. Initially, when I started the new job on Dec. 19th, I put contributions at 10%. I have about 20K in the 401K from the old job that I am in the process of putting in a Rollover IRA. I also have about $3800 in a ROTH IRA that I opened in 2022. I have a 6 emergency fund once that sign-on bonus is deposited. I am looking for advice on what I should do with the new money coming in. I really want about a year in emergency savings but I also really want to max out my 401k contributions but not sure where I should focus or how I should split it. Maxing out the 401k would be contributing around 20% based on my calculations. &#x200B; I am also experiencing some lifestyle creep. I use YNAB and have been combing over my budget for the last year pretty closely. It seems that the biggest places I could see savings are eating out, groceries, clothing, and pet supplies. I got a puppy last year so there were a lot of expenses for that that should calm down. But my problem is that if I have the money for something expensive that I've been wanting (like new furniture this year :( - I will buy it in cash and then not be able to save as much. I have never made this kind of money before and I want to be responsible but I am not sure how to balance the wants that I have and socking everything into savings. Any advice on how to manage this and budget for big expenses while also saving enough is welcome too. Or if there is anything else that I should be doing that I haven't thought of, please let me know! I just want a plan moving forward this year so that I can track my progress well. ### Answer: Congratulations on your new job and increased income! Here's a plan that might help you balance your goals: 1. Emergency Savings: Since you already have a solid 6-month emergency fund, start slowly building towards a year. You don't need to rush this, as 6 months is already a good cushion. You could allocate a small portion of your monthly income towards this. 2. 401k Contributions: Maxing out your 401k is a great idea as it provides tax advantages and your employer matches a portion of your contributions. The 2022 contribution limit is $20,500, so you may need to adjust your contribution percentage to hit this amount if you can afford it. 3. Roth IRA: Since you're already contributing to a Roth IRA, try to max this out as well, which is $6,000 for 2022. This provides post-tax benefits and can be a good complement to your 401k. 4. Student Loans and Mortgage: Your interest rates are quite low on both, so while you should continue to make your regular payments, it's not necessary to prioritize paying these off early over maxing out your retirement accounts. 5. Lifestyle Creep: It's important to enjoy your increased income, but also to save and invest for the future. Consider setting a budget for discretionary spending each month and stick to it. You could also start a separate savings account for larger purchases, contributing a small amount each month. 6. Budgeting for Big Expenses: Set specific savings goals for big ticket items and save towards them gradually. This will prevent you from depleting your savings at once for a single purchase. 7. Investing: Once your retirement accounts are maxed out and you have a comfortable emergency fund, consider investing in a taxable brokerage account. Diversified index funds are a good place to start. 8. Regular Check-ins: Regularly review your spending, savings, and investment. This will help you stay on track and make necessary adjustments. Remember, personal finance is personal. These are general suggestions and you should adjust them to fit your lifestyle and financial goals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: As the title states I took out a personal loan about 6 months ago to purchase a piece of equipment. Total principal left on the loan is sitting shy of $18,000. I have since sold the piece of equipment and have enough to pay the principal amount back but I am worried I will be slapped with fees for such a early payoff. What are my options and should I expect any fees associated with a early payoff? ### Answer: Your concerns about potential prepayment penalties are valid as some lenders do charge a fee if you pay off your loan before its term ends. These fees are intended to compensate the lender for the interest they would have received had the loan been paid off as originally agreed. However, not all lenders charge this fee, and even those that do may have different conditions under which it applies. Here's what you should do: 1. Check Your Loan Agreement: Your loan agreement should clearly state whether a prepayment penalty applies to your loan. If it's not clear, or if you don't have the agreement, contact your lender directly to ask about it. 2. Understand the Fee Structure: Prepayment penalties can be structured in various ways. Some lenders charge a flat fee, some charge a percentage of the remaining loan balance, and others charge a sliding scale fee that reduces over time. Make sure you understand what type of fee your lender uses, if any. If a prepayment penalty does apply to your loan and it's