micha8st

micha8st t1_iudq2tg wrote

Investing in one company is...gambling. I guess it's not strictly gambling, because you're spending your money on something that holds value instead of a chance at something of value. But, given how fickle investors are, and how fickle the market is, I would consider individual stock to be gambling.

Yes, a lot of companies pay dividends. Apple. Motorola. Stanley Black and Decker. Pfizer. And a whole lot more. But instead of buying one or a couple of them, I'd buy an index fund that invests in dividend funds. Vanguard has two: VDIGX and VDADX.

Then there's "Dividend Aristocrats" -- those are companies that have not only consistently paid dividends for at least 25 years, they've consistently raised their dividend. NOBL is an ETF that invests in Dividend Aristocrats. There are others.

I hold some VDIGX, but nowadays I'm putting money into more traditional index funds. VTSAX and VTIAX come to mind

You should be investing for retirement...but to invest into a tax advantaged retirement account, you have to have income from a job.

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micha8st t1_iu9m5t1 wrote

what will be your employment status? Will you be an ex-pat working for your current employer?

Do you expect to return to USA?

You need to pay back the loan within, by law, I think 60 days after quitting. If you fail to do so by the next tax-filing deadline, it then becomes a dis-qualified withdrawal, subject to taxes and penalties.

Generally, rolling the thing to an IRA is the best thing to with the 401k.

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micha8st t1_iu9gori wrote

never been paid monthly. Since I started my big-boy salaried job, I've been:

  • paid weekly
  • paid semi-monthly
  • paid bi-weekly.

My favorite was semi-monthly - for the same reason you like monthly.

Simplest, especially since you're getting a pretty good raise, is to ignore the occasional third check of the month. It all goes into savings or is invested or however you handle unbudgeted cash.

For a few years when I got paid bi-weekly, that third check of the month was different -- benefits like health insurance were NOT taken out of it. Now for me, they are taken out of all 26.

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micha8st t1_iu75l0k wrote

I don't think it's that obvious.

First of all, I'm old. Roth wasn't even invented until I'd been contributing to my 401k for 10 years. Then it took another 14 years before my employer decided to add Roth to my 401k.

73 + 37 = 110. 22%(73k) + 12k = 22,060. That's 20% of your combined income. General recommendation is 10-15%. 20% is steep, unless you're behind.

Fidelity recommends having 1x your (combined) salary saved for retirement by age 30. How close is your combined retirement account value to 110k?

I'm old, but not quite old enough to withdraw from my retirement accounts. Wifey is younger than me. So if I were to quit at 59 1/2, at least 3/4 of my retirement money will be in Traditional, only 1/4 in Roth. But.

For those years between retiring and RMDs, I can spend out of my Roth, and convert Traditional to Roth. That will lower my tax rate, allowing me to get money into Roth.

There are 2 good reasons to go Traditional, in my opinion:

  1. you need the tax break to hit your savings goal. I don't think that applies to you.
  2. Congress. You never know when Congress might get squirrelly and change the rules on you in a negative way. For all we know, some future Congress might disallow social security to anybody holding a Roth account. Or to anybody holding a Traditional account.

Don't think Congress can't ruin your plans? My parents-in-law planned to take money out of my FIL's workplace retirement account to pay for college. Before the eldest daughter graduated HS, Congress changed the rules and those withdrawals were no longer permitted. So I married a girl with Student Loans.

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micha8st t1_iu6zet3 wrote

First of all, it holds your money safe. The account is FDIC protected in most American banks. NCUA for Credit Unions.

The interest the bank pays is your cut of the interest they charge when they lend out your money.

Back when I was a kid, my savings account paid 5%. I have some accounts that pay over 1% today.

Lets say on October 1, you put 1000 dollars in a savings account paying 1%.

  • on October 31, your 1000 earned 83 cents.
  • on November 30, your 1000.83 earned another .83
  • on December 31, your 1001.66 earned another .83
  • on January 31, your 1002.49 earned 84 cents

In other words, the interest compounds.

obviously it compounds faster if you can ear higher rates of interest.

A lot of people talk about HYSA -- High Yield Savings accounts.

I have a high yield checking account -- the account earns 3%, but only on the first 10k in the account, and only if I meet some other provisions.

bankrate.com lists several companies paying over 2.5% in interest for deposits there.

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