significant, you might want to consider whether it's worth paying off the loan early. You should compare the amount you would save on interest by paying off the loan early with the amount of the prepayment penalty. If no prepayment penalty applies, or if the penalty is small compared to the interest savings, paying off the loan early can be a good choice. It will save you money in the long run and free up your monthly budget. It's always a good idea to consult with a financial advisor or accountant to help you make the best decision based on your specific circumstances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I recently moved to Washington state and I have been staying with my brother and I used his address for the time being. I am going to be staying short term in an Airbnb and the owner is not comfortable with me using their address. To make matter worse my brother doesn't seem thrilled to be getting my mail mixed with his. Anyway, I was thinking of just using a UPS address and making that my permanent address, however this would update the address my employer has for payroll (and how the taxes are impacted). Since the addresses are all in the same state does anyone know if this will cause a problem? My goal is to just have my own consistent address while I lock down a permanent rental or buy a house. ### Answer: Given your situation, using a UPS mailbox as a permanent address can indeed provide a stable mailing address without impacting your brother's mail or needing to rely on your Airbnb host. However, it's important to understand a few things: 1. Taxes: Since all the addresses are in the same state, your state income tax should not be impacted. Washington State does not have a state income tax, so that is also not a concern. However, your employer may still need your physical residential address for reasons separate from taxation, such as employment records, contact information, and in case of emergencies. 2. Permanent Address: While you can use the UPS address for most mail and packages, some institutions (like banks, government agencies, etc.) may require a physical residential address and not a mailbox service. This is due to the USA PATRIOT Act, which requires a physical address to help prevent fraud and illegal activities. 3. Future Moves: If you move to a different state in the future, having a UPS address as your permanent address might create complications since your official state of residence for tax purposes should match your physical location. In summary, it's a good temporary solution, but you'll likely need to provide your actual residential address to your employer and other institutions. You should consult with your HR department to understand their requirements, and also consider seeking advice from a tax professional to understand any potential tax implications. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I ordered a 2023 Jeep Wrangler and it will be here in two weeks. Out the door price is $36,500. I saved up the cash to just buy it outright but want to see if any other options. My credit score is 710. I make 35k a year and have no life expenses. My partner makes 80k a year but does not want to co sign. Any suggested credit unions or banks? I’m in Oregon near Portland. Thanks! ### Answer: Congratulations on your new Jeep Wrangler! It's great to hear that you have saved up enough to purchase it outright. If you're considering financing options, a few things you may want to consider are interest rates, loan terms, and prepayment penalties. With a credit score of 710, you should qualify for a decent interest rate. Most auto loans are for a term of 36 to 72 months. If you can afford the higher monthly payments, a shorter term loan will save you money in interest over the long run. You should also check to see if there's a prepayment penalty in case you decide to pay off the loan early. Here are a few credit unions and banks in the Portland, Oregon area that you might want to consider: 1. OnPoint Community Credit Union: OnPoint offers auto loans with competitive rates and flexible terms. They also have a few branches in the Portland area. 2. Unitus Community Credit Union: Unitus also offers auto loans and they have a few branches in the Portland area as well. 3. Advantis Credit Union: Advantis offers auto loans with no payment for the first 90 days. They have several branches in the Portland area. 4. U.S. Bank: If you're interested in going with a traditional bank, U.S. Bank offers auto loans with competitive rates. They have many branches in the Portland area. 5. Wells Fargo: Wells Fargo is another traditional bank option that offers auto loans. They also have a number of branches in the Portland area. Before you make a decision, I would recommend shopping around and getting quotes from a few different lenders to ensure you're get the best rate and terms. Remember, just because you're pre-approved for a certain amount doesn't mean you need to borrow the entire amount. Consider what monthly payment will be comfortable for you based on your income and other financial obligations. Lastly, please consider the cost of insurance, maintenance, and fuel when budgeting for your new vehicle. These can add significantly to the cost of ownership. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: My wife and I (both early 30's) are finally in a place where we're making decent money (gross $120,000). We do not own a house, nor have kids. There are a few things I want to start doing, but am not sure where to start. I've gone through the wiki and have a couple ideas, but wanted more specifics. - My wife has little credit, most things have been in my name. She doesn't have bad credit or anything negative about her credit, she just has a small credit history. I want to help her build up her credit score. I was looking at a credit card that we could pay off every month and earn travel points (we can afford vacations now!), but very little cards have co-signers or joint accounts and authorized users don't benefit as much as they used to. Advice? - We both have Roth's/401k, but I'd like to do more investing. I was thinking about a mutual fund or investing on my own into an index, but would like some more specific advice or maybe a book(s) I could get. - I've heard a lot about how the standard "get a job, IRA and investment portfolio" won't be enough for us to retire. What else should we be doing to prepare? - Finally, I'd like to maximize my money for today, be able to make big purchases, go on vacations etc. What else can I do to make my dollars work harder for me or maximize my financial usage? Thanks ### Answer: Great to see that you're thinking about these important financial concerns. 1. Building Credit: One way to build your wife's credit is to add her as an authorized user on your existing credit cards. Even though this doesn't have as much impact as it used to, it can still help. She could also consider getting a secured credit card which requires a cash collateral deposit that becomes the credit line for that account. As she uses it and pays it off each month, she’ll be building her credit history. Over time, she can then qualify for unsecured credit cards which will further improve her credit score. 2. Investing: Mutual funds and index funds can be a good idea. Index funds in particular are popular for their low cost and market-matching returns. ETFs could be another option to consider. As for books, I would recommend "The Intelligent Investor" by Benjamin Graham and "A Random Walk Down Wall Street" by Burton Malkiel. 3. Retirement: In addition to your Roth and 401k, you could consider investing in a Health Savings Account (HSA) if you're eligible. Also, consider other types of investments like real estate, which can provide steady cash flow in retirement. Diversifying your investments can also reduce risk and potentially increase your returns. 4. Maximizing Money: Budgeting and tracking your expenses are the first steps to maximizing your money. This will help you understand where your money is going and where you can save. You might also want to consider hiring a financial advisor who can provide personalized advice based on your specific situation. Lastly, always ensure you have a good emergency fund (3-6 months of living expenses) in place before going on to make big purchases or investments. Remember that everyone's financial situation is different, and what works for one person may not work for another. It's always a good idea to get professional advice before making any major financial decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Origins from Iceland, 20m. I am new to investing and barely know anything about it. I am going to college in the United States and will take a student loan from an Icelandic loan institution, and I will have to pay 70% of the loan back, 2 years after I get a job and it will be a small percentage of my paycheck. I am a student-athlete so I will have to pay about $8.000 a year, and am currently receiving $6.5k after each quarter from the loan institution, and each quarter is 10 weeks. in conclusion, after I complete my freshman year I will have around $10k, after sophomore year I will have $20k and so on. I'm wondering if it is worth it to invest this money, or just save it. I will not be using the rest of the money until I turn 25-26. Does anyone have any tips on how I should invest this money in this type of situation? thanks for the read! ### Answer: Hello, and congratulations on your decision to pursue higher education in the United States! It's a very exciting journey that you're embarking on. Given your situation, it seems like you are in a position to invest some of your money. However, there are a few things you should consider first: 1. Emergency Fund: Before you start investing, it's important to have an emergency fund that can cover at least 3-6 months' worth of living expenses. This fund acts as a safety net for unexpected expenses or events such as medical emergencies, car repairs, or sudden loss of income. 2. Loans and Interest Rates: You mentioned that you have a student loan from an Icelandic institution. Understand the interest rate on this loan. If it's high, it might be more beneficial to pay off this loan faster rather than investing your money. If you've taken care of these points, then investing could be a good idea. Here are a few tips: 1. Diversify: Don't put all your eggs in one basket. Diversify your investments across different asset classes (like stocks, bonds, real estate etc.) and industries. 2. Low-Cost Index Funds: As a beginner, investing in low-cost index funds can be a good strategy. These funds track the performance of a specific index like the S&P 500. They are generally a safer bet than individual stocks and require less knowledge about investing. 3. Time Horizon: Since you're young, you can afford to take on more risk because you have a longer time horizon. You can invest in assets with higher potential returns (but also higher risk) like equities. 4. Regular Investing: Consider a strategy called dollar-cost averaging, where you invest a fixed amount of money at regular intervals. This reduces the risk of investing a large amount in a single investment at the wrong time. 5. Get Professional Advice: Since you're new to investing, getting advice from a certified financial planner or advisor can be helpful. They can provide more personalized advice based on your financial situation and goals. Remember, investing always comes with risks and it's important to do your own research or seek professional advice. Good luck with your financial journey! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: A while back I used a software whose name I can no longer remember. It was a free to use software that some good Samaritan developed and hosted and was a pretty straightforward system for inputting investment/savings/etc and projecting retirement assets and income. Unfortunately, due to big SEO budgets trying to search for it now just gives me a ton of big names. ### Answer: I'm sorry but without more specific information, it's difficult to pinpoint the exact software you previously used. However, below are some free software applications that might be similar to what you're looking for: 1. Personal Capital: This is a popular financial software that offers tools to track and manage your overall financial picture. It includes retirement planning features. 2. Mint: Owned by Intuit, Mint offers budgeting tools and allows you to link and monitor all of your accounts in one place. It also offers some basic investment tracking features. 3. Quicken: While not free, Quicken is one of the most comprehensive financial software applications available. It offers detailed investment tracking and retirement planning tools. 4. FireCalc: This is a free online tool specifically designed for retirement planning. It's fairly basic, but it can be useful for getting a rough idea of how much you need to save for retirement. 5. Portfolio Visualizer: This is another free online tool that offers more advanced investment analysis and retirement planning features. 6. GnuCash: This is a free, open-source personal and small-business financial-accounting software, available for GNU/Linux, BSD, Solaris, Mac OS X and Microsoft Windows. 7. EveryDollar: A budget app that helps you create a monthly budget so you can achieve your money goals. While these may not be the exact software you used before, they should be able to provide similar services. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Backstory: A few years ago, we sold enough stock to buy a house. Something like $250k. After doing our taxes for that year, the CPA made a comment to my wife along the lines of "if this happens a second year in a row, you'll owe penalties". We also apparently got some forms that make it possible to pay taxes quarterly ahead of time. My wife is now in mortal fear of ever selling stock again because of these "penalties" and doesn't know how to use the forms. There's no info on them about what to do with the form once you fill it out. Question: We googled these "penalties" and apparently if you owe more than $1000, you can be charged 6%. It is obviously extremely common to owe more than $1k in taxes and I've never heard of anyone paying quarterly or being charged a penalty for it. Am I out of the loop and penalties are extremely common? What is the real, actual rule as enforced? When are penalties actually accrued? Are we OK to be selling stock in $15-50k segments throughout a year to pay for college without fear of penalty or do we have to figure out whatever these quarterly forms are? If we've already sold $30k-$50k of stock this year without doing quarterly forms, should we panic-pay a big chunk to the IRS today (12/31) to avoid penalties? ### Answer: The IRS does require taxpayers to pay their taxes throughout the year, not just at the end when they file their tax return. This can be done through withholding from your income or through estimated tax payments. If you don't pay enough tax throughout the year, you could be liable for an underpayment penalty. This is most likely what your CPA was referring to. The general rule is that you must pay at least 90% of your current year's tax liability or 100% of last year's tax liability (110% if your adjusted gross income was more than $150,000), whichever is smaller, to avoid an underpayment penalty. If you owe more than $1,000 when you file your tax return, you could be subject to the penalty. However, these rules don't apply to everyone. Some taxpayers, such as retirees, farmers, and fishermen, may have different rules. Additionally, the IRS does waive the penalty in certain circumstances, like if the underpayment was due to a casualty event, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. As for your question about selling stock, it really depends on your overall tax situation. If the sale of the stock results in a significant capital gain, you could owe more in taxes. If that's the case, you may need to make estimated tax payments to avoid an underpayment penalty. The form you mentioned is likely Form 1040-ES, used to calculate and pay estimated taxes. If you've already sold a significant amount of stock this year, you may want to consider making an estimated tax payment. The fourth quarter deadline for 2021 is January 18, 2022, so you have some time to determine whether a payment is necessary. Remember, everyone's tax situation is unique, so it's always a good idea to consult with a tax professional. They can help you understand your tax liability and whether you need to make estimated tax payments. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: My husband financed a van for his business last January. February we contacted the dealership as there was some issues with the van and scheduled a time to bring it in. He arrives and they told them the lender advised to repo the van. Confused because I thought I set up auto payment. Looks like I made an error with the checking number and we were only 12 days late. I actually received a letter that very day from the lender saying we missed a payment and showing it with the next month payment. I paid it that day. Anyway, they end up taking the van after one missed payment. I have checked his credit score and the loan still shows with nothing negative. What can we do about this? We want to buy a house this year and we are afraid this will set us back. We have never missed a payment on anything before and always pay our credit cards off each month. His score is around 750. Do we dispute this as loan no longer valid in hopes the lender doesn't report a repo? Edit- This is all showing on all three FICO scores and credit karma. Any advice would be helpful. Thanks. ### Answer: I'm sorry to hear about your situation. Here are a few steps that you might want to consider: 1. Contact the Lender: The first thing you should do is reach out to the lender. Explain the situation and your error in setting up the auto payment. If it's your first missed payment, they may be understanding and willing to work with you, especially if you've already paid the missed payment. 2. Get Everything in Writing: If you come to an agreement with the lender, make sure to get it in writing. This can be useful if there are any future disputes or if the issue is not resolved as per the agreement. 3. Check Your Loan Contract: It's also a good idea to check your loan contract. It seems unusual for a vehicle to be repossessed after just one missed payment, there might be something in your contract that allows for this, or there could be an error. 4. Dispute the Repo: If the lender is not willing to work with you, or if you believe the repossession was unjust, you can dispute it. You can do this by filing a dispute with the credit bureaus (Experian, Equifax, and TransUnion). You'll need to provide evidence to support your claim, such as your payment receipts and any communication you've had with the lender. 5. Consider Legal Advice: If the dispute doesn't resolve the issue, you may want to consider getting legal advice. A lawyer who specializes in consumer law or auto loans may be able to help. 6. Rebuild Credit: If the repossession does end up on your husband's credit report, it can impact his credit score. But it’s not the end of the world. Continue to make all other payments on time and keep credit card balances low. This will help rebuild his credit over time. Remember, every situation is unique, so what works for one person may not work for another. It's always a good idea to talk to a financial advisor or legal expert before making any major decisions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I opened couple of cds with discover last year for a year term. Looking back I could of sworn the interest rate was good. Now looking at it there's 1.5 and 1.8% currently which is waaay lower than my current savings rate. I thought CD rates don't change? Or was I just unlucky that savings acc rate changed for the better? ### Answer: Certificate of Deposit (CD) rates are indeed fixed for the term of the CD. The rate you receive when you open the CD is the rate you'll get for the entirety of its term. However, what you're seeing is probably the current rates offered on new CDs, which can fluctify based on various factors including the overall economy and Federal Reserve policy. On the other hand, savings account rates can and do change over time. These rates are variable and can increase or decrease based on similar factors. So, it's possible that your savings account rate increased after you opened your CDs. It's also worth mentioning that while savings accounts might currently offer better rates, they don't always. The main advantage of CDs is the guaranteed return rate, even if savings account rates increase. CDs also typically offer higher rates than savings accounts when interest rates are high or expected to fall. To summarize, you were not necessarily unlucky. Instead, it's more about the timing and the fluctuations of the economy. It's always a good idea to keep an eye on interest rates and make financial decisions that align with your financial goals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Since the tax brackets are changing (and not for the better 🫠) for 2024, should we be putting more money into a pretax retirement account vs. our Roth IRAs? We are currently comfortably in the 12% bracket (~105k/year, MFJ), but that will change to 22% for next year. I have been putting more of an emphasis on our Roth contributions. We have the cash to max out our Roths in January 2023, but after that... do we focus on the 401k/457b? A mix of both? ### Answer: The decision to contribute to a pre-tax retirement account (like a 401k or 457b) or a Roth IRA depends on your current tax rate and your expected tax rate in retirement. Roth IRAs are funded with after-tax dollars, meaning you pay taxes now, but qualified distributions in retirement are tax-free. This can be beneficial if you expect your tax rate in retirement to be higher than your current rate. Pre-tax accounts like a 401k or 457b are funded with pre-tax dollars, meaning you get a tax deduction now, but will pay taxes on distributions in retirement. This can be beneficial if you expect your tax rate in retirement to be lower than your current rate. Given your situation, with a potential increase in tax rate from 12% to 22%, it may make sense to contribute more to your pre-tax accounts in 2024. This would give you a tax break now, when your tax rate is higher. However, it's also important to consider your long-term expectations. If you expect your tax rate in retirement to be even higher than 22%, it might still make sense to prioritize Roth contributions. Diversifying your retirement savings can also be a good strategy. By having both pre-tax and Roth accounts, you will have some flexibility in retirement to manage your taxable income. As always, it's recommended to consult with a tax advisor or financial planner who can look at your specific situation and help you make the best decision. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Hello everyone. My fiancé worked at Northwestern Mutual as a financial advisor for part of this year before quitting in November. He has received an invoice for “reversed policies” stating he had to pay back over $3000. Has anyone had success in not paying this back? Is he legally obligated to pay these commissions back? Thanks! ### Answer: As an AI, I can provide some general guidance on this issue, but I would strongly recommend consulting with a legal professional for advice tailored to your specific situation. Financial advisors at companies like Northwestern Mutual often work on a commission basis. This means that they are paid a commission for each policy they sell. If a policy is later canceled or lapses within a certain period, the company may "charge back" the commission to the advisor. Whether your fiancé is legally obligated to pay this back depends on the terms of his contract with Northwestern Mutual. If his contract states that he is responsible for chargebacks on policies that lapse within a certain period, then he may be legally obligated to pay. It's also worth noting that different states have different laws regarding chargebacks, so the legality may also depend on where you live. As for having success in not paying this back, it would likely depend on the circumstances and the specific policies of the company. If there was a misunderstanding or a legitimate reason why the policies were canceled, it may be possible to dispute the chargeback. However, this would likely involve discussions or negotiations with the company. Again, I would strongly recommend consulting with a legal professional to understand your rights and obligations in this situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Both wife and I dropped credit scores without any late payments and not extravagant spending, anyone know why that could be? ### Answer: There could be several reasons why your credit score may have dropped, even if you are making payments on time and not indulging in excessive spending. Here are a few potential causes: 1. High credit utilization: This is the ratio of your credit card balances to their credit limits. If this ratio is high, it can negatively impact your credit score. It's generally advisable to keep your credit utilization below 30%. 2. Closing a credit card: If you recently closed a credit card, it could have decreased your available credit, thus increasing your credit utilization ratio. 3. Applying for new credit: If you or your wife recently applied for a new loan or credit card, the lender likely performed a hard inquiry on your credit report, which can cause a temporary drop in your credit score. 4. Changes in credit mix: Credit scoring models consider the types of credit you have. A diverse mix — such as credit cards, a car loan, and a mortgage — is generally better for your credit score than having just one type of credit. If you've recently paid off a loan, your credit mix could have changed, which might have caused a drop in your score. 5. Errors on your credit report: Check your credit reports for any inaccuracies. If you find any, dispute them with the credit bureaus. 6. Decrease in credit limit: If your credit card issuer decreased your credit limit, your credit utilization ratio could have increased, leading to a drop in your score. Remember, these are just possibilities. It would be best to check your credit report for a more accurate understanding of the changes in your credit score. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Looking for some advice around what retirement and then investing beyond that, specifically the investment vehicles for myself and for my business (no employees). In two weeks I start a new job (full time W2) and I'm going to be earning about $20,000 more. I've decided that I'm going to keep my spending all the same, dedicate that $20k to just investments. I have no debt, my house is paid for, my car is new, paid for and I'm saving for the next. Paid off student loans. I have 6 months emergency fund. I'm in need of some catch up on retirement, I'm 38 years old. In this new job they have an odd retirement benefits package setup, basically I become eligible and gain access to their 401k after working there for 6 month, then they match after I've been their a year. So I don't want to loose 6+ months of investing time so I need something to fill that gap and hopefully be useful after that. I also own a small company (single member S Corp) with no employees (all contractors and that will remain that way forever). Since I have a full time job, I have been taking all the money I earn and putting back into the business to grow it. Right now and for at least the next 2 years I'm not going to be taking any pay at all, but I could have my business contribute $5k-$10k per year for retirement for myself, if it can be pretax or deducted and I can figure out what vehicle to do it in. Finally I do consulting on the side as a contractor myself which is a 1099 tax form. I've done a lot of research and not sure what's the best retirement vehicle for myself and then what option I could setup within my business with no employees. It is likely that even after off setting my tax burden with business deduction that my Gross Income will start to edge into Roth IRA limits, but I'm dancing on that line depending on tax deductions. ### Answer: Given your situation, here are some potential strategies: 1. For your personal investments during the six-month gap until your 401k becomes available, you could consider opening a traditional Individual Retirement Account (IRA) or, if you qualify, a Roth IRA. This would allow you to contribute up to $6,000 per year ($7,000 if you're over 50). If you're near the income limit for a Roth IRA, you might look into a "backdoor" Roth IRA, which involves making a non-deductible contribution to a traditional IRA and then converting that into a Roth IRA. 2. As for your S Corp, since you have no employees, you might consider setting up a SEP-IRA, SIMPLE IRA, or a Solo 401(k), also known as a one-participant 401(k) plan. All three options would allow your business to make tax-deductible contributions, but they have different contribution limits and rules: - A SEP-IRA allows contributions of up to 25% of your compensation, with a maximum of $58,000 for 2021. - A SIMPLE IRA allows you to defer up to $13,500 of your compensation in 2021 ($16,500 if you're over 50), plus an employer contribution of up to 3% of your compensation. - A Solo 401(k) allows you to contribute as both an employee and employer, with a total limit of $58,000 for 2021 (or $64,500 if you're over 50). 3. For your consulting work, you could also contribute your earnings to the SEP-IRA, SIMPLE IRA, or Solo 401(k) mentioned above, depending on which one you choose to set up. 4. Once your employer's 401k becomes available, you should aim to at least contribute enough to get the full employer match, as that's essentially free money. 5. If you have additional funds to invest after maxing out these tax-advantaged accounts, you could consider a taxable brokerage account. While this won't provide the same tax benefits, it offers more flexibility as there are no limits on contributions or restrictions on withdrawals. Remember, investing strategies should be personalized to your specific financial situation and goals. It's advisable to consult with a financial advisor or tax professional to ensure you're making the best decisions for your circumstances. ###end

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